Student Name: Reem Saklou

Course Title: Global Management Skills

Instructor Name: Dr. FouadMimouni

Case Study

“Perfect Deal or Debacle? The Case of DaimlerChrysler”

1. Which, if any, of the Global People Skills were missing in the DaimlerChrysler case?
Explain with reference to the text.

There are many skills missing in DaimlerChrysler case, such as establishing credibility,
obtaining information, giving and receiving feedback, building global teamwork, training
and development, and strategic planning. In this case I will focus on three skills only:

A. Establishing Credibility

Establishing credibility is the foundation and important skill on the level of merging that
pose significant obstacles for the merged companies. It is vital for gaining effective
traction in the new environment.(from the book)

However, in the case of DaimlerChrysler this skill was missing. For example, Daimler-
Benz CEO announced the merge as a merger of equals to the world. In fact, in their
intentions it is a takeover.

In addition, the Mercedes dealers saying that they “would never drive a Chrysler” which
proved the mismatch between the two companies. Not only that, but even the new
entity was called DaimlerChrysler, not ChryslerDaimler. This is proved to any observer
that Daimler had emerged as the dominant partner in this merger of equals.

B. Building global teamwork

Teamwork is not easy for diverse group whose members may bring with them very
different viewpoint and assumption. (From the book) reference

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Student Name: Reem Saklou
Course Title: Global Management Skills
Instructor Name: Dr. FouadMimouni

According to the text, there was no equal communication and equality of work. For
example, the HR manager from the previous Chrysler organization held a meeting with a
group of American and German colleagues. He had planned to have a brainstorming
session on expatriate medical benefits policies. Daimler team had prepared a 50-slide
PowerPoint presentation with detailed plans about how solutions should be
implemented. However, on the other hand, the American Chrysler team who are having
the mentality of "cowboy", "regular guy", "American Dream" felt shocked about the 50-
slide presentation as from their point of view as they see it the matter was much simpler
than that; they are taking it as a creative session where everybody will brainstorm his
mind along with the other participants on a simple white big board – which by the end
of the day would look like an abstract art with its intermingled lines, shapes and words.
After arguing, approving, disapproving, encouraging, criticizing…etc. they think they will
reach the ultimate creative solutions for this issue of medical policies.

This is how the American culture – or as stated above the mentality of "cowboy",
"regular guy", "American Dream" – works.

Here we can find a failure in the global teamwork as everybody is clinging to his own
cultural background and idea of business.

Decisions and work processes were mainly dominated by Daimler team. For example,
the board members of the new entitywere 8 from Daimler and 5 from Chryslar which
affects decision making. Also, the hierarchal structure of Daimler company dominated
the flat structure of Chrysler.

Another example, is that the CEO of the new merged company was from Daimler and
the vice chairman was from Chrysler which indicates that the new merged organization
was controlled mainly by the Germans and the Americans had a less of power in
decision making and in the provision of information. Therefore, the vice chairman of
Chrysler, Bob Eaton, found himself less effective in the new environment which lethem
to think to retire in three years.

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Student Name: Reem Saklou
Course Title: Global Management Skills
Instructor Name: Dr. FouadMimouni

Mutual trust

C. Training and Development:

Another cultural differences that were not taken into consideration is the fact that each
company was trying to impose their own culture and values on the other culture. For
example, the Daimler team was trying to train the Americans on things such German
dining etiquette which is a strong national root. On the other side, the Americans were
trying to teach the American Dreams values to the Germans. For instance, they were
giving trainings on things like American affirmative action such as discrimination and
sexual harassment; which are issues not faced in the German culture. Although the HR
manager of Chrysler proposed cultural awareness training to avoid the conflicts between
the two groups, unfortunately, this proposal was rejected.

2. Using the cultural dimensions provided in the Peterson Cultural Style Indicator,
compare and contrast the cultural styles of the employees of both Chrysler and
Daimler-Benz. Choose any two of the cultural dimensions.

With such words flying across public news channels, it seemed quite apparent that culture
clash has been eroding the anticipated synergy savings.

The main reasons of DaimlerChrysler merger failure are because; both companies
ignored the differences in culture and the human elements and focusing only on
financial and facilities integration of both companies. According to Peterson Cultural
Style Indicator

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Student Name: Reem Saklou
Course Title: Global Management Skills
Instructor Name: Dr. FouadMimouni

Daimler Group Chrysler Group

Restraint
In contrast, the Daimler group was very
structured, and formal. They focus on
perfection rather than speed. Its designs
changed slowly with a small modification,
and the innovation should be well
documented. The Germans pay great
attention to policies and procedures, they do
not like to leave any detail unattended lest it
could lead to project failure.
Status:
The German business culture encourages the
hierarchical organizational structure which
emphasizes on job levels and chain of
command. This, in their opinion, produces
accuracy and precision. In the same time,
they also have a formal interaction style with
the junior staff. In other words, your position
determines how people will treat you, if you
are a manager; their behavior will not be the
same as if you are a clerk.
Risk
Risk taking was one of the Chrysler’s
attributes culture. Chrysler had a major
concept of speed from design to production.
Their cars productions suit the U.S
marketplace with high on design and low
price and with frequent design changes to
meet the American consumer’s taste.
Consumers who owned Chrysler cars kept
their cars an average of three years.
Equality:
As an American company, Chrysler has the
culture of flat organizational structure which
makes everybody feel equal and comfortable
to disagree with his superiors in matters
related to work. This equality creates
flexibility and encourages every employee to
be more productive and speak his mind
whenever he sees something wrong or
suggest something that would improve work.
It is this spirit that makes a "regular guy" able
to establish a huge successful business.

Conclusion

The Daimler Chrysler merger proved to be a costly mistake for both the companies. In my
opinion, the DaimlerChrysler merger failed because both companies concentrated on business
activities only and ignored or did not pay the required attention to the human resources factor.
Both companies did not pay attention to the different cultural concepts and stereotypes of each
others' cultures.

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Student Name: Reem Saklou
Course Title: Global Management Skills
Instructor Name: Dr. FouadMimouni

Analysts felt that though strategically, the merger made good business sense; but contrasting
cultures and management styles hindered the realization of the synergies. Daimler-Benz
attempted to run Chrysler USA operations in the same way as it would run its German
operations. Daimler-Benz was characterized by methodical decision-making. On the other hand,
the US based Chrysler encouraged creativity. While Chrysler represented American adaptability
and valued efficiency and equal empowerment Daimler-Benz valued a more traditional respect
for hierarchy and centralized decision-making.

I believe that both companies were smart enough to think that it is an awesome strategic move
to merge two of the biggest car manufacturers in the world in one company; however, they were
not smart enough to realize that working globally is not the same as working locally.

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Student Name: Reem Saklou
Course Title: Global Management Skills
Instructor Name: Dr. FouadMimouni

3. Based on the answer of Q2 above, was a cultural clash between the two organizations
bound to, happen? Were there any mistaken assumptions that are likely to have made
the situation worse?

Yes, a culture clash was bound to happen due to the differences in Peterson Cultural
Style Indicator. Whereas the cultural styles of the employees of Chrysler were risk and
equality; those of Daimler-Benz were restraint and status.

I believe there are also mistaken assumptions which made the situation worse. These
wrong assumptions are that each party neglected the cultural differences and assumed
that the other party would do business in the same way his partner does. This
assumption has worsened the situation as it is faced with stubborn attitude that no
company wanted to compromise or meet half way.

So, the culture differences escalated the gap between both Daimler and Chrysler leading
eventually to the failure of the merger.

4. Being an experienced Global Manager with excellent knowledge of different cultural

dimensions and the Global People Skills, if you had been given the responsibility of
managing the cultural and human element of the merger, what would you have done
differently? Give a comprehensive and detailed answer.

As I understand that the employees will undergo tremendous changes, I would plan for
the merger to manage it successfully as follows:

First, anticipate the cultural changes and not to focus entirely on the financial aspects of
the merger. It is necessary to allot enough time for proper planning to occur, with the
integration processes prepared as far in advance as possible. The earlier the preparation,
the better these processes will unfold.

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Student Name: Reem Saklou
Course Title: Global Management Skills
Instructor Name: Dr. FouadMimouni

Second, appoint teams from both companies Daimler and Chrysler to design the new
“transitioned organization”. These teams must have a vision and a direction to go to
which is minimizing the cultural gap between the employees. Team members should be
selected based on their ability to be more open-minded than narrowly focused.
Members should be more inclined to make decisions by coming to a consensus, rather
than to dominate the processes and procedures.

Third, make decisions of organization structure or employees assignments based on the

best interest of the new organization.

Fourth, creating a new culture and being mindful of how it will affect each employee.

Fifth, engage Senior Management around the topic of organization culture, specifically
what organizational development steps need to take place in order to create an optimal
new organization.

Sixth, involve the Human Resources department in the merger process to act as
advocates for and counselors to the employees of the newly created company.

Conclusion

To conclude, I believe it is critical to first allow enough time for the change to happen, to
plan ahead as best possible, to appoint appropriate teams who are experienced in
dealing with organization development issues, in particular, soft issues such as culture,
communication and building relationships.