Globalization has become keen in recent times, gone are the days when most countries were economically self-sufficient, when locally made food and raw materials were typically processed for local consumptions. As the world evolves, industries and organisations have realised the impact of being extensive and going globally. Companies go globally for various reasons, either to expand in customer base, increase sales and revenue, source for cheaper resources that cannot be attained in their home country, cheaper labour, technological assistance, or to gather new idea; a company consisted of different backgrounds and culture can create new ideas and views that can help in the general growth of the company. Most times companies going into the global market forget that there are more to going global than only gaining the mass market share (introduce culture here)
Different nations of the world have different values, beliefs, norm, languages, laws and doctrine guiding them. All these elements make up the ‘culture' of that nation. As little or as irrelevant understanding these cultural differences may seem, it plays a huge role in determining the success of a company going into a new market. There have been cases of various companies who did not put cultural differences into consideration and this in turn had a disastrous effect on them. BenQ Siemens was an ideal case of failure resulting from lack of understanding cultural differences.
BenQ a Taiwanese company was established in 1984, it was initially known as Acer peripherals Inc, and it was later rebranded and became a mother company in 2001 as BenQ. It was known as a consumer electronics contract manufacturer and was headed by Kuen-Yao Lee. BenQ expanded hastily as it soon had huge clients like Motorola and Nokia. Chairman Lee concluded that “technology changes so fast, and consumer habits are changing all the time. The only thing a company has in a long term is the brand name and management philosophy” (Einhorn, 2004, p.26). Lee having this philosophy about ‘brand image' felt the need to develop a globally known brand image, increase the product line and expand it contract manufacturing business. In June 2005, BenQ acquired the ailing mobile device division of Germany's Siemens. BenQ acquisition of Siemens presumed it to be a good opportunity to entering the global market and therefore gain some percentage in the global market. It soon forgot there are more to entering the global market than just gaining a share in the global mass market. Ghemawat (2001) stated that “companies routinely exaggerate the attractiveness of foreign market and that can lead to expensive mistakes”.
BenQ merged with Siemens and it became ‘BenQ Siemens', the new business division started its operation on the 1st of October 2005. The company was headquarter in Munich Germany and had over 7000 employees working on research and development, design, sales and marketing. However the integration between BenQ and Siemens soon failed. They encountered various issues and challenges, most of these challenges were ‘cultural differences' issues. Based on these cultural issues faced by global companies, several dimensions were found to understand national cultural differences. According to Hofstede () “the position of a country on these dimensions allows us to make some predictions on the way their society operates, including their management process and the kind of theories applicable to their management”. BenQ which was Taiwanese based company had a different culture as companies to Siemens which was German. These two companies with entirely different cultural background brought about conflict in different ways.
First was a challenge of ‘authority' according to Hofstede this case is referred to as ‘power distance'; this is when less influential people in an organisation or community accept that power is distributed unequally. Taiwanese culture has a high level of power distance in relation to the German culture Hofstede (1980). BenQ which was power-oriented believed that managers determine the organisational management styles and gaols; therefore employees should follow and obey whatever he managers bring to the table without objecting. Also employees were highly influenced by the managers both inside and outside making the work relationship between managers and employees ‘diffuse' Trompenaars (). On the other hand Siemens which was role-oriented concentrated more on getting work done rather than who does the work, therefore anyone can take top position in order to accomplish a task, as long as he/she is qualified. Employees in the Siemens sometime disagreed with the manager about how to achieve task rather than totally accepting the manager's idea. Siemens mangers had not influence on employees outside workplace, the relationships with managers, employees and workplace was ‘specific'. (talk about the wages). This power distance differences brought misunderstanding when the employees and managers of BenQ came to Munich to work together with the German colleagues.
Secondly was ‘delayed decision making' Taiwanese culture is known for collectivism; where people function better as a group, and groups are highly respected. Whereas Germans are individualist; where people function and make decisions as individuals, and are also responsible for themselves Hofstede (). Managers of BenQ had a close relationship with their employees; each time a task is assigned, benQ's employees' work together to deliver the task immediately and also give feedback for decision making. Due to this effective feedback from benQ employees, the managers of benQ are quick to determine where changes should be made. On the other hand, the Siemens managers and employees were more individualist, there was no close relationship between them. The Siemens managers could not receive instant feedback from the Siemens employees and it made the decision making of the Siemens manager slow. This whole process delayed the final implementation of change and decision of the company. BenQ, who believed their style of making decision and implementing change immediately, blamed Siemens for the short comings of the overall decision making of the company. Meanwhile Siemens believed that it is not about making decisions quickly but rather taking time to come up with the right decision. Due to the discrepancy towards decision making and changes, the conflicts were unavoidable on the time schedules when they produced “BenQ Siemens” cell phones.
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