CULTURE INTEGRATION IN CROSSBORDER MA IN FINANCE INDUSTRY IN VIETNAM

TABLE OF CONTENTS LIST OF ABBREVIATON LIST OF FIGURES AND TABLES INTRODUCTION.....................................................................................................1 CHAPTER 1: THEORETICAL FRAMEWORK .................................................7 1.1 Overview of crossborder MA.....................................................................7 1.1.1 The definition of crossborder MA ........................................................7 1.1.2 Motives for crossborder MA.................................................................8 1.1.2.1. Motives for FDI....................................................................................8 1.1.2.2. Motives for crossborder MA..........................................................10 1.1.3 The MA modes.....................................................................................12 1.2 Overview of Culture in the organization.....................................................14 1.2.1. The background of culture .....................................................................14 1.2.1.1 The definition of culture......................................................................14 1.2.1.2 Levels of culture..................................................................................15 1.2.2 National culture .......................................................................................17 1.2.2.1 The definition of national culture .......................................................17 1.2.2.2 Hofstede’s theory on national culture ................................................18 1.2.3 Organizational culture .............................................................................20 1.2.3.1 The definition of organizational culture .............................................20 1.2.3.2 Schein’s theory on organizational culture..........................................20 1.2.3.3 Types of organizational culture ..........................................................22 1.3 Culture integration in crossborder MA..................................................23 1.3.1 The definition of culture integration .......................................................23 1.3.2 The theories of culture integration ..........................................................26 1.3.2.1 Mercer’s theory about MA culture integration ...............................26 1.3.2.2 Zhu and Huang’s theory about principles of culture integration management ....................................................................................................27 1.3.3 The impacts of culture on crossborder MA performance...................28 1.3.3.1 Positive effects ....................................................................................28 ii 1.3.3.2 Negative effects ...................................................................................29 CHAPTER 2: THE ANALYSIS OF CULTURE INTEGRATION IN CROSSBORDER MA IN FINANCE INDUSTRY IN VIETNAM ..............................30 2.1 The actuality of crossborder MA in Finance Industry in Vietnam......30 2.1.1 Crossborder MA in Banking sector ....................................................30 2.1.2 Crossborder MA in Insurance industry..............................................33 2.1.3 Crossborder MA in Securities industry ..............................................35 2.1.4 Crossborder MA in Financial services sector .....................................37 2.2 The case studies of culture integration in crossborder MA in Finance Industry in Vietnam ............................................................................................38 2.2.1 The acquisition of Andersen by KPMG in Vietnam...............................39 2.2.1.1 Case Description.................................................................................39 2.2.1.2 The analysis of culture integration after MA...................................41 2.2.1.3. The results of culture integration and summary of implications from the case............................................................................................................52 2.2.2 The case of HSBC and Bao Viet.............................................................54 2.2.2.1 Case Description.................................................................................54 2.2.2.2 The analysis of culture integration after MA...................................57 2.2.2.3 The results of culture integration and summary of implications from the case............................................................................................................63 CHAPTER 3: THE RECOMMENDATIONS FOR THE BETTER CULTURE INTEGRATION IN CROSSBORDER MA IN FINANCE INDUSTRY IN VIETNAM ...............................................................................................................65 3.1 Forecast crossborder MA activity growth in Finance Industry in Viet Nam for 20162020...............................................................................................65 3.2 The recommendations for the better culture integration in crossborder MA in Finance Industry in Vietnam...............................................................68 3.2.1 The recommendations in the prestage of crossborder MA in Finance Industry in Vietnam..........................................................................................70 3.2.1.1 Culture Awareness ..............................................................................70 3.2.1.2 Effective Planning...............................................................................72 iii 3.2.2 The recommendations in the poststage of crossborder MA in Finance Industry in Vietnam..........................................................................................75 3.2.2.1 Topdown and constant communication .............................................75 3.2.2.2 Active management of the cultural integration process .....................77 3.2.2.3 Retaining key people...........................................................................80 3.2.2.4 Crosscultural Training ......................................................................82 CONCLUSION........................................................................................................84 REFERENCES

FOREIGN TRADE UNIVERSITY FACULTY OF ECONOMICS AND INTERNATIONAL BUSINESS o0o GRADUATION THESIS Major: International Business Economics CULTURE INTEGRATION IN CROSS-BORDER M&A IN FINANCE INDUSTRY IN VIETNAM Student‟s name : Vu Thu Huong Student ID : 1211150061 Class : A25 – High Quality Program Course No : 51 Instructor : Nguyen Thi Viet Hoa Hanoi, May 2016 i TABLE OF CONTENTS LIST OF ABBREVIATON LIST OF FIGURES AND TABLES INTRODUCTION CHAPTER 1: THEORETICAL FRAMEWORK 1.1 Overview of cross-border M&A 1.1.1 The definition of cross-border M&A 1.1.2 Motives for cross-border M&A 1.1.2.1 Motives for FDI 1.1.2.2 Motives for cross-border M&A 10 1.1.3 The M&A modes 12 1.2 Overview of Culture in the organization 14 1.2.1 The background of culture 14 1.2.1.1 The definition of culture 14 1.2.1.2 Levels of culture 15 1.2.2 National culture 17 1.2.2.1 The definition of national culture 17 1.2.2.2 Hofstede’s theory on national culture 18 1.2.3 Organizational culture 20 1.2.3.1 The definition of organizational culture 20 1.2.3.2 Schein’s theory on organizational culture 20 1.2.3.3 Types of organizational culture 22 1.3 Culture integration in cross-border M&A 23 1.3.1 The definition of culture integration 23 1.3.2 The theories of culture integration 26 1.3.2.1 Mercer’s theory about M&A culture integration 26 1.3.2.2 Zhu and Huang’s theory about principles of culture integration management 27 1.3.3 The impacts of culture on cross-border M&A performance 28 1.3.3.1 Positive effects 28 ii 1.3.3.2 Negative effects 29 CHAPTER 2: THE ANALYSIS OF CULTURE INTEGRATION IN CROSSBORDER M&A IN FINANCE INDUSTRY IN VIETNAM 30 2.1 The actuality of cross-border M&A in Finance Industry in Vietnam 30 2.1.1 Cross-border M&A in Banking sector 30 2.1.2 Cross-border M&A in Insurance industry 33 2.1.3 Cross-border M&A in Securities industry 35 2.1.4 Cross-border M&A in Financial services sector 37 2.2 The case studies of culture integration in cross-border M&A in Finance Industry in Vietnam 38 2.2.1 The acquisition of Andersen by KPMG in Vietnam 39 2.2.1.1 Case Description 39 2.2.1.2 The analysis of culture integration after M&A 41 2.2.1.3 The results of culture integration and summary of implications from the case 52 2.2.2 The case of HSBC and Bao Viet 54 2.2.2.1 Case Description 54 2.2.2.2 The analysis of culture integration after M&A 57 2.2.2.3 The results of culture integration and summary of implications from the case 63 CHAPTER 3: THE RECOMMENDATIONS FOR THE BETTER CULTURE INTEGRATION IN CROSS-BORDER M&A IN FINANCE INDUSTRY IN VIETNAM 65 3.1 Forecast cross-border M&A activity growth in Finance Industry in Viet Nam for 2016-2020 65 3.2 The recommendations for the better culture integration in cross-border M&A in Finance Industry in Vietnam 68 3.2.1 The recommendations in the pre-stage of cross-border M&A in Finance Industry in Vietnam 70 3.2.1.1 Culture Awareness 70 3.2.1.2 Effective Planning 72 iii 3.2.2 The recommendations in the post-stage of cross-border M&A in Finance Industry in Vietnam 75 3.2.2.1 Top-down and constant communication 75 3.2.2.2 Active management of the cultural integration process 77 3.2.2.3 Retaining key people 80 3.2.2.4 Cross-cultural Training 82 CONCLUSION 84 REFERENCES iv LIST OF ABBREVIATON Abbreviation Full name AEC ASEAN Economic Community FDI Foreign Direct Investment FTA Free Trade Agreement GDP Gross Domestic Product M&A Mergers and Acquisitions MNE Multinational Enterprises MNC Multinational Corporation OECD Organization for Economic Cooperation and Development R&D Research and Development SBV State Bank of Vietnam SOE State-owned Enterprises TNC Transnational corporation TPP Trans-Pacific Strategic Economic Partnership Agreement UN United Nations UNCTAD United Nation Conference on Trade and Development UNESCO United Nations Educational Scientific and Cultural Organization WB World Bank WTO World Trade Organization v LIST OF FIGURES AND TABLES FIGURES Figure 1.1: Driving Forces Behind Cross-border M&A 11 Figure 1.2: Levels of culture 15 Figure 1.3: Model of organizational culture 21 Figure 1.4: The relationship between culture types in terms of the degree of restrain they place on individuals 22 Figure 1.5: Modes of organizational and individual acculturation in M&A and its potential outcomes 25 Figure 1.6: Eight-step cultural integration process 26 Figure 2.1: The Hofstede‟s national culture index, Vietnam in comparison with China and the UK 57 TABLES Table 2.1: Cross-border M&A deals in 2007-2012 32 Table 2.2: Comparison of empirical data and Hofstede„s (2005) cultural dimensions 42 INTRODUCTION Background of study In the age of globalization, FDI is an integral part of an open and effective international economic system and a major catalyst to development The majority of FDI activities have been in relation to TNCs which penetrate into host market by two widely used modes: cross-border M&A and Greenfield Investment In practice, M&A has been adopted as a core growth and expansion strategy and made the higher-equity end of themenu Global FDI inflows jumped 36% in 2015 to an estimated $1.7 trillion, their highest level since the global economic and financial crisis of 2008-2009 (UNCTAD, 2016, p.1), which pegged the increase to a wave of cross-border M&A M&A activities cover a variety of industrial sectors in the economy, in which global financial services sectors including: banking capital markets, insurance, wealth and asset management have experienced an increase in recent years A significant volume of M&A activity was seen within the Financial Services Industry, with over £265.1 billion of deals announced worldwide by the end of third quarter of 2015 (Deloitte, 2016, p.1) In Vietnam, banking and insurance are considered as two potential fields for investment and M&A deals The main reason why M&A activity in Finance, especially in Banking sector in Vietnam, draws high attention is not only the upward trend of M&A on a global scale but also the banking restructuring scheme, launched by the SBV Despite of the fact that M&A, in general, and M&A in Financial sector, in particular, have gained popularity and made up large proportion of international investment, there are some challenges to be successful M&A Many researches have underlined the high rate of failure among international M&A and the difficulty to achieve expected results The failure rate for M&A sits between 70 percent and 90 percent (Harvard 2015) The reasons for international acquisition failures derive from different issues and explained in different ways; however, it is generally agreed that there are three main factors: the financial, the strategic and the cultural The high rate of failure of M&A which has been analyzed by many researchers primarily relates to business and financial misfit; while cultural issues have been left with less concern Nevertheless, Cartwright (2006) highlights that the successful management of integrating companies involved and their cultures is the key to attaining the desired M&A outcomes Differences in culture make integration process more difficult, resulting in dissimilarities in organizational and administrative practices and employee expectations In the case of cross-border M&A, many cultural conflicts often ariseregarding not only the corporate culture, but also the national culture corresponding to the habit, thoughts and beliefs, which has an influence on thecorporate culture depending on the country in which the company evolves, stating that one of the key factors of M&A activity is culture integration The analysis of the impacts of cultural aspects on M&A deals in financial sector would create conditions for international integration process smoothly; more specifically, assist financial organizations to implement M&A rationally which takes cultural elements into account of making decisions: whether making a deal or not, culture-related issues during M&A negotiation and how to harmonize different culture to develop business strategy in the post –M&A stage, reaching the ultimate goals of generating more profit for the newly built entities; therefore, I would like to write a thesis with the topic: “Culture Integration in cross-border M&A in Finance Industry in Vietnam” Literature Review Cross-border M&A has become one of the leading approaches for financial firms to gain access to global markets Yet there has been little progress in the research exploring the role that culture may play in the success or failure of these ventures, especially the studies conducted by Vietnamese researchers On the culture levels context, a diversity of studies was conducted based on national culture and corporate culture In the world, researchers have begun to develop comprehensive assessment of the role of organizational culture in the M&A process (Cartwright & Schoenberg, 2006; Stahl&Voigt, 2008) One review concludes that the study of culture in M&A is still inits infancy and that current research is too inconsistent to support clearconclusions about the positive or negative role that culture can play during M&A (Teerikangas& Very, 2006) A second line of research unique to cross-border M&A in particular isunderstanding the effect of differences in national culture The research on this issue, however, has been inconclusive Ahern et al (2011), Datta et al (1995), Barkema (2008), and Das (2003) have concluded that cultural differences have a negative impact on M&A transactions, whereas Chakrabarti et al (2005), Morosini et al (1998), Doukas et al (2007), Brown et al (1989) have found that cultural differences have the capacity to generate a positive impact regarding the long-term performance of the combined firm In terms of research methodology, research can be conducted by two sorts of research methods: qualitative method and quantitative method The culture is a broad and intangible entity which is subject to the personal opinion and preconceptions of the researchers There is no definite model to observe culture, and the author realize that the measurement, collection and interpretation of the data on culture are affected by subjective factors, whether the judgement is based on quantitative or qualitative data However, almost of researchers studying cultural aspects in cross-border M&A have used more qualitative method than quantitative one, particularly, qualitative case studies approach There are two typical master thesis analyzing culture integration in M&A and using the case study of Andersen acquisition by KPMG in Vietnam (Karol Duda – Hong Y Pham, 2009; Jing Chen – Vi Nguyen, 2010) More specifically, the methodology in those researches is interpretive and exploratory approach They drew conclusions on the basis of similarities and differences analyzed from the qualitative data, gaining an all-round view on culture from different levels of the two companies Rather than collecting large data for statistical and generalization purpose, a qualitative study is used to present empirical investigation from real life experience and consequently search for an understanding Nevertheless, there still exists a research called “Mars-Venus Marriage: Culture and Cross Border M&A” (Rajesh Chakrabart, Swasti GuptaMukherjee, Narayanan Jayaraman, 2008) using quantitative method which studied the performance of over 1150 cross-border acquisitions between 1991 and 2004 involving acquirers from 43 countries and targets from 65 countries This eventually found that long-term stock market performance of the acquiring firms is positively and significantly related to the cultural distance between the target and acquirer Besides, there are some researchers using descriptive approach, based on literature review and the typical one could be the bachelor thesis conducted by Daan (Perhlen, 2010) The information presented in the paper relied on existing knowledge which originates from respected academic journal articles, books and data from reliable and qualified organizations In Vietnam, there has been almost no study specifying the culture integration in cross-border M&A, except for an article “M&A and cultural impacts” written by MA.TrinhThiPhanLan and MA.NguyenThuyLinh, Vietnam National University This article was posted on Science Magazine of Vietnam National University in 2010 The content of this article mentions about the characteristics of cultural aspects in M&A activity and the cultural factors in contributing to the success of integration process However, this article just covers the surface of the cultural issues in M&A activity without having a deep knowledge about how cultural elements affect the consolidation process and how to deal with the matters of culture to promote the efficiency of M&A transactions However, this article was the first Vietnamese publication that addressedthe cultural aspects in M&A activity It is clear that both Vietnamese and foreign research studies on the overall situation with a broad view, especially, not make concentration on any specific fields in the economy, particularly finance industry Moreover, the previous studies often focus on mentioning only national culture or corporate culture, instead of both of them Therefore, by dint of digging deeper into the culture integration process in cross-border M&A in Finance Industry in Vietnam, the author hopes that this thesis would be a good reference in the future The purpose of study The purpose of this research is to provide a deep understanding about the characteristics and outcome of cultural integration as influenced by both national culture and organizational culture in cross-border M&A in the context of financial sector in Vietnam In this way, there are three main missions within the research Firstly, the author will build theoretical framework about the cross-border M&A and the culture in the organization Accordingly, the author will analyze two M&A 74 The members of this team should at least possess the following qualification: they should not have the bias towards any single nation, but have a high communicative competence in a multi-culture environment; have a good perception towards the complexity of interaction between people under the culture other than their own; they should possess cultural sensitivity, be able to utilize their abundant cultural experiences in different countries, regions and organizations to establish interpersonal relationships with people from different cultures; they should possess the capability to quickly adapt to another culture environment, and to make good use of cultural differences by combining all the advantages synergies of different cultures The role of cultural integration team There are some main duties of the team in whole process of cross-border M&A; however, in the pre-M&A transaction, the cultural integration team mainly focuses on time and effort to analyze and strategize on the existing cultures of the target financial institutions Initially, the team starts by assessing the current state of both culturesprior to the time cross-border M&A happens This will help firms in a M&A deal understand how people operate in Vietnamese finance system and it will serve as a starting point to creating the new merged culture latter After that, the team makes assessment about different aspects of culture compatibility and incompatibility between two companies Accordingly, they give feedback to senior management in making decision to conduct the deal, and at the same time propose appropriate solutions to integrate the culture after the deal In particular, the team will analyze individual and organizational behaviors, the business outcomes they produce and the key factors that influence patterns ofbehavior They may set a clear image of the culture following several below aspects:  Leadership style – patriarchal or community-oriented?  Company values, belief, philosophy and business strategy  Environment attributes: collaborative or process-driven? 75  Coordination and control (management style)  Capabilities and talent management  Employee engagement and motivation  External orientation  Innovation After analyzing the existing cultures, the team is responsible for assessment of these above factors and draw conclusions about the success rate of the deal, making contribution to the decision-making process whether conducting cross-border M&A or not To conclude, cultural integration management plan in finance industry in Vietnam should be a part of the overall cross-border M&A action plan and that all stakeholders agree on it Develop a holistic plan for managing the cultural integration process have positive effects on defining specific targets to gauge progress, ensuring cultural work streams are aligned and relevant to business processes, conveying how and why culture is experienced at the employee level and developing a comprehensive change and communication plan in the poststage of cross-border M&A This plan will not only make managing the cultural change easier but it will provide leadership with a clear, tangible roadmap for financial firms to follow 3.2.2 The recommendations in the post-stage of cross-border M&A in Finance Industry in Vietnam 3.2.2.1 Top-down and constant communication In any cross-border M&A, regular communication with key stakeholders, most notably employees is critical to the long-term success of the newly created entity after the deal even though they are working in the same financial sectors Because employees of both merging entities will have to work together in a new and different environment, communicating and managing cultural differences will become key success factors Although we are talking about cross-border M&A in the field of finance with the same industrial cultures, bridging two distinct corporate cultures of financial institutions also implies a lot of communication, which is considered as one of the most important tools in the integration process Indeed, 76 integration must be progressive, go through group work and excellent communication Understanding of each other has to be created upon bridges between both companies Communication takes place in every step from the beginning of the cross-border M&A process Building Communication Plan It‟s essential that these communication efforts should be planned and organized in a well-thought change communication strategy and that they remain constant throughout the merger (both pre-merger, as well as post-merger) Planned changes and common shared vision of the company create less anxiety in the company and people may work more effectively Change communication is a critical element in creating, managing and distributing the messages at each stage of the cross-cultural integration process, therefore, to start, the merging entities should implement a communication plan, beginning with the senior leadership of the new organization To help employees understand and cooperate in this monumental effort, leadership must present the story early on, in a straight-forward matter, addressing all key aspects that deal will involve The senior leadership would need to identify the mission and key goals of the new organization, to the extent that these are changing, and plan to communicate these changes to the employees The involved firms must organize a series of allstaff meetings, webcasts and roadshows that include presentations by senior business leaders from the acquirer and the target organizations explaining the reasons for the acquisition, a brief history of the buyer, growth projections for the merged organization and significant dates and targets Employees need to know what‟s changing, why, when and what will happen, both in the overall big picture, as well as on a day-to-day basis They need to understand what this means for them and what the newly promoted behaviors are In communications with employees, the senior team should talk about making commitments they cannot keep; for example, that nothing will change It‟s also important to have senior leadership involved in the communication because it demonstrates their commitment to the employees A schedule of updates to employees, through a variety of 77 communication avenues, should be planned, along with a target date for the transition period, including any organizational changes to be completed As soon as the acquirer can, given the constraints of confidentiality, it make the employees in the target organization feel comfortable with the acquisition Cross-border M&A communications may be all about first impressions This is when credibility and brand loyalty are built The messages firms convey, and how to communicate during the transaction process, will be remembered for a long time by employees, customers, partners, suppliers, the news media, industry analysts, financial analysts, and pretty much everyone who has a hand in the success of the business In all of the employee communications, it‟s crucial to make sure the words match the actions, as key talent often stays on to see how the integration plays out before deciding to leave because of what they perceive as misleading information and broken promises It is important at the outset to communicate the benefits of the merger People may not like it, but if they see that it has a legitimate purpose, and the benefits are obvious, there is less resentment and employees are more likely to accept it Communication helps to mitigate risks by proactively addressing the fears and concerns experienced by the people of both organizations involved in the deal It provides the careful and strategic alignment of key messages with a plan for consistently communicating those messages to all stakeholders, particularly those people most impacted by the deal Companies that implement an effective communication plan concurrent with the announcement of an M&A transaction can significantly improve customer focus, employee commitment and productivity, speed at which decisions are made, and confidence in the direction of the integrated business Clear and open communication mainly avoids confusions and rumours in the company, which could create an insecure and unpleasant environment 3.2.2.2 Active management of the cultural integration process Active management of culture is the key to successful integration and ultimately realizing deal objectives After both financial entities involved in cross-border M&A address the cultural drivers identified in the culture 78 assessment conducted in the pre-stage, they should take action accordingly at the organizational, program or individual level after the M&A The firms must ensure that these activities are visible, coordinated and driven to demonstrate their commitment to building an action-driven culture, which is a cultural trait that is universally shared by companies with high-performing cultures across all strategy types in finance system in Vietnam Several specific actions to manage the culture integration In the integration, it is recommended that both companies learn from each other, then modify their culture, and finally get along well, entering into the real and deep integration Cultural integration goes from the appearance into the core layer Therefore, several specific actions are suggested to actively manage culture integration process as following: Find common rules: Along with the integration process, both companies would find some common rules or values Based on this, the companies need seek common points while reserving difference As a result of the fact that both entities involved in cross-border M&A are operating in the same industry in Vietnam, they must have several common cultural traits which have similar characteristics of not only the financial sectors but also Vietnamese market Learning from each other: In order to have a clear perspective of each other, both merging entities should learn from each other More specifically, acquiring firm should not put its values and strategy into acquired firms directly; they could modify and change The acquired could work more to promote integration and create a balance between integration and separation Specially, learning from each other is compulsory when the acquiring firm and the target in a cross-border M&A may be in different sectors of finance industry For example, there is an insurance company and a bank involved in the deal in the case of Bao Viet and HSBC As a result, it is extremely important for HSBC to have understanding about the values and beliefs of insurance industry, which lead to the successful culture integration 79 Build common perspective: A common perspective that both companies recognize, plan and explicit details on how to make it true should be dwell designed Also, the foundation of this measure is that employees from both parties understand and agree with it Internalization of culture system: After the acquisition, both entities are willing to acquire new culture, is expected to build a system which could support the work of new culture, and so achieve the goal and improve the brand of the newly created organization Shape a new corporate culture Creating a new culture is not about „creating a new culture‟ It is instead about establishing the right processes and capabilities to lead to a new culture It starts with forming a senior leadership team that understands this proposition and is prepared to show others what the new organisation is really going to be about.Shaping a new culture should also contain three aspects as follows: Reshaping of corporate values Corporate values are the core of a corporate culture, so it is also the central point of cultural integration After the implementation of cross-border M&A, there must be various values, which can be reflected as the different views of employees towards corporate goals, corporate image, corporate ethics, as well as corporate operation philosophies etc If a company‟s employees cannot reach a consensus on the ideology, it is difficult to achieve the ideal synergy neither can optimize the allocation of resources Therefore, the company should advocate the interactive learning and communication, and guide the employees reach consensual values, let all the employees participate into the reshaping of corporate culture Reshape the corporate rules and regulations Corporate rules and regulations are also the important components of a corporate culture, which prescribe employees‟ norms of behaviors, ethics as well as rituals within the company After the cross-border M&A, company should establish a whole set of new rules and regulations in terms of the division of responsibilities The most important thing is that managers must set an example by personally to abide by the regulation system 80 Reshaping the material culture integration Material culture is located at the artifacts level of a corporate culture, which is the most superficial level Cultural elements at the material level can promote the understanding of the deeper layers of the corporate culture For instance, uniforms can give employees the sense of belongingness and discipline, besides, corporate logo, workshop, processing equipments, working environment, infrastructures etc all of these material elements will work along with other corporate cultural elements, and gradually influence employees‟ ideology, which is considered conducive for the shaping of the new unified corporate culture During a merger or acquisition, people need to be inspired to move towards new goals and visions In the absence of a compelling purpose for a new organisation, people tend to stay locked in the past and to unhealthy speculation In a true merger designed to create a new combined entity, the senior teams of each organisation need to work together to clarify the new mission and the shared values, or behavioural ground rules by which they are all going to play In acquisitions that are assimilations, the acquiring company needs to have a clear vision and set of values and guiding behaviours and a process to orient employees of the acquired company If the company is not clear about these things themselves, it is very confusing and disruptive 3.2.2.3 Retaining key people A valuable lesson for businesses conducting cross-border M&A is that "employee of the target company is the best to understand the company." Especially in the finance industry, one of the main objectives of consolidation is to gain personnel, brand and customer networks Retaining talented and experienced financial experts of the target firms after the deals strengthen the comparative advantages and create synergies for the newly created firms in the cut-throat finance system in Vietnamese and global market as well, because almost financial institutions have many training program during their operation to create well-qualified staffs The well-qualified workforce which own many years of experiences must provide assistance for the new entities to overcome obstacles in the initial business operation Moreover, another implicit 81 benefit is that the new firm would take advantages of customer networks from those retained staffs in the context of scarce client sources in Vietnam finance market, especially in the credit and loan-making sectors Thus, the company should put emphasize on retaining talented and skilled workers, which are essential assets for the company Employers need to retain their employees because they need to retain their intellectual capital, the client relationships that have been fostered, and the business focus that allows the organization to continue to operate effectively Companies should have policies to retain talent and know how to encourage them to better after the consolidation because the staff in the target company generally has a sense of discomfort when the new owners have changed In addition, experienced financial experts may receive offers from other competitors after cross-border M&A These are issues that the managers need to be noted and apply appropriately for each particular case Identify the key staffs The first and foremost step is to identify those people critical to continued success and initiate a plan to ensure that these key people stay and remain engaged and aligned In essence, the company must decide who is needed for short-term transition and who is needed for long-term value creation Early identification of talent decisions also requires at least some understanding of employees‟roles, functions, skills and their ability to contribute to the goals that initiated the transaction process Three levels of criticality may be used for defining those needs:  Strategically critical Those employees are most essential to the ongoing operations of the newly combined organization; typically, top executives and key business unit leaders  Integration critical Those employees are essential to the integration effort itself  Knowledge-transfer critical Those employees are with specialized knowledge essential to the transfer of ongoing information and know-how 82 Use Retention Agreements Using retention agreements during a merger is common and quite useful, as long as it doesn‟t violate any law Once addressing the key contributors and final list of employees in place, an agreement that includes a cash bonus or other monetary benefits will prove effective Many companies choose to go beyond the typical financial benefits allure and offer other non-monetary rewards such as promotions, management programs (such as leadership development programs), or an opportunity to lead a project Discussing the terms of agreement with each employee individually might be a better approach Although, this will be slightly more time-consuming, taking a note of which particular financial or non-financial incentives each key employee prefers would guarantee retentions since you will be offering them just the “perfect package”.Offereing incentives before the deal is appropriate for certain key employees and roles Alternatively, a company can choose to offer incentives after the merger has already taken place, taking post-merger “performance” into account This could save the company a lot of money as well 3.2.2.4 Cross-cultural Training Strengthen the inter-cultural training to all the employees after the implementation of cross-border M&A in financial sectors is the effective way to promote the integration of employees from both parties The content of cross-cultural training The intercultural training should involve the following aspects: national and original corporate culture cognition and understanding of the counterparts; training of cultural sensitivity and cultural adaptability, as well as language; intercultural communication skills and way of conflict resolution; introduction of new corporate culture However, one thing should be aware that the training process should follow the principle of step by step, be sure not to make the employees of the acquired company feel that they are forced to changed their original values, faith and norms of behavior, otherwise, it is difficult to achieve ideal synergies from the intercultural training 83 The methods of cross-cultural training The creative training designed to address the issues of cultural diversity and significant operating may include: video about the country situation, operating day's business culture to all relevant staff, company's internal Web site, national cultural and practical travelinformation Other way to improve integration ability and relief conflicts may be that organizations could recruit some experienced entrepreneurs or professionals to address lectures, hold workshops, trainings, exchange trips or set up an integration coach department in terms of culture such as language, customs, thinking styles etc Companies only with passion for integration but no knowledge about culture would be hard to succeed in this field In many cases, the company has not yet merged from a cross-cultural perspective However, it is important that all employees have the right mindset towards addressing the cultural factor, this a training session that opens minds and supplies the employees with explanations as to why the employees with another cultural background are working and communicating the way they Companies seek our advice and ask for training support in order to smooth the working relationships between people from different countries working together To conclude this chapter, financial institutions should be noted that each cross-border M&A deal has differences in its structure depending on the form of carrying out the transaction Therefore, every business needs to know the application of lessons learned on to the specific case in Vietnamese market in an appropriate manner to create suitable and necessary changes when in order to achieve high successful rate of culture integration 84 CONCLUSION The objectives of the thesis as mentioned at the beginning are to analyze two typical case studies to demonstrate a picture of the culture integration in crossborder M&A in finance industry and to make suggestions for financial firms that have intention to conduct cross-border M&A in Vietnam After describing the overview of M&A activities in general and cross-border M&A in finance industry in Vietnam in particular, the author usescase study approach with the aim to explore the comprehensively problematic cultural issues The failure culture integration of KPMG and Andersen together with the successful culture integration of HSBC and Bao Viet creates favorable conditions for the readers to get an understanding about the characteristics and outcome of cultural integration as influenced by both national culture and organizational culture in cross-border M&A in financial sector in Vietnam Thanks to apply theoretical framework developed at the beginning of the thesis, both cases are discussed and assessed in terms of different cultural dimensions, particularly, national culture including individualism, power distance, long-term and short-term orientation; organizational culture including the artifacts, espoused values and beliefs In this situation, there are some recommendations for the companies in finance industry to take in order to have better culture integration in cross-border M&A Firstly, the top-down and constant communication channels among two firms involved in the deal is necessary to improve by well-building communication plan Secondly, specific actions are implemented to actively manage the culture integration, together with shaping the new corporate culture for the newly created entities after M&A Last but not least, retaining key people in the old entities before the deal and organizing cross-cultural training programs after the deal must be definitely taken into consideration REFERENCES BOOKS Alvesson, M & Berg, P.O (1992) Corporate Culture and Organizational Symbolism New York: de Gruyter Cartwright, S & Cooper, C L (1996) Managing Mergers, Acquisitions and Strategic Alliances: Integrating People and Cultures Oxford: Butterworth-Heinemann Cateora (1999) Business leadership and culture: national management styles in the global economy Cheltenham: Edward Elgar Publishing Ltd Hofstede, G (1991) Cultures and Organizations: Software of the Mind New York: McGraw Hill Hofstede, G (2001) Culture´s 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