Alcatel is a company that makes communication equipment. It is based in Paris France while Lucent Technologies is a giant US Telecommunications company. During the renewed merger in 2006, various issues were negotiated that were missing in the collapsed deal of 2001.
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The main reason why the deal collapsed in 2001 was discussed and settled in 2006. The two companies failed to agree on the strength of Alcatel in the merger. Whereas Lucent officials wanted a deal in terms of merger of equals, Alcatel negotiated for a takeover1. The two companies agreed in 2006 to merge under a new name and brand Alcatel – Lucent.
There were financial matters that were not clearly elaborated in 2001. This was ironed out in 2006. In this agreement, Alcatel paid Lucent a total of $ 13.5B. The stock valuation was discussed. It was agreed that one Alcatel American depository share was to go for every five lucent shares.
Issues on saving costs were handled in details in 2006. It was agreed that by dismissing 10% of the employees, 9000 of the workforce, $ 1.8bwould be saved spread over three years. The cross- cultural conflicts that would result from the merger were predicted. This was addressed by the adoption of English as the company official language, and, hiring of the staff with mixed nationalities2.
Mr. Ben Verwaayen heads the current management team of Alcatel- Lucent Company. The company is on course to recover the big losses they incurred during Ms. Russo’s tenure as the Chief Executive.
Describing the merger as a giant transatlantic experiment in multicultural diversity was based on various assessments. To begin with, this was a merger between a giant American telecommunications company and big French communications equipment maker. They were merging one company from the US and the other from France.
These are nations with very different cultural setups. France appears to be male dominated while the US exercises more gender equality. This is what necessitated the appointment of Ms Patricia Russo as the CEO and Mr., Serge Tchurunk as the Chairman. The merger was experimental in the sense that in the recent times there had been no mergers of that kind and between the two nations3.
There is evidence from the article that the company ran into cross-cultural problems. The CEO, Ms Russo, failed to integrate Lucent’s corporate culture with Alcatel that was structured in the French business model. Her reason of quitting was a clear indication of this. She claimed that she could not agree with Mr. Tchurunk.
Further evidence emanates from the Alcatel leadership that did not appreciate the decision to give leadership to the target company. It became bad when choices of managers were based on nationality rather than skills. In averting the crisis, the new appointments went to French as the board Chair and a Dutch national who was fluent in both French and English4.
Most of the problems the company faced arose from leadership. This eventually spilt to how the company performed attracting industry obstacles. Once the top management was in crisis then the company could not do well. The company would have been better of if leadership would never have been negotiated based on nationality5. The negotiations should have been restricted to professional ethics and requirements. This would save the company from the turbulence.
Belz, Frank-Martin. Sustainability Marketing: A Global Perspective. New York: John Wiley & Sons Ltd, 2009.
Charantimath, Paul. Total Quality Management. New Delhi: Pearson Education, 2006.
Hitt, Ireland. Strategic management: Competitiveness and globalization, concepts, Cengage Learning, Connecticut, 2010.
Sirkin, Keenan. A 2005, “The Hard Side of Change Management”. Harvard Business Review 3.4, p. 18.
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Wilson, David. A Strategy of Change: Concepts and Controversies in the Management of Change. London: Cengage Learning, 1992.
1 Hitt Ireland (Strategic management: Competitiveness and globalization, concepts, Cengage Learning, Connecticut, 2010), p. 89.
2 Sirkin, Keenan. (The Hard Side of Change Management”, Harvard Business Review 3.4 (2010), p. 18
3 Wilson David (A Strategy of Change: Concepts and Controversies in the Management of Change. London: Cengage Learning, 1992), p. 78.
4 Belz Frank-Martin (Sustainability Marketing: A Global Perspective. New York: John Wiley & Sons Ltd, 2009), p. 24.
5 Charantimath Paul (Total Quality Management. New Delhi: Pearson Education, 2006).
Charantimath Paul (Total Quality Management. New Delhi: Pearson Education, 2006), p. 28.