Key Challenges to Cross Cultural Management: O2 Germany Case Study

1162 Words Oct 12th, 2008 5 Pages
Generally, culture can be viewed as the behavioural norms within a group of people sharing common ethnicity, beliefs, education, historical background, location or institutions. It is widely the accepted behaviour in a group and likely the most striking or peculiar form of behaviour noted by a foreign member new in the group. Considering this, multinational corporations (MNC) must be highly sensitive towards cross cultural management in order for them to expand, implement their strategies and achieve their goals in domains outside their home.
According to the GLOBE Project (House and Hanges, 2004, p15), leadership is the ability of an individual to influence, motivate and enable others to contribute toward the effectiveness and success
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Post-acquisition, Mr. Gröger was appointed joint CEO of o2 Germany and Telefónica DE. However the subsequent poor revenues in the following six quarters forced CEO Gröger to announce layoffs as part of cost-cutting measures and to step down. A new top management was introduced with a former Telefónica S.A senior executive from Spain as CEO, an Argentinean CTO, and other non-German Managing Directors. The employee morale was very low by mid-2007. An annual internal audit at the end of 2007 showed the employee satisfaction index had sharply dropped compared to previous years.
The main challenge top management faced was to regain the lost employee trust and confidence. The layoff programme on the new management’s agenda did further damage. The employees were feeling detached from the organization. They assumed that the Spanish CEO’s main role was to trim the company down and that they were not strongly represented within the Telefónica Group, leading to low employee motivation and several experienced personnel opting for the layoff with compensation programme. The network division was skeptical about the capabilities of its CTO, having only previous experience in Argentina, to lead in the German market, where quality and regulatory requirements were more stringent. Every effort from the management to identify synergies between the two companies was met with resistance, as it was seen as a redundancy-identification exercise.

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