Cultural Differences and Communication Issues in International Mergers and Acquisitions. The BenQ Debacle

A Case Study

Term Paper 2014 12 Pages

Communications - Intercultural Communication


Table of conteats

1 Introduction

2 Merger and Acquisition

3 Dimensions of culture

4 Cultural incompatibility

5 Conclusion

List of abbreviations


1 Introduction

The number of global corporations has grown in the last few decades. The advent of tech­nology and fliberalization of political and regulatory barriers enables companies to oper­ate their business internationally. There are less moving barriers between different coun­tries, more common worldwide laws, less barriers in monetary transaction and fewer geo­graphic distances. However, very often companies fail in acquisition, foreign direct in­vestments and cross-border partnerships because their global strategies are not proper enough, or the execution is more complex as expected.

This paper deals with BenQ's failure of acquiring of Siemens mobile devices. During the acquisition, parties face different challenges like market, technology and how to allocate budget, but in this case the biggest challenge was cultural interchange. This report ana­lyzes cultural differences of both countries in which these companies are located based on Hofstede's cultural dimensions. This particular acquisition is an appropriate example of why some intercultural mergers don’t work because of big differences in national, organi­zational and professional culture.

2 Merger and Acquisition

BenQ Corporation is a Taiwanese international company that focuses on the production of consumer electronics, computing and communications devices, more precisely on the production of monitors, displays, mobile computing devices, cameras, camecorders, pro­jectors, LED lighting, digital signage and interactive Flat Panel.[1] The company's head­quarters is located in Taipei and has offices worldwide segregated into America, Europe,

Asia and the Middle East and China regions[2].

The abbreviation BenQ means “Bringing Enjoyment 'N' Quality to life”[3]. According to BenQ, life is subdivided into four spheres as lifestyle, business, healthcare and education. BenQ's goal is to deliver its products in order to improve and facilitate human life in each sphere.[4]

The brand BenQ was founded in 2001. The company flourished since its establishment and peaked success year after year. In 2003, BenQ was placed as one of the “Taiwan Top 10 Corporations”, and was awarded for Innovation.[5] In its second stage, BenQ became a technology leader and acquired Siemens AG's Mobile Devices business in June 7, 2005.[6]

Siemens AG is a German global engineering, electronic and technology company with current divisions in energy, healthcare, industry, and infrastructure. It's plants, facilities, warehouses and offices are spread all over the world.[7] Siemens attaches importance to innovation, pioneering research, technology, science and excellent know-how[8]. The com­pany is headquartered in Munich.[9]

One of the Siemens' former divisions was the Mobile phone division. In the beginning of the 21th century, Siemens was the fourth biggest mobile phone manufacturer in the world. However, in 2004, Siemens Mobile suffered a radical change in the financial figures of this division and was in the red because of some software problems for new mobile phone devices.[10] On June 7, 2005, Siemens announced the sale of their mobile phone devices unit to BenQ.[11]

After signing the contract on October 1, 2005 a new brand BenQ-Siemens appeared. BenQ's goal was to widen the geographical reach of the brand, to make their name well known and to combine the opposite strengths of two parties. It wanted to bind synergy, to develop and launch a new brand, BenQ-Siemens. The vendee had an advantage in recog­nizing customer needs through thorough market research and analysis and transforming customer needs into valuable products[12], but was interested in Siemens' know-how, ex­cellent employees, established distribution channels, high standard of research and devel­opment, and broad client base[13]. Because of this merger, BenQ was poised to become the fourth largest mobile phone brand in the world.[14]

The Headquarters of BenQ-Siemens was in Munich. However, BenQ didn’t take over the losses in the amount of around 1 million euro a day until September 30, 2005. Siemens still covered the losses on their own. There wasn’t a direct money transfer to Siemens. Instead Siemens funded BenQ with 250 million Euro. After launching the brand BenQ- Siemens, Siemens was supposed to buy shares of the new brand for 50 million Euro. Fur­thermore, Siemens provided BenQ with the know-how and support in the development of handset technologies. BenQ was able to bring savings in materials and other manufactur­ing activities. It was committed to keep Germany's labor contract agreements until the end of 2006.[15]

The vision, plans and expectations were big, but integration and implementation looked different. The brand BenQ- Siemens didn’t exist for long. In September 28, 2006 BenQ announced to give up the brand BenQ-Siemens because of an unsuccessful and cost con­suming launching process.[16] Martin Prager, insolvency administrator, announced on an­nual general meeting, that the earned amount of last quarter of the year 2006 didn’t meet the expectations. Summarized, it means that BenQ-Siemens had to declare insolvency[17].

3 Dimensions of culture

After international acquisition, acculturation is one of the important stages of adjustment to the new company. Acculturation means that managers have to adjust to new culture, learn to tolerate and accept it but can keep using their own customs. Merger parties shouldn't consider only natural culture but also should deal with organizational values, operative practices, strategies and organizational ethics. Cultural intelligence is required in order to understand organizational differences[18].

Culture may be understood as a set of norms, behaviours, values, customs, traditions and beliefs of one certain group of people. This group of people has similar patterns in behav­ior, the way of thinking and feeling. Culture is transgenerational and is learned from childhood through the impact of social environment.[19]

Cheng and Seeger ran their research through press releases, company homepages and other media in order to analyze the merger failure of BenQ and Siemens. They focus on cultural and communicational differences and used the dimension model from Hofstede.


[1] Cf. BenQ (2014a): Products.

[2] Cf. BenQ (2014b): Global Offices.

[3] Cf. BenQ (2014c): Overview.

[4] Cf. BenQ (2014d): LIFE.

[5] Cf. BenQ (2014e): Milestones.

[6] Cf. GSM Arena (2005).

[7] Cf. Siemens (2014a): Siemens Worldwide.

[8] Cf. Siemens (2014b): Values.

[9] Cf. Siemens (2014c): Global Offices.

[10] Cf. Investor Verlag (2004); Telespiegel (2005); Zeit (2005).

[11] Cf. GSM Arena (2005).

[12] Cf. BenQ (2014f).

[13] Cf. Zeit (2006).

[14] Cf. GSM Arena (2005).

[15] Cf. Cheng/ Seeger (2011): 63; Telespiegel (2005); Zeit (2006).

[16] Cf. Stern (2006).

[17] Cf. Computerwoche (2007); Infoworld (2006).

[18] Cf. Cheng/ Seeger (2011): 64.

[19] Cf. Luthans/ Doh (2009): 96.


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cultural differences communication issues international mergers acquisitions benq debacle case study




Title: Cultural Differences and Communication Issues in International Mergers and Acquisitions. The BenQ Debacle