Cross-Cultural Management. The case of the DaimlerChrysler Merger

Dossier / Travail de Séminaire , 2006 , 26 Pages , Note: 1,0

Gestion d'entreprise - Direction d'entreprise, Management, Organisation

On 6 May 1998, Daimler-Benz of Germany signed a merger agreement with Chrysler
Corporation of the United States. The merger marked the beginning of the ambitious goal of
merging two styles of auto-making, two approaches to business and the proud, but distinct
cultures of two nations. The opportunities for significant synergies afforded by a combination
based on factors such as shared technologies, distribution, purchasing and know-how. Daimler’s
engineering skill and technological advances could be complemented by Chrysler’s skills for
innovation, speed in product development and bold marketing style. Juergen Schrempp, CEO of
DaimlerChrysler, said, that the new company will reach an eminent strategic position in the
global marketplace by combining and utilizing each other’s strengths. It seems that Germans and
Americans in the enterprise have not become closer since the merger. This paper explores the
reasons for DaimlerChrysler's failure to realize the synergies identified prior to the merger. It
examines the different culture and management styles of the companies that were primarily
responsible for this failure. The focus will be on the cultural issues and on the different theories
that try to explain cultural differences between nations – the US and Germany - and how values
in the workplace are influenced by those cultures. First of all it describes the overall
circumstances that led to the merger. Both companies and their conditions prior to the merger are
introduced as well as the general objectives that led to the merger and the goals of it are
highlighted. After that, some of the theories that try to explain cultural differences such as the
Cultural Dimensions of Hofstede are introduced with a special focus on the differences between
the two cultures in play, the German and the US. It will proceed with an analysis of the different
corporate cultures and the accompanying communication difficulties and mistakes that have been
done in this context. The paper will conclude with recent developments, the current situation of
DaimlerChrysler and some recommendations to work on the existing cultural issues and other
problems within the merged company.

Inhaltsverzeichnis

• Introduction
• General background information about the DaimlerChrysler merger
  • The Merger Objects - Chrysler Corporation and Daimler Benz AG
  • The 'Deal' - Preconditions and Expectations
• Cultural Differences between Americans and Germans - Theories on Cross Cultural Management
  • Hofstede's Cultural Dimensions
    • Individualism vs. Collectivism
    • Masculinity vs. Femininity
    • Power Distance
    • Uncertainty Avoidance
    • Term Orientation
    • Cultural Mapping
    • Conclusion and Analysis of the Merger
  • Trompenaars's Seven Dimensions of Culture
  • Cultural Orientations Framework-Mapping
• Two different Corporate Cultures
  • The new Corporate Structure
  • Communication Issues
  • Differences in Corporate Cultures and Management Styles
• Conclusion
• References
• Appendix

Zielsetzung und Themenschwerpunkte

This paper examines the reasons for DaimlerChrysler's failure to realize the synergies identified prior to the merger. It examines the different culture and management styles of the companies that were primarily responsible for this failure. The focus will be on the cultural issues and on the different theories that try to explain cultural differences between nations – the US and Germany - and how values in the workplace are influenced by those cultures.

• The merger of Daimler-Benz and Chrysler Corporation
• Cultural differences between Americans and Germans
• Theories on cross-cultural management
• The impact of cultural differences on corporate culture and management styles
• The reasons for the failure of the DaimlerChrysler merger

Zusammenfassung der Kapitel

This paper explores the reasons for DaimlerChrysler's failure to realize the synergies identified prior to the merger. It examines the different culture and management styles of the companies that were primarily responsible for this failure. The focus will be on the cultural issues and on the different theories that try to explain cultural differences between nations – the US and Germany - and how values in the workplace are influenced by those cultures. First of all it describes the overall circumstances that led to the merger. Both companies and their conditions prior to the merger are introduced as well as the general objectives that led to the merger and the goals of it are highlighted. After that, some of the theories that try to explain cultural differences such as the Cultural Dimensions of Hofstede are introduced with a special focus on the differences between the two cultures in play, the German and the US. It will proceed with an analysis of the different corporate cultures and the accompanying communication difficulties and mistakes that have been done in this context. The paper will conclude with recent developments, the current situation of DaimlerChrysler and some recommendations to work on the existing cultural issues and other problems within the merged company.

While Chrysler has the reputation of being a ‘lean' car manufacturer producing ‘cutting-edge' vehicles, Daimler Benz was the symbol of Germans conservative, high class quality craftsmanship. Before the merger was made public, Chrysler was the most efficient one of America's Top Three car producers with a very strong market position in the SUV and minivan market. Only a few years before the merger announcement, in the mid-1990s, Chrysler was very close to bankruptcy and survived a failed hostile buy-out attempt launched by Kirk Kerkorian, a corporate raider who had a big stake in Chrysler at that time. Chrysler's advisers saw a need for the company to merge with another automobile maker in order to survive in the competitive car industry. Chrysler was considered a regional car manufacturer, with nearly 90 per cent of its sales in North America and only one per cent of its sales in Europe and almost all of its employees working in the USA. Its corporate strategy had its focus on the national market. However, Chrysler's reputation was based on creativity, efficiency and economy in design and production.

On the other hand, Daimler-Benz, as a producer of mainly luxury cars and other non-automotive products and services, was not only the actual world's most profitable car maker but also with one of the highest production costs in the industry facing strong labour unions and regulations in Germany. It owns the valuable brand of Mercedes with high international reputation about its high quality engineering. Its reputation was based on craftsmanship, quality and safety. Daimler-Benz had 63 per cent of their sales in Europe, and 21 per cent of their sales in North America.

In May 1998 the German car maker Daimler-Benz AG and America's third largest automobile company, Chrysler Corporation, signed the merger agreement to build one of the world's biggest automakers. The merger resulted in a large automobile company, ranked third in the world in terms of revenues, market capitalization and earnings, and fifth in the number of units sold. DaimlerChrysler generated revenues of $155.3 billion and sold 4 million cars and trucks in 1998. Schrempp and Eaton jointly led the merged entity, as co-chairmen and co-CEOs.

Schlüsselwörter

The keywords and focus themes of the text include cross-cultural management, DaimlerChrysler merger, cultural differences, Hofstede's cultural dimensions, Trompenaars's seven dimensions of culture, corporate culture, management styles, communication issues, and the failure of the merger.

• Université: California State University, Fullerton
• Cours: International Management
• Note: 1,0
• Auteur: Ralph Johann (Auteur)
• Année de publication: 2006
• Pages: 26
• N° de catalogue: V114405
• ISBN (ebook): 9783640158713
• ISBN (Livre): 9783640159758
• Langue: anglais
• mots-clé: Cross-Cultural, Management, International, Management