Culture and Leadership - Lenovo Ibm Case Study

Case Study: Lenovo - IBM: Bridging Cultures, Languages, and Time-Zones.

1. What are the main drivers behind this merger?

Lenovo is a Chinese multinational technology firm who deals in PCs, computers and so on and they have always aspired to become a global player. Lenovo declared its intention to acquire IBM pc division at the year end of 2004 and this audacious deal will allow Lenovo make significant inroads on its path to globalization. IBM is a US multinational and integrated technology consulting firm who makes and markets computer software and hardware and gives out services to mainframe computers. The driver behind this merger for Lenovo was that they will have access to IBM brand along with worldwide brand recognition, global marketing network, as well as cost savings through economies of scale in procurement. Another driver for Lenovo was the right to use IBM brand name for a period of five years. In May 2005 both companies merged due to the acquisition that was completed at that time and this marked a new era of globalization. In addition, IBM hopes to enhance its foothold in China as it expects that the merger with Lenovo will further consolidate its presence in the world’s fastest growing IT market.

2. What impact does international cultural difference have on the case? Can you​ ​find​ ​examples​ ​of​ ​it​ ​being​ ​a​ ​barrier​ ​or​ ​an​ ​enabler​ ​of​ ​success?

International cultural difference definitely had an impact on the case since both company’s where from two different cultures that operate across 12 time zones and this also affected the company’s competitive position. One of the impacts of international cultural difference was language barrier and communication style. Language barrier led to long meetings and frequent misunderstanding as some Lenovo senior executives could not speak English while IBM managers didn’t understand Mandarin. So IBM managers do most of the talking and Lenovo leaders just listen. This communication style affected their decision making as IBM managers go ahead with decisions without the input of Lenovo. Hall (1976) divided cultures according to their ways of communicating into high context and low context culture. The communication style of Lenovo falls under the high-context culture and IBM on low-context as they are highly individualized. Another impact was that Lenovo was more of a hierarchy driven company where hierarchy cannot be challenged and the approach to decision making is based on a top-down approach. This was different with IBM as they were more process-oriented with a bottom-up thinking which enables them to solve issues and provide resolutions.

3.​ ​Does​ ​the​ ​culture​ ​of​ ​the​ ​organization​ ​itself​ ​play​ ​a​ ​part?​ ​If​ ​so, ​how?

Lenovo and IBM both have their various cultural norms, values, and beliefs and they both share strong belief in innovation, personal responsibility, and responsiveness to customer’s needs as well as commitment which interpreted differently to both companies. Lenovo’s organizational culture played its part in the merger as their culture demands them to plan before they pledge and this planning was done by looking at what would gain and also benefit the organization as a whole with them acquiring IBM before then making a pledge. Furthermore, Lenovo also keeps to their promises and this made it easier for IBM to work with them as they kept to all their commitment and agreement. All these I believe played a role in the acquisition. However, IBM is not into the plan and executes policy as it was not implemented so with both organizations merging effecting some changes in organizational culture could pose serious issues.  Cultural web created by Gerry Johnson and Kevan Scholes 1992 provides a model for looking and changing organizations culture which can uncover cultural assumptions and practices if used.  The cultural web identified six interrelated elements that help make up a model of a working environment and they are stories, rituals and routines, symbols, organizational structure, control systems and power structures.  (Johnson et al 2008)

4.​ ​Which​ ​theory​ ​or​ ​model​​ ​is​ ​still​ ​helpful​ ​in​ ​a​ ​globalizing​ ​world?

Globalization is a trend of the world nowadays and it can be an expensive process as it requires the firm to own a well-developed research and development capabilities, financial support, production, distribution network, sales and marketing skills so as to make an outstanding over its rival’s internationally. Hofstede, Trompenaars, and GLOBE project examined lots of employees and managers across the world in other to identify key values from which they developed dimensions used to define organizational culture and nations. However, Hofstede (2011) model is helpful in a globalizing world as it presents dimensions through which one can compare cultures. He also defined culture as the collective programming of the mind which distinguishes the members of one classification of individuals from another. His dimensions help to understand the difference between various countries and also give a scale to explain different work values and attitudes under different national culture. Hofstede’s dimension in which culture differs includes power distance, individualism versus collectivism, masculinity versus femininity, uncertainty avoidance, indulgence versus restraint and lastly, long-term/short-term work orientation.