Organizational Culture of IBM
Discuss about the Culture Impact Private Label Performance.
Lenovo Group Ltd is a Chinese multinational business organisation, which is currently headquartered in Beijing. The business organisation manufactures, develops and provides support to personal computers, mobile phones, servers and electronic storage systems. The business organisation operates in more than 60 countries across the world and the key person of the business organisation is yang Yuanqing. When Liu Chuanzhi initially founded the business organisation in the year of 1894, the organisation used to operate under the name of Legend (Lenovo.com 2018).
Initially the company tried to import televisions but that venture was tagged as a major failure and later on, they entered the market of computer and information technology and started to experience profitability. When the business organisation started making circuit boards for IBM, the organisation experienced success for the first time. After a few years, Liu asked for permission from the government of China to form a subsidiary in HongKong and to move there with five other employees of the business concern (IBM.com 2018). Liu moved a part of his business to Hong Kong in the year of 1988 to reduce the production costs and gradually started experiencing some profitability(Fu, Zhongjuan and Pervez 2018).
In the year of 1994, the management of the business organisation made the company public and initially the stakeholders thought that going public was a move to raise more funds, but it was for establishing the business organisation in an international way. Eventually the management of the business organisation issued 50 million shares that earned them a massive sum of 212 million US dollars in the year of 2000. Later on in the year of 2005, the directors of Lenovo acquired IBM’s personal computer division that accelerated the management’s profitability (IBM.com 2018).
International Business Machines Corporation or IBM is an American multinational technology business corporation, which is headquartered in New York, and they currently operate in more than 170 nations across the world. IBM manufactures and distributes computer hardware and software and also provides impeccable customer services to their target customer base and holds the record of most US patents generated by a single business corporation. Charles Ranlett Flint founded the business organisation in the year of 1911. The business organisation was widely recognized after their significant inventions like SQL programming language, Automated teller machine, Personal computer, floppy disk, hard disk drives and many more. IBM’s management has continually shifted their business mix by commoditizing markets while focusing on the higher value, whichis more profitable markets. It has been seen that IBM ranks among the top 30 business organisations that are known as the largest recruiters in the private business sector (IBM.com 2018).
Organizational Culture of Lenovo
To define the organisational culture of IBM it can definitely be said that the management of the business organisation aligns their organisational culture with the targets and the goals of the business organisation for leadership in the IT industry. The corporate or organisational culture exhibits the principles, philosophies and the values of a particular business organisation (Zhou and Xueli 2014). Being an American company, IBM has a specific organisational culture that differs from the organisational culture of IBM. In this regard, it can be said that the cultural characteristics of the business organisation effectively influences the workforce of the company in order to enhance the organisational performance.
The communication within the business organisation is good and that allows sharing of knowledge and experience in the workforce that helps the employees to perform with greater accuracy. It has been observed that IBM has a corporate culture of THINK and this type of corporate culture is dependent on T J Watson Sr’s efforts to incorporate the organisation, which was accepted or known as the Computing-Tabulating-Record Company (CTR), which was formed after the merger of four business organisations. Watson Sr’s efforts significantly contributed to the current values, principles and beliefs of IBM and to address the fundamental elements of the company culture of IBM it can definitely be said that dedication to the success of each and every customer, radical thinking, innovation and the trust and personal responsibility in the business related relationships (Cong and Yang 2018).
To describe the corporate culture of Lenovo, it can be said that long before the acquisition of the personal computer making department of IBM, the management of Lenovo was trying to shed off their typical Chinese culture and bring in an international organisational culture in the business corporation(Liou, Rao-Nicholson, and Sarpong 2018). Lenovo is one of the oldest Chinese companies which has rightly incorporated a global corporate culture in the workplace and that has given a major boost to the productivity and profitability of the business organisation. The director of Lenovo believes in an autocratic leadership and only he takes all the important decisions for the business organisation and that culture significantly differs from the corporate culture of IBM. Therefore, the management of Lenovo had to incorporate a wider international outlook in the organisational culture after the acquisition of IBM’s personal computer department (Cong and Yang 2018).
After the acquisition, the management of Lenovo faced the challenge to bridge the east-west culture gap for sustaining the productivity of the business organisation. When Lenovo started their journey as a business organisation, the company had a different set of values, beliefs and ideas, which were steeped in Chinese culture. However, the management of Lenovo faced some challenges post acquisition of the personal computer department of IBM. The management of IBM analyzed the culture of both the business organisations and got to know that two firms share almost same values and beliefs, but the only difference between the two companies are the difference in their leadership styles(Cong and Yang 2018).According to Hofstede’s cultural dimensions theory Lenovo being a Chinese company and IBM being an American company there has to be some cultural differences among the workers of these two business organisations. Therefore, after the acquisition of IBM personal computers department the management of Lenovo faced some misunderstandings that hampered the meetings and the production of the business organisation due to cultural differences between the workers of both the business organisations (Fu, Zhongjuan and Pervez 2018).
Organizational Issues Post Acquisition
These types of problems can only be solved by improving the cultural and emotional intelligence and by improving; the communication among the workers of the business organisation and the management of Lenovo rightly realized the root cause of this issue and deploy the dedicated team for fighting this particular challenge in the workplace. After the acquisition the managerial board of Lenovo said that having people from two different countries in the workforce who speak different languages that has to be some cultural differences as in this particular case the workers who are from Chinese background are generally tend to be humble quieter and Mule over before speaking something.
On the other hand, Hofstede’s cultural dimensions theory the employees who are hailing from the Western background are open that is more direct and they love to share their experiences when they said they have immediately want feedback from the other party. In order to maintain harmony in the workforce the management of Lenovo started taking a few initiatives like calling in meetings in a frequent manner and improving the cultural and emotional intelligence of the entire workforce so that they can get what the other person from a different cultural background is trying to say.With this the management of the organisation has experienced an average improvement of the situation and experienced that the misunderstandings which were taking place in the workplace earlier in a frequent manner got significantly lower(Fu, Zhongjuan and Pervez 2018).
Not only that after a lot of brainstorming the management of Lenovo started asking the American employees of the organisation to speak more slowly and also encourage the Chinese workers to raise their voices to let know others about their opinions. In this regard, it can be said that these two cannot be the only solution of this situation and the both parties both the Chinese employees and the American employees of the business organisation had to come forward to solve the situation (Liu and Neng 2017).
After 6 or 7 years after the acquisition, the management of Lenovo still experienced some issues in the workforce and they thought that the lack of production scene and the quality of the production is falling due to the lack of communication and sharing experiences between the workers due to cultural differences. In this case the management had already did everything that they can do to align these workers who came from different cultural background but it was only a matter of time and which time these problems or challenges actually shade of from the management of Lenovo(Fu, Zhongjuan and Pervez 2018).
In this context is worthwhile to mention that for this particular case language weekend another barrier for the alignment of the both cultures as the American speaking American English and the Chinese people speak in Mandarin language so the management of Lenovo had to arrange for special Mandarin classes for the American employees of the business organisation.They did the same by arranging some English classes for the Mandarin speaking workers of the company.
The managementrealized that until and unless they enhance sharing of knowledge and experiences in the workforce of the company, satisfying the targets set by the management of the organisation in terms of productivity will be unattainable.Therefore,bridging between the western culture and the Eastern culture in the workforce of the company had become vital to secure the productivity along with the profitability of Lenovo(Thomas 2016).
English literacy is on the higher end in the Chinese business sector and it is seem to be same in mainland(Lebedev et al. 2015). It can be said that on the roads of China it may become hard to find someone who can properly understand or speak English but in the business sector people are used to speak and understand English as English is one of the major International languages.To do business on an international scale the management of the business organisations or the employees of the business organisations will have to have a clear understanding of the language. While doing business transactions with other business organisations the management of Lenovo used to take help of a translator who used to translate English into Mandarin for them. However, after the acquisition of IBM the management of the organisation understood that they got to understand English and they need to speak English much more fluently in order to establish a balance in the workforce of the company(Fu, Zhongjuan and Pervez 2018).
To establish harmony in the workplace where the workforce is diverse in terms of cultural and ethnic background communication should be the key to face any kinds of challenges that may appear in the workplace due to the cultural differences(Liu and Neng 2017). Due to the difference of approaches, the American workers may get offended by not understanding the viewpoint of a Chinese employee. On the other hand,the behavior of an American employee due to their inability to understand each other’s point of view may offend a Chinese employee and that may create the problems and disruptions in the workplace.
It may significantly lower the productivity along with the profitability of the business and can potentially reduce the company’s reputation in their market of operation(Fu, Zhongjuan and Pervez 2018). Therefore, the management of Lenovo had to take steps in a very calculated way in order to solve this growing problem in the organisation. After almost a decade’s effort, the situation was under control.
The theory that can be used to analyse the issue related to the organisational development is the Hoftstede’s model. According to Mazanec, Crotts, Dogan and Lu (2015), the Hofstede’s model analyses the differences that exist in the cultural aspect of the two organisations that belong in different countries. In the case of IBM and Lenovo, the organisational as well as the national cultural of USA and China are analysed. The analysis is done keeping in mind the six factors that define the culture of the countries.
Power distance:The power distance analyses the equality status of individuals in a society. Not every individual in the society are equal and it is important that a distance be maintained so that the power division in the organisations can take place.Bakir, Blodgett, Vitell, and Gregory (2015) stated that the power distance in countries vary based on the manner in which it treats its people. From the analysis of the Hofstedemodel, it can be seen that the power distance between the people in China is more. The analysis states that the people of China believe in the existence of the inequality among the people and this is reflected in the organisations. However, in the US, the power distance is a lot lower and the people in the organisations are treated equally. In the case of Lenovo and IBM, the acquisition of one company over another may create a conflict of interest particularly given the fact that only one department of IBM has been acquired. Hence, there may be problems within the departments over the power distance that exists in the departments of the organisation (Saleem and Larimo 2017).
Individualism: This particular attribute analyses the level of interdependence between the societies. This is an important trait for the progress of a community as it is important for a community to work together towards the safety and sustainable development (Rallapalli and Montgomery 2015). At the same time, it is also needed that organisations maintain similar culture so that teamwork can be effectively developed. The Hofstedeanalysis shows that the level individualism is less in China than compared with the US. This denotes the fact that in China, people are interdependent on one another and a sense of unity exists among the citizens. Hence, team projects can be an effective method of working in China. On the other hand, the US culture prefers individualism, which denotes the fact that people are more self-centred. The improvement of the individuals is more in focus than the development of a collective effort for the benefit of an organisation. Hence, the acquisition of IBM may see certain employees refrain from being dependent on one another (Beugelsdijk, Tatiana and Roth 2017). This may cause problems, as easy aid may not be provided to the employees of Lenovo in case they need assistance. At the same, extra help provided to the employees of IBM may lead to conflict;as such, interdependence does not exist in the culture of the USA.
Masculinity:According to Engle and Nash (2015), the masculinity feature denotes the dominance of culture. The level of competition and need to achieve high standards are the characteristic of this type of society. The uniqueness of this particular cultural attribute is the fact that such competitiveness starts from the school level and continues in the work level that exists in the organisations. As per the analysis of the Hofstede model, it is seen that the work culture of both China and United States is quite similar. This denotes that both are highly competitive and the employees of the organisations in both the countries drivethe masculinity characteristic. Therefore, the acquisition of the one company over another may not pose problems as the competitiveness between the employees and the organisations will be active. However, with the slight difference in the cultural attributes, the management of the organisations may need to adjust (Kim 2017).The Chinese people can sacrifice family and leisure time in order to gain profit however, the United States people would like to create a balance between the work and family life.
Uncertainty avoidance:This particular dimension deals with the manner in which society perceives risks. The willingness to plunge in risk taking activities is identified in this dimension. The extent that threatens that member of the society and the cultural implication is analysed in this particular factor (Upadhyaya and Terri 2015). In the case of China, the uncertainty avoidance is low which implies that the people are reluctant to take risks. The people in the country value the cultural traditions that exist in the country and due to this any rapid changes in social or organisational level are not welcomed. On the other hand, the United States people have a comparatively high level of uncertainty avoidance. (Chien, Yi, Sycara, Liu and Kumru (2016) stated that the level does not denote excessive risk taking ability as a balance is maintained in the US culture over the intake of new ideas. Logical application compels the organisations of the country to undertake a plunge into the uncertainty culture. However, the acquisition of IBM by Lenovo denotes a different take from the Hofstede’s model. Although the decision is logical and out of character from the attribute of the Chinese culture there may be possibilities that such acquisition effort may not be taken in the future.
Long-term orientation:This attribute denotes linking the current state of a society with the past. The challenges that exist in the present and future need to be undertaken keeping in mind the past performance of the society. Therefore, the goals of the societies need to be decided that highlights the two types of societies that exist. In the case of China, the long-term orientation is high which denotes that the country has a more pragmatic approach towards business (Matzler, Strobl, Stokburger-Sauer, Bobovnicky and Bauer 2016). The dependence on situation to understand the truth is highly dependent on the by the people. The uniqueness of this is that the people of China can adapt itself with the changed tradition that exists in the community. On the other hand, it is seen that in the United States the long-term orientation is low. This denotes that the people in the United States are not pragmatic but have a never say die attitude to strengthen the needs of the organisations. According to Budhathoki, Schmitt, and Michaelidou (2018), it can help Lenovo to identify the success of the acquisition by analysing the truth behind the situation of the acquisition. Hence, this can help in the success of both the organisations and provide a positive work culture.
Indulgence:According to Putnam and Gartstein (2017),indulgence deals with the socialising of the children and ensures that the future generations are developed. This particular factor defines the manner in which the impulse of the people is controlled so that they can strike a balance between the work and family life. In the case of China, the low score of indulgence suggests that the country have a high restrain over its impulse. The people believe in being responsible and dedicate its time for the development of the organisation. On the other hand, the high indulgence culture of the United States denotes that the people prefer to strike a balance between the work and family life (Laitinen and Suvas 2016).Therefore, it can be said that such contrasting attitude in this particular dimension can help in the success of the acquisition. This is because both Lenovo as well as IBM will have responsible workers that can contribute towards the development of the organisations.
Impact of language:One of the problems that IBM may face while working with Lenovo is that of the language. According to Minkov, Dutt, Schachner, Morales, Sanchez, Jandosova, Khassenbekov and Mudd (2017), most Chinese people are not aware of the English people. The communications that take place between the local people are mainly with the help of the local language. However, in the USA, the national language is English and for this reason, the communication of both the countries may suffer. As stated by Minkov (2018) language problem can hamper any possible chances of conducting a business deal or help in the progress of the people. Hence, it is important that the language problem between the people be sorted out so that the business deal and the acquisition remain a success.
Impact of ineffective and problematic communication:As observed earlier the impact of language can have a negative influence on the business. It is necessary that communication be conducted in a proper manner so that the business can have a proper sense of direction (Bolman and Terrence 2017). Therefore, ineffective and problematic communication may hamper the creativity of the organisations and in doing so may provide the organisations with a competitive disadvantage.IBM and Lenovo need to sort out its communication issues by undertaking effective communication solving steps so that it can conduct its business in a proper manner. In this regard, it can be said that some of the steps that can be used by the companies include hand signals along with putting up task related placards on the desk of the employees (Goleman 2017).
Cultural difference: The cultural difference between the two countries has clearly been stated after the analysis of the Hofstede’s model. Therefore, it can be said that despite certain similarities between the two cultures, certain difference may prove to a crucial factor for the success of the acquisition (Antonakis and Day 2017). For example, the differences between the power struggles between the two countries are high and therefore, this may lead to problems that may have a severe impactin the success of the companies. For example, problems may arise particularly due to the fact that only one department of the IBM have been acquisition by acquisition. Therefore, the cultural problem that may be faced by the computer department of IBM may not be faced by the entire organisation (Fairhurst and Connaughton 2014).
Leadership: According to DuBrin (2015), the leadership between the two companies have a contrasting difference despite both companies aiming to ensure that they remain the best in the business market. While Lenovo adopts a more autocratic approach, IBM adopts a more democratic approach. This can be attributed to the power distance that exists between the two companies. The autocratic approach provides more control over the employees and as seen from the Hofstede’s analysis, people in a society or in an organisation are not treated equally. At the same time, the adoption of democratic approach provides opportunities for every member to take part in the decision-making activity (Fairhurst and Connaughton 2014). Hence, this can be considered as another problem that IBM and Lenovo may face during the acquisition.
The objectives of the acquisition were to formulate a strong ally with one another and become the leading IT business in the world. However, with the constraints that are seen from the analysis, it is the duty of the CEO of both the companies to undertake measures that can be helpful for meeting the objective of the organisations. For example, in order to mitigate the language barrier, the companies can implement translators. This can help in translating any messages delivered in either Chinese or English so that the message can be understood properly. Such a device can be placed at the desks of every member so that every member can understand the messages. The cost for implementing this device can be about $30,000.
At the same time, the leaders can carry out mutual truce of leading the employees so that one particular type of leadership is not followed. For example, it is essential that employees be involved in the decision-making activities only in the matter that concerns innovation. Other managerial decisions such as pay scale and promotion does not have to include the employees. Therefore, it can be said that despite the differences in the cultures of both the countries, IBM and Lenovo can provide support to one another by sorting out these differences. The cost of implementing the translation devices may be more but the success that the companies can achieve after its implication can help it to attain the set objectives.
Another recommendation that can be provided is based on the application of the leadership. Lenovo prefers to maintain a distance with the employeesthat is a tradition of the Chinese culture, however, with IBM, the decision to involve the employees provides additional motivation to them. Hence, the adoption of a more autocratic leadership can help Lenovo be involved with the condition of the employees and ensure that the culture of both the countries are maintained and implemented in the organisation.
Gaining assistance of a translator can be another recommendation for the company. Although this may not be long-term solution, the effectiveness of the business can be maintained for a short time with the help from the translator. For a long-term practise, the company can implement providing the employees of IBM with training to understand the basic Chinese language. This can help in the effective conduct of the business.
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