Reference no: EM132944596

Case 1 Management gurus might rethink the Dutch approach.

In 2002, a group of consultants published a book examining 'the extraordinary successes of Dutch companies acquiring abroad, most especially in the USA'. The book, Leading Cross-Border Mergers, by Spencer Stuart, the head-hunters and the Trompenaars Hampden-Turner, the Amsterdam-based specialists in inter-cultural management, said that if your company was going to be taken over by foreigners, you should pray they came from the Netherlands. Dutch owners offered 'autonomy, understanding, respect, collegiality, friendship and complementarity, with no nationalistic agendas', the book says. 'It is a very attractive approach.' Among the chief executives interviewed for the book was Ceesvan der Hoeven, chief executive of Ahold, the Dutch retailer. Mr van der Hoeven boasted that Ahold was a 'real champion' when it came to making the acquisitions that had turned it into the second largest food retailer in the US. 'In all modesty, we can say that we are by far the best integrators in our sector,' he said.

In 2003, Mr van der Hoeven and Michael Meurs, the chief financial officer, resigned after revealing a $500 million overstatement in earnings at Ahold's US unit.

Ahold is not the only Dutch company to have run into difficulties since appearing in the book. Others extolled for their skill in integrating foreign acquisitions included Akzo Nobel, the drugs and chemicals group, Buhrmann, the supplier of office products, and information technology company Getronics - all of which have since been hit by trouble at US subsidiaries.

None of this is likely to lead to immediate changes in the way the Netherlands views management and business. Indeed, the Dutch are considered experienced international managers. They are also successful at forging international partner[1]ships; the Anglo-Dutch groups Unilever and Royal Dutch/Shell are the world's longest-standing cross-border companies.

Dutch managers pride themselves, too, on having an outlook that is far removed from the US obsession with a shareholder value and quarterly financial reports. 'The Dutch way of management is different from [other countries],' says Karel Waagenaar, chief executive of Dutch-based W&S, an international firm that provides companies with temporary managers. 'The French like dictating. The Germans look to their superiors and are very obedient. The Americans are no-nonsense - if the boss says "we're going ahead "then you go ahead. The Dutch always try to compromise.'

It is a popular portrayal. The authors of Leading Cross-Border Mergers cite foreign observers' admiration of the way the Dutch deal with paradox. 'They are a monarchy, but think and behave like republicans. They are thrifts yet generous, blunt yet caring, protesting yet tolerant,' the book says.

Above all, the Dutch encourage the long-term view in business. The US focus on shareholder returns is seen as damaging to a company's future. 'We have a deep reluctance to accept the Anglo-Saxon framework of "shareholders first". Shareholders are people who never share. Holland is the country of the stakeholder. It should not be the analysts who decide how you run a company. We say: "Forget about the analysts. They kill our long-term thinking",' says one Dutch management consultant.

Ahold's financial problems were widely known so there was little shock at yester[1]day's resignations. But management observers are waiting to see what drove the US operation to behave as it did before drawing conclusions about the need for Dutch managers to change their approach. Some suspect the affair will confirm what hap[1]pens when you press managers to produce financial performance beyond what the business can manage. Others wonder whether Dutch companies will have to allow foreign subsidiaries less autonomy. All agree that Dutch companies will think harder before buying US companies in future. And there will probably be less bragging about how good the Dutch are at managing them.

Source: Skapinker, M., 'In European countries, there are three or four competitors. In the US, there are 10 or 20', Financial Times, 25 February 2003.

Questions:

1.What are believed to be effective Dutch characteristics for managing cross-border mergers and takeovers?

2.How does the Dutch approach differ from that perceived to be followed by other nationalities?

3. What evidence is there in the Case Study for questioning whether these national cultural assumptions will, or will not, bring international business 'success'?