Tuesday, August 19, 2014

Assignment: MNC and Cross Cultural Connections (with references)

MNCs role in many cultural environment where, cross-cultural connections are their day-to-day reality that impact performance of their international workers. Therefore, MNCs are required to learn how to handle such connections to set up successful teamwork among their workers. MNCs need to understand restrictions to and companies of effective cross- border cultural connections.

Cross-border cultural relations is the research in the field of HRM. Which specializes in international companies, it rather represents that MNCs are beyond boundaries and cultures and therefore it describes what techniques are used to handle and allow them to function in many places on the globe and in various cultures. However, the latest perspective in HRM, is involved, with the actions of staffs and cultures in MNCs. It maintains the belief that cross-cultural communications can and should be handled to help international companies to earn profit from all countries. (Rozkwitalska, 2013)

Culture provides styles of knowledge and actions of teams that are seen in social procedures and supports for such a wide links and understanding. However, activities are also conditional, so it’s known as natural partialities as well as situational requirements and the biological perspective for example Chinese business systems. Also staff’s actions are psychologically designed by individual character. ( Cui & Hu , 2009)

Cross-border communications includes social barriers because of workers' mental development by their cultural lifestyle. The following obstacles can be recognized to help the company understand the problems of cross border cultures:

  • ·         Short cultural range,
  • ·         Cultural shock,
  • ·         Cultural over simplifications and
  • ·         Auto-stereotypes,
  • ·         Pre-judgments and
  • ·         National ethnocentrism.
  • ·         Make sure that staffs are well trained ,
  • ·         Properly understand cultural language skills,
  • ·         Understand cultural knowledge from local experts;



Although some latest research results have highlighted a more healthy strategy to cultural range by exposing its positive impact on companies and recognizing hurdles if MNCs’ employees don't succeed to handle the cultural difficulties properly. (Rozkwitalska, 2013)

Usually, individuals' communications in MNCs can be also suffering from cultural ego which cannot function in cross border culture. Self-perception of a particular social team, i.e. a Cultural auto-stereotype, effects on the behavior toward other cultures where the company is functioning. Stereotypes and auto-stereotypes present a risk of too far-reaching and unjust decisions which may lead to prejudices. Which badly impacts the quality of cultural communications. MNCs solve this problem by figuring out the degree of control over foreign subsidiaries, independence, and assigned power, they use socializing, acculturation, and modern groups, handle retirees, and transform HRM methods. (Xin Zhou , 2007 )

In case of a cross border cultural assignments, definitely handling client-vendor connection on both factors is important. Other ways to balance the connection would be to use of typical procedures and suitable technological innovation. Use of techniques, procedures, and technological innovation can solve significant problems. Which helps to succeed in standards and principles of company based on cultural background and performing styles of culture. One other way of coordinating cross-culture connection is by modifying to discuss working culture wherein staffs of various cultures accept to change their actions to take account of the other cultural values.  (Gore, 2013) This will not only make the company efficient in its cultural balance but also, improve cross-border understanding. (Fitzsimmons, 2013)

When managing international companies, choosing the right mixture of people, process, and technological innovation can be the difference between success and failing. To increase the security of company’s profitability in cross border culture companies need to, And accept flexible workflows that regard cultural laws; and coordinate technological innovation to customer needs and wants. (Friedman & Struven, 2010)

The growing pattern to globalization of companies is giving increase to a need for the development of effective worldwide management groups handling cross cultural difference. While incorporating effective practices with regards to team development, & knowing the advantages of varying cultural designs and actions. (Eero & Janne , 2011)The truly successful worldwide workforce are likely to be those which include the change through incorporated changes to selection, development, compensate and identification guidelines and methods by understanding the cross border cultures. (Ghislanzoni, et al., 2008)



References 

Cui, W. & Hu , Y., 2009. Culture Differences in Cross-border M&A , Aalborg : AALBORG UNIVERSITY .
Eero, B. & Janne , T., 2011. On the Narrative Construction of Multinational Corporations: An Antenarrative Analysis of Legitimation and Resistance in a Cross-Border Merger.. Organization Science., 22(2), pp. 370-390.
Fitzsimmons, S., 2013. MULTICULTURAL EMPLOYEES: A FRAMEWORK FOR UNDERSTANDING HOW THEY CONTRIBUTE TO ORGANIZATIONS.. Academy of Management Review. , 38(4), pp. 525-549 .
Friedman, D. & Struven, P., 2010. Cross Border PMI Understanding and Overcoming the Challanges, Berlin: Boston Consultancy Group.
Ghislanzoni, G., Risto, P. & Turnbull, D., 2008. The multilocal challenge: Managing cross-border.. McKinsey Quarterly, 12(2), pp. 70-81.
Gore, V., 2013. The Importance of Cross-Cultural Communication.. IUP Journal of Soft Skills. , 7(1), pp. 59-65.
Rozkwitalska, M., 2013. Effective cross-cultural relationships in multinational corporations. Foreign subsidiaries’ viewpoint, Poland: Academia.edu.
Rozkwitalska, M., 2013. Human Resource Management Strategies for Overcoming the Barriers in Cross-border Acquisitions of Multinational Companies: the Case of MultinationalSubsidiaries in Poland, Poland: Accademia.edu.
Xin Zhou , J., 2007 . THE EFFECTS OF CULTURAL DISTANCE AMONG NPD TEAM MEMBERS ON TEAM LEARNING.. AMA Winter Educators' Conference Proceedings., 18(2), pp. 247-248.



Assignment: Malaysia's Financial Crisis (with references)


1.    Introduction 

The financial crisis was first felt in Thailand on July 2, 1997, in which later spread to Malaysia, Indonesia, Philippine and Singapore; not forgetting Hong Kong, Taiwan, Korea, Japan and China. None of the countries in East Asia were spared from the impact of the financial crisis. A year later, the financial crisis had spread its wrath to Russia and Latin America, in which it causing a sharp depreciation in their currency values and collapsing the stock market. This had caused a decline in exports, and resulted in a slowdown of economic growth, as well as an alarming rate of unemployment. Moreover, the East Asian region itself was also suffering from internal economic problems which caused a lot of companies and enterprises to file the bankruptcy. The governments concerned had no effective means of mitigating the impact of the financial crisis (Yu, 2007).

The Malaysian government had resorted to public borrowing, which means the government had to find economic sources from borrowing or public debt, essentially through internal or external sources of money, capital, man- power, expertise and so forth. The internal sources of the Malaysian government in public borrowing were from the Central Bank as well as Financial and Commercial Banks. Moreover, the Malaysian government had introduced Danaharta, Danamodal, Merger of Financial Institutions, Corporate Debt Restructuring Committee, and Bond Market in order to overcome the financial crisis internally. However, the internal sources were not enough to over- come the impact of financial crisis and this forced the Malaysian government to resort to external borrowing.


2.The Causes of the Asian Financial Crisis 1997/1998


According to (Hadan, 2003), the Malaysian economy had largely been in a good condition since independence. In recent years, it had enjoyed full employment, considerable stability in the price level, and high growth, with the average rate being 8.7 % during the time period of 1990-1997. Malaysia, even with its small mass, was ranked as the 35th top country in 1997 with developmental momentum. This scenario showed that the recovery plans geared towards battling the crisis was successful, as Malaysia stands strong in the eyes of the world reference to the size of both the aggregate and per capita GNP.

It essentially was a trading country, in which exports and imports played a major role in the progress of the economy. Thus, the economy was highly open, and was much susceptible to external disturbances. The foreign capital had continuously supplemented domestic savings in order to sustain high investment rates, to bring forward growth. Malaysia wanted to retain the advantage of its achievements in economic stability, but it was no easy task, especially because of the international economic policies had assumed political overtones. The high performance of the Malaysian economy that was maintained over the decades, without markets or technology or even the core capital being local, cannot be undermined. However, in 1997 the financial crisis came to light, and essentially being a short-term phenomenon, it caused the crash of the Malaysian economy.  Among the factors that caused the financial crisis in Malaysia were speculative attacks, deficiencies in risk management, form of corporate governance and equity markets, and the legal infrastructure (Colin, 2003).

The Malaysian economy was vulnerable due to the unsustainable pace of economic growth and over-valued exchange rates. The relationship between firms, government and banks in Malaysia in the financial crisis period cannot be describe as good compared to other Asian countries. There was no clear policy on directed lending to big firms, and to that extent one cannot say that the financial constraints on big firms were weak. The government came out with a high growth policy based on a high ratio of investments to gross domes- tic product complemented with the promotion and support of certain mega projects, which led to implicit assumptions by lenders that the government would not let those projects fail, which was helped by lending decisions by bankers based on not only a project’s cash flow but also on collateral and implied government support. The over-investment was fuelled by an aggregated demand to outstrip aggregated supply, with a consequently persistent external deficit. Moreover, it had also led to a poorer cash flow and more problems of loans. Later on, the deficiencies in risk management caused by the financial crisis had also affected the Asian region, including Malaysia; with huge mismatches between the asset and liabilities of enterprises, leading them to assume excessive liquidity, interest rate and currency risks. The currency mismatches had also happened in Malaysia, with the exchange control regime requiring approvals for foreign currency borrowing. Several prominent corporations were allowed to raise foreign currency loans, although they only had ringgit cash flows. Due to the sharp ringgit depreciation, these corporations were faced with massive foreign exchange losses or insolvencies because of their currency mismatches and inabilities to hedge exposures. Moreover, the banking system in Malaysia was very risky and this caused bad macroeconomics.

It was an explosive mix for any corporate entity which had over-borrowed and assumed too much maturity period or currency mismatches. The high risk nature of banking in distinction to fund management had risen from its high gearing and massive asset liability mismatches, and in particular, from its tendency to borrow for a short period and lend for even longer. The over- dependence on banks in Asia was caused by their over-protection, as well as by the over-regulation of capital markets, and had also affected the Malaysian financial system. This had caused the under-development of non-banking financial institutions, capital markets, and risk management products, risk intermediaries, trading and market-making, which had functioned under inconsistent macroeconomic policies (Colin, 2003).The form of corporate governance and equity market was another factor that caused the financial crisis to occur in the Asian region. Asia was characterized by a concentrated shareholdings system. Non-competitive product markets and weak legal protection as well as governance by large share- holders rather than managers had reduced opportunities for managements to specialize, poor diversification of investments, and increased risks of expropriation of outside shareholders by insiders. The concentrated shareholding had resulted in a less-developed equity market. In Malaysia, the equity market was very sizeable (Colin, 2003).

The news of the outbreak of the regional crisis of corporate governance breakdowns, and the weak responses to these regulators had led to a huge stock market sell-down. The problem was compounded by new rules on scrip delivery which was imposed to check the sell-down, even though these rules were scrapped later on. However, the initiatives taken to facilitate the development of suitable mechanisms for improved corporate governance were taken only much later, and doubts persisted on issues related to enforcement. Lastly, the legal infrastructure system in Asia, and more specifically Malaysia, was plagued by inadequate reliance on markets due to its weak infrastructure in private contracting, which in turn was attributed to poor laws or weak enforcement of those laws. The investment decisions were based on the relationship model rather than on market prices, whereas contracts need not manage the supply of capital relative to investment opportunities, which were limited. In order to protect their interest, foreign lenders to Asian corporations and banks invariably made short-term loans; relying on the threat of not rolling over the loans to ensure borrowers serviced the latter. When the Asian economic crisis occurred, a majority of the lenders took back their loans and this caused the capital to outflow without any control. This was considered to be a rational response by the lenders in taking their time and going to courts to enforce their rights; given the poor laws and weak enforcement (Colin, 2003).

The contagion was considered another culprit in the situation. It did play a role, but not entirely within the suffering economies. It was located outside, among the foreign fund managers. Here, the theoretical links between stock prices and exchange rates the literature provides become completely obliterated. Once the managers were convinced that the exchange rate was out of what they perceived as its equilibrium value, one way speculative action was expected [Kawai (2000), p.14]. No less than US dollars108 billion left the region within first six months of the crisis. The herd behaviour of local speculators did aggravate the situation in the stock market but had little to do with the chaos in currency trading.


3.    Impact on the Economy of Malaysia


The financial crisis had an impact on the economy of Malaysia. During the financial crisis, the value of the ringgit had declined. Previously, in April 1997, the ringgit was equivalent to 2.42 of the U.S. dollar, whereas later on the value of the ringgit against the dollar depreciated by almost 50 per cent, hitting a high of RM 4.88 to the U.S. dollar on January 7, 1998 (Mahathir, 1999). Besides that, the composite index (CI) of the Kuala Lumpur Stock Exchange (KLSE), which was the third largest stock exchange in the region after Tokyo and Hong Kong, fell precipitously from 1,077.3 points in June 1997 to 262.7 points on September 1, 1997 (Syarisa, 2002). Between July 1997 and mid-January 1998, approximately U.S. $225 billion of share values were wiped off and between July 1, 1997 and September 1, 1998, market capitalization in the KLSE fell by about 76 per cent to RM 181.5 billion. In the end, Malaysia experienced the biggest stock market plunge among the Asian countries amid the crisis. 

The financial crisis had also caused the real sector of the economy to feel the negative effects of the crisis. Weak stock prices, the property market slump, and the net contraction impact of the ringgit depreciation together led to a negative wealth effect, which resulted in a general contraction of domestic demand. Consequently, domestic-oriented industries, such as the construction and services sectors, were severely hit by the economic crisis. Meanwhile, the increase in non- performing loans (NPLs) of the financial sector was reflected in a sharp down- turn in borrowing and financing, bringing about tight liquidity (Syarisa, 2002).

4.Malaysia’s Remedy measures for the Financial Crisis DURING 1997/1998


According to (Samuel, 2001), there were several actions taken by the Malaysian government to overcome the financial crisis during 1997/1998, such as using the extent of the current recovery, restructuring in the financial and corporate sectors, the role of selective capital controls, and the short to medium term outlook.

4.1.           Extent of Economic Revitalization


In 1998, Malaysia’s current account surplus was RM34 billion or 13% of the GNP (Gross National Product). Strong external sectors were reflected in the improved international reserves position such as in August 1998, in which Malaysia had reserves of US20.2 billion, and these had increased to US31.7 billion in July 1999. Besides that, the level of interest rates had also decreased significantly.  For example, in June 1999, the base-lending rate was 7.24% as compared to an all-time high of 12.27% in June 1998. It meant that the crisis had not recorded a higher impact in the inflation rates in Malaysia. The consumer price index (CPI) increased from 2.7% in 1997 to a high of 6.2% in June 1998.

4.2.           Financial and Corporate Sector Restructuring


The next plan involved two phases of the reform process, which was stabilization and reformation. In terms of the reformation process, several agencies were established to face the financial crisis such as Danaharta which had objective to purchase the non-performing loans (NPLs) and Danamodal to recapitalize financial institutions in the stabilization phase. The reformation phase consisted of corporate sector restructuring (Corporate Debt Restructuring Committee), merger of financial institutions, and the development of the bond market.

4.2.1.      Danaharta

Danaharta, an asset management company, was established in June 1998. Its main objectives were to remove NPLs from the balance sheets of financial institutions at fair market value and to maximize their recovery value. This will free the financial institutions from their debts that had prevented them from carrying out their intermediation functions. Danaharta successfully completed the first phase of its mandate; to deal with NPLs. Later, Danaharta had acquired a total of RM 23.1 billion NPLs, amounting to 31.8% of the total NPLs in the banking system.

4.2.2.       Danamodal

Danamodal had injected RM6.4 billion into 10 financial institutions. As a result, the capital adequacy ratio of the banking system increased to 12.7%. The capital injection was accompanied by absorption of losses by shareholders through reduced shareholding in the institutions, change in the composition of the boards of directors and/or change in the management. Danamodal had also appointed their representatives in the recapitalized institutions to ensure that these institutions were managed prudently and efficiently as well as to institute changes that will strengthen the institutions. Danamodal’s influence on the recapitalization of financial institutions accelerated the institutional merger process.

4.3.           Merger of Financial Institutions


The plan to merge 58 financial institutions into 6 groups, announced on 29 July, was an important component of financial sector restructuring. This initiative was consistent with the earlier plan of financial institutional mergers, which was announced at the beginning of the crisis. Currently, the merger timetable was accelerated, and the restructuring was more comprehensive. The 6 banking groups had merchant banking and securities trading, in addition to commercial banking and financial company activities. There was an overall agreement that bank mergers were necessary as it would prepare the domestic banks for the eventual opening of the financial services.

4.3.1.       Corporate Debt Restructuring Committee (CDRC)

The CDRC had shown some progress, but restructuring of the corporate sector remained slow. The CDRC sought to assist companies to restructure without governmental support. Progress had been slow because the process needed the agreement of all creditors. Banks, in particular, had been reluctant to settle without full repayment. Negotiations had therefore been long because even disagreement from one creditor would jeopardize the whole process.

4.3.2.       Bond Market

 As Malaysia was expected to resume its growth after the crisis, it was important to develop an environment where capital can be mobilized to finance long-term investment and to provide a better match between risks and returns. Thus, the development of a bond market was viewed as a priority because it served as an alternative source of raising capital. In view of the importance of this issue, the Malaysian government had established a committee to expedite the development of the bond market.

4.4.           Selective Capital Controls (SCC)


The SCC was a measure to deal with a situation of extreme uncertainty. Its primary objectives were to bring stability in the exchange rate, and regain control of monetary policy. It had helped to lower interest rates, and support a fiscal stimulus such as liquidity in which it fuelled the domestic economy. It had also provided a shield for carrying out reforms, particularly banks’ recapitalization. Moreover, contrary to some expectations, FDI had continued to flow in. Critics had predicted that Malaysia would use SCC to relate the economy, and bail out companies.

4.5.           Outlook for the Malaysian Economy


The return to growth came from external sectors, which was a result from the strong US economy, as well as the recovery by Asian economies. Thus, even if there was a threat of potential weaknesses from the US economy, the revived Asian economies were most likely to counter balance any slack of export demands from the US market. Furthermore, the intra-regional trade forms a substantial portion of the Malaysian export and the recent recovery of the Japanese and other Asian economies would benefit Malaysia. The performance of Malaysia’s external sector shows that Malaysia’s exports were very competitive. The rate of Malaysia’s export growth was very much higher than the other East Asian economies.

4.6.           National Economic Action Council (NEAC)


This was one of the approaches that were taken by the Malaysia government in order to overcome the financial crisis. The NEAC was establishing 1998 as a consultative body to deal with the immediate issues of tackling the Asian Financial Crisis in 1997. It had been instrumental in turning the economy around through pre-emptive strategies to counter the adverse impacts. Some of NEAC’s objectives were to stabilize the ringgit, restore market confidence, maintain financial stability, strengthen economic fundamentals, continue socioeconomic agenda and restore sectors badly affected by the crisis (Mahathir, 2003).

4.7.            National Economic Recovery Plan (NERP)


This was another approach that was taken by the government in facing the financial crisis of 1997/1998. The National Economic Recovery Plan provided the opportunity for economic fundamentals to reassert themselves. Allowing for the lagged impact of the measures, Gross Domestic Product expanded by 4.1% in the second quarter of 1999. The easier monetary policy led to a considerable easing of the liquidity crunch. From the macro perspective, a more important development was the improvement in both consumer and business sentiments (Mahathir, 1999).

4.8.           World Bank


There are various external resources that can be used as a tool to help countries in crisis such as International Monetary Fund (IMF) and World Bank. Countries such as Thailand, Indonesia and South Korea viewed IMF as their final way to resolve their financial problem. This was because they had no other way out, although they all knew about the consequences of relying on IMF; such as they must follow the conditions given by IMF, and IMF will take over the decision making on their finance over the years, until they were able to pay back the loans to the IMF (Khor K, 1998). However, Malaysia had thought out of the box and had its own solutions. Malaysia preferred to use World Bank as their external resource rather than IMF which could be damaging in the future. Malaysia had collaborated with World Bank in order to maintain the economy of this country. For example, World Bank had launched several missions to enhance Malaysia’s economy. A World Bank mission visited Malaysia in August 1999 to update the information on the Strategic Policy Review process. A previous mission in May updated progress in financial and corporate sector restructuring, identified outstanding and emerging issues related to restructuring, and discussed the corporate and financial restructuring aspects of the current Country Assistance Strategy.  The Malaysia Country Assistance Strategy (CAS) was approved by the World Bank in March 1999 following a series of consultations with government officials and a broad spectrum of organizations representing the civil society. The CAS outlined a number of performance triggers that would guide the Bank's lending programme in the coming years. The mission found that the government authorities acted quickly to establish an institutional framework for financial and corporate restructuring, and progress was note- worthy. The CAS outlined a base case programme of investment loans focusing largely on the social sectors. Financial sector restructuring loans were not anticipated under this base case scenario. Nonetheless, a robust programme of analytical work, policy advice, selective technical assistance, and country dialogue was envisaged in the CAS, particularly in the areas of financial and corporate restructuring, medium-term competitiveness and social issues. Both the impact of the crisis and medium-term challenges were analyse in detail in a Malaysia Structural Policy Review, which served as an instrument for the Government and the Bank to monitor Malaysia’s performance over the CAS period (Malaysia, 2000). Another World Bank mission was launched in March/April 2000 for a Strategic Policy Review monitoring mission, in which it helped to gauge the progress in the financial and corporate sector reform.

In August 1999, the Inclusive Financial System (IFC) organized a mini-seminar in Kuala Lumpur with Malaysia’s private firms. The IFC subsequently received requests to consider participating in several high technology ventures, two corporate restructuring proposals, and a recycling project. Malaysia had a well-developed financial market, and local currency financing was preferred by many companies. In this context, IFC's strategy was to;
1.      Support the rapidly evolving high-tech sector through non-traditional   sources of financing in       Malaysia, such as venture capital.
2.      Support financial institutions that provide assistance to Small and   Medium Enterprises (SMEs) including leasing and venture capital   funds.
3.      Provide direct support to SMEs.

The World Bank assisted the Malaysian government through several channels. The Education Sector Support Project provided funding to a continuous core program in basic education, and supported polytechnic education to provide skilled technicians for the medium-term economic recovery, as well as efficiency improvements through further staff development and institutional strengthening. Implementation was done on schedule.

4.9.           Miyazawa Funds Under the new Miyazawa Initiative

Japan had set up a short term financing facility worth US$2.5 billion for Malaysia. The facility served as a standby for the government should the need arise and was aimed at supporting credit- extending schemes intended to promote economic activities in Malaysia, such as trade financing, and small-and medium scale enterprise credit line.

5.    Ten Years after Malaysian Economic Crisis 1997/1998


Ten years after the economic crisis of Asia, countries that were affected by the crisis had been recovering by embracing the free market and globalization. Asia was one of the most dynamic regions in the global economy. Malaysia’s economy and financial system was at the strongest position after a decade of the financial crisis. Malaysia had greater economic flexibility to shift to new areas of growth, and thus, sustained the developmental momentum. Economic growth was achieved with pricing stability, low unemployment and strong external balances. The level of savings remained high at 37 per cent as a percentage to the GDP, while the level of external reserves remained strong at US$91 billion.


6.    Conclusion


As a conclusion, this paper has discussed the financial crisis that affected the Asian countries.  To overcome this crisis, the government had taken several steps such as the establishment of Danaharta and Danamodal. Ten years after the financial crisis, the countries that were most affected by it were recovering well. In the period of 2006 to 2007, the Malaysian economy was stronger due to the state demand. Growth was achieved by low inflation climate and low unemployment rate. Improving and maintaining economic freedom was the only reliable way to generate positive cycle of economic growth and prosperity. Thus, Malaysians should be proud of the government’s initiatives for the successful financial packages for our country.


7.    References


Colin, B. &. F. L., 2003. Malaysian economics and politics in the new century. s.l.:USA: Edward Elgar Publishing Limited..
Hadan, Z., 2003. recent financial crisis n Malaysia: response, result, challenges..
Khor K, .. P., 1998. Krisis ekonomi Asia Timur..
Mahathir, M., 1999. A new deal for Asia..
Malaysia, 2000. Malaysia macromedia update., s.l.: s.n.
Samuel, C., 2001. Economic crisis in Malaysia: Causes, implications and policy pescription.. Journal of Economic and Management, 2(9), p. 204.
Syarisa, Y. A., 2002. Migrant labour in Malaysia: Impact and implication of the Asian financial crisis.. EADN Regional Project on the Social Impact of theAsian Financial Crisis..
Yu, T. &. X. D., 2007. From crisis to recovery:. East Asia rising:, Volume World Scientific Publishing Co. Pte. Ltd., Singapore..


Assignment: Cultural Clash During Merger and Acquisition (with references)


Introduction
Culture refers to a shared and deeply held set of norms, values, beliefs and attitudes that influence individual and group behaviour within an organization. When M&A happens, it becomes the prime task for the enterprise to integrate resources and operations in terms of its organizational culture, doing so sometimes it faces various cultural clashes.
Literature review
Each organization has its own norms, customs, roles, rituals, ceremonies, dress code, symbols, and hierarchy and reporting lines. To avoid or lessen the conflict of cultural clashes, two aspects need to be considered. One, whether cultural differences should be considered before the decision to acquire/merge is taken. Cultural clashes between enterprises are found in the way they operate, direct, communicate, and motivate. It is the core content of cross border M&A cultural integration to integrate cultural clashes of nations and those of enterprise, which are interdependent, not separate. Communicating with each other effectively and understanding each other’s' culture is the most effective way to eliminate cultural clashes. According to (Cartwright & Schoenberg, 2006), the main factor in making or breaking the merger equation is the culture. Calculations prove that 50% to 80% of the mergers and acquisition are failure because they are performing low than the expected according to different industry and cannot adopt in the culture and cultural clashes happens. For example the Ford motors acquired Jaguar before Tata but it was not a profitable acquisition because of cultural clashes so the Ford motors sold it to the Tata motors but now Tata motors is struggling to pay the bridge loan taken to buy the Jaguar Company and manage its cultural environment.

http://www.tatamotors.com/investors/pdf/2008/Jaguar-Land-Rover-Acquisition-Part-1.pdf 

Comment

The first case of culture clash is the one that occurred between the merger of Hewlett-Packard (HP) and Compaq. The reason of the merge is to improve HP’s market share across the hardware line and double the size of HP’s service unit—both essential steps in being able to compete with industry-giant IBM. Moreover, they hope to create a full-service technology firm capable of doing everything from selling PCs and printers to setting up complex networks. The merger had face culture clash as their cultural differences among these two companies. In 2004, the fact of HP missing the merger’s longer-term revenue and profit goals had become clearer. This poor cultural fit resulted in years of bitter infighting in the new company, and resulted in a loss of an estimated 13 billion dollars in market capitalization. Though the merger itself was widely regarded as a failure, the company has hung on, and has been able to make significant cultural and leadership changes that have resulted in long-term success. (Hewlett, 2009)

Another example of the failure of merger due to problems with cultural integration can be seen in the case of Daimler-Chrysler. The merger of Daimler-Benz and Chrysler became a straight out clash between the business cultures of the two firms. The differentiation in corporate culture of the firms involved was the main reason for the non-success of this alliance. While the management style of Daimler-Benz's was more of a formal and planned out sort, Chrysler's management was more tilted towards a stress-free, unrestrictive style. Additionally, the views of both the firms on key factors, for instance pay scales, benefits and travel expenditure, were completely different from each other. As a result the company's shareholders had to bear the burden of the collision.   (DiMaggio, 2009 )


Conclusion

Compare to HP-Compaq, IBM had outstanding performed in its business for over a century. The reason of their success: ‘IBM has been found in its core business development through organizational culture, decision making and organizational structure’.

First, it should coordinate the cultural differences of peoples to promote understanding and communicating between the different communities in one enterprise and to avoid the negative influence arising from the different thinking models, behaviours, and values. Second, it should coordinate the different company cultures to eliminate the barriers in leadership styles, communication models, personnel system, performance appraisals, and social security benefits. Third, it should establish the company's core values by integrating diverse cultures to improve the company's creativity and competitiveness. Fourth, the effective integration of the companies' cultures could provide conditions beneficial for the integration of operations. (Jacobsen, 2012)



References

Cartwright, S. & Schoenberg, R., 2006. Thirty Years of Mergers and Acquisitions Research: Recent Advances and Future Opportunities. British Journal of Management, 17(s1), pp. s1 - s5.
DiMaggio, M., 2009 . Rasmussen College. [Online] 
Available at: http://www.rasmussen.edu/degrees/business/blog/best-and-worst-corporate-mergers/

Hewlett, R., 2009. Article Base. [Online] 
Available at: http://www.articlesbase.com/ask-an-expert-articles/failure-of-mergers-examples-987272.html

Jacobsen, D., 2012. Globoforce. [Online] 
Available at: http://www.globoforce.com/gfblog/2012/6-big-mergers-that-were-killed-by-culture/




Indian Economics and Globalization Assignment 2013 (with references)


1.   Introduction 

The world is interdependent than ever before. Since the 1980s, the concept of globalization, popular at the end of the Cold War and the division of the Soviet Union has been increased interaction and integration term globalization refers to the process of society and the economy. Phenomenon, economic, social and political changes in the field, as well as communication, transportation, technology and the flow of ideas across the border mode. The concentration of these moves has modified the styles of globalization.

Globalization is not only eliminating limitations among financial systems but also the lifestyle and public connections is struggling with it. The organization of Common Contract on Charges and Business (GATT), Worldwide Financial Finance and the effort of free trade has improved up globalization. (Jan Aart, 2005) 

2.   India and Globalization 

Indian is regarded as a low-income nation in comparison to designed centre class-income nations such as the U. s. Declares and European countries. Although Indian is not as designed as other nations and the common earnings level is significantly low when in comparison, it is moving in the right route to decrease the low-income inhabitants.

Early 1990, India led to default on the loan because the economic crisis, the world economy has opened. India's liberalization, privatization and globalization (GPL) is known as the concept of a new business model in India there was a drastic change of policy.

 In the early nineties, the key actions started as a part of the plan like, the walking away from of certification of sectors, the decrease in the areas of public industry, variation in the monopolies and the managed business systems operate, start privatisation program, reducing cost expenses and the most important was to change to the market identified forex rates. (Sachs, 1998)

This modify in the plan had dramatic results on the expansion of the Native Indian economic system. These changes in the global economy has announced the merger of the Indian economy. Over the years, the policy change, more and more industries, telecommunications, airports, insurance, road, port, airport, attraction of foreign direct investment and portfolio investment and foreign investment to start transportation and more.

Globalisation has brought many jobs & a huge amount of financial commitment to Native Indian. In recent years, the Indian economy is growing at great speed, and has opened many new opportunities in India. But India remains very poor. The benefits of globalization in India most of the people displaced and many of the lower classes suffer from poor working conditions and high-class. With significant positive effects of globalization in India has made a big boom. (Altenburg, 2008) 

3.   Impact of Globalization in Agricultural Sector of India 

India's agricultural market is highly fragmented and disorganized. In particular, the organization of small farmers in the rural credit sector collapse near a variety of changes, given the cost of inputs and the continuous increase in the price of the crop, the agricultural sector's profit potential was decreased significantly. Farmers still game for a few years, except for his not knowing how to manage the economy, will be kept on hooks. If production is good, there is excess supply and falling prices. When there is plants failing farm owners hardly get any settlement with regards to high cost. (Roy, 2012)

Complete regional place of India is 328.7 mn hectares of which 140.3 mn hectares is net planted place, while 193.7 mn hectares is the overall popped place, according to the Yearly Review 2009-10 of the Secretary of state for Agricultural. (MoA, 2010)

Improved use of various technology such as bug sprays, weed killers, and plant foods as well as new types of great generate plants were employed to increase meals manufacturing. These technology included modern implementations in watering tasks, bug sprays, artificial nitrogen manure and improved plants types designed through the conventional, science-based methods available at the time. Due to adopting of High Producing types (HYVs) technology from designed agricultural countries in the world has grown the development of meals grain considerably in Indian. (Pretty, 2003)

Receiving the international market for the agricultural goods of Native Indian, there is a rise in farmer’s agricultural item. New technology, new seeds, new agricultural practices etc. helped to grow the agricultural item.

While exporting agricultural products it is necessary to classify the products, its standardization and processing, packing etc. The industries depending on agricultural are stored and it made a rise in employments. The unorganized agricultural labour force share more than 90% of the organized sector, the Indian economy is a major in accounting.

India's industrial growth and agriculture depth is linked to the national income. 1% improve in the agricultural development leads to 0.5% improve in the commercial output and 0.7% improve in the nationwide earnings in Native Indian. Accordingly, the Government of India in 2002, the Indian economy by the power of the force has announced Agriculture. (Srinivasan, 2003)

Requirements for all countries due to WTO as an opportunity to increase exports of agricultural products and services. India has increased the level of exports.The costs of agricultural products are greater in the worldwide industry than Indian marketplaces. If the western world decreased allows, they have to improve in the costs. So there will be improve in the trade in Indian industry and if the costs develop, there will be benefit.

It globalization generally growing gap between rich and poor is also true that as a feature, but it is a matter of looking at relative poverty. Concerns before India poverty worse than death, and if India's efforts, globalization can be a key to get rid of it. (Birdsall, 2005) 

 4.   Advantages of the Globalization in Agriculture 

There are many effects of globalization on the domestic economy. The trend has increased competition and interdependence between financial systems in the global industry. India's economic reforms have resulted in overall economic growth.

Some of the benefits of the globalization of agriculture are as follows:·         As agricultural manufacturing will improve, Indian will be protected from meals security concern. This will provide Indian physical accessibility meals.

·         Every Indian will have financial accessibility meals because of improve in manufacturing and cost cut due to genetically customized foods (GMFs) will create meals cheaper.

·         As this is a maintainable kind of agricultural trend, Indian will also be able to create its agricultural industry environmentally safe-the accomplishment of environmental accessibility will become possible. (Porter, 2011)

·         Silver world surplus agricultural products to enter the market reforms of the agricultural sector will be able to feel the positive effects of globalization, therefore, benefiting agriculturalists, rural and agricultural businesses can exploit the economic globalization.

·         It is more than 58% of the population, in the agricultural sector jobs created according to the livelihood of payment source. It promotes rural development, poverty reduction, addresses, will be the goal of economic inequality, hunger and malnutrition in India, it is also removed.

·         India is not an example of market failure, the market increase in the purchasing power of the population to succeed.

·         The Human Development Index (HDI) ranking of India in improving and will improve the standard of living of the population. (Hanjra, 2010)  

 5.   Challenges to Indian Agriculture under Globalization Scenario

 India has several important issues in the negotiations on agriculture obligations under the contract so as to ensure the physical location in the country requires immediate attention and debate has emerged in the area of ​​agriculture. Here have a significant impact on the future of agriculture is part of a strategic issue. The provisions of the Agreement on Agriculture in India that can be used to implement the transition period should be extended for five years. In other markets to other markets, improve the accessibility of Indian terms, conditions, and pricing structure are unclear. Domestic support measures reasonable prices to all areas of food security and the need to verify the deployment. The Government of India in the global market for Indian export competitiveness of export subsidies must be reconfigured. Under certain conditions, impose the safeguard clause importer for India, the development of the country considered discrimination must India's balance of payment problems based on the phase-out of quantitative restrictions to study the impact of India.(Somasekhar, 2013)

India is expanding access to modern technology and the production costs and prices of agricultural products, which can have a significant impact on the cost-effective, especially agricultural biotechnology can. Support favourable overall measurement of the agricultural trade tariffs reap the benefits of all the board appointments must be kept. India is just as important for developing countries special and differential treatment is provided for in full use. Indian agricultural research and production and distribution process of reform in the colony's delegates to evaluate the possible consequences. To answer these questions, just the World Trade Organization (WTO) negotiations with congressional immense importance in the context of home. Investment, competition policy, transparency in government procurement and commercial equipment elements of the agenda of the Conference held in Doha, the Indian delegation is very difficult negotiations on the issue of implementation. (Timmer, 2005) 

 6.   Conclusion and Recommendation: 

Growth of the Indian economy in the global competition depends largely on the participation of rural areas. The current situation and the Indian government to protect our agriculture and to take effective measures to strengthen to know about the problem. Organization and our farm production increases Creek series of measures needed to achieve structural change. Some of them, particularly the attitude change and can be accessed on the basis of long-term production of the input increases. (Boserup, 2007)

India's agricultural sector in the global scenario for improving some of the recommendations are as follows:
  1. Computerized social media of Germless facilities are essential to develop improved types of plants for trade.
  2. We produce the most important criteria of quality, efficiency and profitability will improve.
  3.  Government must introduce rigorous measures to end corruption in check posts and reduce taxes on transport firms to reduce cost of movement.
  4. The Gov. may highlight on the trade of the agricultural produce, which would generate it’s awaken non-urban success and large employment methods. It is possible, if actions are taken instantly, to make agricultural more confident, competitive and commercial.
  5. In the future, India in the WTO negotiations need to take a very strong position. Agricultural trade liberalization in developing countries including India are likely to bring rich dividends. To realize this potential, India, the multilateral rules-based trading system and the WTO negotiations to establish the depth of the effort to strengthen.
  6. The need for the growth of the agricultural sector in order to clarify. Time tasks and methods of innovation has been implemented. Otherwise, there will be large deficit in food production.
 

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7.   References


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