MKT 3311

INTERNATIONAL & GLOBAL MARKETING

Module Leader: Dr Samar Faten Baddar

Daimler-Chrysler: A Cultural Mismatch

Silvesta Ese – Imajemite 2311778

Hajot Deooray 2217461

Ozzy

Executive Summary:

The merger of  (the manufacturer of ) (Germany) and the  (USA), is classed as a cross-culture merger. A cross-cultural merger is the process of  two companies from different backgrounds and with different practices were joined together to form one successful company. There were many different reasons why a cross-culture merger is not successful. Daimler-Chrysler failed to analyse both companies before they went ahead with the merger. The main reason that their merger was not successful was that the German way of business and the American ways differ profoundly. Both companies should have been analysed to examine their strengths and weaknesses, in regards to their practice. The communication between both companies lacked and therefore no common ground was found.  

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

A merger is the process of two or more entities combining into one for the hope of increasing market share.

This process can be achieved by a company merging with or acquiring their competitors.

This process has become quite common over the years. Differences in culture, language, and business practices can prove a liability. In most cases, mergers are claimed to be a partnership of two equal businesses but this may not always be the cases. Some companies may acquire companies that are under-performing in a mutual market. Companies may indulge in such a process to increase customer share or to avoid costly marketing battles. Co-CEO of Daimler Chrysler stated that the deal was never expected top be a merger but more Daimler-Benz were acquiring Chrysler.

Looking can the histories of both Daimler-Benz and Chrysler, Its clear to see that Daimler Benz were the bigger company as Mercedes-Benz’s are manufactured in no less than 13 different countries including Thailand, UK, and Argentina. In regards to sales revenue Daimler- Benz outperformed Chrysler as the Chrysler Corporation Had experienced hard times in the early 1990’s. It seemed that Chrysler was starting to show improvements in sales, especially when they introduced their range of jeeps, which proved to be most profitable.

Introduction

In this report we will be discussing questions in regards to the merger between Daimler- Benz and The Chrysler Corporation. One of the basic elements within a merger is to realise the synergies between two or more companies. However, some companies that take part in a merger fail to realise the synergies that were expected to be gained. We will discuss why The Daimler Chrysler merger failed to realise the synergies that were expected from it.

Another important aspect of mergers and acquisitions is the identification of cross cultural issues between two companies from different cultural backgrounds. Many cross-cultural mergers fail due to the lack of attention given to the difference between the two cultures. We will briefly describe the issues that should have been addressed to make the cross cultural merger between Daimler-Benz and Chrysler a success.

In most cases, companies involved in a merger claim for the process to be a partnership of two equals. This may not always be the case as one company may always be bigger than the other. Jurgen Schrempp, co-CEO of Daimler Chysler made particular comments stating the deal was never really intended to be a merger and that Daimler- Benz had acquired Chrysler. We will be discussing the backgrounds of both companies, which will then give an indication of why Mr. Scrempp made such comments.  

Case 2.1 Daimler-Chrysler Merger: A Cultural Mismatch

  1. Mergers and acquisitions take place to realise the synergies between the two or more companies involved. Why do you think the Daimler-Chrysler merger failed to realise the synergies that were expected from it?

After the merger in 1998, DaimlerChrysler have been through integration problems especially due to the differences of culture between Americans and Germans. By making references to the Cultural Web, this part of the report will show the key post merger problems that the company had to solve and will analyse if solutions were effective or not. Firstly I will present the culture of the organisation, then I will describe the Cultural Web and lastly I will present the key issues and assessment of solutions.  

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First of all, the culture of the organisation must be resumed by the representation if the Beliefs and Values of the company. Beliefs are “issues which people in the organisation can talk about” and Values represent” missions and objectives of the company”. The paradigm is the “taken for granted assumptions” as the core of an organisation (Johnson. G, eds. 2002, p 229).

The Cultural Web of Daimler Chrysler

The key issue here was the definition of the alliance between the two companies. As it was presented as a “Merger of Equal”, Managers followed this way of work. But as ...

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