Managing Across Borders
Title:
Coursework 2
Individual Case Study on
Alcatel-Lucent Merger
Submission date:
4th Febuary 2011
Word Count:
1632
Introduction
In a merger, cultural differences are more vital to overcome then fighting for equal power or profits. (Harford, 2003) The marriage of Alcatel and Lucent was never going to be easy. To some extend the merger was a good business step. Lucent 's with its wireless business nicely complemented Alcatel 's global image and its prowess in fixed-line and broadband. However their cultural differences were among many challenges that Alcatel-Lucent had to face during the merger. One was hierarchical and centrally controlled, the other entrepreneurial and flexible were among the many differences that caused the company to suffer in sales, stocks and employees. (Massie, 2007)
1) Referring to the case, what conditions and negotiation factors pushed forth the merger in 2006 that were not present in 2001? (8 marks)
One of the factors that the merger happened again in 2006 was because of the increasing number of new competitors in the telecommunication industry. Business Monitor International (2010) quoted that “Alcatel acquired Lucent for US$13.4bn with hopes of facing down the increasing competition in the market from ZTE and Huawei as well as larger rivals that had also gained scale from mergers and acquisitions”
If Alcatel and Lucent were to stand alone it would not be able to compete with new giant companies such as ZTE and Huawei. They needed each other in order to survive in the industry in 2006, something they were not worried about in 2001. As mentioned in Barron’s article in August 2006, the current condition in the industry caused both companies to be pushed into each others arms out of desperations in order to survive a brutal and even more competition in the future.
Sometimes companies merge in order to survive or to be more powerful. (Harford, 2003) In this case, Alcatel and Lucent did
Coursework 2
Individual Case Study on
Alcatel-Lucent Merger
Submission date:
4th Febuary 2011
Word Count:
1632
Introduction
In a merger, cultural differences are more vital to overcome then fighting for equal power or profits. (Harford, 2003) The marriage of Alcatel and Lucent was never going to be easy. To some extend the merger was a good business step. Lucent 's with its wireless business nicely complemented Alcatel 's global image and its prowess in fixed-line and broadband. However their cultural differences were among many challenges that Alcatel-Lucent had to face during the merger. One was hierarchical and centrally controlled, the other entrepreneurial and flexible were among the many differences that caused the company to suffer in sales, stocks and employees. (Massie, 2007)
1) Referring to the case, what conditions and negotiation factors pushed forth the merger in 2006 that were not present in 2001? (8 marks)
One of the factors that the merger happened again in 2006 was because of the increasing number of new competitors in the telecommunication industry. Business Monitor International (2010) quoted that “Alcatel acquired Lucent for US$13.4bn with hopes of facing down the increasing competition in the market from ZTE and Huawei as well as larger rivals that had also gained scale from mergers and acquisitions”
If Alcatel and Lucent were to stand alone it would not be able to compete with new giant companies such as ZTE and Huawei. They needed each other in order to survive in the industry in 2006, something they were not worried about in 2001. As mentioned in Barron’s article in August 2006, the current condition in the industry caused both companies to be pushed into each others arms out of desperations in order to survive a brutal and even more competition in the future.
Sometimes companies merge in order to survive or to be more powerful. (Harford, 2003) In this case, Alcatel and Lucent did
References: Austen, I. and Bajaj, V., 2006, 25th March.,“A Continental Shift,” New York Times, Available at http://money.cnn.com/2007/10/31/technology/mehta_alcatel.fortune/ (Accessed 21st January 2011) Business Monitor International, 2010 December, “Alcatel-Lucent slowly raising profile in Africa and middle east” Business Monitor International Ltd [online] Available at : http://www.telecomsinsight.com/file/94913/alcatel-lucent-slowly-raising-profile-in-africa--middle-east.html (Accessed 20th January 2011) Deresky, H., 2011, International Management: Managing Across Borders and Cultures (7th Edition), Pearson. Harford J., 2005, September, “What drives merger waves?”, Journal of Financial Economics, Volume 77, Issue 3. SSP Staff, 2011, 18th January, “ Alcatel-Lucent Stock Price Strengthens throughout six consecutive Months, NYSE:ALU, Savvy Stock Picks.com, Available at: http://www.savvystockpicks.com/stock-updates/2011018752-alcatel-lucent-stock-price-strengthens-throughout-six-consecutive-months-nysealu/ (Accessed 20th January 2011) The Bank of New York Mellon, 2008, “Case Study – Corporate Action Alcatel-Lucent Merger”, The Bank of New York Mellon Corporation. Available at http://www.adrbnymellon.com/files/PB23290.pdf (Accessed 20th January 2011) Veverka M., 2001, 11th August, “Chiefs, not problems, leave Alcatel-Lucent” Barrons, Volume 16.