Chapter 5

Suggestions on Cultural Integration of Multinational mergers and

acquisitions Enterprises

5. 1 Government-level recommendations

5.1.1 Strengthen supervision of the relevant service system

The supervision and management of multinational enterprises should be paid

attention to, the first task is to clear the regulatory body and its responsibilities.

Joint-stock companies or individual membership, private enterprises should be

regulated by law and related overseas enterprises management practices,

implementation of supervision according to law. In addition, overseas investment of

China should be built a standard security system, this can be learned from the United

States, the United States is the first country to build overseas investment protection. It

can be found by consulting relevant literature, that relevant laws on overseas

investment of the United States were administered in 1948, in 1969, "Foreign

Assistance Act" was passed, OPIC enterprises were established this year in response

to this legislation, in 1975, the principal risk subjects of overseas investment were

established. And Britain, Germany and France are also not to be outdone, followed by

the construction of the relevant laws and regulations and the corresponding

institutions and organizations for the protection of overseas investments. In summary,

our government should also build relevant legal protection, construct supervision

system, give greater protection to Chinese enterprises when they expand overseas

investment and perform their duties.

5.1.2 Formulate national development strategic planning and implementation of

support policies

Since China's accession to the WTO, China has become a solid part of the

world economy, which is evident to all facts. According to the formulation of the

economic strategy, multinational enterprises will be the next 5-10 years of business

planning into China's economic development strategy. This will be a gospel for

transnational corporate mergers and acquisitions, showing that our government is very

much in favor of for the implementation of this initiative, grasping this opportunity

would be a great chance to expand our business development. In Korea, for example,

after the Government's support for mergers and acquisitions, categories of

multinational mergers and acquisitions in this country with lightning speed increased

more than 5 times, South Korean government’s support for this move is reflected in

the level of taxation, for example, giving the amount appropriate changes and

adjustments, and giving some preferential system, for the acquisition cost a

corresponding loss policy will be given to take care of mergers and acquisitions

enterprises, in addition to this aspect , for the economy the loan conditions will be

also relaxed, or making other strategies to give financial support at the financial level,

even allocating earmarked funds for the acquisition of specialized enterprises as a risk

subsidy. In China only low-interest loans are to be given to support cross-border

mergers and acquisitions as preferential policies, this is obviously not enough, it is

recommended that the Chinese governments introduce policy supports of other

countries as its reference, establish and improve a complete set of legal system,

introducing more talents to support the progress of the integration of domestic and

foreign resources.

5.1.3 Improve the examination and approval system

The development of current world economic is rapid with varied forms, in

order to make enterprises more internationalised, our government should rectify and

reform its departments appropriately, consider taking a multi-level authority for

approval of this initiative, and establish a domestic administrative examination and

approval authority with the administration of the Overseas Investment Committee as

the center, so that enterprises can more easily start the approval process. For the

approval criteria, constraint conditions can be relaxed appropriately, according to the

actual situation of enterprises the procedures for approval can be simplified

appropriately. By reducing the approval process, approving authority of the local

examination and approval authority can get an appropriate increase, gradually moving

to the consulting service-based registration system, providing more convenient

channels for multinational companies.

5. 2 Enterprise-level recommendations

5.2.1 Vigorously cultivate and use transnational business talents

Competition is wherever it exists, for enterprises if they want to be in their

own competitive advantage, they must seize the talents and be good at talent handling.

Talents can be cultivated by their own, or can be introduced outside. If choose the

former, the enterprise should not only focus on brand-name university graduates, but

focus on the professional foreign language graduates of foreign trade, also should not

choose some foreigners to hold a post without qualifications. It is understood that

most internal talents of the well-known enterprises coming from its employment

mechanism or internal accumulation of talent platform. Therefore, companies need to

pay more attention to their own internal and increase capital investment, build

relevant systems, modernize talents, and nurture qualified personnel for their own

enterprises. While the latter is chosen, business owners need "Bole" to find "Maxima"

for them. First of all, multinational companies need to have a strong international

background color, in terms of talent they can make it with international practice,

select the appropriate management of overseas recruitment related system, and learn

the foreign ways to introduce talents. Lenovo, for example, after its successful

acquisition of IBM PC business, did not choose to drastic reform, but followed the

former vice president, Huawei is introducing Taiwan and other select international

business background with talents, most of these companies are successful with very

broad development prospects.

5.2.2 Institutional innovation and the implementation of global business strategy

Enterprises need to strictly comply with relevant laws, such as the existing

"Company Law", and the employment systems also need to be strengthened. For the

talents recruit those with real materials, break the employment mechanism and inhale

more talents for business effectiveness without paying more attention to salary.

Secondly, the management of work can not be ignored, and they need to build

appropriate business management decision-making mechanism, taking other Western

companies as examples, and follow their related methods. For example, a hierarchical

decision-making management mechanism may be adopted, followed by

decentralization, mainly for the performance of middle-level cadres, the management

of the rights of high-level staff needs to be weakened, make them focus its center on

the macro-control and market research. In addition, the issues of product design and

production, etc., they need to strictly comply with the relevant standards, strictly abide

by the requirements of the standard for all countries, making the desire of

monopolizing the national practices can not be implemented. Moreover, companies

will also need to examine the current situation, identify opportunities to develop.

Vision should be accurate, while expanding the territory, rapidly occupying effective

market position. And finally learn to use the relevant laws and regulations to solve the

problem while protecting their rights and interests.

5.2.3 Taking innovation as a guide, forming technological competitive advantage

as soon as possible

The development of enterprises is inseparable from talent and innovation,

from an innovative point of view, business is the main body, they are both the

beneficiary and the initiator. Enterprises in the first task is to seize the market

opportunities to achieve technological competitive advantage, this should be done in

the following areas: First, optimizing the enterprise's existing innovation systems.

Take enterprises as the main body, not following the pace of research institutes and

other institutions, but to make enterprises as the protagonist of innovation work.

Second, the industrialization and R & D departments to keep up with the pace.

Completely shut out those phenomena of disconnect, to know the needs of expanding

scientific research projects in close connection with corporate R & D departments.

Third, funding for research projects should be strictly controlled. According to

accessing to the relevant literature, we can see that in developed countries, enterprises

will put at least 10% of annual profits into the enterprise important projects, and even

some 20% of the annual profits will be invested in which. This is indeed respected by

our country, but the real implementation is less. Therefore, our government and

enterprises should pay more attention to it, and actively build the audit of financial

oversight bodies, making the actual use of scientific research funding into practice,

this initiative can effectively reduce corruption case. Fourth, encourage innovation

and build technology-related innovation reward and punishment system, give

appropriately outstanding contributions to scientific and technological personnel, and

punish the disciplinary personnel. Fifth, strengthen Sino-foreign cooperation. In the

21st century, cooperation between Chinese enterprises and foreign enterprises is

already very common, on this basis, enterprises need to intensify cooperation at this

level of scientific research, to create a competitive advantage for themselves. R & D

and technology innovation and talent is inseparable, many developed countries are

worth being learnt from, and therefore need to strengthen cooperation with them.

5.2.4 Development and implementation of a strategic plan for mergers and

acquisitions integration

When multinational enterprises carry out mergers and acquisitions projects,

it is essential for corporate culture integration and acquisition of ownership, but

success is inseparable from a suitable merger integration of strategic planning.

Mergers and acquisitions need to focus on the integration of enterprises, we need to

know the risks of mergers and acquisitions are great, if one step is wrong, then the

other steps will be also wrong step by step, eventually leading to failure of mergers

and acquisitions. It is necessary to establish a scientific and appropriate integrated

planning, this plan needs to pay attention to the actual situation of each country and

each enterprise, so this plan must be a strategic merger integration planning. We take

TNC merger case as an example to make an analysis, based on our comprehensive

mergers and acquisitions experience of China, we should realize synergies mainly

depending on dealing with strategic issues, which need to carry out collaborative

integration work, specifically, the market operation, production management of

human resources, and enterprise organizational structure and national culture these

three should be combined to integrate. In other words, integration is not just about

corporate culture or part of the enterprise, but taking the enterprise as a whole plan to

expand into integration, it can be considered that this is the emphasis on the overall

integration of performance practices.

5.2.5 Attach great importance to corporate culture integration

Multinational enterprises should pay attention to discrepancies between

cultures, doing a good job of cultural integration, and handling well with its cultural

barriers. Corporate culture is mainly constituted by the following four aspects:

business values, corporate business behavior, interpersonal behavior, and public

relations. The company's operating values are the key, which are responsible for

co-ordinating the other three points. For multinational enterprises, the cultural

integration problem can not be ignored. First of all, comply with the principle of

seeking common ground while reserving differences, understand the local culture and

the differences between local cultures, integrate a new corporate culture as far as

possible. We can get a lot of understanding from Mirvis’s corporate culture thoughts,

it considers that we should realize the importance of corporate cultures to achieve

integration of both cultures, understand the cultures of both sides, and finally adapt to

each other to promote mutual development. When China 's enterprises enter the

market in other countries to start transnational operations, they must first have a

preliminary understanding of this country's culture and business conditions for this

country, make a specific analysis of the enterprise's business and internal structure and

other cultural elements. In the expansion of cultural integration, take their own

corporate culture as the main body, and reflecting the advantages of their own local

culture, absorbing the culture of the host country based on corporate local culture.

Finally expand running, integrate a new corporate culture, maximize the synergy

effects and value creation effect to the limit.

5.2.6 Boldly cultivate and use professional integration managers

Enterprise integration is inseparable from personnel integration, the key to

the integration is to control of the team managers. The presence of integration

manager can regulate both of the companies, it belonging to a hub, can identify

problems in a timely manner with high professional skills and strong problem solving

skills. In addition, the integration manager can make the two sides of the enterprises

more smoothly to communicate, to achieve integration goals. Seen in this light, the

presence of integration manager is necessary.

After checking the relevant findings, compared with non-use integration

manager of the enterprise, the presence of integration managers has a greater chance

of achieving the goal of integration. China should pay more attention to the role of

integration manager while expanding overseas mergers and acquisitions, to be good at

using talents. The practice is very correct that the vice president of IBM Group is still

employed by Lenovo Group after the successful acquisition of IBM Group. Most

companies understand the role of integration manager, however, due to the high cost

of integration of employment, some companies do not want to take this measure. But

in the long run, its actual benefits and costs are very impressive.

Recruitment of professional integration managers need to understand the

following aspects: First of all, understand their ability to work, which is critical for the

integration of the team building and management; Second, understand their work

experience, those who are holding a chicken feather token can not be hired, recruit

people who can clearly identify themselves and use their rights properly. Finally,

understand their mental capacity and emotional intelligence condition, which is the

necessary quality for a qualified integrated manager.

In general, if Chinese enterprises want to carry out mergers and acquisitions

more effectively and enable enterprises to achieve effective and long-term

development, they must attach importance to the role of integration manager and hire

relevant personnel.

5.2.7 Efforts to increase the integration of corporate culture

For mergers and acquisitions integration, the main difficulty lies in the

integration of corporate culture. The corporate culture mainly makes up of these four

areas : business values, business behavior, interpersonal behavior and public relations.

Corporate business values are critical, they are responsible for coordinating the other

three. For multinational enterprises, the cultural integration problem can not be

ignored. The key for mergers and acquisitions integration is to deal with these four

aspects of business contents for both sides of enterprises. Marks believes the

integration of the corporate culture is the primary task of cultural importance,

expanding the integration of both companies need to be aware of national culture,

understand local traditions, and have a clear understanding of the company's history

and reputation, and believes that the integration of the corporate culture can not

despise other cultures, and can not suppress the corporate culture of other side.

Implementation of corporate culture integration should be careful and need to attach

importance to it, it is recommended to start a special seminar to unify views and then

expand integration. In general, it is necessary to abide by the principle of seeking

common ground while reserving differences, understand the local culture and the

differences between the local cultures, producing the new integration of corporate

culture as far as possible. First of all to understand the country's culture and traditions,

have a preliminary understanding for the country's business situation, In addition to

fully understanding the enterprise's business and internal composition of the

enterprise, also need to analyze the differences. Expand the cultural integration based

on their own corporate culture, reflect the advantages of their native culture, absorb

the host enterprise culture on the basis of local culture, achieve the final integration of

a new corporate culture, and maximize the synergies and value creation effect to the

limit.

5.2.8 Focus on speed integrated value

While integration we should pay attention to the value of integration speed,

not anxious and not too slow. Slow integration is the result of cultural integration, in

this regard the integration is no quick fix, we need a process of adaptation, this also

requires a sound planning program. In terms of speed integrated value, many

companies have emerged in the case of integration failure. Based on the analysis on

the acquisition of the case data from Conyers Consulting Company, we know if the

length of integration is beyond two years, the probability of problems for merger

integration issues will be increased, it’s easy to affect the morale of employees,

affecting business efficiency, as synergistic declines arise, leading to failure of

mergers and acquisitions. According to Mercer management consulting firm’s data

consolidation on the merger, we know that the speed of integration has a great

influence on the performance of mergers and acquisitions. Specifically, the speed of

corporate merger integration is positively related to the performance, If the speed is

slow, the performance is also poor, if the speed is fast, the performance is growing

well. When Chinese enterprises expand mergers and acquisitions business, must

overcome this speed of the integration, there is no sense of urgency of time. Moreover,

integration needs to take into account holistic strategies, paying attention to

intelligence gathering, expand researches, this is a good reference for reducing

consolidation costs and preventing integration risks. We need to accelerate the

integration of speed after the merger, so as to achieve it with short-time and high

efficiency, and to achieve integrated synergies, so that corporate value re-creation will

be achieved through cross-border mergers and acquisitions, and the national

enterprises stride forward to international enterprises.

5.2.9 Beware of "small swallow big"

Cross-border mergers and acquisitions is an effective way for enterprises to

expand and enhance their capital, market value and brand in international operations.

There are many financial, energy, media and other corporate giants in this way

quickly to seize the favorable international market, to form monopoly advantages. But

many mergers and acquisitions multinational practices tell people, real successes of

hot "mergers and acquisitions" to the last are less than 40%. Such as Lenovo's

acquisition of IBM's PC business, it is with a lower success rate, only about a few

percent of the probability. Chinese enterprises because of their capital strength,

international level, management experience, technology leadership, brand and market

channels, and completely different with the Western cultural system, making their

cross-border mergers and acquisitions and integration more difficult. Therefore, when

Chinese enterprises go out looking for acquisition opportunities, can not blindly

imitate the operation mode of Lenovo Group, but can not be emotional impulses,

despite the merger integration costs, act on their own initiative. We should learn from

the United States General Electric Company and the "having many meals but little

food at each " mergers and acquisitions strategy, target mergers and acquisitions target

enterprises with overall planning and in-depth research, act according to actual

circumstances and focus on the replacement of business and new business expansion.

The size of each acquisition does not seek large, but seek to integrate and easy to

digest, to ensure a higher success rate of mergers and acquisitions.

5.3 The Strategy of Cultural Integration in Merger and Reorganization

5.3.1 The process of corporate culture integration

Cultural integration is through communication and mutual adaptation, and

ultimately achieve the purpose of integration success. Cultural integration is not easy,

need to be based on the two cultural differences, combined with the actual situation of

enterprises, to identify that part of the inappropriate development of enterprises, and

then removed, and eventually to assemble and integrate those parts suitable for

enterprise development. Cultural integration can be divided into the following three

levels. The first level is to communicate and exchange, this is a job to be performed

before the mergers and acquisitions. After expanding understanding, the enterprise

was able to carry out research and analysis, and ultimately made the decision to

achieve mergers and acquisitions. This level is mainly focusing on corporate core

values, having a preliminary understanding of corporate culture, and getting to know

leaders in the management of the enterprises. After achieving the above points, make

a comparative analysis on the enterprise culture and the local corporate culture, learn

the difference and expand their assessment analysis, take a good grasp of the whole

idea of mergers and acquisitions. The second level of work required to expand

cultural input. Expanding cultural input is very troublesome, an inattentive will

generate cultural conflicts, which therefore must be careful. A good grasp of core

values are the foundation, followed by finding the right point of entry for its

monitoring and promoting the work estimate, part of the focus of the monitoring

should be on difficult elements. Such as the emergence of struggling for power after

mergers and acquisitions integration, at this time both sides tend to maintain their own

thinking and ideas. This needs to expand surveillance and cultural input , cultural

input is mainly done to cultural counseling. In the case of cultural integration if the

allergy appears, we will have to pay full attention to the situation of culture itself,

weighing the pros and cons, and then start the integration work, and finally to

determine the progress of integration.

For cultural integration, we must first understand its specific situation,

examine whether all levels and phases meet integration requirements. The second is to

increase investment in staff training, expand staff training to promote employee

adaptability to different cultures, facilitate the detection of integration problems and

improve. Cultural conflicts can lead to integration failure. The innovation period will

be more favorable for the cultural integration, and help to create a new corporate

culture. This phase is to start with the development of enterprises, there is no end, can

not be predicted. Therefore expanding cultural integration needs as much as possible

to find a suitable cultural integration factor at this stage, strengthen cultural

construction. On the other hand employees can not be ignored, be good at observing

the differences between employees, and then to improve it, adding to exclude the

adverse cultural. The construction and development of new culture are conducive to

employees to enhance self-restraint. It is noteworthy that when companies start

cultural integration, they must have a good team, the cultural quality of team leader is

related to the height of the enterprise, integration and management are inseparable

from a good team, this is very effective in preventing cultural differences in cultural

integration, but also to promote cultural integration. According to the perspectives on

the process of corporate cultural integration, team building is to adapt to new forms of

the essential, and it is the best choice for enterprises.

5.3.2 The principle of corporate culture integration

Depending on the specific construction environment and the use of different

ways, corporate culture will show a different connotations. Standing on the

perspective of business development, starting point for the gradual integration of

corporate culture should be people-oriented, that is to put the enterprise employees in

the first position. The aim of corporate cultural integration is not only to emphasize

the subjective will of cultural builders, but also to grasp the object of cultural

construction, to instill this concept in the building of enterprise culture. Put the values

of your employees first, highlight the particularity and importance of the staff in the

development of enterprises, well maintain and manage the basic rights and interests of

employees in production and life, as well as some additional spiritual values they need.

In the process of building corporate culture, we are down to earth, fit the actual needs

of production and management, can not blindly pursue high standards and high goals,

under the premise of creative and insist on seeking truth from facts. After mergers and

acquisitions, there will be a certain period of cultural conflicts among enterprises, this

requires corporate leaders to carry out the overall cultural reform of mergers and

acquisitions, to achieve the integration of corporate culture in a short period of time,

and then quickly generate economic benefits.

However, in the course of concrete practice cultural conflicts often emerge,

exclusion phenomena arise during the integration process of the two cultures, this

requires corporate managers to come up with practical cultural reform program, and

gradually create a harmonious integration of the environment, in the process of

cultural integration, mutual actively absorb the essence of culture, and gradually

integrate the advantages of the two parties, improve and perfect those factors which

will not meet the enterprise development. In such a process, those excellent cultures

that are really conducive to the survival and development of enterprises will be

reserved and integrated, thus forming a new corporate culture. In addition, enterprises

should always maintain cultural exchanges with each other, in the process of

integration of corporate culture, both sides should conduct a comprehensive and

detailed understanding, and to adjust and improve some minor cultural differences. In

the cultural construction system the production and operation of the acquired

company should be taken into account, this is also requirements and a prerequisite for

successful mergers and acquisitions. Cultural integration followed the principle of

synchronous construction, requiring integration in all aspects can be synchronized, all

aspects can take into account and unity, all parties are able to penetrate and promote

mutual, this is also the basic requirements of corporate culture, in order that the

construction of cultural system can be recognized by the vast majority of employees.

5.3.3 Process of corporate culture integration for cross-border mergers and

acquisitions

The integration of corporate culture is a dynamic process of cooperation

between the two sides, different mergers and acquisitions relationship between the

two will produce a variety of cultural integration mode, how cultural integration is

conducive to production and operation of enterprises in the future is the focus of

attention for both sides, which is one of the factors influencing the success of mergers

and acquisitions. According to the characteristics of the dynamic cooperation process

between the two sides, that is, enterprises are gradually acquiring the situations of the

actual production and management of the acquired enterprise, this kind of cultural

integration mode is divided into the following four categories: injection, collaborative,

discrete and remodeling type, in general these four categories have their own

characteristics, basically covering the current emergence of corporate culture

integration mode.

1. Injection mode of corporate culture integration

Integration of corporate culture in the injection mode is essentially in the

process of mergers and acquisitions the host corporate culture will be gradually

injected into the merged enterprise, the host corporate culture and the merged

enterprise culture will be gradually integrated together in the subtlety. The acquired

company's original core values and philosophy of the enterprise are gradually

abandoned, leaving only those favorable to the development of enterprise culture.

Because culture is formed in the long-term production practice, it is an everyday

habits and ideas, this type of thing once formed will be difficult to change, injection

corporate culture integration mode applies to those enterprises whose host corporate

culture is extremely sound and robust, or by the presence of the cultural construction

of the acquired enterprises with a lot of flaws and shortcomings. In this model of

integration, the acquired company often plays the role of forced indoctrination, which

is very weak in terms of finance, management, operations, technology, etc. If mergers

and acquisitions are not carried out, they will not be difficult to maintain their

production and management, from the perspective of the acquired party, mergers and

acquisitions are highly desirable behaviors. However, since there are many differences

in the actual cultural construction of the two sides, there will still be some subtle

problems in the cultural infusion, such as different technical flow process that the

enterprises formed, different corporate social background and influence and different

working behavior patterns,etc. Therefore, for the acquiring side, when making the

decision to carry out mergers and acquisitions, also need taking into account the

actual cultural differences of both sides. Whether they want to improve the cultural

construction of the acquired companies through the injection of cultural patterns, they

need to do some publicity and import for the cultural differences before mergers and

acquisitions, let the two sides of the company's personnel and cultural institutions

have a certain degree of contact and communication in advance, do some of the actual

bedding and preparation work before the cultural integration. During mergers and

acquisitions we should pay attention to take care of the feelings of the acquired

business side appropriately, make amendments and improvements on the basis of its

production development, learn the excellent corporate culture from them rather than

deny the overall, create a more harmonious environment for the future cultural

integration, reduce the production of the unnecessary risk after mergers and

acquisitions. Through the appropriate publicity and communication, the main

corporate can make the acquired company's cultural transformation more smoothly to

some extent, and cause the staff's sympathy and enthusiasm easily. Of course, the

premise of using this model is that the gap between the two sides is still very evident

in all aspects. The most notable example is Desai Group acquiring Shen Wanshan,

setting up Desai Industry Co., Ltd. , the original leadership of the organization is to be

re-appointed directly after completion of the acquisition, after cultural injection

actively carried out, in a short period of one year, production and operating profit of

Desai Industrial Co., Ltd. is on the turnaround. In addition, there are many distinct

practical cases.

2. Collaborative mode of corporate culture integration

Integration of corporate culture in the collaborative mode is a corporate

culture built on premise of which both sides are very good, at the same time both

sides have the idea of becoming better, that is so-called win-win co-operation. This

model for both sides of the corporate culture is a slow penetration process, as the time

goes and it further develops into a new corporate culture. Both sides have a positive

attitude, on the basis of the original culture both gradually absorb the dominant

culture of each other, and then make up the shortcomings of their own culture existing,

in the new cultural model both adopt each other's good points and avoid his

shortcomings, mutual cooperate. Only in this case, both companies will be able to

promote each other and develop together. The two sides will come to a positive

acquisition impact on the development of the industry according to their development

needs. The most notable example is the combination of HP and Compaq to achieve a

powerful combination, the entire industry was subversive, and promote the rapid

development of computer technology.

3. Discrete mode of corporate culture integration

Culture discrete integration refers to the current merger sides are evenly

matched in the building of enterprise culture, neither is willing to make concessions in

cultural construction, while rejecting all other cultures into their own cultural system,

which led to that the acquisition of the two sides did not have the basic opportunities

to communicate with each other. This situation occurred in the mergers and

acquisitions which business differences in both sides are large, both directions in the

cultural construction have a certain bias, if having a mandatory cultural integration,

within their own enterprises there will be a large number of disharmony emerged,

eventually leading to mergers and acquisitions failed, it is not conducive to the

subsequent production and management development. Therefore, faced with such a

situation, it must be extremely careful to take exchange and communication before the

merger, reduce cultural conflicts arise in the process of cultural reorganization while

taking mergers and acquisitions, and gradually enhance the understanding and

integration of the two sides. The most typical example is the case of US company

General Electric Company's acquisition of Japanese Isuzu, as decision makers make

wise decisions, when General Electric Company of the United States becomes the

actual controller of Isuzu, they did not blindly carry out reforms with which the two

companies are independent production and management, which also makes the future

development of the two companies more quickly.

4. Remodeling mode of corporate culture integration

The essence of cultural reshaping corporate culture integration refers to the

way that the dominant part doesn’t value the corporate cultures of either their own or

the acquired company, the construction of enterprise culture in a post-merger

integration is in a state of undone situation, the occurrence of such a phenomenon

occurs for a variety of reasons, usually because the claimed subject wants a better

control of the acquired company, or because the cultural conflict between the two

sides is very serious, the new culture after the integration can not play a

corresponding role for the business development of the enterprise, the adoption of this

model is likely to result failure in mergers and acquisitions. Because the merger risk

for both sides in this way is asymmetric, almost all of its risk borne by the acquiring

enterprise, this is extremely unfavorable for future development, it will be likely to

harm the economic interests of all parties. The most typical example is the case of

TCL acquiring Alcatel company, because of cultural conflict between the two sides is

obvious, leading to damage to the interests of all parties, making the production and

operation of enterprises after mergers and acquisitions even worse.

5. The Choice of the mode of corporate culture integration

The Choice of the mode of follow - up culture integration should be agreed

by the two companies in the early stages of mergers and acquisitions, this is also a

comprehensive communication process for the two companies, to a certain extent,

there is a big cultural difference for the both parties of the acquirer and the acquired,

acquirers usually stand in the perspective of their own development to consider and

choose post-merger integration of culture, even if fully accept foreign culture, also

choose a certain extent of integration. It is very important for the employees on both

sides of mergers and acquisitions, how to choose a suitable cultural atmosphere for

their career development and stability, no matter what kind of mode, the cultural

aspirations of employees should be taken into account.

Once the business direction of both sides in mergers and acquisitions is

extremely relevant, at the same time the corporate culture of the dominant part is

extremely perfect and powerful, and there are a lot of flaws and shortcomings in the

cultural construction of the acquired enterprises, in this model of integration, the

acquired company often plays the role of forced indoctrination, this model is

conducive to the smooth conduct of mergers and acquisitions. If the collaborative

culture integration model is adopted by the enterprises, then there is a certain

requirement for the business direction of the enterprise. The use of this model should

first take into account the cultural differences between the two sides, actively look for

the presence of both in common, reference cultural advantages of both in cultural

development, combine the advantages of both, quickly built a new cultural system.

But if both sides of the cultural construction is perfect, the emergence of some

cultural conflicts in the process of cultural integration can not be avoided, in which

case the characteristics of a decentralized approach to cultural integration should be

brought into play, in the early integration well-designed compacts must be done,

otherwise, it may have a negative impact on the process of mergers and acquisitions.

The process of cultural integration of mergers and acquisitions, principles to

abide by and applicable integration modes are discussed above, and put forward some

suggestions and measures according to the specific application, some practical and

feasible strategies in the aspect of cultural integration have been put forward, they are

conducive to the sustainable development of enterprises after the merger.

5.4 Suggestions on the concrete operation of enterprise culture integration in

cross - border mergers and acquisitions

The areas of development in cross-border mergers and acquisitions in China

are still being explored, and so far the mergers and acquisitions model with their own

characteristics haven’t been formed, most companies are groping forward, and this

aspect of academic research has just begun, in general, the relevant supporting work

and research are in the initial stage, this study makes an in-depth study on the cultural

integration of cross-border mergers and acquisitions in domestic enterprises.

5.4.1 Employing international management talents after the acquisition

In order to make the whole work of mergers and acquisitions can be more

perfect execution, mergers and acquisitions must be carried out by specialized

departments and teams that are responsible for the implementation of the business,

under special circumstances demand, or even to hire specialized intermediary

companies engaged in mergers and acquisitions to assist in the work. This can solve

some unnecessary trouble in the follow-up cultural integration, to avoid the

phenomenon of integration difficulties caused by the cultural differences. If we

blindly follow the model of the existing domestic multinational mergers and

acquisitions, it will be very detrimental to the development of enterprises after the

merger.

5.4.2 Absorb different cultures, and create common ground

The road of cross-border mergers and acquisitions of Chinese enterprises is

still in the initial stage, this means that there is still a lot of preparatory work to do.

Overseas famous enterprises which domestic enterprises want to acquire in the future,

are more mature in their corporate culture development, there is a lot we can learn

from them. Therefore, in most cases the purpose of cross-border mergers and

acquisitions is to learn foreign advanced cultural concepts, in order to enhance our

own cultural construction, so that both can be seamlessly connected. It has a very

important role in promoting for the local business development.

5.4.3 Training for different cultures

Concerning the company management after the cultural integration, we

should select the relevant personnel within the enterprise, rather than relying on the

assistance of third-party agencies, implement appropriate cross-cultural training, so

that employees can receive a certain extent of foreign corporate culture, and better

accept and include the new culture in the early integration of culture. This will

establish a good reputation for the domestic mergers and acquisitions enterprises in

the international market. Explore outstanding employees from the internal parts of the

enterprise, and gradually reduce the dependence on foreign management team, this

also can save part of the cost, which can be used in the construction of enterprise

culture system.

5.4.4 Play the lead role model of business leaders

Domestic special development environment determines that the current

enterprise managers are not only the organizers but also leaders of the cultural

construction, they play a key role model in the enterprise culture reform. Therefore,

after the occurrence of multinational mergers and acquisitions, both companies need

to communicate in accordance with the actual situation to carry out the unity of

cultural values, and establish a new culture on the basis of their respective systems.

After the new corporate culture is established, the managers of both sides should

actively practice their own responsibility, guide the delivery of all employees to learn

new corporate culture. In summary, corporate managers play a very important role in

the integration of post-merger culture.

5.5 Conclusion

With the development of science and technology, especially the development

of digital information, make it possible that the production and operation of

multinational companies, but also provide a convenient strategic development

conditions for the globalization of high-tech enterprises. In the environment of global

integration development, modern enterprises have not satisfied with the development

and utilization of domestic resources, their perspectives will be extended to foreign

countries, direct investment overseas by multinationals has become a very fashionable

way. Under the guidance of the national macro-policy, the desire of Chinese

enterprises for going out become more and more intense, a considerable portion of the

domestic companies have chosen to overseas development, but the road for the

development of the mergers and acquisitions was not always smooth, the reasons for

this phenomenon are manifold, the key point is the cultural background of the

difference. This paper provides some strategies and thoughts on overcoming cultural

barriers, the main points are the following:

1. Cross-border mergers and acquisitions of enterprises ties more and more closely

in the global economic development, in this way it is possible for enterprises to

achieve certain business development abroad, they can indirectly reduce

production costs, bring new business opportunities for the development of

production, and help domestic enterprises to go to the world. Mergers and

acquisitions can make the development of enterprises to avoid the restrictions of

trade barriers, and then get more business space. However, there are still some

problems in mergers and acquisitions for domestic enterprises, integration failure

is one of the most influential factors, not only to have an impact on the mergers

and acquisitions process, more caused unnecessary shackles for the future

production and operation of enterprises. Thus, in which cultural integration plays

a key role, need to be focused on.

2. There is a big difference between Chinese culture and Western culture, and

concepts in the management is not the same, the emergence of these differences

will have a subsequent impact on the success of mergers and acquisition. In

addition to the actual operation of assets, equity transfer on the outer appearance,

most of the acquired business will be integrated, or even be implemented

corporate culture reconstruction. These differences are a double-edged sword, on

the basis of promoting the sustainable development of the company's future, may

have a certain impact on the internal harmony and stability of enterprises, however,

if handled properly, it is helpful for all parties, it will bring a broader space for

development of business enterprises.

Because cultural integration in the mergers and acquisition process plays a

vital role, so in order to solve a series of conflict problems that exist in the integration

process well, enterprises tend to have careful and meticulous investigation and

research before mergers and acquisition, do some publicity and import on the

existence of cultural differences, let the company's personnel and cultural institutions

of two sides in advance have a certain degree of contact and communication, do some

of the actual bedding and preparation work for the cultural integration, to prevent the

phenomenon of cultural conflict, in addition, develop appropriate measures to deal

with cultural conflicts, and actively build management models and compensation

programs recognized by mergers and acquisitions enterprises, in the system to reach

an agreement, and then create more economic benefits and potential business values.

Of course, there are some shortcomings in this study, mainly as follows：

（1）Cross-border mergers and acquisitions is not just a simple company equity

changes， the factors involved are varied, all of corporate finance, development,

culture and other aspects need to be improved. In the face of specific cases of

corporate mergers and acquisitions, make a detailed analysis of the actual situation,

actively explore a way out of mergers and acquisitions in line with its own. Since

there are still some limitations in this study, in particular, the retrieval of data and

documents is still not comprehensive enough, making the current research is not

perfect. In addition, except cultural integration factors in cross-border mergers and

acquisitions, other influencing factors have not been addressed in this study.

This study is based on the previous studies, because I have less talent and

learning, some understandings and views may still have limitations, and the actual

situation of cross-border mergers and acquisitions enterprises still need to be further

explored in the future. I will put in more effort in future academic research, focus on

related research of multinational mergers and acquisitions, make my own future

research results more applied to specific practice, constantly experience myself,

enrich the relevant research results, and strive to achieve real development and

innovation.