Daimler-Chrysler Merger: A Cultural Mismatch

Outline
The challenge The literature Daimler-Chrysler Suggestions

The Literature
Broad Review
Diversity between Asia and West Problems to recognize as an English Speaker Avoiding language traps
- In business, online

Multi-national advertising Suggestions for business-people

The Challenge
How do international corporations avoid conflict brought on by differences in cultures?
Stereotypes Geographic Business Style Values Relativism Communication

Stereotypes
Stereotypes need to be unlearned
They are the most damaging in creating cultural conflict

Stereotypes impede progress

Lead to conflict Misunderstanding Breakdown

Geographic Conflict
Differences abound - Business style East and West - Emotional vs. Logical - Yes and No

Values
Relativism
Different cultures value things differently
Life Family Money and Possessions Autonomy

Communication
Clear communication solves problems with conflict caused by miscommunication Verbal Small talk vs. 5Ws and H Yes and No are not always clear Progress is viewed differently Time Meetings Phone Time zones Agenda Superiority Non-Verbal Sight-seeing Smoking Eye-contact Physical Contact

The DaimlerChrysler Merger

Merger
A merger is the combination of operations of two companies. Merger generally happen with the acquiring company giving its stocks to the shareholders of the target company in an exchange for the shares of the target company. It could also be done with partial cash and partial stocks or complete cash.

The DaimlerChrysler Merger

The merger of Chrysler Corporation and Daimler Benz involved the creation of a truly global corporation by combining two organizations of roughly the same size and in the same industry, but with two very diverse cultures. The Daimler Chrysler merger was announced as biggest industrial merger of all the time.

cont
The merger was considered to be merger of equals. Daimler-Benz luxury vehicles had captured less than 1% of the American markets. Chrysler's primary reason for teaming with Daimler-Benz is to extend its international reach Provide Culture Workshops for employee No Culture Clash at manager level

The goal of the merger

Expected huge savings by combining purchasing and other operations Reduce total research and development costs

However

The DaimlerChrysler Merger

Mercedes was universally perceived as the fancy, special brand, while Chrysler, Dodge, Plymouth and Jeep were the poorer, blue collar relations

-- James Holden, President of Chrysler

Many organizations fail to implement changes after merger

Delay in Organizational changes Restructure with respect and dignity Lack of information Cultural issues are not dealt with

Our Analysis
Corporate Structure Corporate Cultures Customer proposition Value chain Leadership

Corporate Structure
Daimler
Hierarchical Structure

Chrysler
Team-orientated

Corporate Cultures
Daimler
Management processes of planning, organizing and controlling. More conservative, efficient and safe.

Chrysler
Setting goals, directing and monitoring implementation. Known as the risk-taking underdog

Customer proposition
Daimler
The driving image and experience associated with the highest quality available in the market

Chrysler
Attractive, eye-catching design at a very competitive price

Value chain
Daimler
Emphasis on engineering, design, quality and after sales service

Chrysler
High volume, low cost manufacturing and distribution

Leadership
Daimler
Jrgen Schrempp - with independent personality and South African overlay

Chrysler
Robert Eaton - broke the Chrysler tradition of commanders

Conclusions
Recognize the differences in the corporate contexts will this merger work? Channels of communication must be open
Consider a mediator at meetings hired help (if you are a multibillion dollar company) Goals, goals, goals?

Avoid cultural stereotyping

Trade employees a major failure
Resolve cultural stereotypes Contextual differences Share knowledge Exploit the merger

Questions?

References

Cox Jr. T.H. (1996) Intergroup conflict, in: Shafritz, J. M. & Ott, S. J., Classics of Organization Theory, 4th edition, 192-202.
Dou, W. & Clark Jr., G.W. (1999). Appreciating the diversity in multicultural communication styles, in: Business Forum, Vol. 24, Is.. , pp. 58. Finkelstein, S. (2002). The DaimlerChrysler Merger. Retrieved Mar. 2, 2006 from http://mba.tuck.dartmouth.edu/pdf/2002-1-0071.pdf Strebel, P. (2002). Focus on Corporate Specifics Not National Clich CrossBorder Lessons from the DaimlerChrysler Merger. Retrieved Mar. 2, 2006 from http://www01.imd.ch/news/research/perspectives/index.cfm?art=2325 Wan, K. (2004). Bridging Cultural Gap Through Communication in: Korea Herald. January 1, 2004.