Cifa Firm’s Cross-Cultural Integration with a Chinese Company

Topic: Strategic Management
Words: 575 Pages: 2

Culture and Mergers

Culture refers to the beliefs and values that dictate people’s behavior, attitudes, and mindset in performing their duties in an organization. People working in different entities are not exposed to the same environment. Hence, organizations seeking to merge have to assess their alignment and the cultural context of their cooperation to guarantee their success or failure. In the case of Cifa, an Italian company and Zoomlion, a Chinese company, cultural factors were not comprehensively assessed prior to the merger. The two entities had a longstanding history of operation in different cultural contexts. Despite the great benefits of merging, their partnership was threatened by different cultural approaches to the management of their individual operations. Cifa largely operated under Western culture and used English as the mode of communication, while Zoomlion was founded on Chinese cultural values. The differences between the Western and Chinese cultures presented initial challenges, particularly in communication and the perception of each other’s future business interests.

Italian and Chinese Negotiating Styles

The Chinese negotiations are based on building long-term cooperation rather than a one-time engagement that characterizes Western negotiations. The Chinese people prefer to engage in dialogue that allows each party to evaluate and judge the other’s capacity. Through negotiation, the parties can agree on a specific matter, situation, or deal that is mutually beneficial. Therefore, Chinese negotiations are founded on long-term alliance and problem-solving through a lasting, vigorous process considering the pragmatic matters and context. However, the Italian style of negotiation is largely impartial, instinctive, and too focused on quick gains. That is why the first five years proved to be challenging in adapting to the different strategies and cultures. This is why Zoomlion created a liaison office comprising 5-6 teams and working groups. They were required to perform specific tasks, including translation and explanation.

Trust and Mergers

The process of mergers and acquisitions is quite challenging because of the complexity arising from business vulnerability. Businesses are likely to be affected by cultural changes, market shifts, and varying business models. In such a context, negotiations must be cemented by trust, which entails the psychological state comprising the expectation to embrace susceptibility based upon positive possibilities of an engagement or behavior. Since business partnerships pose risks to either party, leading to negative outcomes, the parties are expected to engage in the best interest of the other. Cifa and Zoomlion sought to expand their reach and establish a multinational corporation capable of competing aggressively in the industry. Their trust was tested when Zoomlion came to the rescue of Cifa which suffered greatly because of the unforeseen consequences of the global financial crisis.

Typical Chinese Company’s Approach to Managing Foreign Companies

China is principally a communist republic and most companies in the country are closely connected to the government. Despite its growing influence in the global economy, the Chinese people have not shown their prowess in managing a big liberal multinational corporation. The limited knowledge and expertise in managing a foreign entity were evidenced by the challenges Zoomlion encountered in managing Cifa. Nonetheless, managers from both companies did their best to embrace each other and act in the business’s best interest. The main interest of the executives was the business synergy and the underlying philosophy of working together. Zoomlion developed an approach of forming a liaison office and the appointment of managers across the two regions helped the companies to overcome cultural differences and enhance the understanding of each other’s business strategy.

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