Having had a client whose blueprint for a very hush-hush new radar system was copied and manufactured by the potential customer they were in discussions with in the Far East , I’ve witnessed the problems connected with holding on to intellectual property rights. (See below two new books on the subject). That incident happened over ten years ago and still other similar battles are erupting all over the globe.

The scope of the problems surrounding intellectual property rights in our globalised world is vast – how far can copyright and patent-holders go in preventing others from taking their property? Intellectual property protection is not a field of bright lines and clear rules. And, the economic consequences of the dispute are also immense.

Marks & Spencer has just learned how expensive the transaction costs in international business are when you don’t do your homework properly. The opening of the first Marks & Spencer store on the Chinese mainland has been beset by many cultural problems – most of which could have been foreseen with a little research.  One of the most costly though was their complete lack of Market Research. Sir Stuart Rose, executive chairman of Marks & Spencer, admitted that the company “had misunderstood the local market” by assuming Hong Kong sizing would also apply to the mainland. “Shanghai clothing sizes were based on Hong Kong sizing, but the smaller sizes rapidly sold out” he explained. (FT February 10th 2009). Remember to do your cultural research – you can’t afford to get things wrong!

The cultural difficulties concerning the failed merger between Daimler and Chrysler are legendary, but not legendary enough it seems for Robert Diamond, president of Barclays Capital.  He found out the hard way that ignoring corporate culture can harm your business.  Eight weeks after the acquisition of Lehman Brothers’ US business much of the senior talent had left. Mr. Diamond’s famous ‘knee-jerk’ approach of getting rid of non-team players did not sit well with those he wished most to keep: “That approach is a style that is anathema to many of Lehman’s senior bankers who Mr. Diamond wants to retain, as well as the European bankers he’d like to attract” (FT November 3rd 2008).  It seems Mr Diamond has fallen foul of the first rule of an M&A – it’s people that make a business, it’s people you ‘buy’, and it’s people that are your most important asset – make sure you understand what makes them tick! Ignore culture at your peril.