By Terri Morrison and Wayne A. Conaway
© Copyright 2004, All Rights Reserved
For months, the press has reported on the difficult merger of Hewlett-Packard and Compaq computers. At least in one respect, it should be an easy merger, since it consists of two US-based companies. Mergers and acquisitions between firms based in different counties experience an additional challenge...the merger of cultures.
Executives who do business internationally often fall afoul of cultural differences. They inadvertently violate a local taboo, or overreact when a foreigner acts in a seemingly inappropriate manner. A single inadvertent insult can ruin an international meeting. Many US and European salesmen have accidentally insulted would-be customers in the Middle East simply by sitting incorrectly. When they cross their legs, they point the sole of their foot at their intended customer. As readers of this column know, displaying the sole of your foot is considered an insult in much of the Middle East and in the Muslim world.
Avoiding cross-cultural insults
Consider how many chances there are for cross-cultural insults to occur when a company is acquired by a foreign concern. Instead of brief contacts between foreigners, people from different cultural traditions must interact on a daily basis.
Cross-cultural communication problems can arise even on the most basic of issues. The 1998 merger of the US automaker Chrysler with the German firm Daimler-Benz is an example. Initially, US executives touted the move as a merger of equals, while German executives stayed silent. It soon became clear that Chrysler was going to be the subordinate partner. If the Chrysler executives believed their own press, they were badly mistaken. US executives are accustomed to making quick, high-profile decisions. The standard German business model is that of slow, cautious activity conducted out of the publics eye. German companies also have a hierarchical system. To the Germans, there was no need for public pronouncements contradicting the merger of equals statement the Americans would learn their place at the appropriate time.
Even when mergers go fairly smoothly, the differences between cultures can cause problems. For example, in 1990 the US pharmaceutical concern Rorer merged with the health division of the French company Rhone-Poulenc. (The merged company is now part of Aventis Pharmaceuticals.) Some US managers from Rorer had difficulties in dealing with French employees. The French way of doing business included long lunches, long discussions about every decision and a very un-American attitude towards time and punctuality. There were other unexpected cultural issues as well. While US workers rarely cry, thats not uncommon in French workplaces where emotional outbursts are considered neither shameful nor potentially dangerous. One US manager reduced his secretary to tears just by telling her she had to work overtime. A female US executive became frightened when a frustrated French subordinate flung his binder against the wall. In both cases, the French employees soon returned to normal after their outbursts. US employees who displayed such outbursts would probably be surly and unproductive after such emotional scenes, but the French (who use the idiom soupe au lait known as milk soup in English to describe such outbursts) believe this allows them to get anger out of their systems and prevents them from bearing grudges.
Human differences aren't the only differences
Sometimes the main problem isnt with the personnel but with their products. The US corporation Colgate-Palmolive found this out in 1985 when it bought out the Hong Kong-based Hawley and Hazel Chemical Company. Like Colgate, Hawley and Hazel produced toothpaste. One of Hawley & Hazels products had as much as 70% of the market share in some Asian countries. Unfortunately, that product was a toothpaste named Darkie. Not only was the product name problematical, but the package featured a smiling image of a man in a black face and a top hat, resembling the singer Al Jolson.
When marketed to Asians, this image generated no protests. Asians werent offended by the image since the association was with brilliant smiles. The product had been marketed since the 1920s and Colgate didnt want to risk losing sales by adjusting the name or image. Nor did Colgate intend to expand the marketing of Darkie toothpaste outside Asia.
However, while a Hong Kong company was relatively immune from pressure from US minority groups, Colgate wasnt. Within two years, Colgate found itself under such pressure from US-based groups that it announced it would change the name and logo.
Colgate handled the change well. The company changed the image to a racially-ambiguous smiling character in a top hat and tuxedo, and it changed the name of the product from Darkie to Darlie toothpaste. The change was done gradually, over the span of a year, which gave customers time to adjust. Finally, Colgate-Palmolive picked up all the redesign and repackaging costs, and even agreed to reimburse Hawley and Hazel for any lost sales.
Interestingly, the only changes were those that Westerners could easily understand. The Chinese logo of Darlie toothpaste remained the same: Chinese characters that read Black Man Tooth Paste.
There are thousands of intercultural difficulties due to mergers and acquisitions across all industries. Whether you are a high growth, high acquisition firm, or are considering a single international merger, management should be aware that they face long-term maneuvering across cross-cultural minefields.
Excerpted from OAG Frequent Flyer, May 22, 2002