Cultural Problems in International Business

Topics: Sociology, Mergers and acquisitions, Management Pages: 4 (986 words) Published: November 17, 2012
Martinez Construction Company in Germany - Cultural Problems

2. 2.1 PROBLEMS

Cultural barriers to integration
The considerable differences between the Spanish and German business practices could have been diminished through a sound pre-assesment made by Martinez Co. Since this understanding process was not pursued, a cultural conflict occured which may significantly hinder the processes of strategic and operational management of the two companies as a whole. The most important barriers of cultural dimension include:

Barriers to cultural integration| Suggestion for limiting the impact| 1. ‘Cultural shock’ as a consequence ofstrong cultural diversity of companiesconstituting a holding group;| Cultural transformation, respectingcultural values and customs of a targetcountry.| 2. ‘Cultural maladjustment’ of boardmembers delegated by a parent company;| Management through values, systems formonitoring social feelings of the targetcompany.| 4. Management style differencesbetween companies.| Management through goals as a basisfor work appraisal of the managementpersonnel and employees|

Financial issues
Martinez Co.’s representatives are involved in a process of Merger and Acquisition which they discover gradually. This means that they have allowed themselves to be unaware of the exact risks and implications, especially from the financial point of view, from the moment they accepted a contract that did not contain enough information related to this topic. Now they are facing unpredicted expenses, and the possibility of new ones to occur cannot be excluded. Ensuring that an acquisition is a good fit, not only on paper, but as an integrated business, calls for going beyond traditional financial assessments, to detailed value analysis, especially within an international business context. As Treuhandanstalt rushed the process and Martinez Co. simply went with the flow, requirements that should have been included in the contract are...
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