You will be required to submit a business report of a case situation as the final assignment. You...

Question

You will be required to submit a business report of a case situation as the final assignment. You MUST use a
business report style with appropriate headings, analysis and style/language.
Typically a business report consists of:
1. An executive summary.
2. A general overview of the major issues for the company.
3. An analysis of the issues using relevant ideas and theories to inform your analysis.
4. An identification of the problems (no more than 5, no less than 3). An identification of solutions to
those problems.
5. The solutions and recommendations should be prioritized according to importance. Recommendations
should be realistic and take into account the potential cost of implementing solutions. They should also
be implementable.
6. A summary of your recommendations.
7. Even if the case situation is a global human resource issue, the report much always first, consider the
business issue. It is important always to note that you are business people first and HR people second.

someTitle 281 Case 5 Lenovo-IBM: Bridging Cultures, Languages, and Time Zones Kathrin Köster and Günter K. Stahl (A) An Audacious Deal “Cultural integration is still one of the biggest challenges . . . We face the com- bined effect of different corporate cultures and the difference between the cultures of the East and the West.” Orr and King, 20071 On Tuesday, December 20, 2005, the public learned of the departure of Steve Ward, the CEO of Lenovo. He had lasted just eight months in the position before he was replaced by William Amelio, a former Dell executive.2 The move came as China’s Lenovo, despite its difficult start, seemed poised to become the world’s leading PC maker. Just 23 months prior, on December 8, 2004, Yang Yuanqing, who was then Lenovo’s CEO, announced his intention to purchase IBM’s PC division for US $1.75 billion—an unprecedented move for a company based in an emerging market (for a timeline of the deal, see Appendix A1). The radical deal would transform Lenovo from a company that sold exclusively in China into a major global player. Furthermore, IBM’s PC division accounted for three times the sales that Lenovo earned, so the announcement seemed less like a merger and more like David was trying to swallow Goliath. The Long March from Legend to Lenovo Prior to 2004, Lenovo had been known as Legend, a company established by Liu Chuanzhi, a graduate from Xi’an Military Communications Engineering College. In 1984, he and a few colleagues spun off Legend from the state-owned Chinese Academy of Sciences, which provided seed money of US $25,000 that the young entrepreneurs Thomas, David C., and Lazarova, Mila B.. 2013. Essentials of International Human Resource Management : Managing People Globally. Thousand Oaks: SAGE Publications. Accessed April 23, 2018. ProQuest Ebook Central. Created from curtin on 2018-04-23 21:25:05. C op yr ig ht © 2 01 3. S A G E P ub lic at io ns . A ll rig ht s re se rv ed . 282 ESSENTIALS OF INTERNATIONAL HUMAN RESOURCE MANAGEMENT used to set up shop in a ramshackle building in “Swindler’s Alley,” Beijing’s electronics black market. Very quickly, Liu Chuanzhi realized that differentiation through innova- tion was the only way forward. The Legend brand thus developed an add-on card that allowed Chinese applications to run on English-language operating systems; it capitu- lated China into the PC age. For this innovation, Legend received one of China’s high- est honors, a National Science Technology Progress Award. In contrast with its main competitor, Great Wall, Legend was not well connected to or protected by government authorities. For example, the company was refused a license to manufacture in China. But with innovation as its watchword, Legend came up with the idea of entering into a joint venture in Hong Kong, in which capacity it would also build motherboards and PCs and thereby outmaneuver its better- connected Chinese rivals. It was not until 1990 that Liu Chuanzhi could realize his dream to build PCs in his home country, though. In 1994, Legend went public to raise capital in Hong Kong and thus be able to compete with foreign computer manufacturers, whose products had been flooding the Chinese markets since the beginning of the 1990s. Before its competitors, Legend introduced a Pentium PC in China; this first-mover advantage contributed greatly to its status as the leading PC maker in the Chinese market. Although Legend diversified into a few non-core businesses, such as IT services, the PC business remained the center of its operations. During the mid-1990s, a young man- ager, Yang Yuanqing, stood out for his work in this division. An unusually bright engi- neer with a strong desire for clarity and precision, Yang had been promoted at a very young age. A forceful personality and firm believer in discipline and centralized decision- making, the young Yang Yuanqing prompted descriptions such as acutely intelligent, touch and decisive3 as well as autocratic in his leadership and abrasive. Yet Yang also proved a visionary, with a sharp eye for promising innovations and new business oppor- tunities. In retrospect, observers noted that his arrival at the company was a true turning point in Legend’s history (Appendix A2 provides a description of Yang Yuanqing). With Liu, Yang shared the conviction that to achieve ambitious goals, Legend needed to attract China’s best and brightest and then imbue them with the Legend spirit. Newcomers had to “fit the mold,” and the company went to great lengths to instill the right mindset, values, and work ethic. Legend’s vice president Du Jianhua described the desired corporate culture, as well as required changes in management practices and individual behavior, using the “1-2- 3-4-5 formula:”4 1. Adopt one common culture and vision that all Legend employees and managers share. 2. Require dual attitudes from employees. That is, Legend employees were expected to treat customers with the utmost respect and care, in line with the motto, “the customer is the emperor,” and go the extra mile to meet customers’ needs. Legend’s definition of “customers” included internal customers, suppliers, dealers, and distributors, so employees also were warned not to offend or exploit these members of the extended Legend family. The second employee characteristic the company prioritized was frugal- ity. Every employee needed to be aware that Legend was a profit-maximizing organiza- tion, with the motto “Save money, save energy, save time.” Thomas, David C., and Lazarova, Mila B.. 2013. Essentials of International Human Resource Management : Managing People Globally. Thousand Oaks: SAGE Publications. Accessed April 23, 2018. ProQuest Ebook Central. Created from curtin on 2018-04-23 21:25:05. C op yr ig ht © 2 01 3. S A G E P ub lic at io ns . A ll rig ht s re se rv ed . Cases 283 3. Concentrate on three fundamental leadership tasks: build the management team, deter- mine the strategy, and lead the troops. These tasks, reflecting the philosophy of Sunzi, constituted not only the capabilities that leaders needed to possess but also the recom- mended approach to managing people. Thus, management was to instill the discipline and obedience in the rank-and-file staff and ensure employees strictly adhered to com- pany rules and policies. Only in case of an emergency or crisis that might cause severe damage to the company could employees act according to their own judgment. 4. Adhere to four commandments: (1) don’t abuse your position to line your own pockets; (s) don’t accept bribes; (3) don’t take any second job outside the company; and (4) don’t discuss your salary with anybody in the company. These rules defined minimum requirements; employees also were expected to meet additional standards of conduct. In a management meeting in August 1997, Yang described the ideal Legend employee as follows: accurate, careful, and meticulous when it comes to details; able to analyze the root causes of problems and come up with practical solutions; able to effectively com- municate and cooperate with others; and marked by relentless self-discipline. At Legend, such military-like discipline as strictly enforced and backed by stiff penalties for misbehavior. Only under pressure and with clear rules and accountabilities, Yang was convinced, would employees perform and thrive. Employees had to clock in and out; if they came late to a meeting, they had to stand for one minute behind their chair. If they were seen outside the office building without a plausible explanation, they had to accept a pay deduction. 5. Consider five changes. As the twentieth century drew to a close, Legend’s top manage- ment perceived a need to move away from hierarchical control toward a more participa- tive style of leadership that encouraged people to take ownership and responsibility for their performance. Strict lines of authority and top-down control, Yang and Liu came to realize, would prevent Legend from responding to market needs and trends and achieving international significance. Thus the company faced the significant challenge of delegating responsibility broadly and promoting an entrepreneurial spirit, as well as leadership at all levels. Five changes in behavior and skills would be needed to imple- ment Legend’s new management model, which Yang introduced in 1998. Specifically, managers were expected to: i. work toward meeting goals and objectives rather than blindly following a supervi- sor’s instructions; ii. develop from a people-oriented into a task-oriented manager; iii. do what needs to be done to respond to the needs of the customer; iv. think in terms of numbers and specify concrete, quantifiable objectives to be achieved; and v. become more inquisitive and open-minded. These management principles and rules aimed to impart a greater performance orientation and cultivate a culture of accountability throughout the company. They also were designed to reflect the company’s core values: customer service, innova- tive and entrepreneurial spirit, accuracy and truth-seeking, trustworthiness, and integrity. Thomas, David C., and Lazarova, Mila B.. 2013. Essentials of International Human Resource Management : Managing People Globally. Thousand Oaks: SAGE Publications. Accessed April 23, 2018. ProQuest Ebook Central. Created from curtin on 2018-04-23 21:25:05. C op yr ig ht © 2 01 3. S A G E P ub lic at io ns . A ll rig ht s re se rv ed . 284 ESSENTIALS OF INTERNATIONAL HUMAN RESOURCE MANAGEMENT To instill these values, Legend’s top managers decided to adopt Western-style per- formance management and human resource (HR) practices. It was among the first Chinese companies to introduce a stock option program for managers. It also imple- mented a forced ranking, or “rank and yank,” system that required managers to iden- tify the top and bottom 10% of performers, similar to the appraisal system introduced by Jack Welch at General Electric. This prompted some observers to conclude that Legend was not a “typical” Asian company.5 In 2001, when Yang was appointed CEO and Liu took on the chairman role, Legend also began globalizing. Yang and Liu had become convinced that growth opportunities in China were limited by the

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Ram Mohan · Accepted Answer

CMS Template.docx
2
Assessment3: Case Study 
Name 
Class
May 28, 2018
Contents
1Executive Summary
1Introduction
3Analysis of the Issues using Theories
5Identification of Problems
7Solutions to the Problems
11Summary of the Recommendations
11Conclusion
11Bibliography
Executive Summary
Cross border mergers and acquisitions need careful integration of the respective divisions and functions by amalgamating the different cultures, employee behaviors, organizational structures, and strategies into a workable and cohesive whole. This calls for deft handling of the diverse cultural and business mores of the erstwhile entities so that there is minimal disruption to the newly merged entity. 
The case in question relates to the merger of IBM and Lenovo which are culturally dissimilar owing to them being quintessentially Western and Asian entities. People, Culture, Strategy, Organization, and Approach are the determinants of success for mergers of this type. As can be seen from the case, Lenovo and IBM were able to tackle most of the challenges arising out of these differences in these factors.
Having said that, the sudden replacement of the CEO with a Lenovo board member suggests that there were underlying problems that were invisible to the naked eye. Indeed, given the secrecy surrounding this move, it is worth investigating the reasons. In addition, as the case details, there are several minor and major problems due to culture and people and hence, this business report focuses on outlining such problems, using theoretical approaches as the basis for analysis, suggesting some possible solutions, and recommending a course of action that the new CEO can implement. 
The analysis in this case is informed by a blend of theory applied to practice and the discussion proceeds in multiple perspective based examination of the problems and solutions. Above all, this business report offers lessons for such mergers through the Glocal approach that combines global thinking with local execution. 
Introduction
The globalization of the world economy since the 1990s has seen an unprecedented rise in the number of International M&A’s or Mergers and Acquisitions between Western multinationals and Asian firms. One such example is the merger between the American Technology giant, IBM’s Personal Computer division, and the Chinese PC (Personal Computer) maker, Lenovo. Indeed, this deal is more of an acquisition by Lenovo instead of a merger between the two firms since at the time of the deal, Lenovo’s sales surpassed those of IBM’s PC sales by nearly three times. 
Having said that, the approach taken to the deal was to treat it as a “marriage of equals” and as the case illustrates, this was driven from the top as well as embraced down the hierarchy with all employees being motivated to work together in the best interests of the merged entity. However, as the case illustrates, there were many problems both apparent to the naked eye as well as under the radar issues as exemplified by the replacement of Stephen Ward by Yang. Indeed, one of the aims of this report is to uncover the reasons for the problems that cropped up after the merger. 
Indeed, the case highlights the problems that crop up when two organizations with vastly different cultural mores and from geographically diverse countries attempt at merging and the ensuing problems related to the “clash of two rivers” exemplifying the insurmountable barriers caused by place, culture, people, and differing approaches. Further, given the myriad differences in the organizational structures and behaviors as well as cultures between them, there were very real problems arising from a culture and personality clash as well. 
General Overview of the Major Issues
When Western and Eastern firms come together as part of M&A’s, there are bound to be cultural issues arising from the differences in those cultures as well as differing approaches on how to run the merged entity. In addition, the structural problems resulting from organizational behavioral and change management are common as well. Among the important reasons for the problems at Lenovo, after the merger, were people and cultural issues that arose due to the very real aspect of a culture and a personality clash (Connor, Min and Iyengar 2013). 
On the other hand, it can also be argued that the merger was a success since Lenovo neither saw an exodus of the customers (it’s as well as IBM’s) nor ran into issues related to attrition and mass layoffs. Indeed, the statistics show that it managed to retain 98% of its customers as well as lay off only a few thousand of its employees and that too due to the shifting of the headquarters from New York to Raleigh. Moreover, there were very few disruptions as far as order fulfillment and customer satisfaction levels were concerned and hence, this is another reason why the merged entity continued to perform well (Stahl and & Köster 2013).
The success of the post merger and acquisition phase is determined by five critical factors which are People, Culture, Organization, Strategy, and Approach. These five factors operating individually and taken together have to be analyzed for any potential issues or problems. This report mainly focuses on the people, culture, and approach dimensions though there is a discussion on strategy and organization (Burke 2008). In addition, this report relies extensively on the Theories of Cultural Dimensions to underpin the analysis as well as references Globalization, Strategic Management, and Organizational Behavior and Change Management theories to illustrate the reasons for the problems, suggests some solutions, and offers some recommendations that can be implemented (D. and Morgan 1991). 
 
The mutually cooperative approach that the two entities after the merger followed is exemplified by the decision to split the leadership roles evenly between the Lenovo and IBM executives (Stahl and & Köster 2013). As part of this decision, IBM’ Steve Ward  was designated as the CEO or the Chief Executive Officer of the merged company while former CEO Yang Yuanqing was made the chairman (Stahl and & Köster 2013). This decision was widely hailed as a wise one by several commentators with one of them saying that, “as they enter foreign markets, Chinese execs realize they lack essential skills. ‘China needs brand names, reach, logos, marketing, distribution — and the management that attends to all of those.’ (Employee. 2010)
Having said that, the ensuing change of guard at the top meant that the initial bonhomie and the euphoria about the merger between Lenovo’s and IBM’s management and employees quickly dissipated and it is the contention in this report that cultural and personality issues played a prominent role in the subsequent churn in the managerial level. As discussed elsewhere, there was a fundamental cultural disconnect between the Americans and the Chinese which was initially papered over. Indeed, starting with time zone differences, and including language barriers, as well as interpersonal communication issues, there were many problems which were not apparent at first sight, but, soon manifested themselves in ways that led to friction between the employees of the erstwhile firms now working together (Ghemawat and Vantrappen 2015). 
Analysis of the Issues using Theories
The major theories that inform the analysis of the problems being faced by Lenovo include Hofstede’s Theory of Cultural Dimensions, Trompenaars theory of cultural differences, the Globalization versus localization theory, and the concept of Glocalization as popularized by the famous authors and New York Times columnist, Thomas Friedman, to explain how global firms have to adjust and adapt to local conditions. The underlying thread or the commonality in these theories as applied to the present case is the factor of diverging approaches, strategies, people issues, and organizational behavior all bound together by the cultural dissimilarities as far as IBM and Lenovo were concerned (Friedman 2005).
The reasons for the clash can be explained by reference to Hofstede’s Theory of Cultural Dimensions. As discussed in the section related to theoretical basis for this report, Geert Hofstede’s model is especially useful to explain and analyze the cultural and the personality clashes between Lenovo’ s and IBM’s employees and managers. For instance, the dimension of Power Distance for Asian and Chinese in particular is high when compared to Western and especially American employees (Hofstede 2000). 
What this means is that the Chinese are more hierarchical and deferential to authority than the Americans who are instinctively democratic in their approach to interpersonal relations. As can be seen from the case, it is clear that there were very real problems due to miscommunications, wrong interpretations,

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