Cross Cultural Management - M&A - India & France

ArcelorMittal MergerThe cultural side of one

of the biggest deals inthe steel industry

Team Members:Petr Boros

Luke FarrellyTanguy Bocquet

Emmanuel de CroyEvelyne Hemstedt

Lubomila Jordanova17th of March, 2014ID419 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

Team Process Video Theory Managerial Lessons

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

Team Process Video Theory Managerial Lessons

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 realityTeam Process Video Theory Managerial

Lessons

Cultural Dimentions Considered in Video

Individualism vs

Collectivism

Relationship

Orientation

Uncertainty Avoidance

Power Distance

Time Orientation Punctuality

Cultural Context

Team Process Video Theory Managerial Lessons

VIDEO!

Team Process Video Theory Managerial Lessons

Which cultural dimensions can you identify?

Team Process Video Theory Managerial Lessons

Seven cultural differences between France and India

France IndiaUncertainty 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

Team Process Video Theory Managerial Lessons

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

Seven cultural differences between France and India

France IndiaIndividualism

• 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

Team Process Video Theory Managerial Lessons

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

What went wrong?

Team Process Video Theory Managerial Lessons

Long-Term versus Short-Term View Opposition

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

• Both parties listened to the each other’s opinion

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

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

Solution

What went wrong?

Team Process Video Theory Managerial Lessons

Uncertainty avoidance

• Different views on what to do with aging

factories• Different incentives for

managers: bonuses vs market share

Problem Be aware of topics

that are nationally sensitive (unions, economic situation)

Better understand the habits and fears of the management and employees

Solution

What went wrong?

Team Process Video Theory Managerial Lessons

Cultural context

Although smooth meeting, different

perceptions about the outcome of the meeting

subsequently led to diverging views

Problem Align their vision (E.g.

Establish a common summary of the negotiation)

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

Team Process Video Theory Managerial Lessons

Awareness of the “Merger Syndrome”

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

Well-defined Vision of the Transaction Context• Mapping Bridging

Intergrating = smooth M&A process

• Preparation neccessary for deal of such size

“Cultural Distance” Hypothesis• success of the M&A deal

extensive 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?