The high failure rates of cross-border mergers due to the focus of companies on hard factors

Bachelor Thesis from the year 2005 in the subject Business economics - Business Management Corporate Governance grade: 2.0 New College Durham course: Strategic Business Management language: English abstract: In today's economy of globalization technological change an increase in innovation and shorter product life cycles have led to intensified international competition. The result is an increase in productivity and capital requirements due to high R&D and growing quality costs. Cross-border mergers have become a predominant form of global expansion and a common possibility of adapting to changing market conditions (Buchner 2002 p. 21). As the described economic development will continue and may become even stronger the requirement for cross-border mergers exists (Gösche 1991 p. 153). However statistics show that the failure rate has been quite high (see p.13 2.3).The author will investigate critical success factors that are often neglected and the main cause of failure. By failure the author does not mean a complete failure but that the merged company has not achieved its expected goals. Based on preliminary research and existing knowledge the analysis of critical success factors will mainly refer to soft factors. In cross-border mergers cultural issues in the form of organizational and national culture play an important role (Gertsen et al. Cultural Dimensions in International Mergers and Acquisitions 1998). Furthermore the author will focus on change management as mergers bring along major changes that have enormous impact on managers and employees. In this context the effect of knowledge management and communication will also be analysed (Buchner Der Mensch im Merger 2002). As these issues will have to be considered at certain stages within the merging process emphasis will also be laid on due diligence and the integration process (Galpin & Herndon The Complete Guide to Mergers and Acquisitons 2000).