IBM is a leading PC manufacturer in the World with its headquarters located in New York. The company is popular for its innovations and competitive positions in the global market. However, the company was facing some problems in capitalising the PC market in the world. It was because of inadequacy in the innovation in the international market. According to the company annual report, it can be stated that the company was suffering from dearth of innovation and as a result of that IBM management was going to invest $5.7 billion to the Research & Development program in the year 2004. In fact, due to the investment in its R & D projects the company yielded $96.3 billion revenue that was an annual increase of 8%. Moreover, it increased the earning of IBM up to $8.4 billion that was identified as 11% increase approximately. As a matter of fact, the year 2004 was considered to be an important year in the business opportunities for IBM and as a result of that the company was going to introduce some changes in its business orientation.
On the other hand, Lenovo is a core Chinese company that leads the IT Company in the Asia region. In fact, during the 2004 the company enjoyed a sharp increase in its business with ban annual turnover of HK$ 23,176 million in compare to the previous year’s turnover of HK$ 20,233 million. Moreover, the innovativeness was identified as a major characteristic that fostered progress and profit for the company.
In this regards, the organisational culture of IBM has been operated in a flexible organisational culture where there is no hard and fast measure to maintain a strict organisational hierarchy. In fact, the global power distance index shows that United States ranks 40 in the list. However, in China the prevalence of organisational hierarchy is very strict and it is in the culture of Asian countries to resemble an autocratic organisational structure. In fact, China ranks third in the global Power Distance Index and a result of that it is obvious that the Lenovo Company follows the same line of rigid organisational structure.
Therefore, the purpose of this report is based on the collaboration of IBM and Lenovo in 2005. In course of the discussion, the report will discuss various issues and cultural differences that foster the way of separation between these tech giants. In addition to this, the report encompasses an understanding of the determinant factors regarding the clash between IBM and Lenovo on business objectives and come forward with a number of solutions. Further, the discussion will followed by a conclusion.
Language is considered to be very important in continuing business among two organisations belong to different nations. In fact, it can be argued that language is a medium of communication on which corporate from different nations are relied in a great deal of manner. in this regards, language is considered to be a determinant factor for in house as well as making communications with different business organisations. According to a report, in UK industries 27% of the admin and clerical jobs were remained vacant due to dearth of communicative skills in 2011. With the advent of globalisation the prevalence of business to business communication has been increased in a rapid pace that now business organisations are giving priorities to employees having multiple or at least bilingual communicative skills. In this context, learning languages like Mandarin, German and Japanese is very imperative to continue business with foreign clients and business to business communication. In fact, it can be stated that the growing market capitalisation by Chinese companies heightens the importance of Mandarin globally.
Based on this discussion, the case of IBM and Lenovo can be identified in a detailed manner. There is no doubt that the integration of IBM and Lenovo in 2005 was a phenomenal event in the history of IT industry. In fact, in its first financial year the joint venture of IBM and Lenovo had created enormous profit and it took on the aspirations of the customers. However, after in the financial year the company had witnessed a number of issues that perturbed the integration of the two leading PC manufacturer companies. In this regards, the language differences was referred as one of the major issues that halted further development of merging. Both the companies possessed a different culture in language. According to the HR Director of Lenovo, it can be observed that the IBM leaders were fond of talking where as the Lenovo authorities were practiced less talking and more listening. It is, in fact, considered to be a cultural difference between West and Asia. The Chinese culture in general is more silent in conversation. On the contrary, the English speaking people are talkative in nature. A 6 to 7 seconds gap is identified as awful. Therefore, the cultural clash was inevitable where both the companies were representatives of their respective cultures.
In addition to this, the medium of language was erratic in nature. It was visible in case of the board meetings between IBM and Lenovo. Most of the Lenovo board members did not know English and they were speaking in their native language, Mandarin. On the other hand, the IBM board members had no idea of Mandarin and they only acknowledged English as the major communicative language. As a result of that communication gap took place in the board meeting and most of time the decision making process was hampered because of difference of language. However, there were some communicative programs where the Chinese were taught to accustom with the Western form of communication. In fact, the proposal making process was different in this regards. The Chinese have a trend to illustrate the background at first and then get into the main discussion. On the other hand the Western proposal is structured with an abstract in the beginning of the discussion that encompasses the key discussion of the proposal. Both the IBM and the Lenovo authorities were not aware of the difference of expressing themselves and in return it created a number of problems in understanding the purpose of the proposal.
Culture is defined as the backbone of accompany whether it tries to establish business inside the organisational structure or it wants to expand business internationally. In this regards, cultural diversity is considered to be a significant trend that the corporate organisations are following nowadays. However, there must have some common grounds based on which companies can develop the process of diverse work culture. In response to this, the relation between IBM and Lenovo was formulated on the grounds of vague conception of work place diversity. It is of course both the companies were tried to establish cultural exchange programs that helped them to build up a strong bonding in order to retain the business. For an instance, a program like “East Meets West” program was generated in order to bridge the cultural differences between Chinese and American culture. Moreover, to show a great deal of enthusiasm the IBM sent their camera teams in Beijing to enable video greetings to their Chinese counterparts.
Despite of these measures, the cultural differences were not succeeded to be formed in a healthy manner. The reason behind this gulf bestowed in the difference of cultural practices. The cultural norms are identified in this regards. In this context, the power structure or the organisational hierarchy is different in nature in USA in compare to China. It can be argued that the organisational structure is very much flexible in USA. In other words, the American companies do not operate in any kind of strict organisational hierarchy. The managers and the senior executives have a good relation with the lower rungs of the company. It can be identified as bottom-up kind of thinking. On the contrary, in China, companies are maintained a strict hierarchical decorum where the employees in the lower level do not have the right to challenge the authority. In this respect, the idea of leadership is literally maintained there. As a result of that the organisational culture differed from each other.
In addition to this, the attitudes towards the leaders are also different in a great deal of manner. For an example, when the IBM executives went to China for a conference, they got a warm welcome with precious gifts from their Chinese counterparts. However, the Chinese delegates arrived in the J.F. Kennedy Airport there was no one to greet them which was considered to be a humiliation in their perception. This kind of cultural practices are not practiced in America and as a result of that it was evitable to have a clash between the two.
Furthermore, the company objectives were different in case of the Lenovo and the IBM organisation. The Lenovo Company is very much focused on the customer maximisations more than puts emphasis on the quality assurance. As a result of that the US State Department confiscated 14,000 Lenovo computers because there were failed to cope with the quality measurements. On the other hand market orientation is also a key objective for the IBM Company. However, it is supplemented by the quality management. It can be argued that because of this conflicting attitude of the consumers it was impossible for both the companies to continue the integrity further.
Besides this, not everywhere this integration has been taken in a good manner. for an instance, in Japan the staff fiercely resisted the idea of Chinese ownership. More importantly, the Japanese design team was more concerned about their practice of innovation that was possibly hurt by the Chinese take over.
Power distance is considered to be a relevant factor in this regards. it can be defined as the Power Distance Index measures extent to which less powerful employees expect and accept unequal distribution of power. In this regards, the higher the Power Distance Index number the greater tolerance for unequal power. In this regards, the individualism and collectivism are very significant. Individualism is defined as individual power where as collectivism reflects collective process of sharing power. Based on this idea, it can be argued that the difference in power distance between IBM and Lenovo facilitates the clash between them. In one hand IBM enjoys a flexible hierarchical structure as per the trend in US. In this context, the Power Distance Index shows that US places in the bottom of the lists with a rate of 40 PDI. It proves there is a trend of moderate hierarchical practice that is incorporated in every corporate organisation spread into America. On the other hand, China ranks third in the global power Distance Index with a point of 80 Power Distance Index. As a result of that there must be a clash of organisational behaviour after the integration. The IBM employees were not used to with the autocratic hierarchical behaviour. A bottom up kind of thinking has been prevailed in the organisational behaviour of the American organisations. At the same time the Chinese companies are habituated with enormous domination form the upper structure of the company hierarchy. The senior executives do not entertain any kind of compliance from the employees. They are not fond of this kind of organisational environment. Therefore, this kind of opposite practices were contradicted the very existence of the integration.
It can be asserted that the cultural norms in China are very different from the cultural foundations in United States. For an example, it can be argued that in China family hierarchy is in practice. In other words, it can be argued that most of the business are operated and owned by families. In fact, this is not the case in big industries only. The Small and Medium Enterprises sectors are also practiced this kind of trend. Besides this, the Autocratic leadership is a key facet in this regards. Almost all the business houses existed in China perceives an authoritarian leadership style. Autocratic leadership is considered to be a major feature of the company structure in China. As a result of that the role of the technical competence is not present in the context of Chinese business activities. In a sharp contrast to that, in USA the rights and ownership has bestowed in the hands of the few individual board members. However, it cannot be identified that the board members are the ultimatum of the company. Employee suggestions and advices are considered to be equally important. As a matter of fact, the companies motivate their employees to get involved in the important decision making. As a result of that the employees enjoy a number of relaxations in the work place. In addition to this, the Western countries like US, UK, Canada are practiced the habit of signing a contract in the form of every signatories have the equal right in decision making process. However, in case of China the perception is not the same as it supposes to. In China, signing a contract means start a negotiation. It means, the mother country has the right to make the major decision where as the ancillaries can influence the decision making only.
Verbal cues are very important in order to identify the structure of the company in this regards. It can be argued that the verbal cues are comprised with the attitudes and body languages of an individual. Often it is being seen that the cultural differences are supplemented by the difference in their attitude. A simple body movement is considered to be an expression of acceptance where as to another culture it possesses a bad manner. in this regards, it can be argued that verbal cues are imperative in order to maintain diverse culture in business to business communication. These cultural differences in the form of verbal cues can be seen in case of the relationship between IBM and Lenovo.
The IBM higher management are not bothered about personal recognition. They enjoy a simple professional outlook in their workplace. As a result of that when the IBM senior executives went to China for a delegation they were greeted in an explicit way that they never dreamt of. However, in case of the Lenovo senior team, they did not get any warm greetings after arriving in the J.F. Kennedy airports. It seemed a disrespectful attitude towards the Chinese delegates according to their perception.
Identification of the issues Impact of language
Difference in language is one of the major challenges being identified in the business operation of Lenovo and IBM. This is mainly due to the reason that internal stakeholders of Lenovo are comfortable in Mandarin language, which is the national language of China and IBM officials are having English as their official language. Both of the officials are not known to the languages of their opposite peers. This lead to the emergence of language related barrier in the communication process between the officials. On the other hand, there are number of major issues or challenges being faced by Lenovo in their business operation after the acquisition.
One of the major issues faced by Lenovo from the emergence of language barrier is leading their business acquired from IBM. This is due to the reason that leadership roles in their western operations especially for the market of the United States should have the knowledge of English in order to manage their employees. However, the majority of the leadership in Lenovo is not having the knowledge of English and this restricted them to convey their vision effectively to other stakeholders in the United States. This in turn led to the reduction in the effectiveness and efficiency of the leadership in the overseas operation of Lenovo.
With the origination of the language problem after the acquisition of IBM business by Lenovo, the average cost for Lenovo got increased due to the reason that intermediaries are getting increased. This is due to the reason that with the language distance between the two set of internal stakeholders and thus according to the case study, translator has to appointed in the meeting. This factor is having two major implications for Lenovo. One of the major implications is the increase in cost for them in appointing extra employees by means of translator. On the other hand, this caused involvement of the outsiders in the confidential meetings. Involvement of the outsiders in the meeting may have negative and adverse impact on Lenovo. This also led to the origination of misunderstandings among the stakeholders between IBM and Lenovo. The subject matter of the communication may get different meanings with translating from Mandarin to English or vice versa.
Another major issue being identified is ineffective and problematic communication. This is due to the reason that apart from the language barrier between the stakeholders from both the organization, there are number of other differences being identified between the two sections. One of the major differences identified is the differences in the cultural approach of both the group.
According to the case study, board meeting in Lenovo after the acquiring the business of IBM witnessed number of barriers due to the reason that stakeholders of Lenovo are majority of the Asian origin and people from the Asian culture prefers staying silence in the middle of the conversation. On the other hand, Western culture prefers more interactive style of conversation. Thus this caused emergence of issues in the board meeting comprising of both members from Lenovo and IBM. It is being stated in the case study that while the members from Lenovo preferred to stay silent in between the conversation, members from IBM perceived it negatively that lead to the conflict between the members. This also caused adverse implication on the decision making process due to the reason that consensus cannot get created between the members due to the presence of conflict in the board meeting. Another probable business issue for Lenovo is clash of culture. This is due to the reason that, emergence of conflict between the two cultures may lead to the intolerance among the members. Employees from one cultural group may not accept the cultural aspects of other group. This will cause emergence of ineffective internal management in the organization.
Another major business issue for Lenovo after the acquisition of IBM is ineffective communication practices. This is due to the reason that in the Chinese society is more oriented towards the autocratic type of leadership with more inclination for the hierarchical structure. On the other hand, western culture especially the American culture is more flexible in nature with less preference for hierarchical structure and they are having more preference for the democratic structure. This led to the conflict between the board members of IBM and Lenovo. The emergence of conflict also led to the communication issues due to the reason that upper level management of IBM is more preferable for consulting with their subordinates while on the other hand, the upper level managers from Lenovo prefers taking decision by their own. While the employees of IBM are expecting that they will be consulted in the decision making process, Chinese members are initiating the decision making process by their own. Thus the vision of the upper level management is not getting effectively communicated to the lower level employees that are further leading to the emergence of issues in the internal management.
Conclusion
Thus it can be concluded that there are number of challenges being identified for Lenovo after the acquisition of IBM in this report. One of the major challenges being identified is communication and cultural differences between the employees of two organizations. In this report, there are number of recommended steps being identified and discussed and it can be concluded that effective implementation of these steps will help Lenovo to overcome the identified issues.
Reference
Cole, Michael S., Min Z. Carter, and Zhen Zhang. “Leader–team congruence in power distance values and team effectiveness: The mediating role of procedural justice climate.” Journal of Applied Psychology 98, no. 6 (2013): 962.
Jenifer, R. Delecta, and G. P. Raman. “Cross-cultural communication barriers in the workplace.” Internafional Journal of Management 6, no. 1 (2015): 348-351.
Lebedev, Sergey, Mike W. Peng, En Xie, and Charles E. Stevens. “Mergers and acquisitions in and out of emerging economies.” Journal of World Business 50, no. 4 (2015): 651-662.
Tenzer, Helene, Markus Pudelko, and Anne-Wil Harzing. “The impact of language barriers on trust formation in multinational teams.” Journal of International Business Studies 45, no. 5 (2014): 508-535.
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