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Role of Effective International Management

Introduction to International Business Management

Nowadays, effective management of international business has become very essential for growth and success of global brands. Further, effective management is not an easy task as businesses are required to deal with lots of issues and challenges . Companies also need to develop effective strategies in order to overcome all major issues faced by them. The present research report explores the concept of cross border merger along with the key situations in which organizations opts for such kind of strategy. A research regrading one successful and one unsuccessful cross border merger is also mentioned in the present study.

The concept of cross border mergers

In last few years, the concept of cross border merger among businesses has grown with a very good pace. It can be stated that the concept is not only providing benefits to companies but it has also started to play very important role in shaping back the entire structure of industry at international level. Cross border mergers became more popular in the year 1990's where foreign investments started laid more emphasis on cross borders mergers and acquisitions instead of focusing upon concepts such as greenfield investments. Today, cross border merger has become a common phenomenon and are carrying out in almost every industry  . The main reason why such kind of strategies or concept has become so popular is that they not only aid to existing sales, profits of a business enterprise but also offers several kinds of benefits to the host countries where merger has taken place.  It supports nations in boosting up their overall economic growth by encouraging more foreign investments. In simpler term cross border merger can be defined as the situations in which two businesses operating in different nations integrate with each other in order to achieve some common goals and objectives. Usually these are the business deals which is carried out between international company and domestic company in the specific or targeted country. Cross border merger has helped entire economy of the world in getting accelerated and   perform more effectively. There are two different types of cross border mergers which are carried out by organizations and they are vertical and horizontal mergers. In context of a business enterprise, cross border mergers can provide several kinds of benefits. One of the major and most important among all is related to increasing of sales and profitability. In the present scenario, the competition among businesses in almost every industry has become so intense that it is not easy for companies to attract new customers and retain their old ones.

Further, operating only in domestic market also restricts profits of organizations due to limited number of customers. Therefore, cross border merger helps firms to move towards other countries and find new customers base which can results in increasing sales and profits. Apart from this, cross border mergers also supports in lowering down the cost associated with carrying out business in international market  . Integrating resources and management practises with other firms directly results in dividing the entire risk associated with carrying out operations in the international marketplace. The concept of cross border merger can be inward or outward and it entirely depends on objectives of a firm that what kind of merger they should carry out. It can be stated that inwards mergers results in movement of funds or capital within a nation. For example a foreign investor has merged with domestic firm. On the other side of this, outward merger results in outflow of the money as domestic company mergers with other foreign businesses.

Circumstances in which MNE's internationalize using cross border merger

Cross border mergers are not always beneficial and there are certain situations or circumstances in which multinational enterprise (MNE) can make use of such mergers for internationalization. In situations where existing competition level is very high, businesses can adopt this strategy.  High degree of competition creates several kinds of obstacles in long term growth and success of any organization. In addition to this, it also results in creating difficulties for companies to increase their sales, profits, market share and existing customer base. Thus, in such kind of situations, firms can adopt the strategy of internationalization with an objective to  acquire new customers and maintain their market share. Other than this, cross border mergers can be used in circumstances where internationalization seems to be a risky move. For many business enterprise, expansion of operations in other international market is not an easy task and  companies are required to deal with various factors. Different types of international markets has  different type of customer taste and demand which needs to be taken care of. This means that it is not necessary that a product is successful in one market will attain the same kind of success in other international market . Therefore, businesses can make use of cross border mergers in order to lower down the risk associated with failure. By integrating business operations with other foreign company, a business enterprise has an option to lower down risk associated. Some other circumstances in which cross border mergers can be used by multinational enterprise for internationalization includes business strategy which focus on internatio nal operation and  reducing the cost of operations.

Sometimes, organizations adopts the strategy of cross border merger with an objective to low down their cost of operations. It can be stated that moving in other countries help firms in acquiring raw material and labour at cheaper cost  . Minimizing cost of regulatory compliance can be other circumstance in which business can opt for the strategy of  cross border merger in order to carry out internationalization. Further, before planning to operate in any new nation, it is required by companies to identify business environment, customer trends and level of competition prevailing in the market place. This will result in development of more effective strategies for carrying out smooth flow of operations and business activities in the international market. Apart from this, it will be also required by firms to become aware about and follow all rules, legislations and laws which guides business practise in other international country.

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One successful and one unsuccessful cross border merger

In context of successful mergers it can be stated that the merger of YouTube and Google. Further the deal was completed for £880m paid by Google to YouTube and it can be stated that there are several kinds of reason associated behind the same. One of the key reason which forced  Google to merger its operations with YouTube can be considered as its popularity. YouTube is considered as one of the most successful and popular video streaming site all across the world. On the other side of this, Google video do not have any kind of existence even in the top ten video playing sites in the world. Apart from this, Google has also made a big mistake by not acquiring MySpace in situations where it was having chance to acquire the same. This means the organizations was no more interested in repeating the same mistake again and thus it merged with YouTube in order to enhance its existing sales, profits and popularity. The merger also resulted in enhancing the overall search quality of Google's products and services.

Other than this, in terms of unsuccessful mergers, it can be stated that the merger of Chrysler and Daimler can be considered as one of the most unsuccessful merger in the history of world. It was in the year 1998 the two companies Chrysler and Daimler agreed to merge their operations and share resources with each other in order to attain some common goals and objectives. The main objective behind carried out this merger was to take advantage of globalization and ensure long term competitiveness in the marketplace. After the merger took place there were main products and services which were launched by the above stated two companies. The entire merger took place in the year 1998 and costed a sum of around $38 Billion. However, it can be argued that due to some reasons the merged completely failed and provided several kinds of losses to both the business enterprise . Thus, it can be expressed that it is not necessary that mergers and acquisitions always succeed and if things are not managed properly huge losses needs to beard by a company. At the time of making such kinds of decisions, there are various things or factors which needs to be taken into considered.

The reason why one succeeded and other one failed

Effective market research and popularity of YouTube and Google can be termed as the key reason why the merger between above mentioned two companies became so successful. Google also identified different key reason regrading why merger with YouTube will be beneficial for the brand. It can be said that Google videos were not so popular among people in the market whereas video of YouTube are very famous all across the world  . Apart from this, YouTube also has a very loyal, active and enthusiastic followers which has ultimately benefited Google after carrying out the merger. In terms of sharing and uploading also the followers of YouTube are very active as compared to any other online video steaming site. Google on the other hand is considered as one of the most successful and popular search engine  . The strategic decision of merger has helped Google to acquire a community which is highly active in terms of sharing videos and information. Another key reason why YouTube merger with Google can be termed as successful is of stickiness and usability. The main difference between YouTube videos and Google videos was that people love to watch different types of videos on YouTube for long time when which was not the same in case of Google. This market gap was identified by Google and by working upon the same, it decided to merge with YouTube. The merger became very successful and helped both these brands to carry out smooth flow of operations and activities in long run.

On the other side of this, culture can be termed as the main or key reason which has resulted in failure of the merger carried out between Chrysler and Daimler. In terms of culture, it can be stated that both the organizations completely failed to integrate their respective cultures with each other and this ultimately resulted in providing huge losses to both the business enterprises  . Chrysler was a company whose culture laid emphasis on daring creativity and diversification. This means it was very aggressive in terms of making bold moves and strategic decisions. On the other side of this, Daimler is a German based organization which is conservative and safe in nature  . This means that the culture which has been implemented by both the above mentioned organizations completely different from each other. Apart from this, the level of hierarchy which has been adopted by Chrysler and Daimler was also different. Chrysler was carrying out its operations with a more team oriented approach in which all team members were encouraged to take part in the decision making process and strategy formulation. Daimler on the other hand has adopted for a structure which depicts a strong chain of command which needs to be followed by each and every employee working in the organization. Another key difference between Chrysler and Daimler was related to how these brands treated their respective clients. Chrysler was more focused towards attaining success through understanding customer need, demand and then developing products on the basis of the same to gain customer satisfaction. However, it can be argued that Daimler looked forward to attaining success by focusing on design of their cars and offering the same at prices which were very competitive. Thus, differences in corporate cultures and values can be termed as one of the main and most important reason which resulted in failure of merger between Chrysler and Daimler. Other reasons includes lack of communication, effective coordination and trust among employees of both the organization after the merger took place.


It can be stated that cross border merger is not an easy task and therefore companies are required to take care of several things in order to make those mergers successful. Some recommendations for carrying out successful cross border mergers are mentioned below as:

It can be recommended that before adapting the strategy of merger, businesses should carry out effective market research related to organization and country. The market research may include identification of elements such as market trends, customer demands, level of competition and overall business environment. On the basis of information collected more successful strategy related to cross border merger can be developed by organization.

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It can be also recommended that integration of corporate culture and values is one of the most important thing which needs to be taken care of at the time of choosing strategy of merger across border. The chances of failure increase in situations where two companies or organization has different type of values and culture which guides their operations and activities. Therefore, it is suggested that at the time of carrying out such kind of merger, it is required by companies to lay emphasis on integrating their respective cultures.

It is also recommended that in order to attain successful cross border mergers, companies should focus on development of effective plans and executing the same. Planning supports companies to identify what kind of resources and people are required to carry out smooth flow of operations and activities. Further, it is suggested that a democratic leadership style is more effective and suitable during the initial stage of merger. Organizations needs to develop new goals, objectives and needs to communicate the same to all the employees working in the organization. By making use of democratic leadership style, businesses can create satisfaction among workers by encouraging their view regarding how merger can be carried out successfully.

It is also recommended that effective communication and coordination needs to be developed by businesses in order to make cross border mergers more successful and attain the best possible outcome. It can be stated that such kind of mergers usually involves two different employees working together and they belong to different cultural background. Therefore, if communication and coordination among workers in not effective, mergers will result in complete failure.


From the above carried out report, it can be concluded that internationalization has become very important for higher growth and success of a business operating at domestic level. Further, the strategy of cross border mergers is more suitable and effective for internationalization as it results in lowering down the risk associated with carrying out operations  in other country. It can be inferred that the integration of business culture and values is the key reason which has resulted in making merger of Google and YouTube successful and the merger of Chrysler and Daimler a complete failure. It can be also concluded that there are several things which needs to be taken care of by a business enterprise before adapting for the strategy of cross border merger.


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  • Brakman, Steven, Harry Garretsen, Charles Van Marrewijk, and Arjen Van Witteloostuijn. "CrossBorder Merger & Acquisition Activity and Revealed Comparative Advantage in Manufacturing Industries." Journal of Economics & Management Strategy 22, no. 1 (2013): 28-57.
  • Erel, Isil, Rose C. Liao, and Michael S. Weisbach. "Determinants of crossborder mergers and acquisitions." The Journal of Finance 67, no. 3 (2012): 1045-1082.
  • Qiu, L.D., 2010. Cross-border mergers and strategic alliances. European Economic Review, 54(6), pp.818-831.
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