Reference no: EM132252519

Lenovo-IBM: Bridging Cultures, Languages & Time Zones Post-merger Integration While the synergies between Lenovo and IBM looked great on paper, the roadblocks to making Lenovo–IBM the PC industry’s world leader remained formidable. Not only would the process need to merge two companies with vastly different business models and cultures across 12 times zones, but the combined company needed to stay constantly competitive in the fast-paced PC industry. Michael Dell, the chairman of Lenovo’s main rival, asserted: “It won’t work”. Most observers agreed. But Lenovo’s top executives vowed to prove these sceptics wrong. Their vision for the new Lenovo was to create a computer powerhouse that would combine the best of both worlds and thereby reinvent the entire global PC industry. As Lenovo executives stated: “….What Lenovo brings to the table is the best from East and West. From the original Lenovo we have the understanding of emerging markets, excellent efficiency and a focus on long-term strategy. From IBM we have deep insights into worldwide markets and best practices from western companies”. This best-of-both-worlds integration approach could work if the combination represented a partnership rather than a takeover. Lenovo’s CEO Yang repeatedly stressed his perception of the IBM deal as a “marriage of equals,” based on trust, respect, and compromise. Yang demonstrated his willingness to compromise right from the start: He stepped down as CEO to make way for IBM’s Steve Ward, while he became chairman. Yang also accepted Ward’s proposal to locate the new headquarters in New York, rather than establishing dual headquarters in the United States and China. Lenovo’s new global headquarters took up the top floor of a nondescript office building outside the city; the IBM PC division’s staff mainlycontinued to work out of their existing site in Raleigh, North Carolina. Despite the seeming friendliness of the deal, cross-border problems soon emerged. Simple geographical distance was a major barrier: The flight from Beijing to New York took 13 hours and crossed 12 time zones. Without any direct flights from Beijing to Raleigh, North Carolina, that trip took an additional few hours. Making the trip, in either direction, for a day of meetings or workshops was not possible, and any gathering or information exchange had to be planned weeks in advance to make the trip worthwhile. The thousands of miles separating the company’s main locations made exchanging information about best practices incredibly difficult. The regular business hours of New York and Beijing overlap only for three to four hourseach day; if the company needed to include European colleagues, the operation became nearly impossible—or required employees to arrive at the office at very odd hours. Even as they racked up miles of travel and readjusted their alarm clocks, the management teams on both sides continued to view the deal as an opportunity to learn. They displayed a genuine and remarkable willingness to set aside their own egos and make decisions in the best interest of the combined company. As one former IBM executive recalled: “Where the Chinese approach worked best, we borrowed it, and where the IBM approach worked best, we borrowed that. Or maybe an outside approach. The point was to do the right thing … because the fundamental mission [was] to be seen as a global corporation, not a Western and not a Chinese company. And wherever we could get ideas or implement tools that advance that idea, we did”. This pragmatic and learning-oriented approach also featured what appeared to be an honest enthusiasm for creating something new and better. Ravi Marwaha, the Indian-Australian in charge of running Lenovo’s worldwide sales, admitted, "I spent 36 years in IBM. I could easily have retired. Why am I here? Because it is exciting”. Another senior Lenovo executive explained, “We are the first of this kind in the world, and I think people are authentically and genuinely excited about being in a place that is very fresh, and young, and new.… It is an experiment and something that has never been done before, and there is no company like us in the world”. Such enthusiasm might have been expected from Lenovo, given that it was Lenovo that had acquired IBM’s PC business. But the general sense of excitement also seemed shared among the IBM PC executives, who had for years felt like the unpopular stepsister in their former company. That is, IBM considered hardware a peripheral business and thus made few investments in the PC division. With the merger, the PC division became a core business again, if for Lenovo. This positive attitude spanned various levels of the organization. In the first days of the new Lenovo, people took creative steps to bridge their geographical distance. IBM sent camera teams to Raleigh and Beijing, to enable video greetings to various counterparts around the globe. In the call center in Raleigh, employees filmed themselves throwing their IBM badges into the trash. Frances O’Sullivan, the COO of Lenovo International, initiated a program called the “Trash Bin Project,” which encouraged ex-IBMers to submit examples of what they had done in their previous work life but did not want to do in the new Lenovo. Creating a Structure The new Lenovo started with three separate business units: China PCs, China Cell Phones, and International Operations (former IBM PC division). In this sense, business continued much as usual for the IBMers, except that project teams formed to support different functions, such as sales, finance, and order management. The project teams consisted of former Lenovo and IBM managers and took the responsibility of preparing the further integration of the functions. Yang Yuanqing announced a managerial restructuring on September 30, 2005. Top management jobs would be split approximately evenly between the Chinese and Western sides (Exhibit 1). One-third of the board members would be from Hong Kong (where Lenovo is registered); another one-third would come from the United States and Europe; and the rest would be from China. This restructuring aimed to provide a framework for further integration, but it also was designed in accordance with Lenovo’s goal of joining the league of global technology powerhouses, in that it provided a multinational management team spread across national boundaries and several time zones. The new management structure then led to closer integration in functions such as supply chain management, planning and control, product development, and marketing. In support of its global supply chain, the company applied a unified ITsystem that enabled it to ship directly to 100 countries, usually with products configured to order. In the wake of this integration, corporate headquarters moved from New York to Raleigh. But the integration also meant some redundancies, especially in IBM’s sales structure. Therefore, layoffs announced in March 2006 affected approximately 1,000 of the company’s 21,400 employees. The cuts spread across company offices in the Americas, Asia-Pacific, and EMEA regions. Dear student, you are asked to review the scenario provided and complete the following sections to create a ‘Cross National Management Plan’ for the organisation in question:

Please provide an executive Summary – Overview of key points (1-2 pages)