Introduction
From my experience in the telecom industry, I will be addressing the cultural differences and the institutions impact using the popular case of the acquisition of Siemens German mobile unit by the Taiwanese manufacturer BENQ.
BENQ has made its first FDI via acquisition, and failed before getting into any maturity phase. We will start by briefly addressing the history of the parties and the acquisition. We will move then to analyze in details the culture and the communication differences using the frameworks introduced in the international business body of knowledge. We close the essay by recommendation on how such failure could have been avoided via different production strategy and approach to the cultural differences.
BenQ and the motives for the acquisition
BenQ was established in 2001 as Acer’s separate brand armed to operate in the electronics industry. Later in 2006, Acer disposed its remaining BenQ shares. Before the acquisition, BenQ had few trials in the mobile phone product markets, however, its cash cows in wider the electronic markets were desktop computers, laptop computers, monitors and LCD projectors. As a Taiwanese manufacturer operating in a low cost labor market, BenQ was also known as a contract manufacturer for major phone OEMs such as Nokia and Motorola.
Being a contract manufacturer, BenQ was facing the low profit margins characterizing such stage in the mobile phones value chain. Furthermore, if BenQ was to grow on its own as mobile phone brand, it had to achieve considerable scale in the R&D and the sales channels, a survival characteristic in such industry dominated by few.
With the successful example of Lenovo acquiring IBM hardware unit and the aspiration of diversifying forwardly and becoming a global brand, BenQ acquired Siemens mobile unit in Oct 2005. BenQ chairman Mr. Lee expressed how this deal fits BenQ aspirations