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Background of study Theoretical Framework Culture Integration Analysis Recommendations On the context of enterprises in finance industry Globalization: WTO, AEC, TPP, VKFTA, EVFTA,… Actively finding partners to conduct MA 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. 254qdttg 032012) The most effective method: MA MA Boom 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 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 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 Hofstede’s theory on national culture Vu Thu Huong – A25 K51 – “Best Thesis Award 2016“ – 2nd Round II Theoretical Framework 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 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: https://www.geert-hofstede.com 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 TOP M&A OF THE YEAR IN 2010 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 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 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 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 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 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 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 IV Recommendations Vu Thu Huong – A25 K51 – “Best Thesis Award 2016“ – 2nd Round CONCLUSION Problems in Culture Integration in cross-border M&A in Finance Industry in Vietnam What similarities and differences of Cultural Dimensions are Why several cultural factors affect cross-border M&A outcomes How firms involved deal with problematic cultural issues Shortcomings x No all-sided views in case Bao Viet - HSBC Secondary Sources mainly from company records and websites => No real-life information from interview or survey x No experiencing culture in the organization in reality The analysis is on the basis of other sample case studies analysis and personal perspectives (analytic, comparative, synthetic methods) A new matter - A reference for other studies Vu Thu Huong – A25 K51 – “Best Thesis Award 2016“ – 2nd CONCLUSION Solutions and Further Analysis • Conducting Interviews with several key people involved in case Bao Viet – HSBC • Improve the quality of current thesis • Analyze other cases to define new matters which have not been explored Vu Thu Huong – A25 K51 – “Best Thesis Award 2016“ – 2nd THANK YOU FOR LISTENING Vu Thu Huong – A25 K51 – “Best Thesis Award 2016“ – 2nd [...]... 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. ..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... 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)... 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... national culture index, Vietnam in comparison with China and the UK Source: https://www.geert-hofstede.com 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. .. 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... 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... 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 IV Recommendations Vu Thu Huong – A25 K51 – “Best Thesis Award 2016“ – 2nd Round CONCLUSION Problems in Culture Integration in cross-border M&A in Finance Industry in Vietnam What similarities and differences of Cultural... 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 –... several cultural factors affect cross-border M&A outcomes How firms involved deal with problematic cultural issues Shortcomings x No all-sided views in case Bao Viet - HSBC Secondary Sources mainly from company records and websites => No real-life information from interview or survey x No experiencing culture in the organization in reality The analysis is on the basis of other sample case studies