Issues of Culture in Mergers: Case Study of Alcatel-Lucent

Issues of Culture in Mergers: Case Study of Alcatel-Lucent

Posted on July 6, 2012 by John Dudovskiy

Today many companies are merging together in order to form bigger companies so that they will have competitive advantages in the marketplace. Competitive advantage in this case will be obtained through economies of scale, greater financial resources, and expertise, so that new company formed as a result of merger can be a leader in its market.

However, merger can be associated with problems like people from different companies not getting along with each other due to differences and perceptions and cultural differences. In this case management must take specific measures in order to ensure that cultural misunderstanding will not be a barrier to success.

This article analyses the case of merger between French company Alcatel and US based Lucent, looking at reasons why serious problems emerged when the merger just took place, and analyses the strategy through which those problems were eliminated.

Contents [hide]

* Conditions and negotiation factors that pushed forth the merger in 2006 that were not present in 2001

* The status of the merged company 

*  Merger  as a giant transatlantic experiment in multicultural diversity

* International challenges that Alcatel-Lucent faces as it moves forward as a combined company

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Conditions and negotiation factors that pushed forth the merger in 2006 that were not present in 2001

Initially negotiations about the merger of Alcatel with Lucent had taken place in 2001, but have failed because sides could not agree about the share of power each would have in a new company. Lucent management wanted the merger to be “merger of equals”, and had concerns that Alcatel management did not share their vision in that aspect.

Sherman and Hart (2006) confirm that disputes, misunderstandings and disappointments about the share of control in joint-venture is one of the main reasons...