Slide: Culture Integration in crossborder MA in Finance Industry in Vietnam

Culture Integration in cross-border M&A
in Finance Industry in Vietnam

Vu Thu Huong – A25 K51 – “Best Thesis Award 2016“ – 2nd Round


OUTLINE
I.Background of study
II.Theoretical Framework
III.
Culture Integration Analysis
IV.
Recommendations

Vu Thu Huong – A25 K51 – “Best Thesis Award 2016“ – 2nd Round


I. Background of study
WHY CROSS-BORDER M&A IN FINANCE INDUSTRY ?

On the context of enterprises in finance industry
•Globalization: WTO, AEC, TPP, VKFTA, EVFTA,…
•Actively finding partners to conduct M&A

On the context of Government: Favorable Policies and Legal Framework
•SBV’s Project “Restructuring the system of credit institutions during 2011- 2015” (enclosed
with the prime minister’s decision no. 254/qd-ttg 03/2012)
•The most effective method: M&A

M&A Boom in Finance Industry In Vietnam

Vu Thu Huong – A25 K51 – “Best Thesis Award 2016“ – 2nd Round


I. Background of study
3 Key criteria for success in M&A
– The financial fit
– The strategic fit
– The cultural fit

• Poor culture fit => Failure M&A
• Less concern and little attention
• Not many research in Vietnam (Report “M&A and cultural impacts”)
WHY CULTURE INTEGRATION?
Vu Thu Huong – A25 K51 – “Best Thesis Award 2016“ – 2nd Round


I. Background of study
Methodology

Why Case Study Analysis?
• Culture – Interpret Complex Phenomena: Abstract and
problematic
• Ability to generalize empirical evidences from theoretical
framework and the real-life settings
• Specific focus and investigation of individual cases.

Vu Thu Huong – A25 K51 – “Best Thesis Award 2016“ – 2nd Round


II. Theoretical Framework

1. Levels of Culture

Figure 1.2: Levels of culture
Source: Alvenson & Berg (1992, p.64)

Vu Thu Huong – A25 K51 – “Best Thesis Award 2016“ – 2nd
Round


II. Theoretical Framework
2. Hofstede’s theory on national culture

Vu Thu Huong – A25 K51 – “Best Thesis Award 2016“ – 2nd
Round


II. Theoretical Framework
3. Schein’s theory on organizational culture

Vu Thu Huong – A25 K51 – “Best Thesis Award 2016“ – 2nd
Round


III. Culture Integration Analysis
CASE STUDY ANALYSIS

KPMG Vietnam and
Andersen Vietnam

HSBC and Bao Viet

Vu Thu Huong – A25 K51 – “Best Thesis Award 2016“ – 2nd
Round


III. Culture Integration Analysis
KPMG Vietnam and Andersen Vietnam

Case Description

Vu Thu Huong – A25 K51 – “Best Thesis Award 2016“ – 2nd
Round


III. Culture Integration Analysis
KPMG Vietnam and Andersen Vietnam

National Culture

CONFLICTS IN OPINIONS-SHARING AND DECISIONS-MAKING

Vu Thu Huong – A25 K51 – “Best Thesis Award 2016“ – 2nd
Round


III. Culture Integration Analysis
KPMG Vietnam and Andersen Vietnam

Organizational Culture

Vu Thu Huong – A25 K51 – “Best Thesis Award 2016“ – 2nd
Round


III. Culture Integration Analysis
KPMG Vietnam and Andersen Vietnam

Organizational Culture

CONFLICTS IN
COLLABORATIVE WORKING

Vu Thu Huong – A25 K51 – “Best Thesis Award 2016“ – 2nd
Round


III. Culture Integration Analysis
KPMG Vietnam and Andersen Vietnam

Implications and Results

Culture Differences put obstacles on integration process

After 2 years, more than 90% former Andersen Vietnam’s staffs resigned
Vu Thu Huong – A25 K51 – “Best Thesis Award 2016“ – 2nd
Round


III. Culture Integration Analysis
HSBC INSURANCE (ASIA-PACIFIC) AND BAO VIET

Case Description
• 9/2007, HSBC Insurance Asia-Pacific
acquired a 10% share of Bao Viet
• 10/2009, HSBC Insurance pacific
increased 18% share of Bao Viet

Vu Thu Huong – A25 K51 – “Best Thesis Award 2016“ – 2nd
Round


III. Culture Integration Analysis
HSBC INSURANCE (ASIA-PACIFIC) AND BAO VIET

National Culture

Figure 2.1: The Hofstede’s national culture index, Vietnam in comparison with China and the UK
Source:

Both are mostly affected by Asian culture

Vu Thu Huong – A25 K51 – “Best Thesis Award 2016“ – 2nd
Round


III. Culture Integration Analysis
HSBC INSURANCE (ASIA-PACIFIC) AND BAO VIET

Organizational Culture
ARTIFACT

Vu Thu Huong – A25 K51 – “Best Thesis Award 2016“ – 2nd
Round


III. Culture Integration Analysis
HSBC INSURANCE (ASIA-PACIFIC) AND BAO VIET

Organizational Culture

Key factors to successful
culture integration

Sustainable Growth in

Long-term benefits to stakeholders

Insurance Industry

Vu Thu Huong – A25 K51 – “Best Thesis Award 2016“ – 2nd
Round


III. Culture Integration Analysis
HSBC INSURANCE (ASIA-PACIFIC) AND BAO VIET

Implications and Results
• Eastern culture (Collectivisim)
• Decentralization
• Charitable Culture

• Benefit stakeholders in long run
• Similar core value

1. TOP 2 M&A OF THE YEAR IN 2010

2. THE MOST TYPICAL PRIVATE
PLACEMENT DEAL IN 2009-2013
(Voted by M&A Vietnam Forum)

• Sustainable Growth in Insurance Industry
Vu Thu Huong – A25 K51 – “Best Thesis Award 2016“ – 2nd
Round


IV. Recommendations

1. In the pre-stage of M&A
1.1. Culture Awareness
Have an overall look about culture
• Define national culture: Vietnamese culture, the culture in finance system in
Vietnam, the culture of a MNC’s parent company.
• Define organizational culture: core values, philosophies, work practices,…
• Help to integration plan effectively.

Vu Thu Huong – A25 K51 – “Best Thesis Award 2016“ – 2nd
Round


IV. Recommendations

1. In the pre-stage of M&A
1.2. Culture Integration Planning
Establish culture integration team
• Requirements: Not bias towards single nation, good multi-cultural sensitivity, critical-thinking.
• Duties:
₋ Define the different aspects of cultures
₋ Analyze individual and organizational behaviors
₋ Address cultural similarity and incompatibility
₋ Draw assessment about the successful integration
₋ Manage the culture integration during and after M&A
₋ Help to develop communication plan in the post-stage

Vu Thu Huong – A25 K51 – “Best Thesis Award 2016“ – 2nd
Round


IV. Recommendations

2. In the post-stage of M&A
2.1. Top-down Communication
• Inform employees reasons for M&A
• Address some changes in terms of people, business operations, structure,…
• Distribute the messages about: mission, key goals, development plans
=> Reducing the employee confusion
⇒Building the employee credibility and loyalty
=> Improve employee commitment to the sustainable growth

Vu Thu Huong – A25 K51 – “Best Thesis Award 2016“ – 2nd
Round

IV. Recommendations

2. In the post-stage of M&A
2.2. Active management of the culture integration process
• Build common rules and perspectives
• Shape a new corporate culture
– Reshaping the Material Culture: uniform, logo, infrastructure
(artifact levels)
– Reshape corporate rules and regulations: a new set of work
practices, customs, ethics, behavior
– Reshaping corporate values: all employees should involve to reach
consensual values (values and beliefs level)
Vu Thu Huong – A25 K51 – “Best Thesis Award 2016“ – 2nd
Round


IV. Recommendations

2. In the post-stage of M&A
2.3. Retaining key people
Reasons
– M&A objective: Gaining well-trained and experienced personnel networks
– Gaining customers networks
– Strengthen Comparative Advantages
How to identify key people: Strategically critical, Knowledge-transfer critical and
Integration Critical.
How to retain key people : Retention Agreement
– Financial benefits: Salary Level Increase,…
– No-financial benefits: Promotion, training and development programs, preferred C&B

policies,…

Vu Thu Huong – A25 K51 – “Best Thesis Award 2016“ – 2nd
Round


IV. Recommendations

2. In the post-stage of M&A
2.4. Cross-Cultural Training
• Hire some professionals to hold workshops, address lectures,
culture trainings
• Set a temporary integration coach team (support for language,
customs, work practices changes)
• Organize Business Culture Day, provide necessary information on
websites, social media,…
=> Cultural Adaptability

Vu Thu Huong – A25 K51 – “Best Thesis Award 2016“ – 2nd
Round