Cultural challenges of integration: Value creation and daiichi sankyo’s indian acquisition Harvard Case Solution & Analysis

Introduction/Context

At the beginning of the new century, a significant change was observed in the global pharmaceutical industry. Many pharmaceutical companies started to merge, specifically with the generic companies. The main reason for these mergers and acquisitions wasthat many of the patents of the pharmaceutical companies were about to expire and they needed to invest in some new opportunity to continue running their business while earning profits.

In the same context, a Japanese pharmaceutical company, Daiichi Sankyo, took the initiative by acquiring one of the biggest Indian-Based generic companies, Ranbaxy in 2008. The main motives of Daiichi while acquiring Ranbaxy was to not only to expand their business globally by entering into new markets through Ranbaxy, but also to market generic drugs in Japan under the company’s brand name.

The post-acquisition situations, however, didn’t turn out as expected by Daiichi. An increased turnover of the top management was observed in Ranbaxy. The chain of resignations began with the resignation of the Chairman and CEO, Malvinder Singh, who was the grandson of the founder. Apart from this, the company faced difficulties in financial terms as well. This raised many questions regarding the usefulness and practicability of the Hybrid Business Model approach that Daiichi was planning to adopt.

Daiichi wants to incorporate a blend of the innovators and generics to create a new Hybrid Business Model. This approach is, however, new for the company as it includes some issues like cultural differences and integrity. These areas require some adjustments in the form of practicability and implementation in the company. In the course of solving these issues, Daiichi had set up a Synergy Office to address and solve the issues of integration.

Q1 Using Hofstede’s Dimensions of Culture, compare and discuss Japan and India culture. Relate these dimensions to the impact on the merger integration process and specifically, comment on impact on corporate/managerial values.

A1

Hofstede’s Dimensions of Culture

The cultures of Japan and India have been compared on the basis of latest 6-D (Cultural Dimension) model and are discussed as under,

Power Distance

This dimension determines the extent of unequal distribution of power as expected and accepted by less powerful members of the organization and the society. In the current scenario, Japan and India scored points of 54 and 77 respectively. The higher score means that the majority accepts the unequal distribution of power (Centre, n.d).

Japan has a lower score because of their basic teachings of equality since the childhood. On the other hand, in India there is no such concept. The difference in scores clearly indicates the difference in the mentality of the two countries.

Individualism

Individualism measures the degree of dependence among the members of the society. The scores of Japan and India are very close, each bearing a score of 46 and 48 respectively. These scores indicate that Japan is comparatively less individualistic as compared to India(Centre, n.d).

Japan is a little bit more collectivistic, which is evident from their sense of loyalty to both family as well as companies. On the other hand,in India people are indifferent as they more or less towards both individualistic as well as collectivistic. The collectivistic side is show cased in the form of large families, whereas individualistic side is reflected through their religious beliefs.

Masculinity

Masculinity determines the extent of competitiveness, power and ambition in the society. Japan and India score 95 and 56 respectively in masculinity dimension. Japan’s score is one of the highest, which shows the determination and a high degree of competition and achievement in the people (Centre, n.d). On the other hand, India is also a masculine country however; it is comparatively less as compared to Japan. This indicates that in India, people are still competitive and ambitious but less as compared to Japan.

Uncertainty Avoidance:

Uncertainty Avoidance indicates the degree of tolerance and control to avoid an uncertainty or future outcome. Japan again scores 92 on this dimension as compared to India, which is standing at a score of 40 (Centre, n.d).

A score of 92 indicates that Japan is more inclined towards practices to avoid any future uncertainty. These practices may be because of result of excessive storms and typhoons, which have led them to be prepared for unpredicted future situations. India’s score of 40 puts them in the position of patient countries. India is less towards pre adjustments and arrangements and it accepts the events that are going to take place in the future...................

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