Cultural Problems in International Business

Martinez Construction Company in Germany heathenish Problems 2. 2. 1 PROBLEMS Cultural barriers to integration The considerable differences between the Spanish and German business practices could have been diminished through a sound pre-assesment do by Martinez Co. Since this understanding border was not pursued, a heathenish troth occured which may f whole guyifi dopetly hinder the processes of st computegic and operational management of the twain companies as a whole. The most important barriers of cultural dimension intromit Barriers to cultural integration Suggestion for limiting the impact 1. Cultural grogginess as a consequence ofstrong cultural diversity of companiesconstituting a safekeeping group Cultural transformation, respectingcultural values and customs of a targetcountry. 2. Cultural malad skilfulment of boardmembers delegated by a p arent caller-out trouble through values, systems formonitoring social feelings of the target confederacy. 4. Management st yle differencesbetween companies. Management through tendencys as a basisfor black market approximation of the managementpersonnel and employees Financial issues Martinez Co. s representatives are involved in a process of Merger and Acquisition which they discover gradually.This means that they have allowed themselves to be oblivious(predicate) of the exact risks and implications, especially from the pecuniary point of view, from the moment they accepted a contract that did not contain enough randomness related to this topic. right off they are facing unpredicted expenses, and the possibility of new ones to occur keisternot be excluded. Ensuring that an acquisition is a trusty fit, not only on paper, barely as an integrated business, calls for going beyond traditional financial assessments, to fine value analysis, especially within an international business context. As Treuhandanstalt race the process and Martinez Co. imply went with the flow, requirements that should h ave been included in the contract are now threatening the Spanish companys financial capacities. 3. 2 Causes of the fusss The problem regarding cultural contradiction became difficult to cross due to the sideline errors -Martinez representatives did not make 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 genuine and had a practical thinking, but his lack of information proved to have a great negative impact on the deal obtained. Their reasoning to expand in Germany is poor. Diego Martinez took into cypher only the fact that Germans enjoy Spanish atmosphere and often choose Spain as a target mart for business. On the other hand, they did not take into account that differences in leadership approach and culture in general can affect their interest. It is very important to be aware that if companies from a detail country conduct successful affairs in your country, it does not needfully mean that you entrust benefit from the same success there. The financial problem occurred main(prenominal)ly because some 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 Phase Contract which made Germans unclear and, more(prenominal)over, gave them little attitude about future financial risks. In fact they bought a company without knowing exactly what they are getting. The second main contribution to the synergisms financial issues was brought by Treuhandanstalt. Although THA essential 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 speed of transaction.Therefore, they pressured Martinez during this process, without focusing on future risks and arrangements for upgrade. 3. 3 ostracise effects that occur If problems will n ot be solved The cultural dissonance will have the following consequences * Management will fount severe problems in providing incentives for employees, therefore their productivity will go downward * Employees will proceed confused about their role in the company so their lack of initiative and responsibility will worsen.In addition, this synergy adjudicate will face challenges caused by financial problems * The plans of stability and progress will be severely hampered in the case of Martinez Co. if they fail now, they will go on it extremely hard to expand even on another unconnected market (a financial fiasco would make Martinez unconfident and the idea of international blowup 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 solution would be to map out the chain of drop (employees must(prenominal) understand their exact role in the company and must be informed about the participative leadership approach specific to the Spanish company) communication based * Strategic focus agree on the goal (enrichment) and find the right cultural approach to achieve it ( certainty needed, more like Germans) * flux useful elements from both cultures in such personal manner that leadership and employees can move together towards their goal ( keep the all about work policy but make them involve in decision fashioning 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 range investment advantages) *Assess the co future growth rate and lucrativeness in order to understand if the acquisition is a good plectrum * 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 ( discuss 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 inclined to reject the new management and their approach. b. Studies of the market ( it has probable since raw materials are available an also is labor) , discussion with experts and third parties.