Cultural Problems in International Business

Martinez Construction Company in Germany heathenish Problems 2. 2. 1 PROBLEMS ethnical barriers to consolidation The considerable differences between the Spanish and German personal credit line practices could pick out been diminished through a sound pre-assesment made by Martinez Co. Since this reasonableness process was not pursued, a ethnical conflict passed which may importantly hinder the processes of strategic and operational management of the two companies as a whole. The most important barriers of cultural dimension include Barriers to cultural integration Suggestion for limiting the impact 1. Cultural shock as a consequence ofstrong cultural diversity of companiesconstituting a holding group Cultural transformation, respectingcultural values and customs of a targetcountry. 2. Cultural maladjustment of boardmembers delegated by a refer company c atomic number 18 through values, systems formonitoring social feelings of the targetcompany. 4. Management style differen cesbetween companies. Management through goals as a basisfor sue appraisal of the managementpersonnel and employees monetary issues Martinez Co. s representatives are involved in a process of Merger and achievement which they discover gradually.This means that they take allowed themselves to be unaware of the exact risks and implications, peculiarly from the fiscal point of view, from the moment they accepted a select that did not contain enough information related to this topic. Now they are lining unpredicted expenses, and the possibility of natural ones to occur give the sacknot be excluded. Ensuring that an acquisition is a good fit, not only on paper, provided as an co-ordinated business, calls for going beyond traditional monetary assessments, to detailed value analysis, particularly within an international business context. As Treuhandanstalt rushed the process and Martinez Co. need went with the flow, requirements that should have been included in the contrac t are now fleshy the Spanish companys financial capacities. 3. 2 Causes of the problems The problem regarding cultural contradiction became difficult to cross due to the following errors -Martinez representatives did not build an appropriate due diligence as no research regarding business practices in Germany had been made. Juan Martinez was sent to conduct negotiation just because he was accredited and had a practical thinking, but his escape of information proved to have a great negative impact on the deal obtained. Their cogitate to expand in Germany is poor. Diego Martinez took into account only the fact that Germans enjoy Spanish atmosphere and often choose Spain as a target marketplace for business. On the other hand, they did not take into account that differences in lead approach and culture in general can affect their interest. It is rattling important to be aware that if companies from a specific country conduct successful affairs in your country, it does not nece ssarily mean that you allow for benefit from the same success there. The financial problem occurred mainly because close to of the steps within negotiating the merger were skipped.Firstly, Martinez accepted to sign a contract without enough details about Konstrukts financial position. They requested, indeed, a mannequin Contract which made Germans unclear and, moreover, gave them little perspective about emerging financial risks. In fact they bought a company without knowing precisely what they are getting. The second main contribution to the synergys financial issues was brought by Treuhandanstalt. Although THA must have focused on evaluating the firms, especially their financial soundness and the cost for the buyer, it had, in this case, as main concern the accelerate of transaction.Therefore, they pressured Martinez during this process, without focusing on future risks and arrangements for upgrade. 3. 3 Negative effects that occur If problems lead not be solved The cultura l dissonance will have the following consequences * Management will pillowcase severe problems in providing incentives for employees, therefore their productivity will go downwards * Employees will last confused about their role in the company so their lack of initiative and responsibility will worsen.In addition, this synergy attempt will face challenges caused by financial problems * The plans of stability and progress will be ill hampered in the case of Martinez Co. if they fail now, they will find it extremely firmly to expand even on another foreign market (a financial fiasco would make Martinez unconfident and the idea of international expansion would definitely be seen as a peril). * Company might become insolvent if the new expenses emerged are not handled at time and properly. 3. SOLUTIONSCultural barriers a first response would be to map out the chain of command (employees must actualise their exact role in the company and must be certain about the participative leadership approach specific to the Spanish company) communication found * Strategic focus agree on the goal (enrichment) and find the repair cultural approach to achieve it ( certainty needed, more like Germans) * pleat useful elements from both cultures in such manner that leadership and employees can move together towards their goal ( keep the all about work policy but make them involve in decision do through incentives) Financial issues Cash injection , as expense on regulations is compensated by the opportunities offered on this new market ( raw materials at hand, low wages required and brown field investment advantages) * rate the co future growth rate and profitability in set out to understand if the acquisition is a good option * Require a renegotiation of the contract, which should imply these extra- expenses. 4. CHOOSING the OPTIMAL SOLUTION . Culture Mix useful elements from both cultures in such manner that leadership and employees can move together towards their goal ( keep the all about work policy but make them involve in decision making through incentives) * b. Financial Assess the co future growth rate and profitability in order to understand if the acquisition is a good option ( hold forth with third parties and experts) . IMPLEMENTING the OPTIMAL SOLUTION a. Communication employees must be informed about policies adopted, about their role exactly. This way, they will be less given up to reject the new management and their approach. b. Studies of the market ( it has potential since raw materials are available an also is labor) , discussion with experts and third parties.