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What are the cultural aspects involved in a merger? Give sufficient examples.

Cultural compatibility is one of the most significant determinants of a successful M&A transaction. Acknowledging whether cultural compatibility can exist should be a factor in determining whether to pursue a given deal. Integration can never be attaining and growth strategies never realized if two companies are worlds apart culturally. This alignment of cultures can be achieved through information sharing, emphasizing similarities and mitigating dissimilarities through effective communication.

Organizational culture has been identified by some analysts as a key determinant of the outcomes achieved as a result of Daimler-Benzs acquisition of Chrysler Corporation. In speaking to risks associated with this acquisition, one analyst suggested that "when it comes to downside risks, the greatest is certainly culture. Beyond the fact of both being carmakers, the two companies differ in just about everything: language, markets, work traditions and governance. And in the executive suite, how will Chryslers sky-high American salaries and stock options fit with the German structure of employee representation and a supervisory board?" However, a position articulated by Jurgen Schrempp, the chairman of Daimler-Benz, in a discussion of his firms acquisition of Chrysler indicated an awareness of culture as a key component of organizational fit and the acquisitions success. In Schrempps words, "We are set to build a truly global culture." Robert Eaton, Chryslers former chairman, supported this intention by observing that "this is precisely one of the reasons we immediately agreed to run the business initially together. We both believe that integrating and merging cultures is possibly the greatest art of management." Thus, there appears to be a commitment between the top executives of the acquiring and acquired firm to take definitive actions to prevent organizational culture from having a negative effect on the acquisition. In some countries, the host government provides strong incentives to foreign firms to use joint ventures as a mode of entry into their markets. Another reason to form joint ventures is to gain rapid access to new markets. Learning is another objective behind many international joint ventures. By partnering with local companies instead of entering a market on their own, foreign firms can more quickly develop their ability to operate effectively in the host country. IJVs also provide a means for competitors within an industry to leverage new technology and reduce costs