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German Company Acquisition - International Business

The assignment is all about the difference between two cultures of Germany and Japan. It is a case study in which a Japanese Car manufacturer company has agreed to acquire a German company operating in Germany. Whenever there is an international cross boarder deal within the two companies the cultural differences arise which crates difficulties for the mangers of home countries. In the similar way we are going to analyze the situation in the organization department of Finance, Marketing and Human Resource. The report is about the corporate analyses. So, our major concentration is the difference between the corporate cultures and also the national normal cultural differences between the two countries. In this case study we have assumed that the Japanese company is HONDA and the German company is SRAMT.


Even by being a multinational Corporation, Honda doesn’t have any manufacturing plant or listing of the company in any of the Germany. The Acquisition of SMART would be a small step to have an access to the German markets and the acquisition will also help the company to keep an eye on the major German based international competitors of the company including Audi, Porsche, and OPEL.



The full name of the company is Honda Motor Company, Ltd. is Japanese Company relates to automobiles sector. Honda was established on 24 September 1948. This Japanese multinational corporation is primarily known as a manufacturer of automobiles and motorcycles. It is the sixth largest automobile manufacturer around the globe (Honda, 2010).





SMART is also a car manufacturing company based in Germany. The major business of the company is manufacturing and selling of micro- cars. The company was founded in 1994 and now it is the wholly owned division of Daimler AG. In our case Honda has agreed to acquire the subsidiary business from Daimler AG (SMART, 2010)



This section of the report is based on the cultural differences between the two countries which are the obstacles for the Japanese company to work in the Germany. There is a huge difference between the cultures of the two nations. Japan is an Asian country which strongly reflects the different cultural aspects of Asia and on the other hand Germany is a European country which strongly reflects the western culture. Both of the countries have different languages and both of them have a strong culture which is based on their history, values & norms, languages, religions education, customs & traditions and culture at the work place (Hill, 2009). We will discuss the work place cultural differences in the next section of the report.



While evaluating the difference between the two culture of the two nations firstly, we will discuss the German culture on the above mentioned points basis and then we will talk about the Japanese culture dealing with the same points.


Basic German Culture


The basic culture of Germany includes the poetry, artistic works, music and customs and traditions. Germany was historically called the land of poets and thinkers. The German culture starts with the rise of Germany as a nation-state with the entire German-speaking world. Culture in the Germany is shaped by major combination of both religious and secular people. Resultantly, it is not easy to identify a specific German tradition alienated by the larger sketch of high European culture. In Germany, the Federal States is responsible for the cultural institutions. To promote the German culture, there are about 250 subsidized theatres, many hundreds of symphonic orchestras, museums in thousands and more than 25,000 of libraries are spread over the sixteen states of the country.


Germany has produced some of the most famous classical music composers of the world which includes the names of Ludwig van Beethoven, Johannes Brahms Johann Richard Wagner, and Sebastian Bach.  Germany has the fifth largest music market round the globe which has influenced the local people to become the pop and rock music star.. Germany is also well known for the artistic work and has produced the well-known painters naming Albrecht Dürer, Matthias Grünewald and Hans Holbein the Younger (Warez, 2010).


German literature has the history back to the Middle Ages and has produced some of the world most famous writers such as Walther von der Vogelweide and Wolfram von Eschenbach. Few of the world most famous authors and poets of Germany include the names of Friedrich Schiller and Johann Wolfgang von Goethe (Elizabeth, 1992).



The official language of Germany is German language which is leading spoken language in the country. There are 23 official languages in the European Union and Germany is one of them. It is also one of the only three working languages of European Commission. Other includes the English and French. Other native minority languages in the country are Danish, Romany, Sorbian, and Frisian. The most famous immigrant languages are Polish, Turkish, and Russian.



The largest religion of the country is Christianity, with the believers of 52.116 million which are 63% according to year 2007 statistic. There are 26.5 million Protestants and 32, 25.5 million Catholics about 31% in 2007. The second leading religion of the country is Islam which has about 4.3 million of believers who are the 5% of the total population. Other religions in the country include the Buddhism and Judaism, Hinduism, Sikhism.



The German education system is not different from the highly developed nations in the world. In the basic language for education is German and it has outstanding education system from kindergarten to the higher education in the universities.


Japanese culture


Japanese Basic Culture:

Japanese culture is also one of the oldest cultures in the world’s countries. The current culture of the country is contemporary culture, which is combination of Asian, European and North American cultures. Traditional arts of Japan include the crafts of; ikebana, ukiyo-e, origami, dolls, pottery and lacquerware, perfromances of bunraku, kabuki, dance, noh, and rakugo and other traditions of; games, tea ceremony, swords architecture and gardens and special Japanese cuisine.


The blends of traditional culture include; woodblock printing and, a typically Japanese comic books are well-renowned to the world animation, film is called anime, Japanese-made video game consoles, typical Japanese music composed of instruments, styles and scales from the neighboring cultures and Karaoke which is the most largest cultural activity composed of traditional cultural pursuits like arranging flower and tea ceremonies.



Almost the whole population of Japan speaks Japanese as their first language.



About 96%, of the Japanese believe in the Buddhists religion.


Japan has one of the best education systems around the globe and the basic language in the education system is the national language of Japan, the Japanese language.



It is extremely important to know the corporate cultural difficulties of the most country where you are going to invest because most of merger plans fails because of the cultural difficulties on the post merger plan dealings between the two companies.


In this section of the report we will discuss that what cultural difficulties the Honda can face on post acquisition plan or while implementation of the agreement to acquire the SMART micro car manufacturing company. As the assignment is related to the business acquisition, we will discuss the corporate culture in the light of three most important business departments of marketing, finance and human resource. We will see that how a Japanese manger responsible for this German business unit would face cultural problems in these three business department.



There is no doubt that the international banking system has reduced the financial difference in the countries and both of the countries use the same internally acceptable accounting standards of International Financial Reporting Standards (IFRS). Even then there are still many financial cultural differences which the Honda can face while investing in the German company.  


The biggest obstacle on the way towards the acquisition would be the language of the German company. In Germany every company’s accounting system is based on the local German language of the country. There are always the different local laws financial and accounting of each which you have to follow. Stock exchange listing and dealing conditions are different for every country. The Honda will also face problems while listing and dealings of shares with the stock markets (kwint, 2010).


There are also the companies’ ordinances of the Germany which are very different from the one in Japan. In this way company will face a lot of corporate governance issues which would be different from the Japanese laws. There is also a higher level of corruption into the Germany comparing the corruption in Japan. IFRS allows the countries to make some of the laws different comparing the IFRS to comply with the local governmental affairs in the country.

Japanese companies place emphasis more on the sales and the market share growth. The Germany use more extreme versions of accounting. Creditor directions, tax confromity, and use of provisions for smooth earnings are all issues which are considerably different between Germany and Japan. There is a conservative culture in the Japan as the earnings understated in this country. There are also differences which ca arise between the disclosures if balance sheet and income statement, according. Honda business manager may also face difficulties regarding these issues.



The department of marketing is the business factor which affected the most by the cultural factor of any country you are going to invest in. Although the language difficulty in the marking for SMART by the Honda would be a certain issue but there is many other marketing issues related to the corporate culture which the Honda can face while promoting the micro cars company.


Marketing is something in which we have to consider the behavior, aptitude and culture of our target audience. The major word to combine all these things is communication. There can really be a lot of communication gaps while marketing in the German markets.

Honda must consider the following things about the German communication for the better marketing in the German markets:


German people consider the facts very important issue. They do not express the personal emotions and do not deflect the truth from being spoken. This directness is interpreted as rudeness in the Japanese cultures. However, the similar direct speaking is seen as a sign of respect in Germany.


A tag of arrogance is sometimes attached with the German businessmen. Although there is great pride perceived by the German achievements, which is reflected and misinterpretation as arrogance in direct speech by the foreigners. Germans will give an honest rendition of their own capabilities, which is not done in the Japanese culture (mega, 2010).


There is perception of lack of humor in the Germany which not true at all. They have a sound sense of humor with all the cultures. There is a difference of positioning and style lies in both of the cultures. In the time place there is no humors in Germany and A things is funny in the Japanese culture can come across as nonsense in the German. Germans are highly individualistic but the Japanese are very socialists.  They are very conservative in their life style. Germans guard their personal life, so you would not be welcomed to phone a German business executive at home without any permission.



Human resource is a department whose prime responsibility is to hire the right people. HRM policies differs from country to country. It is the Japanese manager who has to hire the employees from the local people of Germany. So, we will discuss the Japanese ways of HRM which are to be tested at the Germany. On the other hand there would be a need of the German HRM people who would be responsible for the coordination and cooperation between the employees and between the workers of the German Unit of Honda.


The promotion system in the Japan is very slow and is seniority proffered. It is quite commonly practiced that Japanese company hires worker and manager into the entry level position right from the college. It is done because they want the employee to grow with the company and stay throughout in their careers. It is like a sin to leave a country in Japan. In Japanese company all the decisions are made in the groups rather than top management. The reverse is true with the German companies. Japanese HRM differs from that of the Germany, but as more and more companies are joining the international markets, Japanese are forced to comply with more of the German or Western HRM system. This happening generally because of fear of lawsuits by the employees of their (Japanese) companies working abroad (Klein, 1992).



Without any doubt Honda is one of the market leaders and one of the biggest names in the global market. It knows how to handle an acquisition in a new market. But this is not always happens that a merger of acquisition deal is successful. Most of the merger and acquisition agreement get cancelled because of cultural differences. In this report we have seen that there is a lot of difference between the Japanese and German Culture.


There is a difference of language, religions, history literature, norms, values and behavioral differences between the two nations. Honda must do its homework before stepping into the German markets. In fiancé it has to hire the local people to deal with the local issues of laws, language and accounting difference. In marketing Honda have to understand the living style and the culture of the local people in details before launching any promotional campaign in the Germany. In the HRM department, the manger responsible for the German unit should proceed for on his HRM policies in the Japanese way with the blend of the German or western HRM policies to avoid the needless lawsuits by the employees of the company.

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