Cultural Differences Between China And Samsung

Over the past decades, mergers and acquisitions is regarded as a strategic option to enhance organizational performance for many companies. Culture is a major cause of the failure to many M&A but its influences are usually being underestimated. Cultural change is inevitable in any M&A. However, two companies with different culture merge together is not necessary lead to an adverse result. This essay is going to analyze a case of cross-border M&A of Sweden’s Volvo and South Korea’s Samsung in 1998. Even though both Hofstede’s national culture and Trompenaars & Woolliams’s corporate culture model reflected that there are many cultural differences between these two companies, it is a successful M&A that reflected by their financial statement.

In this centralized organizational structure, there will be a large gap in the relationship between management and employees. Management tends to have greater power and authority over the decision-making process and employees are expected to respect their manager. After acquired by Volvo, the organization structure was flattened by reducing the hierarchy from ten to three: executives, managers and staff members, in order to identify employee by their jobs instead of by their titles. Some managers even lost their managerial titles after conducting job analysis which indicated that it is sufficient to run the business by 130 managers whilst there were 390 managers before the acquisition, thus, strong resistance was created among these managers. However, it is eventually accepted by offering them the same base pay as before and a bonus of 10-20% of base pay. According to the survey conducted by Lee et al. (2014), Korean employees of VCEK are satisfied with the changes on the organizational structure because they are happy that they can talk with an executive of the company in an open manner which they have never be experienced before. Employee are identify themselves by their job instead of title, they found that power distance in the workplace is lower because all management dose their trivial chores such as copying paper or

After the acquisition, employee performance is measured by their individual performance. Furthermore, no one would like to take up the “gray job” which is usually done by people who finished their own work earlier in past. These changes result in a decreased loyalty to the company.

Another cultural difference of Volvo and Samsung is masculinity-femininity. South Korea is masculine whilst Sweden is high feminine culture. In high feminine culture, people prefer fewer working hours. They emphasize work-life balance and quality of life is important for them. They work in order to live. It is totally reflected by the “Swedish employee in VCEK did not understand why Korean employee stay at office even though they finished their job.” However, after became a part of Volvo, “Korean employees are pleased to reduce overtime work to do meaningless paper work.” (Lee et al.