Cultural Difference

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The Cultural Differences Analysis of Geely's Acquisition of Volvo

1. Introduction

Cross-border mergers have become the inevitable trend of economic globalization, which is strategic tool for the enterprises to obtain the core competitiveness. The mergers can not only enhance the internal competitiveness of the enterprises, but also promote the enterprises to develop international markets and some emerging areas. However, when multinational companies enter the international market, Cultural difference is becoming more significant, and even will lead to failure of cooperation. These issues have become a hot topic and widely discuss. For these contradictions and confusion existing in multinational corporations’ management, some business operators believe that this is a business management issues; while they try to solve this problem, but the effect is limited, or duplication of efforts. In fact, it is cultural difference in the multinational companies’ management, and cultural differences are the direct cause.
On March 28, 2010, Zhejiang Geely signed a definitive stock purchase agreement with Ford Motor Company to acquire 100 per cent of Volvo Car Corporation for $1.8 billion. The company said they intend to preserve Volvo Cars’ existing manufacturing facilities in Sweden and Belgium, while Volvo will take to further strengthen the sales network in China and procurement channels. The headquarters of Volvo will remain in Gothenburg, Sweden.
Mergers and acquisitions in the car business do not have a good record. DaimlerChrysler is one of the worst examples. Indian Tata Motors Ltd. has struggled with Jaguar and Land Rover since it bought it from Ford in 2008. In addition, General Motors Co. attempted to sell its rugged Hummer brand to a Chinese heavy equipment maker, but now it has collapsed. What problems will the Group face after acquisition? How can Geely make profit from this acquisition? How can Geely deal with the issues that are caused by cultural

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