Cross Cultural Management - M&A - India & France

ArcelorMittal Merger The cultural side of one

of the biggest deals in

the steel industry

Team Members: Petr Boros

Luke Farrelly Tanguy Bocquet

Emmanuel de Croy Evelyne Hemstedt

Lubomila Jordanova 17th of March, 2014 ID419 Cross Cultural Management

Agenda

§  The Team

§  The Process

§  The Video

§  The Theory

§  Managerial Lessons

§  Conclusion

Team Process Video Theory Managerial Lessons

Arcelor, Mittal & Cross Cultural Consulting

Emmanuel de Croy, Consultant from Cross Cultural Consulting

Lubomila Jordanova, Consultant from Cross Cultural Consulting

Unnikrishnan Paramekkavil, financial managers of Mittal

Francois Simon, Vice-President of

Arcelor

Abishek Mukopadhyay,

Vice-President of Mittal

Sylvie Thomas, Strategic Manager of

Arcelor


The Process

Interview with a PhD candidate examining the cultural differences between France & India

Interviews with French students based in India

Interviews with Indian students based in France

Theory that covers the two countries and differences between them


The Video – Rationale for Choice •  Merger discussions between two steel

producers, Arcelor (France) & Mittal (India)

•  Focus on scenes that expose differences in cultural perceptions in the 2 countries

•  Reasons for choosing this case –  Suprisingly little theory on the

Franco-Indian relationship from a cultural perspective

–  France - 2nd strongest economy of Europe, strong culture

–  India - emerging might in the new economic reality


Cultural Dimentions Considered in Video

Individualism vs Collectivism

Relationship Orientation

Uncertainty Avoidance

Power Distance

Time Orientation Punctuality

Cultural Context


VIDEO!


Which cultural dimensions can you identify?


Seven cultural differences between France and India

France India Uncertainty avoidance

•  Try to control the future •  Intolerant to unorthodox behaviour and

ideas

Uncertainty tolerance •  Tend to let things happen •  Relaxed attitude, practice counts more than

principles

Short-term oriented •  Rewards immediate results •  Respects traditional approaches

Long-term oriented •  Attaches more importance to the future •  Foster pragmatic values

Punctuality •  Being on time is crucial •  Strict respect of working and non-working

hours

Non-punctual •  Arrive when possible •  Time is continuous, no difference between

today and tomorrow

Femininity •  Stronger focus on relationships and

collaboration

Masculinity •  More competitive and performance oriented


Source: Geert Hofstede Cultural Dimensions (1991), Steelcase Culture Code, Solomon and Schell: Managing Across Cultures (2009)

Seven cultural differences between France and India

France India Individualism

•  Individuals are expected to take care only of themselves and their immediate families

Collectivism •  Individuals are very concerned with the

well-being of the larger group rather than their own

Lower power distance •  Less hierarchical, decisions can be taken at

different levels

Higher power distance •  More hierarchical, everyone can participate

in the decision-making process but the decision is eventually taken at the highest level

Lower cultural context •  Tend to be direct when dealing with others

Higher cultural context •  Tend to be more indirect and vague


Source: Geert Hofstede Cultural Dimensions (1991), Steelcase Culture Code, Solomon and Schell: Managing Across Cultures (2009)

What went wrong?


Long-Term versus Short-Term

View Opposition

•  Leads to disagreements (e.g. agenda, shareholders)

•  Both parties listened to the each other’s opinion

Problem

ü  Better communication on the goals (elaborate the agenda of the company together)

ü  Understand the other party’s concern and show you will really take it into consideration

Solution

What went wrong?


Uncertainty avoidance

•  Different views on what to do with aging factories

•  Different incentives for managers: bonuses vs market

share

Problem

ü  Be aware of topics that are nationally sensitive (unions, economic situation)

ü  Better understand the habits and fears of the management and employees

Solution

What went wrong?


Cultural context

Although smooth meeting,

different perceptions about the outcome of the meeting

subsequently led to diverging views

Problem ü  Align their vision (E.g.

Establish a common summary of the negotiation)

ü  Ensure a better follow-up with pre-established deadlines

Solution

General Learning Points for Managers

Source: Marks & Mirvis ,1998; Hofstede, 1980; Forbes, 2013, Chakrabarti et al., 2009., Lane et al., 2005


Awareness of the “Merger Syndrome”

•  3 aspects, personal, organisational & cultural reactions not taken into account in the beginning è “Hostile Takeover”

Well-defined Vision of the Transaction Context

•  Mapping è Bridging è Intergrating = smooth M&A process

•  Preparation neccessary for deal of such size

“Cultural Distance” Hypothesis •  success of the M&A deal èextensive effort in understanding the CULTURE on the other side of the table

Utilisation of Success Potential

•  Success rate of cross-border M&A found to be higher than for domestic M&A

Thank you!

“It is never too late to give up your prejudices” ―Henry David Thoreau

Questions?

Business

Cross Cultural Management - M&A - India & France