Car manufacturers Daimler, Renault and Nissan have recently announced a three-way global tie-up of their brands. The alliance will allow the three automotive giants to share technologies and development costs, leading in particular to the production of new electric cars. These are the kind of technical, financial and strategic advantages usually associated with international partnerships, and therefore used to advocate them. What is often overlooked, however, are the human factors that affect their performance.
In an international partnership of this scale, where employees with different national and corporate cultures work together virtually and face-to-face on a daily basis, failure to manage intercultural differences will lead to cross cultural misunderstandings, increasing tensions between colleagues and ultimately jeopardising cooperation.
Cross cultural clashes of this kind in international partnerships are usually caused by a lack of integration, due to the fact that members of one organisation are unable to adapt all or part of their corporate and national culture to meet their partners’ expectations. The result is failure to accept a common reality and common goals, essential for the success of any international partnership. Cross Cultural Awareness Training courses for international management are specifically designed to create the cross cultural awareness employees and management will have to draw upon in order to fully reap the benefits of global partnerships formed by the likes of Daimler, Renault and Nissan.
Renault and Nissan, French and Japanese car makers respectively, are familiar with the cross cultural challenges of international partnerships. In 1999 they formed the Renault-Nissan alliance, the first of its kind in the automotive industry, which saw Renault take a controlling stake in Japanese giant Nissan. Renault CEO Carlos Ghosn was placed in control of the Japanese company, who fired a number of its top Japanese executives. Hardly an example of cross cultural co-operation, the deal nevertheless saw Nissan turn around its profits and eliminate its automotive debts, all in the midst of a flailing Japanese economy. As a result, Ghosn was awarded a medal by the Japanese government and Renault-Nissan is now the fourth largest carmaker in the world.
No one can dispute this success story, and it may be on its wave that Ghosn has claimed international tie-ups are the way forward for the automotive industry. Yet it is estimated that no more than 50% of international mergers and acquisitions achieve the level of success initially anticipated. Reasons for slow progress or outright failure are high labour turnover, low morale amongst employees, reduced job satisfaction and increased stress, amongst others. These may not be immediately measurable in monetary terms, yet their effect on companies’ performance cannot and should not be ignored or underestimated.
Another factor that has a huge impact on the success of international partnerships of this kind is cross cultural difference. Many organisations will venture into an international partnership unprepared for the many cross cultural challenges and only face up to them when projects have been abandoned or key employees have resigned.
Just like due diligence processes are carried out in preparation for international ventures, global organisations should consider pre-emptive measures and consider the cross cultural differences all parties will encounter and provide staff with relevant cross cultural awareness training initiatives. Intercultural Training courses designed with the specific needs of global organisations and their employees in mind – such as Managing Virtual Teams and Managing International Mergers and Acquisitions – will considerably reduce the cultural risks inherent in international operations such as that recently undergone by Daimler, Renault and Nissan.
© Communicaid Group Ltd. 2010