Sold—To the Highest Bidder in Japan: Operational Challenges and Culture

5 Pages Posted: 30 May 2017

See all articles by Kristin Behfar

Kristin Behfar

University of Virginia - Darden School of Business

Gerry Yemen

University of Virginia - Darden School of Business

Allison Elias

University of Virginia - Darden School of Business

Abstract

Most talented executives can recognize when an acquisition has strategic or financial benefits, and in this case, the decision to be acquired was an appropriate exit strategy for a successful start-up. Peter Street's start-up had been growing quickly and was building a reputation for reliability in a booming industry when a Japanese firm offered to pay a premium for the U.S. firm. Having done business in Japan (and extensively with the acquiring company) before the sale of his company, Street entered the acquisition with enthusiasm. As part of the deal, Street's former company would continue to operate in the United States as a division of its parent company and Street would remain as CEO. A few months into the transition, however, Street discovered a huge difference between working with and working for the Japanese firm. Cultural norms for confronting seemingly small problems quickly became bigger operational issues, and Street experienced a growing dichotomy between corporate (in Japan) and his division (in the United States). This case focuses on the challenges of implementing a cross-border acquisition.

Excerpt

UVA-OB-1064

Mar. 19, 2015

Sold—to the Highest Bidder in Japan:

Operational Challenges and Culture

There was no doubt about it: Japan-based firms were on a spending spree in foreign markets. In 2011 alone, Japanese companies spent more than $ 52.5 billion on acquisitions of businesses outside their country. That amount was particularly interesting because total global acquisitions for the previous year were roughly $ 19 billion less. Among those firms acquired was Peter Street's start-up, AXR, a U.S.-based manufacturer of microchips used for electronic ignitions in small engines. AXR had been growing quickly and was building a reputation for reliability in a booming industry. The dynamic market, and a desire to be a world leader in the space, was likely the impetus for Kyoto Japan Motors' (Japan Motors) willingness to pay a premium for the U.S. firm.

As part of the deal, AXR would continue to operate in the United States as a division of its parent company, and Street would remain as CEO. Two years later, however, Street was ready to resign. Although it was a difficult option for him to even think about—leaving the business that he had founded—Street had reached his limit. Was his reaction typical of a former entrepreneur now under the umbrella of a more institutionalized company? Or was there something interpersonal between Street and the acquiring company leaders that just didn't mesh?

. . .

Keywords: culture, cultural differences, workplace, operations, decision making, communication, direct confrontation, indirect confrontation, stereotype, international business, Hofstede

Suggested Citation

Behfar, Kristin and Yemen, Gerry and Elias, Allison, Sold—To the Highest Bidder in Japan: Operational Challenges and Culture. Darden Case No. UVA-OB-1064, Available at SSRN: https://ssrn.com/abstract=2974836 or http://dx.doi.org/10.2139/ssrn.2974836

Kristin Behfar (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

Gerry Yemen

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

Allison Elias

University of Virginia - Darden School of Business

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

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