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Management Sciences Essay

6014 words - 25 pages

1.Introduction BenQ, a Taiwanese-based company, grabbed the international headlines on June 7, 2005, when it acquired the money-losing mobile phone division of Germany’s Siemens and launched the brand, BenQ-Siemens. Subsequently the acquisition proved to be a strategic mistake, as the two companies could not successfully integrate. This article tracks BenQ’s acquisition of Siemens, from the perspective of BenQ, through a qualitative case study. The analysis focuses mainly on culture and communication issues in what became an unsuccessful acquisition. The results indicate that the German Siemens and Taiwanese BenQ are different in important ways, from national culture to organizational ...view middle of the document...

BenQ, a Taiwanese based company, grabbed the international headlines on June 7, 2005, when it acquired the money-losing mobile phone division of Germany’s Siemens and launched the new brand, BenQ-Siemens. With the merger, BenQ Mobile became the world’s fourth largest mobile phone brand after Nokia, Motorola, Samsung (BenQ Press Release, 2005). However, the acquisition of Siemens’s mobile phone unit lost over 500 million euros in 2005, with little sign of financial recovery. In late September, 2006, BenQ decided to stop investing in the money-losing operation and filed for bankruptcy protection in Germany. Barney (1988) indicates that an acquisition creates value for the acquirer when it achieves synergy and adds unique and valuable resources that can be leveraged into the target organization. A common objective in acquisition practice is to bring together companies and enhance the competitive position of the companies through the transfer of complementary capabilities between them. This synergy is often used as a justification for mergers and acquisitions (Fitzgibbon & Seeger, 2002). Similarly, Chairman K. Y. Lee told reporters at a press briefing in Beijing, China, that BenQ would be able to make Siemens’s debt-ridden mobile handset unit profitable in two years. He pointed out “We can achieve a profit quickly because we have sales and distribution channels globally. We complement each other. What Siemens has, we don’t. What we have, Siemens doesn’t” (“BenQ boss sees Siemens unit turning profit in 2007,” 2005, p.11). However, in the case of BenQ-Siemens, the merger failed to create synergy and more value than each company could achieve alone. As international mergers and acquisitions (IM&As) are usually very complex and demanding processes, they result in unique organizational learning (Hitt, Harrison, & Ireland, 2001). There are many factors that link success or failure to the process of IM&As. The existing literature, however, takes mostly a financial and/or economic perspective, measuring the outcomes of IM&As in the market share or short term, while their long-term effects and nonfinancial factors remain untouched (Andrad, Mitchell, & Stafford, 2001). Filling the gap left in current literature, this article tracks this acquisition, from the perspective of BenQ, through a qualitative case study and focuses mainly on cultural differences and communication issues manifest in this unsuccessful business marriage. The aim is to provide a thick, detailed description of the effect culture and communication had on the outcome of this BenQ-Siemens acquisition. 2. Background of BenQ’s Acquisition of Siemens BenQ, established in 1984, was initially known as Acer Peripherals Inc., and later rebranded in December 2001 as BenQ. For years, BenQ had been a consumer electronics contract manufacturer. It quickly expanded to include clients such as the giant cell phone brands, Motorola...

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