The merging of Daimler Benz and Chrysler to Daimler Chrysler was portrayed as a new international conglomerate in the automotive industry. It was emerged as the beginning of a new era where only the two powerful players will survive.
However, cultural conflict started taking place in the organization. Our podcast will include the issues that led to conflict in the organization. We have used Hofstede theory to make the arguments of cross- cultural conflict stronger. The huge difference between the two organizational structures led to the failure in the integration of the companies.
The clash between the German and US culture was responsible for the failure in merging of the two companies. I have read in company reports that these two companies had previously planned to merge several times but failed drastically. There was difference in leadership structure of the two companies. I found out that Benz followed an orderly leadership while Chrysler believed in innovation. Chrysler was more focused on effectiveness and strengthening of workers capability whereas Benz followed an administrative and basic leadership nature.
According to Hofstede, culture refers to “the collective programming of the mind distinguishing the members of one group or category of people from others”. Different dimensions of Hofstede theory were related to individualism vs. collectivism; masculinity vs. feminity; power distance; uncertainty avoidance. The first dimension found out if people in a specific culture considered themselves as a member of the group or not. The second dimension focused if success and power got more preference than family values or not. The third dimension represents the extent to which individuals in a culture can accept huge differences in power. The fourth dimension had focused on extent of tolerance uncertain incidents within the society and individual’s reaction towards those situations. I understood that this theory is relatable to communication, management, marketing and negotiation at the international level. Therefore, I could relate the organizational culture of Daimler Chrysler with the dimensions of the Hofstede theory.
There have been a number of theories and concepts developed to describe the organizational differences between the US and the German culture. However, I found Hofstede theory as the most suitable one for explaining the cultural difference between Daimler and Chrysler. It was easy for us to understand the theory by associating with the reflection on our podcast. Hofstede had explained very clearly the cultural difference and their impact in the workplace. He had put much effort in dealing with the major countries on the dimensions of work- value.
Fig: Hofstede model of cultural dimension
Source: (Bakir et al. 2015)
While working on the organizational culture of Daimler Chrysler, my group learnt about the difference in US and German cultural traits. My research on the specific topic helped us to gain knowledge about the merging agreement and the clash due to the distinct culture of the two countries. Daimler is an automobile manufacturer giant which has other interests such as automotive financing, automotive technology, formula1 and aerospace. The company reports helped us to gather knowledge about merger and acquisition that it was experiencing from its inception in 1886. While working on this podcast, our group found out that, the most remarkable merging of the company was between Daimler and Chrysler in 1924. Therefore, the culture of the company was influenced by the set of organizational level changes that it has experienced.
However, I have faced few issues while working on this podcast. As my entire group members belonged to UK therefore they were not much aware about the US or German culture. Due to this reason, I suggested my group to use the Gibbs model of reflection. This model was useful in making us think through all the phases of our working experience. My group could get over the issue of cultural knowledge gap by using this specific model. As per this model, I could reflect on our working in the podcast where we learnt about the organizational culture of the two companies. Chrysler had the reputation of being a lean car manufacturer that produced cutting- edge vehicles whereas; Daimler Benz was responsible for manufacturing elite- class and standard quality vehicles.
Fig: Gibb’s reflective cycle
Source: (Potter 2015)
The issues of organizational culture in Chrysler allowed it to look for a partner who could help it in achieving international access by providing economical support to sustain in the competitive market. My group researched enough to find out the reason behind choosing Daimler for merging. It already had a powerful economic position and expanded business in several countries and its largest revenue came from the sales of Mercedes. The market for luxury cars was at the peak by the end of 90’s, which helped the company to increase its revenue base.
We focused on the cultural contrasts between the two companies to find out the reason behind the failure of merging. Daimler was more focused on formal clothing and behavior while Chrysler wanted informal communication to prevail in the organization by stressing on casual clothing. Moreover, the German company was not open to casual relationship between the employees unlike Chrysler. There was conflict between the managers of the two companies regarding relocation. The American company was reluctant to relocate and demanded high salary. On the other hand, the Germans were flexible in terms of relocation. The Germans were still associated with the traditional methods of long meetings and reports while the Americans believed in innovation and creation. These were the factors, which resulted in cultural clash between the two managers.
After reviewing the reasons behind the cultural clash between the two managers, I realized that they should have thought about these issues before merging. These are very common reasons that are an inherent part of merging and acquisitions. Therefore, they could have arranged for back- up or discussed the issues by organizing prior meetings. The members of my group suggested that it is always better to take a preventive measure before the occurrence of such severe issue.
It can be said that the task went well for our group as the members could gain insight about the cultural differences that prevailed in the two companies. The different forms of working in the two countries resulted in the failure of merging and acquisition. The issue that I faced while working in the group was out lack of knowledge about other cultures. This could lead us in deep trouble while working in a multi- national company in the future. Therefore, I suggested in my group that we would gather relevant information about other cultures, which will be helpful in our future. If we are able to gain multi- cultural knowledge from now then it will become helpful for our future career. I reviewed various aspects of culture in the two company and their persisting differences.
The use of Hopstede’s cultural dimension theory and Gibb’s reflective model helped in reflecting towards my task. I realized that the differences in the organization resulted in the failure of merging and acquisition. Starting from the remuneration structure to the conditions of relocation, everything led to a conflict between the two managers. They were not efficient enough in bringing the employees together to work under the same roof. The idea to create a shared corporate culture, which will reflect the significance of both German and US culture went in vain.
References
Bakir, A., Blodgett, J.G., Vitell, S.J. and Rose, G.M., 2015. A preliminary investigation of the reliability and validity of Hofstede’s cross cultural dimensions. In Proceedings of the 2000 Academy of Marketing Science (AMS) Annual Conference (pp. 226-232). Springer, Cham.
Potter, C., 2015. Leadership development: an applied comparison of Gibbs’ Reflective Cycle and Scharmer’s Theory U. Industrial and Commercial Training, 47(6), pp.336-342.
Bruner, R.F., Spekman, R.E., Christmann, P., Kannry, B. and Davies, M., 2017. Daimler-Benz AG: Negotiations between Daimler and Chrysler. Darden Business Publishing Cases, pp.1-45.
Bruner, R.F., Spekman, R.E., Christmann, P., Kannry, B., Davies, M. and Bruner, R.F., 2017. Chrysler Corporation: Negotiations between Daimler and Chrysler. Darden Business Publishing Cases, pp.1-45.
Cooke, F.L., 2016. HUMAN RESOURCE MANAGEMENT IN THE CONTEXT Of MERGERS AND ACQUISITIONS. Mergers and Acquisitions in Practice, p.122.
Fitzsimmons, S.R. and Stamper, C.L., 2014. How societal culture influences friction in the employee–organization relationship. Human Resource Management Review, 24(1), pp.80-94.
Friedman, Y., Carmeli, A., Tishler, A. and Shimizu, K., 2016. Untangling micro-behavioral sources of failure in mergers and acquisitions: a theoretical integration and extension. The International Journal of Human Resource Management, 27(20), pp.2339-2369.
Kansal, S. and Chandani, A., 2014. Effective management of change during merger and acquisition. Procedia Economics and Finance, 11, pp.208-217.
Smith, K., 2016. Reflection and person-centredness in practice development. International Practice Development Journal, 6(1).
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