EADS and Intercultural Management

Abstract

Since the 1980s, the number of Merger & Acquisition operations has surged on the European and international markets. During the year 2000, the value of the international Merger & Acquisition (M&A) ventures was greater than $1000 billion and more than half were carried out by European companies. The different studies conducted during these operations indicate that in most cases these Merger & Acquisitions were a failure. Approximately, one out of two operations did not reach the objectives and it did not succeed in creating the synergy that was required financially and operationally. The numbers of failures increased in the case of M&As with an international dimension. It would be quite interesting to understand the place of the cultural dimension in international M&As.

To illustrate this, we will take the example of EADS, which is the result of the merging of three companies (Spanish, French and German) and how they countered different cultural issues. To understand this, we will first present the merger and the different entities involved in this process; then, we will analyze the cultural differences between the three countries and finally, we will analyze how EADS addressed these cultural differences.

The group EADS (European Aeronautic Defense and Space Company) regroups the activities of three different companies: the French company Aerospatiale-Matra, the German company DASA (Daimler Chrysler Aerospace AG) and finally, the Spanish company CASA (Construcciones Aeronauticas SA). Each of these companies is considered a leader in their domestic market. This large European corporation has been formed by the merging of these three entities which became effective on 10 July 2000. The preparation for this merger has been, for the different players, very complicated, mainly regarding issues related to management styles of these companies and the different political issues involved in this merger.

The French group Aerospatiale-Matra was set up in June 1999 by the merger of the state company Aerospatiale and the private company Matra High Technology. The shares were as follows at that time: the French state held 48% of the group, the Lagardere group had 33%, the employees held 2% and the remaining 17% were assigned on the stock. This merger took place in a period of privatization of the State companies. Initially, the company Matra High Technology was formed by the merger of the ‘Societe d'Études et de Realisation d'Engins Balistiques' (Sereb) and the companies Sud Aviation and Nord Aviation.

The activities of the group were divided in four distinct divisions: Aeronautics, Defense and Spatial Transport, Satellites, Services and Telecommunications. In 1999, the Aerospatiale-Matra had a global turnover of €12.9 billion with 52,387 employees.

The German group DASA was set up in 1989 by the merger of the companies: Daimler Benz aerospace, Dornier, Messerschmitt-Bolkow-Blohm (MBB), MTU Monchen and Telefunken Systemtechnik (TST). Later, in 1997, the activities of Siemens Sicherungstechnik were integrated to the group.

The activities of the group were divided in seven divisions: Civilian planes, Helicopters, Military planes, Satellites, Civilian and Defense systems and Aeronautical motors. In 1999, the global turnover of the group was €9.2 billion with 46,107 employees.

Tags: EADS, CASA, DASA, Military defense,Eurocopter