EADS and Intercultural Management

Résumé du document

Since the 1980s, the number of Merger & Acquisition operations has surged on the European and international markets. During the year 2000, the value of the international Merger & Acquisition (M&A) ventures was greater than $1000 billion and more than half were carried out by European companies. The different studies conducted during these operations indicate that in most cases these Merger & Acquisitions were a failure. Approximately, one out of two operations did not reach the objectives and it did not succeed in creating the synergy that was required financially and operationally. The numbers of failures increased in the case of M&As with an international dimension. It would be quite interesting to understand the place of the cultural dimension in international M&As.

To illustrate this, we will take the example of EADS, which is the result of the merging of three companies (Spanish, French and German) and how they countered different cultural issues. To understand this, we will first present the merger and the different entities involved in this process; then, we will analyze the cultural differences between the three countries and finally, we will analyze how EADS addressed these cultural differences.

The group EADS (European Aeronautic Defense and Space Company) regroups the activities of three different companies: the French company Aerospatiale-Matra, the German company DASA (Daimler Chrysler Aerospace AG) and finally, the Spanish company CASA (Construcciones Aeronauticas SA). Each of these companies is considered a leader in their domestic market. This large European corporation has been formed by the merging of these three entities which became effective on 10 July 2000. The preparation for this merger has been, for the different players, very complicated, mainly regarding issues related to management styles of these companies and the different political issues involved in this merger.

The French group Aerospatiale-Matra was set up in June 1999 by the merger of the state company Aerospatiale and the private company Matra High Technology. The shares were as follows at that time: the French state held 48% of the group, the Lagardere group had 33%, the employees held 2% and the remaining 17% were assigned on the stock. This merger took place in a period of privatization of the State companies. Initially, the company Matra High Technology was formed by the merger of the ‘Societe d'Études et de Realisation d'Engins Balistiques' (Sereb) and the companies Sud Aviation and Nord Aviation.

The activities of the group were divided in four distinct divisions: Aeronautics, Defense and Spatial Transport, Satellites, Services and Telecommunications. In 1999, the Aerospatiale-Matra had a global turnover of €12.9 billion with 52,387 employees.

The German group DASA was set up in 1989 by the merger of the companies: Daimler Benz aerospace, Dornier, Messerschmitt-Bolkow-Blohm (MBB), MTU Monchen and Telefunken Systemtechnik (TST). Later, in 1997, the activities of Siemens Sicherungstechnik were integrated to the group.

The activities of the group were divided in seven divisions: Civilian planes, Helicopters, Military planes, Satellites, Civilian and Defense systems and Aeronautical motors. In 1999, the global turnover of the group was €9.2 billion with 46,107 employees.

Tags: EADS, CASA, DASA, Military defense,Eurocopter

Extraits

[...] Moreover, the renewal of employees is also very important. Indeed, the company hired many new employees: 1500 in 2001 and more than 5000 in 2002. This has allowed to create easier a corporate culture The creation of a corporate university In order, to accompany the organizational changes within the company and to facilitate the process of integration, the group EADS has set up a tool of to give several training to employees: this is the CBA (Corporate Business Academy). The activities of this new structure are: training, consulting but also intranet. [...]

[...] So, the company (for fiscal reasons also) has been set up governed under Dutch laws. The choice of a neutral territory for the headquarters allows to maintain a sort of balance between the different actors. However, the Strategic and Marketing headquarters are situated in France (Paris) and the Finance and Communication headquarters in Munich (Germany). The split of these headquarters allows to let in the initial countries position of management and so not only to leave the complete operational part but this has created lack of communication and complicated logistical issues An official language The company decided to adopt an official language: English. [...]

[...] Indeed, the part of the three states: France, Germany, Spain are omnipresent; so, the corporate culture of each of the initial companies were totally different. This is what we will demonstrate through the next part mainly by using Geer Hofstede's analysis Cultural difference analysis: hofstede Between the years 1967 and 1973, Geert Hofstede has analyzed the different national cultures through a survey. In our case, the constitution of EADS, this survey will be very useful, as it will allow us to understand the cultural differences between the three countries (Spain, France and Germany) and so the different organizational culture between the three companies (CASA, Aérospatiale-Matra and DASA) Hofstede's survey Geert Hofstede survey had for goal to explain that national and regional cultures have been developed. [...]

[...] So, the group EADS applied the concept of symmetry (between France and Germany) in the constitution of management. Even if the former companies have already worked together before the merger (on project like Euromissile, Eurocopter it has been quite tough to succeed in finding an arrangement. But after a lot of interviews, it has been decided to apply the system that we have described. So, this symmetry can be observed in the appointment of the French Philipp Camus (former Aérospatiale-Matra) and Rainer Hertrich (former DASA). [...]

[...] The company three distinct activities: Planes, Space and Maintenance. In 1999, the global turnover of the company was: 1.2 billion and it employed 7,430 persons The merge The official announcement of the set up of this new company: EADS has been made by the French and German government the 15th October 1999 in Strasbourg (France). This announcement has been preceded by a long negotiation between the three partners. Indeed, this merge has been really tough to set up as the different companies had a special background and cultural issues. [...]