Daimler-Chrysler Merger (Essay Sample)
Mergers and acquisitions take place to realise the synergies between the two or more companies
1. Using Cultural theories, explain why do you think the Daimler-Chrysler merger failed to realise
the synergies that were expected from it?
2. Discuss some realistic recommendations which will help to address the issues that should be
addressed to make cross-cultural merger a success.
Based on the case study, the merger between Daimler-Chrysler did not succeed; instead, it failed. There is a need to explain why the merger failed, explaining what went wrong during the operation referring to cultural theories. To start with, during the pre-planning process, Daimler did not consider that the merger was a cross-border deal. Based on the case study, Daimler assumed that the merger would not create specific challenges (Blasko et al., 2000). Additionally, the company management did not think there could be any potential emergence of issues because of state and corporate culture differences. During the negotiation of the merger deal, everything went as planned. After that, the CEO of both shared the same vision. Nevertheless, during the integration process of the merger, some issues arose because both companies were situated in totally different locations branded by different cultures, languages, beliefs, and traditions.
After the merger between the two companies was complete, the resulting company had to deal with robust cultural conflicts. Throughout the post-merger process, the new entity asked the employees to attend seminars, workshops, and training where millions of dollars were spent to allow these employees to remain more sensitive and aware of the difference in culture (Finkelstein, 2002). Nevertheless, the workshops and seminars focused on the topics such as sexual harassment present in the Americans' workplace and the dining custom of the Germans. The main reason for focusing on these topics is because the merger between Daimler-Chrysler was the first Trans-Atlantic merger (Nahavandi and Malekzadeh, 1988). The topics did not change the employees' feel concerning the prevailing gaps in the business practices and management styles (Finkelstein, 2002).
Based on the culture theory, differences in culture lead to cultural conflicts. These conflicts make it difficult to establish an environment capable of establishing synergies and relationships between individuals. Furthermore, Hofstede (1984) argues that cultural differences may exist according to different nations. Considering Hofstede's (1984) dimensions, it can be noticed that there was the existence of a difference between the German and American cultures during the merger. Therefore, nation-wide culture played a substantial role in affecting the organizational culture of the resulting company after the merger. Indeed, it affected the beliefs, customs, management and working styles, and the way of thinking that constitute the organizational culture.
Hofstede (1984) further adds that the Germans people have a higher degree of uncertainty evasion compared to their counterparts in America. The German people have a culture of ensuring that there are accurate and detailed strategies and well-structured and written activities. This suggests that the German people are risk-averse while the American people are less in need of procedures and rules and have a culture of risking more when it comes to unknown situations. Referring back to the two companies, Chrysler is seen as a risk-taking organization that invested in invention, while Daimler was doubtful of novelties. On the other hand, concerning the Daimler-Chrysler merger, it is clear from the case study that they all focused on the importance of incomes, challenges, triumphs, and success. Also, both companies remained short-term-oriented, focusing on profit (Hodgetts and Luthans, 2003).
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