The Importance of Recognizing Governance in Multinational Acquisitions

C.

When introducing the concept of governance to a newly acquired company located in a different country, executive management should recognize the importance of various factors to ensure effective implementation. Among the options provided, the MOST important factor that executive management should recognize is the impact of cultural changes (option D).

The acquisition of a large company located in a different country can bring cultural differences that can significantly affect the success of governance implementation. These cultural differences can manifest in the way employees perceive and respond to rules and regulations, the level of transparency, accountability, and risk management practices. Therefore, executive management should acknowledge the potential cultural differences and develop strategies to address them.

While international standards (option A), language differences (option B), and globally recognized good practices (option C) are essential considerations for implementing effective governance, they are not the most critical factor. International standards, such as ISO/IEC 38500 and COBIT, provide guidelines for IT governance, but they may not address specific cultural nuances. Language differences may pose communication challenges, but they can be addressed through translation services and language training. Good practices that are globally recognized may be useful, but they may not necessarily align with the cultural practices of the newly acquired company.

In conclusion, executive management should recognize the potential impact of cultural differences and develop strategies to address them when introducing governance concepts to a newly acquired company located in a different country.