Pre-merger Status vs Post-merger Status of Daimer Chrysler Company - Case Study Example

Analysis of merger- Pre-merger status vs post-merger status al affiliations TABLE OF CONTENTS Introduction--------------------------------------------------------------3 2. Data and Methodology------------------------------------------------5 3. Analysis -------------------------------------------------------------------7 4. Evaluation----------------------------------------------------------------9 4.1. The Post-Merger-Integration at the DaimlerChrysler--------9 4.2. Merging of the institutional Cultures-------------------------10 4.3. The conflict of Culture------------------------------------------11 5. Conclusion---------------------------------------------------------------13 6. References---------------------------------------------------------------15 Merger- Pre-merger status vs post-merger status of Daimer Chrysler Company 1. Introduction Today’s financial system becomes progressively more influenced by the endlessly increasing globalization (Mittermair, 2006). Because of the globalization of the marketplaces companies experience fiercer rivalry, increasing cost strains and the need to adjust business procedures at a transnational level. On these reasons, progressively more over-border Mergers as well as acquisitions may be noted. Within the given thesis the merger of Daimler- Benz, the German auto producer that checks back on a custom of high-class manufacture of comfort cars that previously started in the belatedly nineteenth century and the Daimer Chrysler company, that subjugated the Unite States commuter auto marketplace thanks to its novelty and ingenuity, is covered. The article explores in detail the Daimer Chrysler and its merging process with Daimler-Benz Company that in numerous respects might not be more dissimilar from each other. However on the other hand, they were combined by the joint desire to make it to the peak of the world’s auto business and to make stronger their standing in the increasingly hard-fought commerce and to achieve competitive advantage against their rivals instead of lose foundation throughout economically hard moments. In the late 80s the world’s auto business had to experience a number of demanding problems. The enduring excess numbers of numerous autos manufactures the reinforced position of the customers and the increasing environmental awareness threatened the survival of several car manufactures (Finkelstein, 2002). When experienced with the difficult and increasing problems on the car marketplace and according to the saying what we do not achieve alone, we will then achieve together, Daimer Chrysler and Daimler- Benz Company chose to merge in the 1999, with the outlined goal to generate the maximum synergy impacts possible. The two Daimer Chrysler Corporation in partnership with Daimler-Benz were considered to match each other. The strong points of one of the partners were said to balance the weak points of the other collaborator so as to outshine and leave a stain on their enemies. At the moment, the merger of Daimer Chrysler and Daimler-Benz was unmatched in size as well as significance, but regardless of the potential viewpoint it included high risks too. The augmented danger of over-border M&A rests inside the diverse (institutional) traditions, languages, management styles, as well as political structures along with rules comprised (Mittermair, 2006). Aim of this paper is to explore the merger of the Daimer Chrysler with Daimler- Benz Corporation. After a small overview of the advancement of the relationships between the two companies and the essential backdrop information on the basis of the actions that resulted in the merger, the evaluation of this merger takes into consideration particularly the two diverse company cultures of the USA and the German auto producer. The objective to make it clear, why it came to a purported ‘conflict of culture’ and what causal reasons might be noticed for the challenges that took place throughout the post-merger-incorporation. Contained by this analysis the diverse widespread managerial models of the United States as well as Germany serve a significant role. Additionally, the paper attempts to tackle the questions, if the debated merger may be regarded an ‘amalgamation of equals’ and why it came to a collapse regardless of the potential stage of departure. The presented thesis is the effect of theoretical exploration. The discussed findings are principally founded on a case study as well as on more secondary literature concerning the corporations’ merger. 2. Methodology The arrangement of this proposal takes in two sections: theoretical as well as observed. Theoretical part will comprise an outline of general as well as explicit concepts in the area of post-merger amalgamation in terms of individual management as well as its exacting features, such as management, communication, business relationships, excellence of work style, and maintenance of major talents, assessment, remuneration and chain planning. These features are comprised into the 4P replica of Global administration of workforce by Doney et al (2005). Basing on the widespread literature review and all-inclusive investigation the 4P Representation is predominantly pertinent as it signifies the individual management dimensions critical for the post-merger incorporation progression. Identification of challenges as well as understanding of problems within every person aspect assists to stop their happening in potential mergers. As well, the 4P replica is practical in the current thesis so as to bind a much profound people leadership background that comprises other fields further than those in the 4P representation. Another framework used in the abstract piece is integrative outline by Grube, (2006) that shows precise routs of challenges (stressors) throughout post-merger amalgamation. As far as the 4P representation stresses the people leadership sections and their difficulties in this paper, the integrative structure offers a support to elucidate why exacting problems happen and what the rationales that causes them. Empirical part will be founded on qualitative method and as a result will include data gathered throughout interviews with providers, from technical and investigative articles, manuscripts, papers as well as press-releases. The objective will be to recognize challenges and problems of PMI procedure, to spell out their causes and offer key recommendations for potential mergers. As far as a research technique of significant, a case study amongst other techniques has been selected. Dutta (2001) implies to the lexicon of sociological terms as well as describes that case study is "a means of studying shared fact through the by means of evaluation of a single case. The case study technique provides a single character to the information being investigated by relating a multiplicity of information to a solitary case." Mirvis (2010) gives a set of techniques that may be used in research basing on the study question, control height and a type of the occurrence. Case study technique concentrates on solving queries how as well as why, needs no control of incident and concentrates on present-day event. The how concentrates on the study question of how the post-merger incorporation is implemented in people background while the why query implies the question of what was unsuccessful inside people amalgamation (what issues?) along with explanation why did challenges happen (what stressors?). In this paper the query what mirrors its investigative nature (Mirvis, 2010). 3. Analysis Within the next section the development of the Daimer Chrysler as well as Daimler-Benz merger companies is discussed. A small overview of the corporation history of Daimer Chrysler as well as of the Daimler-Benz company is provided and it will be stressed what landmark resulted in the merger. Subsequently the focal point is placed on the post-merger-amalgamation at DaimlerChrysler as well as the query is raised, why a ‘conflict of culture’ might not be prevented. The Daimer Chrysler Company, used to be a deep-rooted and powerfully positioned business in the United States American marketplace. Chrysler flourished in manufacturing auto models that reacted to the US claim for adventurousness and ground-breaking (Finkelstein, 2002). In the decade 1988, Chrysler’s marketplace share of the United States American auto business equaled approximately 27%. The corporation had created a representation of being a skipjack as well had confirmed their bounce-back capability several times. Since the climax of World Warfare II, Daimer Chrysler had previously experienced bankruptcy five times, however at last it forever flourished in protecting itself from the rivalry and to maintain its ground in opposition to the rivals each single moment. The corporation’s procedures were categorized by very big effectiveness all through the manufacturing progression and small costs in merchandise design along with commodity development. In the mid-80s, the Daimer Chrysler Company was regarded the world’s largely lucrative auto manufacturer (Finkelstein, 2002). Nevertheless it was in the 80s when moments became more difficult for the car business and Daimer Chrysler had to locate a strategy to organize itself for the hard moments ahead so as to circumvent experiencing insolvency a second time. At that period, Daimler-Benz had to experience the precise same problems as Daimer Chrysler on the worldwide marketplace for commuter cars. In the midst of other things, the two corporations had to handle the problems imposed because of overcapacities, a reinforced stand of the customers and increasing ecological awareness. In addition to conquering the pointed out challenges, the German auto producer Daimler-Benz aimed to reinforce its stand on the United State marketplace as well (Benz, (2009). Consequently, from the viewpoint of view of Daimler-Benz, the merger as well as Chrysler appeared to be extremely potential and the corporation expected for receiving a very significant competitive gain for the upcoming. Daimer Chrysler was regarded the ideal equivalent for such a deal. The twelve-monthly income, the high competence, the little costs in brand design as well as development along with a powerfully built delivery set of connections in the United States changed the USA auto manufacturer into an incredibly attractive target. When chose to merge, the two corporations shared the very determined objective of becoming the number one in the world’s auto business. They targeted accomplishing this objective through uniting their diverse skills, their diverse work progressions as well as their completely diverse managerial practices so as to then exploit shared delivery channels, attract on joint hi-techs as well as take advantage of the collected knowledge mutually (Gibney, 2010). Because of the developments in the auto sector pointed above as well as the listed rationales, the two car manufactures entered into dialogue towards a potential merger in 1998. During that year, the two Principal Managers of the Chrysler Company declared the merger of the two auto manufacturers.The Daimler Chrysler AG was established and became the planet’s second largest auto producer, only overpowered by General Motors in form of annual profits as well as marketplace share. The merger of the two auto producers was thought an ‘amalgamation of equals’. Not any of the two companies desired to overpass the other one. Instead they did want to ensure the strong points of the two mergers comprised and be physically powerful jointly (Hofstede, 2006). After the victorious first amalgamation of the two, the flourishing post-merger-integration had to be certain so as to make sure the long-standing achievement of the merger. Inside the post-merger integration progression it was of fundamental significance to connect the two totally diverse company practices intrinsic to the businesses. The subsequent part concentrates on the post-merger-integration at the DaimlerChrysler more in detail. 4. Evaluation 1. The Post-Merger-Integration at the DaimlerChrysler AG The Post-Merger-Integration (PMI) is split into three stages: the start-up-stage, the project-execution-stage and the company-transformation-stage. The start-up-stage is established even prior to the real merger happens and comprises, among other dimensions, the description of PMI-topics, their prioritization as well as the initiation of a PMI-institution (Grube, 2006). Consequently, the project-execution-stage happens, which consists of the execution of the PMI-initiatives. Frequently the schemes are differentiated by solid or soft features of achievement. In the current case only the route of action concerning the amalgamation of the two company cultures as the largely time wasting as well as the generally hard feature inside the soft forces demonstrated (Grube, 2006), so as to not go further than the coverage of this manuscript. 2. Merging of the 2 institutional Cultures The integration of diverse business cultures is predominantly hard in so-called ‘amalgamations of equals’ (Hofstede, 2006) as in the current instance. Because of the reality that it is an amalgamation of equals, it is not the instance that the managerial culture of the buying corporation is enforced on the purchased equal. Inside an ‘amalgamation of equals’ the objective is to unite the cultures comprised, combine them and produce a new, joint company culture. In general this combination of company cultures may be categorized into three core stages: shock, (mental) stress, and readiness to resolve the challenges (Grube, 2006). These three phases of amalgamation require their time as well consequently require a specific level of tolerance. At the commencement of the amalgamation course the workers are shocked and astonished after the declaration of the corporation’s merger. This results in an interior competition among the workers that hinders the amalgamation. This is infuriated by the truth that well-educated as well as skilled workers neither wishes, nor desires to force itself to that type of pressure and strain (Grube, 2006). Instead of distress from the domestic rivalry, qualified workers favor to leave the corporation. Such an event may be noticed in the aforementioned case of Daimler-Benz as well as Daimer Chrysler. This loss of requirements along with competencies delays the amalgamation development even more and develops it even more difficult to thrive. Only subsequent to having struggled and afterwards settled the domestic competition fights, the employees are willing to enter into the amalgamation progression. Surrounded by the merging course it is of principally high significance to plan the process clearly and to engage the workers of both companies involved. In addition, cultural dissimilarities in performance as well as outlook of the affected employees have to be considered when planning as well as managing the amalgamation procedure (Grube, 2006). With consideration to the merging of two absolutely diverse company cultures, the affirmed Endeavour is to join features of all cultures in one. This may become a challenging obstacle. In order to protect the unbeaten combination of managerial practices in the DaimlerChrysler contract, several initiatives were introduced to support the integration. A number of seminars, lectures as well as trainings were provided that informed employees concerning the merger as well as the amalgamation process and that intended at sensitizing the workers for operating with new equals with a diverse cultural environment. Regardless of the entire attempt in the case in point of DaimlerChrysler the amalgamation progression failed and numerous factors resulted in an alleged ‘conflict of culture’. In the subsequent section are the rationales why this culture clashed a. The conflict of Culture The combination of the two managerial cultures, of the German auto producer Daimler-Benz as well as the United States auto manufactures the Daimer Chrysler company failed because of a culture conflict. Right from the foremost day of the fusion on, the cultural dissimilarities (Mirvis, 2010) made the post-merger-integration procedure at the Daimler Chrysler more difficult than in M&As (Gibney, 2010). Regardless of all attempts to synchronize the two company cultures as well as to put down the base for a joint managerial culture, DaimlerChrysler’s administration did not thrive. The two managerial cultures were too diverse to be merged effectively. They were founded on basically different principles and ethics that came to be known in the everyday work. At initial sight, the two companies in question did not appear to be all that diverse; they even appeared to be somewhat alike. They seem like us, they converse like us; they centre on the identical items as we do, and their communication is flawless (Finkelstein, 2002). However, soon the current differences became clear in the everyday work. Choice making at Daimler-Benz, for instance, was tackled extra systematic; at Daimer Chrysler on the other hand, creativeness in the choice making progression was asked for and powerfully supported. Amongst Chrysler’s principles you find effectiveness, empowerment of the workers as well as the same rights among all employees; Daimler-Benz’ ethnicity is more founded on power, administration and central choice making. Another reason that resulted in disagreement between the two companies was the salary structure grounded in the company cultures. The US executives obtained generous salary packages that were condemned by their German equals. This resulted to problems, principally when a US executive was relocated to Germany, for instance, and received thrice as much as his new manager (Dutta, 2001). DaimlerChrysler’s administration hunted for a rough calculation of the two remuneration structures and a resolution to the challenges, by setting very low bottom incomes and complemented by elevated performance-oriented motivation. Additionally the German as well as US workforce resulted to be extremely diverse in their working techniques: more of red tape against no red tape; extremely extensive or even continual reports and debates against reports founded on the bare minimum necessary. The Americans favored the trial- and-error-technique to arrive at a resolution and that is why they considered to be very confused and messy, since the Germans preferred to develop comprehensive schedules as well as correct execution of these schemes. Another significant difference is mirrored in the managerial arrangements of the two companies. Daimer Chrysler’s organization backs on flat chain of commands, which results in lack of understanding amongst the Germans that are recognized for their marked hierarchies as well as their top-down-organization. Due to the abundant dissimilarities in the administration cultures, the amalgamation progression at DaimlerChrysler was unsuccessful. Administration did not thrive in bringing together the two practices and it fell short in establishing the base for a joint company culture that mirrored features of both organizations. 5. Conclusion A large amount of over-border M&A’s do not succeed due to seemingly insuperable challenges. And therefore did also the merger between the two auto produces Daimer Chrysler and Daimler-Benz Companies. The potential merger was unsuccessful due to cultural differences that could not be linked. The collapse of this merger was not resulted by the reality that it did not create meaning to unite two productively functioning companies of the same industry so as to exploit one corporation’s strong points to harmonize the other corporation’s weakest points. From a strategic viewpoint, this merger did create meaning (Dutta, 2001); however the challenges that destined the merger to collapse were the contrasting and opposing company cultures and managerial models that brought insuperable obstructions. Inside the merger, Daimer Chrysler attempted to oversee the Daimler-Benz department as if it was a US corporation. This advance was foredoomed to not to succeed right from is commencement. On the dimension of over-border or cross-organizational M&as, one should not ignore the cultural disparities inherent. One company culture may not only restrain and substitute the other one (Doney et al., 1998). An agreement has to be arrived at and the basis for a fresh culture, founded on components of both cultures comprised, has to be established. To conclude the given paper, it should be summarized that the merger of Daimer Chrysler and Daimler-Benz Company was not expected to collapse right from the start, however rather happened because of cultural variations and bad leadership decisions. If both companies had join hands from commencement day, if they had joined their forces to chase a common aim, if they had focused more to the cultural differences and thus controlled the post-merger-integration procedure productively, they would have had immense opportunities to produce very important synergy impacts and become a top figure in the planet’s auto industry. The debated merger of the two auto producers Daimer Chrysler as well as Daimler-Benz Company is an ideal illustration of how cultural dissimilarities in over-border M&As might establish the achievement or collapse of such a merger. 6. References Benz Y. (2009). Lecture notes “Cross-Cultural Management & Introduction to Business Ethics; US, University of Paderborn. Doney, P. M. et al. (2005). Understanding the influence of national culture on the development of trust. Academy of Management Review, Vol 23, no. 3, p.601-620. Dutta, S. (2001). Daimler-Chrysler Merger: a cultural Mismatch; USA, Hyderabad. Finkelstein, S. (2002). The DaimlerChrysler Merger; New York, Dartmouth. Gibney, F. (2010). Daimler-Benz- Chrysler: Worldwide Fender Blender. Access on: 15 May 2015. Grube, R. (2006). Der Post-Merger-Integrations process der DaimlerChrysler AG. In: Wirtz, Bernd W. Handbuch Mergers & Acquisitions Management; p.757-783. Wiesbaden. Hofstede, G. (2006). Culture’s consequences: international differences in work-related values. Beverly Hills: Sage. Mirvis P. H. (2010). Managing the merger: making it work. New Jersey: Prentice Hall. Mittermair, K. (2006), A. Cross Border M &A, In: Strategists Management von Mergers& Acquisitions – State of the Art in Deutschlandund Österreich; New York, Wiesbaden. Read More