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ABInBev’s Past Experiences In many ways, ABInBev’s own history may provide the best example of a previously successful cross-border merger. In 2008, Belgian-Brazilian-based InBev acquired U.S.-based Anheuser Busch, creating the world’s largest brewing company. InBev first bid $65 per share for Anheuser Bush, which was initially rejected. The final price agreed to was $70 per share. With oper- ations on every continent, the newly combined company had to quickly adapt to diverse national and organizational culture back- grounds. InBev’s organizational culture, heavily influenced by AmBev, was described as “a work atmosphere reminiscent of an athletic locker room . . . a culture that includes ferocious cost

an  understanding of the cultural and business perspectives of those shareholders through face-to-face, in-person meetings, DuPont executives were able to determine that their original offer was seen as offensively low. In response, DuPont adjusted its offer, resulting in a 92 percent approval rate from Danisco’s shareholders. Dupont’s CEO claims, “These face-to-face conver- sations were critical for the actions we took next, and, ultimately, for the successful outcome of the deal.”3

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After the deal was complete, DuPont made culture a strong focus of itsintegration efforts by first hosting a “Welcome Week” with presentations to all employees about the new combined firm, adjusted to local communication styles. After this week- long celebration, designed to encourage excitement and positive thinking, the company gauged successes and failures using reg- ular pulse surveys. These surveys “created a heat map of poten- tial geographic locations where there might be confusion or miscommunication.”4  Anticipating and measuring potential places of difficulty allowed managers to address issues as quickly and transparently as possible, easing the integration pro- cess. DuPont’s CEO reflected on the successful acquisition of Danisco, saying, “If we didn’t execute and integrate well, and if we didn’t get synergies quickly, it wouldn’t be a victory.”5

DuPont’s careful, level-headed due diligence, strong com- munication, and appreciation for Danisco’s corporate and national cultures ultimately helped the firm evaluate the poten- tial success of a combined business venture and avoided deal- ending cultural conflicts. Forming the right deal and designing an integration process with the goal of maximizing the value of the deal provided the merging companies with the tools necessary to optimize their combined value and avoid the pit- falls of cultural miscommunications.6

The Daimler-Chrysler Debacle Looking at failed cross-border mergers can lend some valuable insight as well. One classic case is that of Daimler-Chrysler, two companies that came together in a US$36 billion acquisi- tion that faced severe challenges from the start. Although it was hailed as a historic “merger of equals,” enthusiasm dis- solved in the face of cultural and personality clashes.7  From the onset, German executives were uncomfortable with the lack of protocol and loose structure at Chrysler. Conversely, the American managers felt that their German bosses were too formal and lacked any flexibility. In its first attempt to resolve these issues, top leaders at the company quickly worked to establish firm-wide processes

 

 

124 Part 2 The Role of Culture

Our opening discussion in “The World of International Management” shows how culture can have a great impact on mergers. For some companies, like DuPont and ABInBev, early recognition of differences led to more successful company integration. National cultural characteristics can strengthen, empower, and enrich management effectiveness and success. MNCs that are aware of the potential positives and negatives of different cultural characteristics will be better equipped to manage under both smooth and trying times and environments.

■ The Nature of Culture The word culture comes from the Latin cultura, which is related to cult or worship. In its broadest sense, the term refers to the result of human interaction.16  For the purposes of the study of international management, culture is acquired knowledge that people use to interpret experience and generate social behavior.17  This knowledge forms values, creates attitudes, and influences behavior. Most scholars of culture would agree on the following characteristics of culture:

1. Learned. Culture is not inherited or biologically based; it is acquired by learning and experience.

2. Shared. People as members of a group, organization, or society share culture; it is not specific to single individuals.

3. Transgenerational. Culture is cumulative, passed down from one generation to the next.

4. Symbolic. Culture is based on the human capacity to symbolize or use one thing to represent another.

5. Patterned. Culture has structure and is integrated; a change in one part will bring changes in another.

6. Adaptive. Culture is based on the human capacity to change or adapt, as opposed to the more genetically driven adaptive process of animals.18

culture Acquired knowledge that people use to interpret experience and generate social behavior. This knowledge forms values, creates attitudes, and influences behavior.

Going Forward Companies from the same cultural clusters inherently understand one another’s values, expectations of leadership, and communi- cation styles better than people from different cultural clusters would. With diligent planning and education of their workforce, two firms from different organizational and national cultural back- grounds, such as SABMiller and ABInBev, can still find success through mergers or acquisitions. Although companies from differ- ent geographic regions would not have an “inherent understand- ing,” it is possible to replicate it through employee training and strong leadership, as past mergers at DuPont and ABInBev dem- onstrated. Managers and executives at a newly merged company should educate its employees on the cultural differences of the two joining firms, putting the combined company in a position to leverage the merger as an opportunity to create a new corporate culture that emphasizes elements and values common to both companies’ national cultures while preserving, where necessary, attributes of the distinct cultures of each. Despite diversity among its British, Belgian, Brazilian, and American roots, cultural commonalities and understanding may help to propel the SABMiller and ABInBev merger forward. The companies certainly face challenges ahead, but, as demon- strated by past successes, proper management and careful planning can maximize their chances for long-term success.

cutting and lucrative incentive-based compensation programs.”11

In contrast to this, Anheuser-Busch was known as a family- friendly company founded in St. Louis in the 1800s with strong emphasis on community involvement. Anheuser-Busch “won numerous awards for its philanthropy, diversity, community involvement, and employer of choice. The company was known for luxurious executive offices and lots of perks, with six planes and two helicopters to transport its employees.”12

It was clear to leadership that these two distinct cultures— one very competitive and low cost, the other inclusive with many expensive corporate reward systems—would create conflicts in regards to communication, informal relationships between employees, employee satisfaction, and mentorship.13  In response, ABInBev formulated an integration plan that, among other actions, led to the creation of a new board of directors for the combined company, which included the current directors of the InBev board, the Anheuser-Busch president and CEO, as well as one other current or former director of the Anheuser-Busch board. The management team consisted of executives from both companies’ current leadership teams.14 Ultimately, the ABInBev merger was a financial success, with EBITDA rising from 23 per- cent to 38 percent in the three years following the deal. Despite initial cultural clashes, this merger succeeded due to the recogni- tion and education of these differences and the international management experience of the company’s leaders.15

 

 

Chapter 4 The Meanings and Dimensions of Culture 125

Because different cultures exist in the world, an understanding of the impact of culture on behavior is critical to the study of international management.19 If international managers do not know something about the cultures of the countries they deal with, the results can be quite disastrous. For example, a partner in one of New York’s leading private banking firms tells the following story:

I traveled nine thousand miles to meet a client and arrived with my foot in my mouth. Deter- mined to do things right, I’d memorized the names of the key men I was to see in Singapore. No easy job, inasmuch as the names all came in threes. So, of course, I couldn’t resist showing off that I’d done my homework. I began by addressing top man Lo Win Hao with plenty of well-placed Mr. Hao’s—sprinkled the rest of my remarks with a Mr. Chee this and a Mr. Woon that. Great show. Until a note was passed to me from one man I’d met before, in New York. Bad news. “Too friendly too soon, Mr. Long,” it said. Where diffidence is next to godliness, there I was, calling a room of VIPs, in effect, Mr. Ed and Mr. Charlie. I’d remembered every- body’s name—but forgot that in Chinese the surname comes first and the given name last.20

■ Cultural Diversity There are many ways of examining cultural differences and their impact on international management. Culture can affect technology transfer, managerial attitudes, managerial ideol- ogy, and even business-government relations. Perhaps most important, culture affects how people think and behave. Table 4–1, for example, compares the most important cultural values of the United States, Japan, and Arab countries. A close look at this table shows a great deal of difference among these three cultures. Culture affects a host of business-related activities, even including the common handshake. Here are some contrasting examples:

Culture Type of Handshake United States Firm Asian Gentle (shaking hands is unfamiliar and uncomfortable for some;

the exception is the Korean, who usually has a firm handshake) British Soft French Light and quick (not offered to superiors); repeated on arrival and departure German Brusque and firm; repeated on arrival and departure Latin American Moderate grasp; repeated frequently Middle Eastern Gentle; repeated frequently South Africa Light/soft; long and involved

Source: Lillian H. Chaney and Jeanette S. Martin, Intercultural Business Communication  (Englewood Cliffs, NJ: Prentice Hall, 1995), p. 115.

Table 4–1 Priorities of Cultural Values: United States, Japan, and Arab Countries

United States Japan Arab Countries

1. Freedom 1. Belonging 1. Family security 2. Independence 2. Group harmony 2. Family harmony 3. Self-reliance 3. Collectiveness 3. Parental guidance 4. Equality 4. Age/seniority 4. Age 5. Individualism 5. Group consensus 5. Authority 6. Competition 6. Cooperation 6. Compromise 7. Efficiency 7. Quality 7. Devotion 8. Time 8. Patience 8. Patience 9. Directness 9. Indirectness 9. Indirectness 10. Openness 10. Go-between 10. Hospitality

Note: “1” represents the most important cultural value, “10” the least. Source: Adapted from information found in F. Elashmawi and Philip R. Harris, Multicultural Management  (Houston: Gulf Publishing, 1993), p. 63.

 

 

126 Part 2 The Role of Culture

In overall terms, the cultural impact on international management is reflected by basic beliefs and behaviors. Here are some specific examples where the culture of a society can directly affect management approaches:

∙ Centralized vs. decentralized decision making. In some societies, top manag- ers make all important organizational decisions. In others, these decisions are diffused throughout the enterprise, and middle- and lower-level managers actively participate in, and make, key decisions.

∙ Safety vs. risk. In some societies, organizational decision makers are risk-averse and have great difficulty with conditions of uncertainty. In others, risk taking is encouraged and decision making under uncertainty is common.

∙ Individual vs. group rewards. In some countries, personnel who do outstand- ing work are given individual rewards in the form of bonuses and commis- sions. In others, cultural norms require group rewards, and individual rewards are frowned on.

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