Joint Venture of the France Based Company Alcatel and the U.S. Based Company Lucent Technologies

Topics: Alcatel-Lucent, Joint venture, Culture Pages: 5 (1831 words) Published: April 3, 2011
A joint venture, according to Adler and Graham (1989),along with mergers and acquisitions, licensing and distribution agreements, and sales of products and services – critical aspects of all such interorganizational relationships, are face-to-face negotiations. This would mean the interaction between people. In today’s society, as the world becomes much more globalized than we could ever think of, with the fast growth of the internet industry, we are connected with people from another country at an instant. However, business to business deals and negotiations are still at a stage where face-to-face communication is still required. As interpersonal communication is brought onto the table, with the clash of different cultures as companies today all have the tendency to become globalizes and multi-nationalized, the understanding of another’s culture and cultural values plays an important role in the negotiation, and the interactions thereafter. As the proportion of foreign to domestic trade increases, so does the frequency of business negotiation between people from different countries and cultures. To successfully manage these negotiations, businesspeople need to know how to influence and communicate with members of cultures other than their own (Adler and Grahamd (1989)). Through the analysis of the case study on the joint venture of the France based company Alcatel and the U.S. based company Lucent Technologies, issues of cross-cultural management, the weakness and strength of an international joint venture, including the rights and wrongs of the particular case study will be discussed. As Shenkar (2001)said in an article, establishing a measure gauging the “distance” between cultures has understandably presented an even greater challenge. At the end, recommendations will be provided for future companies seeking joint ventures.

The major differences between the initial negotiation in 2001 and the final successful negotiation in 2006 was the division of power. In 2001, in the original negotiation, the base company was Lucent, which was based in the US. Because it was a joint venture, the amount of power on Alcatel cannot be decided. Due to this inequality, the joint venture was called off in 2001. In 2006, as this inequality no longer stands between the two companies, it established the final negotiation of the joint venture, and at least in the beginning, both companies were satisfied with the negotiation. According to Barkema and Vermeulen (1997), differences in uncertainty avoidance and long-term orientation cause problems. Differences in how IJV partners perceive and adapt to opportunities and threats in their environment are more difficult to resolve. Cultural differences regarding power distance, individualism and masculinity are more easily resolved because they are mainly reflected in different attitudes towards the management of personnel, something firms can make explicit agreements about before entering the partnership. As Berkema and Vermeulen (1997) already said, issues on power distance, individualism and masculinity are considered to be more easily resolved cultural issues, and realizing the fact that if the joint venture between Alcatel and Lucent Technologies could not even solve the more easy problems, it is pointless to say the success of the negotiation. Since the merger in 2006, it is now the fifth year for the joint venture to be in business. With the resignation of Russo, the company is now led by The company is under the leadership of Chief Executive Officer Ben Verwaayen and the non-executive Chairman of the Board is Philippe Camus. Verwaayen and Camus joined the company in the third quarter of 2008 after Alcatel-Lucent's first CEO Patricia Russo and first Chairman Serge Tchuruk resigned. For 2008, the company posted revenues of €16.984 billion and a net loss of €5.215 billion (Alcatel-Lucent (2009)). As Powell and Dent-Micallef (1997) found in their...
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