Cross-Cultural Behaviour and Negotiation

GROUP ASSIGNMENT (CCBN - 4.710)

“Oil and Wasser”

By:EDRALYN L. ODRA - (ID- 20141992)PLABAN ROY - (ID - 20141161)MANASI KHATKUL- (ID - 20141364

Chapter Title

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1. Executive Summary

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2. Introduction

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3. Body

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4. Analysis

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5. Conclusion

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6. Recommendation

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7. Reference Lists

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EXECUTIVE SUMMARY

Two giants of the consumer food industry are merging together to

become the world´s second-largest consumer food business. During

the early moments of the merge, it has provoked challenges to

come its way since both the companies have its own style of

governance and contrasting beliefs on management and leadership;

the two companies follow completely different approach and take a

whole different route in attaining success. This study summarizes

the specific issues faced by the said entities which tap the

cultural issues that were led by cross border merging.

The very fact that there were instances of failure in the past

with cross culture mergers, the current merger also creates a

greater chance of misunderstanding and disagreement. Continuum

Diagram will give a better understanding of two cultures –

English and German; this will help in identifying the degree of

measures that should be undertaken by each one of them for

resolving these differences and come closer.

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The research will then explain the various steps that should be

taken to build an effective multicultural work environment in an

amalgamated company. On the other hand, this study will also

provide the importance of defining roles and responsibilities within the

organization to set the vision clear in the minds of each and

every employee. It then throws a light on a need for building trust

and judgments in both teams as well as managing both teams along

with managing Conflicts arising in both paties to achieve

organizational objectives.

This paper also concludes various recommendations for the two HR

Managers as well as the amalgamated company as a whole. It

emphasize on a fact that in a merger involving different cultures

when conflict arises, address it immediately and treat each other

fairly by understanding the cultural background of each culture.

This will surely help in eliminating issues and misunderstandings

and at the end will be regarded as a successful merger.

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INTRODUCTION

Banks, J.A., Banks, & McGee, C. A. (1989) cited that:

"Most social scientists today view culture as consisting

primarily of the symbolic, ideational, and intangible

aspects of human societies. The essence of a culture is not

its artifacts, tools, or other tangible cultural elements

but how the members of the group interpret, use, and

perceive them. It is the values, symbols, interpretations,

and perspectives that distinguish one people from another in

modernized societies; it is not material objects and other

tangible aspects of human societies. People within a culture

usually interpret the meaning of symbols, artifacts, and

behaviors in the same or in similar ways."

Globalization is a phenomenon which involves economic, financial,

trade and communication integration in opening perspectives from

local to a nationalistic point-of-view. This also paves its way

to be working with different nationalities across the globe.

Thus, it is a vital role for everyone to understand and recognize

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that every group of individuals has its own beliefs, attitude,

roles and knowledge that affect humanity. It cannot be helped

that cultural differences often lead to misunderstandings that

may cause a serious impact in one’s career.

These are some of the reasons behind the threat: a. language

barrier, not all can communicate in the same language that one

speaks. It varies from the way a person delivers a message by his

tone and/or accent, how one handles a conversation whether he is

soft spoken or not; b. valuing time, a popular example: Germans

are well-known for being punctual but in some parts of African

and South American countries they do not treat a scheduled

appointment to be as strict as the way most people practice.

(InterNAtions, n.d.).

As the population grows, influx of cultural diversity is

inevitable. This brings a vast ray of ideas, views and choices

which can help expand the objectives in meeting the set goals.

Different organizations all over the world are being challenged

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by the cultural diversity in the roster of their employees. In

the case study of “Oil and Wasser”, the merging of Royal Biscuit

Company and Edeling GmbH resulted to several matters to be

addressed, from the operations, leadership development programs

and up to the organizational structure of the company.

The purpose of this report is to give a better understanding of

the aforementioned; it will discuss the cultural barriers and

other issues involved in the collaboration of the two companies.

Likewise, this paper will emphasize on the solutions for making

the merging a success.

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BODY

Amalgamation between Royal Biscuit Company and Edeling GmbH- A

conflict of two business cultures

Royal Biscuit Company has revolutionized the British Snack food

in last few years, this decade old company is growing rapidly

quarterbacked by a visionary and charismatic leader Sir John

Callaghan; it hit the double-digit growth and became a very

prominent brand in British snack food industry. After conquering

the British soil, the Royal Biscuit Company wants to take on with

the world and join venture with one of the most loved German

brands, which is the Edeling Gmbh.Royal Biscuit Company. Royal

Biscuit Company emphasize their employment on imparting job

trainings to its dynamic employees and believes in a healthy

competition which ultimately brings the best out of everyone

which will help the company to achieve its desired goals.

In contrast to Royal Biscuit Company, the German company of

Eideling GmbH had glorious a 120-year-old history and was known

to be one Germany's most iconic brands. It is still a family

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owned company which keeps a very humble profile, considered to be

one of the largest food consumer companies in the world, the

company pays attention in numerous fields when it comes to

employment and cultivate its leadership for future generations.

They recruit the best candidates from the top business schools

and train them in Edeling's in-house university. Eideling GmbH

focuses more on teamwork between the employees and managers are

expected to multifunction.

The merging between the two giant European consumer food

industries is proving to be more complex than it seemed in the

beginning. Each one has a different style of governance and

specific beliefs on management and leadership. Edeling GmbH is

organized, stable and based their work on the research

methodologies that are tested for 120 years of work while Royal

Biscuit Company is flexible; they indulge into fresh ideas and

are aggressive in market expansion plan. The companies are too

enormous to give up on their ways of running the joint venture.

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It is a clash between the different business cultures; two huge

proud firms in their own context and neither of the companies

want to give up their practice. This is a clear case of how ones

cultural values impact on business relations; it is not that easy

to smoothly run a multicultural organization. The cultural

difference between the English and German Company is hampering

the merger process, Royal Biscuit Company is not that process

oriented and particular in the choice of words while conversing

to the Germans. Also, they only care for the solutions and not

much in the path followed to resolve the problem. Whereas Germans

are very process oriented. They work hard on the process and

streamlining it for future use. Germans are very straightforward

in talking and work style.

The two cultures have been plotted on a Continuum diagram (Figure

1.1) that shows the degree of cultural differences among both of

them.

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The Continuum Diagram

High Power Distance

English (More status gap)

Low Power Distance

German(Less status gap)

Uncertainty avoidant

German (Strong belief in expert & past experience)

Uncertainty tolerant

English (Willing to accept unknown risks)

Collective

German (Communicates in more indirect manner)

Individual

English (Communicates in direct andopen manner)

Particularism

English (Rely on relationships)

Universalism

German (Rely on specific rules of business)

High Context

German

Low Context

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(Meaning of message comes from Context & words)

English(Meaning of the message comes from words)

ContinuumDiagram

Figure 1.1

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Figure 1.1 demonstrates the two contrasting cultures of English

and German in a continuum diagram. The major issues hampering

this merge between the two big European consumer food companies

are the corporate cultural differences and the style of doing

businesses between the two firms. Both are at their top but the

path followed by them is completely different from each other.

Germans have less status gap, more process oriented, rely on

specific rules of business, communicates in direct manner whereas

English culture has more status gap, more flexible on processes,

communicate in indirect manner.

It is tough enough for two domestic firms with evidently

different cultures to combine but in a cross-border context,

there is a greater chance of misunderstanding and disagreement if

two cultures are involve. Differences in language, customs,

values, and training shout that the two firms in this story are

not equal. A reality confirmed by Royal Biscuit’s dominance of

the management and supervisory boards. A culture clash can indeed

undermine this merger. (Reimus, 2004.).

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There are many instances from the past where many mergers were

canceled because of the doubts of two cultures involved can not

get along. Volvo and Renault’s attempted a merge, during the

early 1990’s has been called off. According to Vovlo’s chairman,

Mr. Gyllenhammar, the combination of business issues and

political concerns complicated the merge. There were doubts

whether that the French and Swedes could get along with each

other. Analysts say that French company will not respect the

Swedish values and workers may face job cuts. (Stevenson, 1993).

ANALYSIS

Despite the challenges brought up by the merging, following steps

should be taken to build an effective multicultural work environment by the

CEO, John Callaghan:

STEP 1 – Define Roles & Responsibilities

The CEO, John Callaghan should set clear vision for the new

company in front of both parties and give his managers necessary

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authority to implement it. He should clearly define & communicate

the strategies as well as financial objectives underlying the

merge. For setting the vision, he should focus on building a team

of Top Executives from both English & German Boards to set clear

expectations and a detailed plan to achieve those with a

predefined Time Frame. He should then delegate necessary powers

to these executives to help them draw short term operating goals

and plans to achieve the same.

STEP 2 – Building Trust and Judgments in both the teams - English

and Germans

It is very important to make both businesses aware that the

merger is done with a view to identify newer business tactics

jointly, which could not have been done on its own by two

businesses.

For doing so, the CEO, can make use of both HR managers –

Brighton and Wallach – by bringing them together, since they are

the best person to know their own side. Callaghan should try to

convince both HR Managers that they have knowledge and

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understanding of their own businesses, which if combined, can

lead to a massive success to the amalgamated enterprise. He

should also work towards creating cultural trust and

understanding to build a harmonious working environment.

Since they are at the middle of the Management Team and the

employees, they can play a major role in building similar trust

among their subordinates and peers as well.

STEP 3 – Managing both Teams

Once the cultural understanding is set between both of the Teams,

both HR Managers will help the team in ensuring and sustaining

the trust in both cultures. The managers should clearly set and

discuss the expectations for each and every individual to make it

clear.

Both HR Managers should take all the necessary steps to make all

members feel that they are very important part of the team and

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without them the amalgamated team can never ever achieve the

success. They should also welcome suggestions from the team

members and should maintain free flow of information exchange

among all. With this, they can give due emphasis on drawing a

proper communication plan setting its frequency, methods and as

well as channels.

STEP 4 – Managing Conflicts arising during Pre and Post Merger

As a business grow, the conflicts are bound to arise and one

cannot avoid it but can minimize it. It is not only important to

minimize the quantum of conflicts but also to manage all those

conflicts that have aroused during the course of business. Proper

escalation and channeling is important in dealing with the

conflicts in the organization. Managers are expected to weigh

things and discuss with the team the different action plans

needed in resolving the issues that may arise.

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Apart from building an effective multicultural work environment,

it is very important for Michael Brighton to become a more culturally

mindful colleague because only then it would be possible for him to

interact effectively and appropriately across two cultures and

personalities. To become so Brighton can take into account

following things:

He should develop personal rapport with his German

counterpart Wallach so that he can make use of some good

business techniques which Wallach would have based on his

expertise.

He can also follow the guidance of his friend and colleague,

Anthony Miles, to get an understanding of German culture

basis his real life experience about Germans. This might

help Brighton in melting away stereotypes about Germans.

Brighton needed to start from the beginning with an

innovative proposal that delights Callaghan that will help

him to lead the business in future.

Brighton should also look for building a strong team by

clearly defining their roles & responsibilities as set basis

the organizational objectives.

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He should continuously seek feedback from his team that will

help him to get the necessary modification done in the

current business practices, if required.

Brighton should represent and lead the team on all the

fronts, whenever required and should always extend his

support and cooperation for the betterment of the team.

At the end he should be always available in case there is

any conflict within the team. He should take all the

necessary efforts to resolve the same within the shortest

possible time.

CONCLUSION

Merging of companies gives a lot of opportunities for the

organization. This move can widen up their knowledge. There would

be additional employees who can share their ideas that can help

the company excel. Multi-nationals can also increase their

market share, products, and services by expanding in different

countries thus making them boost their profits and productivity.

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Both companies have been successful in the industry for the past

years and strengthening it by merging is a big step. Royal and

Edeling has different styles in dealing with the business. The

acceptance of each other’s culture, behavior and business

preferences determines the success or failure of the merging. An

effective HR Manager doesn’t only focus in his views but also he

should consider and welcome new ideas from the counterpart for

the benefit of the company and the workers.

When conflict arises, it is important to address it immediately

and treat each other fairly. Understanding the cultural

background of the people you are working with will help eliminate

issues and misunderstandings. Thus, with the help of the HR

Managers the selection of the right managers will take place and

the merger process will be a triumph.

RECOMMENDATION

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The merging of England’s Royal Biscuit Company and Germany’s

Edeling GmbH will be a success if the two HR managers can

formulate an effective leadership development program that will

give benefit to the two powerhouses. To address the cultural

issues of the two managers, it is recommended to look to the

following points:

Michael Brighton

1. Michael believes that their corporate culture is the best

way for the merging. He must refrain from giving negative

categories based on Wallach’s demographics.

2. Michael should not stereotype Germans. Although Michael was

frustrated with his meetings with Edeling’s HR manager and

has been pessimistic on the success of Wallach’s proposals.

He should appreciate the positive benefits that the German

Company will bring, English can inculcate some of the good

German practices into their work environment that will help

them grow further.

Dieter Wallach

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1. Wallach should avoid parochial statements and premature

judgments. He thinks that their “formal training” of

employees is more superior than Royal Biscuit’s “action

learning” technique and Edeling’s program is the only way

for any organization to succeed. However, he should welcome

new ideas and alternatives that are well testes by the Royal

Biscuit and try to incorporate it in the business.

2. Wallach should establish a transparent and open

communication with Brighton. He should be open with new

ideas, be more flexible and willing to take risks.

Above all the success of the merger will result to larger the

global profits but the two managers should learn first how to

compromise. Four things they must keep in mind:

First, both the managers should deal with their cultural

differences and work as a team. Cultural diversities must

not get into their way while in the process of merging.

Second, set their priorities straight. They should know

their mission and vision and work hand in hand. The main

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goal is to become the 2nd largest food company around the

globe.

Third, is to communicate effectively to avoid confusion and

minimize misunderstandings. Both parties must know how to

listen actively and stop being too defensive.

Lastly is collaboration of knowledge and skills. Know the

strengths and weaknesses of the two different cultures and

come up with more precise criteria in choosing the right

managers, developing leadership programs and organizational

structure.

REFERENCES LIST

Auckland Institute of Studies Cross Cultural Behavior and

Negotiation Workbook. Stream 136

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Banks, J.A., Banks, & McGee, C. A. (1989). Multicultural

education. Needham Heights, Retrieved from:

http://www.carla.umn.edu/culture/definitions.html

InterNations Website. (n.d.). Cultural Differences in Business.

Retrieved from:

http://www.internations.org/magazine/cultural-differences-

in-business-15308

Reimus, B. (2004). Mergers & Acquisitions Oil and Wasser.

Retrieved from https://hbr.org/2004/05/oil-and-wasser

Stevenson, R. (1993). Volvo Abandons Renault Merger. Retrieved

from http://www.nytimes.com/1993/12/03/business/volvo-

abandons-renault-merger.html

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