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

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

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Culture Integration in cross-border M&A

in Finance Industry in Vietnam

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

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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

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3 Key criteria for success in M&A

– The financial fit

– The strategic fit

– The cultural fit

WHY CULTURE INTEGRATION?

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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

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II Theoretical Framework

1 Levels of Culture

Figure 1.2: Levels of culture

Source: Alvenson & Berg (1992, p.64)

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2 Hofstede’s theory on national culture

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3 Schein’s theory on organizational culture

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III Culture Integration Analysis

CASE STUDY ANALYSIS

KPMG Vietnam and Andersen Vietnam HSBC and Bao Viet

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KPMG Vietnam and Andersen Vietnam

Case Description

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National Culture

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Organizational Culture

CONFLICTS IN COLLABORATIVE WORKING

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Implications and Results

Culture Differences put obstacles on integration process

After 2 years, more than 90% former Andersen Vietnam’s staffs resigned

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HSBC INSURANCE (ASIA-PACIFIC) AND BAO VIET

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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

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A R T I F A C T

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Long-term benefits to stakeholders Sustainable Growth in

Insurance Industry Key factors to successful

culture integration

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Implications and Results

• Eastern culture (Collectivisim)

• Decentralization

• Charitable Culture

• Benefit stakeholders in long run

• Similar core value

• Sustainable Growth in Insurance Industry

2 THE MOST TYPICAL PRIVATE PLACEMENT DEAL IN 2009-2013

(Voted by M&A Vietnam Forum)

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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

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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

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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

ÞBuilding the employee credibility and loyalty

=> Improve employee commitment to the sustainable growth

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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)

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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,…

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• Organize Business Culture Day, provide necessary information

on websites, social media,…

=> Cultural Adaptability

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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

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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

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THANK YOU FOR LISTENING

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