The long-awaited merger between Porsche and Volkswagen edges forward. The complexities have additional national features
Mergers tend to reveal and emphasise differences in the cultures of the participating organizations.
A few years ago , I had some personal involvement with a merger between two institutions located close physically and professionally. The outcome for several years was not so much the expected two sub-groups within the new extended organization, but six including two smaller groupings acquired to strengthen the core merger.
Mergers are often said to require around five years for the legacy cultures to settle down, despite attempts by the leadership of the new organisation to establish a shared vision.
In the UK, the diverse cultures of Cadburys and Schweppes remained for at least that long, in an uneasy marriage of the more traditional with the swashbuckling. The two cultures were still recognisable two decades later, and contributed to the logic of CS acquiring the ailing Dr Pepper/Seven Up group, and subsequently demerging the fizzy bits into the wonderfully named Dr Pepper Snapple Group
Porsche Volkswagen makes a classic business case study. I leave its complexities to those more involved in that venerable Business School approach. Here I will concentrate on exploring the map of the merger for its leadership implications.
It promises to be a titanic struggle. The two cultures feature most obviously in the strong brands symbolising the two institutions.
Leaders we deserve has been noting the possibility of a merger since 2007 when Porsche appeared to be the more powerful of the two protagonists.
Dr Ferdinand Porsche designed the original Beetle in 1936, and his grandson, Ferdinand Piech, is chairman of VW and the controlling shareholder in Porsche. Wendelin Wiedeking, chief executive of Porsche, is a member of the supervisory board of Volkswagen …In November 2007, rumours suggested that Porsche intended to acquire VW, and incorporate the models under the Porsche brand through a holding company. The powerful unions at Volkswagen sent a signal of discontent, with work stoppages, including 40,000 workers at the main Wolfsburg plant [Wednesday Oct 30th. 2007]
At the time I commented in the same blogpost
My suspicion is that plans towards securing that dynastic merger are in place. Whether the happy day is near remains to be seen.
There were a few twists and turns to the story over the next two years. A little matter of a deep global recession and financial crisis. Some complex moves involving share acquisitions, and governmental background interventions.
The BBC observed
Over the past year [2008-9] Porsche built up major debts to get a 51% stake in VW, only to fall short of the required 75% when it could not raise more funds. Porsche’s failure to buy VW saw the firm’s former chief executive Wendelin Wiedeking and financial director Holger Haerter resign “with immediate effect” last month [July 2009].
Porsche will now effectively become the 10th brand in the VW family, joining the likes of Audi, Seat and Skoda. However, VW has pledged to maintain Porsche’s “independence”.
Independence. Ah, yes, in the sense that it has been a ‘friendly’ merger, and not, as the cynical are inclined to say, a bloody takeover.
The Cultural Turn
So what of the two cultures? To an outsider, Volkswagen is more than able to accommodate Porsche as a coherent brand such as it did with Audi. It has done a good job in that respect with Seat and Skoda. On the other hand, it might be that the more local historical rivalries will prove more difficult than those posed with international acquisitions. But even as I write, I see that the notion of merger is becoming blurred into the vocabulary of a takeover.
We will have to wait some time to see how this turns out for the organizational culture of the VW organization.