The analysis of the merger of two different companies, Daimler-Benz and Chrysler Corporation

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In this case, the analysis of the merger of two different companies, Daimler-Benz and Chrysler Corporation, believed to share the same goals was made. The analysis revealed perhaps the most important experiences in the case, that is, the "post-merger-integration" and the phenomenon of "clash culture".

Today, businesses are more affected by the effects of globalization and companies have no option but to reduce their costs, maintain their margins and adapt their business to a more international level. To strengthen their position in the market and to gain competitive advantages over their competitors, a merger appears to be an intelligent solution for companies. Yet, one question is that, how successful a merger can be when two companies do not have the same business spirit, the same culture?

In the case of Daimler Chrysler merger, what are the main differences between the American model and the Germany one corporately and nationally speaking? First of all we began by looking at the background information in which the analysis was based, then, the integration of organizational culture and the integration stage parts. We also analyzed the role of the employees and the failure of the merger, thereafter, the "clash of culture" and the comparison between the two models (America vs. Germany).The analysis dwelt much on Hofstede's model of power distance. Finally some far reaching recommendations were made.

Extraits

[...] Moreover, we noticed that the US model was based on individualism unlike the German model which focused on collectivism. The compensation structure in the two parties reflected also this culture difference. Indeed, individual performances were more rewarded in the US, whereas in Germany, team performances were taken into account often. Thus, changing of the German employees' compensation to be more bonus driven (as in Chrysler) should have been better evaluated, as this went against the German culture. Finally, one of the reasons why the merger failed was the dishonesty of Daimler-Benz. [...]

[...] These two different organizational cultures were described as “German engineering versus cowboy independence”(Paul, 2003).They looked closely at first sight, but in daily life, numerous manifestations of these differences in the corporate cultures appeared. Prior to the merger, the two companies have had different aspects of the cognition in corporate cultures. Daimler-Benz was characterized by methodical decision-making while Chrysler asked for creativity. Chrysler was the very symbol of American adaptability and flexibility. So Chrysler valued efficiency, empowerment, and fairly egalitarian relations among staff; whereas Daimler-Benz seemed to value respect for authority, bureaucratic precision, and centralized decision-making (Ralph, 2006). [...]

[...] Understanding German Business Culture US Business Culture, http://www.crossbordermanagement.com/en/guides/business-culture-in-the-us>. [...]

[...] It was initially stated that the merger would be a ‘merger of equals', whereas, the true intention of Daimler-Benz was to use Chrysler as mere subsidiary. This created a lot of tension between the two parties. It is needless to recall that the success of a merger (or an acquisition), is based on mutual trust. Thus, Daimler's CEO should have revealed his true intention before the merger even though that could have compromised the merger. References: Daymler-Chrysler- Merger,http://fr.slideshare.net/amitranjan14/daymler-chrysler-merger-a- cultural Douglas S. [...]

[...] In addition, another German manager, Wolfgang Bernhard, become a new leader at Chrysler division. With these developments, the DaimlerChrysler merger could no longer be considered a ‘merger of equals'. From Chrysler's point of view, at beginning, Daimler-Benz was not hoping for strong partnership. It just wanted to use the efficiency and advanced technology of Chrysler, while disregarding the development of the new company and the protection of the right of employees. Recommendations We have seen that within the merger, the German management took over the whole company's by firing all the Chrysler top management. [...]