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THE DAIMLER CHRYSLER FAILURE

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Irina Gavrylchuk

on 20 January 2016

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Transcript of THE DAIMLER CHRYSLER FAILURE

Agenda
Introduction
Cultural Dimensions
2.1 Geert Hofstede
2.2 Fons Trompenaars
2.3 Edward T. Hall
2.4 Richard D. Lewis
Cultural Differences within the
Business Context
4. The Daimler-Chrysler Case
5. Conclusion & Recommendations


Cultural Dimensions
Following, it will be demonstrated that the cultural differences of Daimler & Chrysler were too great.
Cultural Differences within the Business Context
Understanding your culture & your own "mental software" is a prerequisite to understanding other people's ways & habits. Becoming interculturally sensitive & competent is much like learning a foreign language.

Psychological Characteristics
Germans

The Daimler-Chrysler Case
Major issues and differences
"The Germans are just too obsessed about doing things perfectly. If this keeps up, our operations here will go bankrupt."
THE DAIMLER CHRYSLER FAILURE
Diversity in Business
Dipl.-Anglistin Silke Buhl
Winter Term 2015/2016

Isabella Bumeder
Miriam Ewald
Stephanie Hauser
Iryna Gavrylchuk
Andreas Trezza

A analysis between the American & German cultural dimensions can illuminate the reasons for the big crash.
Geert Hofstede
"Power Distance Index" - PDI
Avoidance of uncertainty
Masculinity vS. femininity
collectivism & individualism approach
Fons Trompenaars
universalism vS. particularism
neutral vS. affective dimension
specific vS. diffuse approach
sequential VS. synchronic cultures
Edward T. Hall
low-context cultures
monochronic cultures
relation toward space Differs
preference about privacy
Richard D. Lewis
Linear-active, multi-active
& REactive
Conclusion
The failed Daimler & Chrysler union illustrates the importance of cultural factors in mergers & acquisitions.
Two companies were unable to overcome the differences in national & corporate culture.
Recommendations
1. Plan well beforehand;
2. Making use of synergies;
3. Ensuring open communication channels;
4. Publically form a united front;
5. Intensive teamwork trainings as well as seminars on cultural differences.
Dialogue 1
Dialogue 2
Bibliography
Thank you for your attention!
1. Ahlstrom, D.; Bruton, G.D. (2010): International Management – Strategy and Culture in the Emerging World, Mason 2010.
2. Aswathappa, K.; Dash, S. (2008): International Human Resource Management, New York 2008.
3. Boeing, M. (2013): Analysis of Cultural Differences and their Effects on Marketing Products in the United States of America and Germany: A Cultural Approach to Marketing using Edward T. Hall and Geert Hofstede, Hamburg 2013.
4. Büschmann, K-H. (2013): Pleite nach Lehrbuch, URL: http://www.sueddeutsche.de/wirtschaft/gescheiterte-fusion-von-daimler-und-chrysler-pleite-nach-lehrbuch-1.1666592, Accessed: 12/03/2015.
5. Hofstede, G.; Hofstede, G. J.; Minkov, M. (2010): Cultures and Organizations: Software of the Mind, New York 2010.
6. Hurley, R. F. (2012): The Decision to Trust: How Leaders Create High-Trust Organizations, San Francisco 2012.
7. Isidore, C. (2007): Daimler Pays to Dump Chrysler, URL:
http://money.cnn.com/2007/05/14/news/companies/chrysler_sale/,Accessed: 12/09/2015.
8. Johnson, D.; Turner, C. (2003): International Business: Themes and Issues in the Modern Global Economy, London 2003.
9. Kazim, H. (2007): Neun Jahre Daimler-Chrysler: Eine AG, zwei Welten, URL: http://www.spiegel.de/wirtschaft/neun-jahre-daimlerchrysler-eine-ag-zwei-welten-a-466373.html, Accessed: 12/14/2015.
10. Kwintessential (2012): How Culture Ended the Daimler-Benz Chrysler Merger, URL: http://www.kwintessential.co.uk/resources/daimlerbenz-chrysler-merger.html, Accessed: 12/13/2015.
11. Kwintessential (2014): Intercultural Management - Germany, URL:
http://www.kwintessential.co.uk/intercultural/management/germany.html,
Accessed: 12/12/2015.
12. LeMont Schmidt, P. (2003): Die Amerikanische und die Deutsche Wirtschaftskultur im Vergleich: Ein Praxishandbuch für Manager, 5th Edition, Göttingen 2003.
13. Lewis, R. D. (2006): When Cultures Collide – Leading Across Cultures, 3rd Edition, London 2006.

Good morning Hans, it's so great to finally meet you in person.
Good morning, Misses Smith.
Oh, my husband just sent me a picture of our daughter at her school recital. Isn't she cute?
Oh, eh, yes, she is... Okay, let's focus on business.
Ah, now that you mention it, I am actually on a tight schedule. And I think we already agreed on the basics. How about we start the project tomorrow, I know there are some issues, but we'll figure them out as we go.
To be honest, I disagree! We need to fix theses problems before we progress. Otherwise we can't ensure the highest quality. I would also like to consult the head engineer for a second opinion. He can take a look at everything again.
That's a great idea, but is it really necessary? After all, I think we have to make the decision on our own; we are the managers.
Eh, well...
Oh, sorry, I have to go. Let's do it as discussed and get the ball rolling, shall we? Talk soon, Hans.
unsuccessful communication
successful communication
American manufacturing executive, working in Frankfurt.
"The Americans are very easy-going and self-confident. But behind that facade, we often find them shallow. they don't always follow up on what they say they are going to do."
German engineering executive, working in Los Angeles.
americans

- serious
- afraid of uncertainty
- neat and orderly
- perfectionists
- conservative in manners
- formal
- loath to take risks
- detail-oriented
- group-oriented
- intense about their work


- overly self-confident
- optimistic
- familiar and casual
- improvisers
- expansive
- informal
- risk takers
- non-conventional oriented
- indviduals
- image-oriented

Business World
Germans
Americans
- task-oriented
- reactive
- long-term oriented
- pro government
- loyal to the company
- highly-skilled
- quality-of-life oriented
- consensus-oriented
- more reserve toward
business
- result-oriented
- pro-active
- short-term oriented
- anti-government
- loyal to themselves
- not always well-trained
- materialistic
- competitive and individualistic
- pro-business
Business Meetings
germans

americans
- formal
- deductive
- systematic
- slower in decision-
making
- insistent on extensive
information
- informal
-inductive
-improvised
-eager to get immediate
results
- satisfied with
minimum information
Communication
Germans
americans
- complicated
- detailed
- overly-analytic
- formal
- excellent listeners
- serious
- factual
- reserved
- simple
- concise
- telegraphic
- informal
- easily bored
- humorous
- exaggerative
- friendly
Lawsuits

germans

americans

- governed by Roman
law
- laws made by
professional jurists
- jury trial for criminal
cases only
- makes it more difficult
to start a new business
- governed by a common
law
- laws are judge-made
"interpretations"
- jury trial for both civil
and criminal cases
- makes it easier to start
a new business
Business Ethics

germans
americans
- less concerned about
business behavior
- more fatalistic about
the nature of man
- less moralistic toward
companies
- guided to community
norms and traditions
- guided by informal
codes
- more insistent on proper
business behavior
- influenced by moralistic
thinking
- pro-business
- guided by the individual's
conscience
- often influenced by
"morality checklists"
Patrick L. Schmidt " Understanding American and German business cultures"
Severe Lack of Trust
Stereotypes
Different Work Styles
Hierarchical Structure
Pay Discrepancies
Communication Style
Contrasting Priorities
Different Mentalities
The Daimler-Chrysler Case
All of this shows, that within Daimler-Chrysler the cultural forces had been directed towards self-protection

instead of integration & cooperation.
The Daimler-Chrysler Case
The new-formed company was unable to create value because they could not use an effective management of trust & collaboration across organizational, hierarchical & cultural boundaries.
INTRODUCTION
1998: Daimler-Benz & Chrysler merge for 36bn
Aims: save costs and ensure survival
Cultures clash -> anti-trust, disagreements
2007: Daimler sells Chrysler for 7.4bn
The Daimler-Chrysler Case
Good morning, Hans. It’s so great to finally meet you in person. .
(After the cultural seminar the manager knows that American business is conducted on a first name basis)
Good morning, Amy, nice to see you as well. How are you and how is family?
Thanks for asking, my family is doing great. Actually, my daughter had a school recital, which was awesome. What about you?
I’m great too. I am especially excited about our project.
(After the seminar she knows that Germans like to have a longer planning process)
I am excited as well, and I have cleared my schedule for today so we can discuss any issues regarding the project.
Okay, fine. Now that you mention it, I have some technical issues I would like to discuss with you. I would also like to consult the head engineer for a second opinion. I know it is going to take more time until we can start with the project, but it will save us time during the production. The head engineer is vital, because he is the one most familiar with the technical details.
Great, let’s do it!!!
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