Intercultural Aspects of Managing Corporate Mergers

Research Paper (undergraduate) from the year 2009 in the subject Business economics - Business Management, Corporate Governance, grade: 1,7, University of Applied Sciences Essen, course: Intercultural Competences, language: English, abstract: The following term paper deals with the topic of managing intercultural aspects in corporate mergers and acquisitions. It focuses on the intercultural aspects of human resistance to change in the PMI phase of corporate mergers. 'Those who underestimate or ignore the human factor do so at their peril.' Over the last two decades mergers & acquisitions are increasingly used to protect and to strengthen the market positions of companies. Due to the continuing globalization of markets, mergers and acquisitions have become a part of daily business. To survive in high competitive markets evermore companies use the possibility to merge or acquire a competitor because this is seen as a relatively fast and efficient method of expanding in new markets and of implementing new technology. In a highly flexible market environment, as it is nowadays, organisations have to be efficient, profitable, future orientated and adaptable to the fast development of the global economy. Otherwise they would not have the option to play a dominant and leading role in their markets. Therefore companies depended on a successful M&A process which is manly influenced by the capabilities and skills of managing and implementing the change effectively, although this is a major challenge. As figure 1 shows, companies are highly aware of financial objectives like the increase of sales or the reduction of costs. It is often the case that companies' financial prospects seem to be excessively high, which in the end leads to multiple missed objectives and even to entirely failed PMIs. Whereas some cases can be explained by financial or market based reasons, there is noticeable amount based on the neglect of human resource issues. Many companies are aware of these facts and thus conduct well structured analysis to satisfy the needs of their employees and at the same time to reach their strategic and financial goals. Nevertheless, they tend to ignore the 'people issues' because these soft factors are difficult to measure quantitatively. As various companies gladly give lip services like 'our employees are the most important resource', divers studies prove that these deliberations play a subordinated role in reality.