Lenovo -IBM Merge PDF

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Individual Formative Task – Case Study – Lenovo - IBM

-What are the main drivers behind this merger? Lenovo is a Chinese computer company which was founded in 1984. The company has decided to globalize when Yang Yuanging became a CEO in 2001. They started to search for an opportunity to open to the new markets. On the other hand, IBM was in a big financial crisis. As per the IBM Annual Report 2004, the PC department lost millions of dollars. They announced that they will leave this market. Therefore, there was a big opportunity for the both companies. Lenovo and IBM announced their merger in 2005. There were many drivers for Lenovo. They wanted to globalize the company. IBM was already operating in 160 countries. According to the agreement, Lenovo was able to use IBM’s name for another five years which would give Lenovo a recognition. Lenovo was able to reach the global market. Besides all these they acquire the technology that IBM has. And of course, with this merge Lenovo had a better hand with suppliers. IBM’s main driver was to sell the department that cost them a lot as financially but on the other hand, they had a chance to go into the Chinese market. So that was a win-win situation for both companies. -What impact does international cultural difference have on the case? Can you find examples of it being a barrier or an enabler of success? (200 words) International cultural differences had great impact on this merger. One of the many impacts was the time-zone difference. They had only 3-4 hours to work together. Sometimes they had to have their meetings at unusual times which effected employee’s work-social life balance. Another impact was the language barrier between the workers. Lenovo decided that the corporate language will be English, so they provided classes. But even they speak the same language communication was still a great barrier. For example, at one of the meetings Chinese delegation’s response was “yes yes yes”. The American delegate thought this as an agreement, but the Chinese delegate was really just saying “I understand, please carry on (Holstein, 2004:4). As per the authors (Koster & Stahl, 2013) say that this cultural difference led to misunderstanding in the meetings. As Chinese delegates were listening, and American delegates were talking most of the time. This effected problem-solving end the decision-making processes. However, both sides were eager and excited about the merger which was not expected by IBM workers because they were acquired by another company. But Lenovo and IBM delegate’s strong will to drive this merger as a success has worked out.

-Does the culture of the organisation itself play a part? If so, how? (200 words) The organisational culture differences were one for the biggest challenges in this case. Schein (2004) organisational culture model focuses on artefacts, traditions as well as behaviours and attitudes. As Chinese and American artefacts, values, behaviours etc. are so different and that effects the culture of the organisations. Schrader and Self (2003) indicates that, problems may occur when one intent to modify another’s organisational culture during mergers. However, Lenovo and IBM executives worked proactively to understand and tried to overcome such differences. We had tried our best to stabilize the emotion of employees… and we wanted to get a common culture… the two companies had the similar value and vision, such as integrity and responsibility… so, we created a unified culture background to strengthen cultural identity gradually. (Zhou and Haung, 2014:38). This must have been received well by the employees as they have achieved to keep %98 of the employees after the completion of the merger. Significant eye-catcher of this case was the resignation of the American CEO Steve Ward. Obviously, no one was ever sure what the reason was, but it was interpreted that he couldn’t handle the organizational cultural differences between the companies. -Which theory or model (e.g. Hofestede) is still helpful in a globalizing world? (200 words) The Geert Hofstede’s model is still valid in the modern days. He indicates 6 dimensions: 123456-

Power Distance Individualism Vs Collectivism Masculinity Vs Feminity Uncertainty Avoidance Long Term Orientation Vs Short Term Normative Orientation Indulgence VS Restraint

As per Hofstede (2005), Chinese culture attitudes are indicated by high-power distance, collectivism, masculinity and high-uncertainty avoidance. And American culture is characterized by low-power distance, individualism, and low-uncertainty avoidance. His model of 6 dimensions help to understand the differences of the countries.

REFERENCES Hofstede, G. (1997). Cultures and Organisations Software of the Mind: Intercultural Cooperation and its Importance for Survival Mcgraw- Hill, New York. Schraeder, M. and Self, R. D. (2003). Enhancing the Success of Mergers and Acquisitions an Organizational Culture Perspective. Management Decision, 41/5, 511-522. Zhou, S. & Huang, X. (2014). How Chinese “Snake” Swallows Western “Elephant”: A Case Study of Lenovo’s Acquisition of IBM PC Division. Journal of International Business and Economy 15(1): 38....