Week 5: Paul

BenQ, Siemens and Poor Communication

BenQ, a Taiwanese electronics company acquired the German mobile phone division of Siemens (Cheng & Seeger, 2012). The result of the merger was failure in less than a year, because of large financial losses. A major contributing factor to the failure was inadequate communication between the stakeholders and a lack of sensitivity to the cultural issues involved. This inadequate communication centered around a lack of clearly defining goals and objectives during the merger process (Cheng & Seeger, 2012).

Good communication is the key to the success of any corporate merger (Appelbaum, Lefrancois, Tonna & Shapiro, 2007). A major complicating factor can be when each contributor to the merger speaks different languages (Cheng & Seeger, 2012). Language differences can greatly increase the time it takes for communication to work well and also increase the expenses involved in the merger (Cheng & Seeger, 2012).

The source of communications involved in any significant change within a business (in this case, a merger) must come from the proper source. "... senior executives will see the demonstrated value that communications brings to the implementation of strategy and will recognize the critical role they must play in that effort" (Argenti, Howell, & Beck, 2005). In German culture, communication from the top is more critical than in Taiwan, and the Taiwanese leaders did not take this into account in their strategy (Cheng & Seeger, 2012).

Communication needs to be appropriate. Many times, what is not said is just as important as what is said. Eisenberg refers to this as "strategic ambiguity" (1984, p. 227). Communications from the leadership on both sides involved in the merger should have used "less than explicit language, being purposefully vague, and leaving key meanings implicit" (Eisenberg, 1984, p. 231). This would have allowed a more accurate level of expectations on the part of the workers. The leadership may have promised more than they were able to deliver. They certainly overpraised to all stakeholders expecting financial returns as a result of the merger (Cheng & Seeger, 2012).

Balancing the need to minimize unneeded communications is the need to communicate vial information to the stakeholders in a merger (Appelbaum, Gandell, Yortis, Proper, & Jobin, 2000). Within the BenQ/Seimens merger, poor communication resulted in a lack of trust on the part of employees (Cheng & Seeger, 2012).

Congruency in messaging is vital. Communications to both internal and external stakeholders must be the same (Argenti, et al., 2005). The BenQ/Seimens merger was fraught with a lack of congruent communication (Cheng & Seeger, 2012).

A major lesson from that the BenQ/Seimens failed merger is that "companies from different cultures considering a merger need to prepare in advance a strategic communication plan" (Cheng & Seeger, 2012, p. 126). That strategy should have included adequately communicating both financial and organizational goals (Argenti, et al., 2005), which would have moderated the level of unmet expectations.

References:

Cheng, S. & Seeger, M. (2012). Cultural differences and communication issues in international mergers and acquisitions: A case study of BenQ debacle. International Journal of Business and Social Science, 3(3), 116-127.

Appelbaum, S., Lefrancois, F., Tonna, R., & Shapiro, B. (2007). Mergers 101 (part one): training managers for communications and leadership challenges. Industrial and Commercial Training 39(3). 128-136.

Argenti, P., Howell, R., & Beck, K. (2005). The strategic communication imperative. MIT Sloan Management Review, Spring. 83-89.

Eisenberg, E. (1984). Ambiguity as strategy in organizational communication. Communication Monongraphs, 51. 227-242.

Appelbaum, S., Gandell, J., Yortis, H., Proper, S., & Jobin, F. (2000). Anatomy of a merger: behavior of organizational factors and processes throughout the pre- during- post-stages (part 1) :[1]. Management Decision, 38(9), 649-661.