Internationalisation through Merger
Do the corporate cultures have to integrate in an international merger? In March 1999, the two large Nordic IT companies, Tieto of Finland and Enator of Sweden, announced their intentions to combine their businesses. The new entity was to have over 10,000 employees and net sales of more than 1 billion Euro. TietoEnator (TE) was to become one of the leading suppliers of IT services on the European market. The combination was announced as a Merger of Equals – the merging companies being of about the same size, and operating mainly in their respective home markets, thus avoiding competition with each other. The authors´ interest to this case has emerged from the fact that company fusions generally, and international mergers of equal partners in particular, are considered as high- risk projects.
The issues discussed in this paper are expected cultural differences between Finland and Sweden, and between Tieto and Enator; differences in management style and market structure and buyer behaviour between the two companies, and differences in the industry environments and business climates of Finland and Sweden.
The purpose of this thesis is to describe and analyze the TietoEnator´s merger process from two perspectives: the cultural perspective and the strategy perspective. The main objective is to exemplify some theories in organizational and strategic research by connecting the theories to the significant events of the TietoEnator merger case. Five executive employees of TietoEnator in Sweden give their personal view on the merger and the development of the company. The strategic (vision, mission, and strategy objectives) statements of the company before, during, and after the merger are compared and analyzed.
Conclusions: the cultural distance should not only be considered as a negative issue. The paradox of cultural proximity, where two neighbouring cultures show significant cultural differences, is according to our findings not expected to lead to serious problems if handled in a constructive manner. Selective integration and leveraging the positive tensions between the different cultures is the key to success in internationalisation through merger.
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