Culture and Organisations of Daimler - Essay Example

Two German automobile manufacturers Benz & Co. and Daimler Motor Company merged together in 1926 and named the new company Daimler-Benz. Its Mercedes cars were arguably the best example of German quality and engineering. Another merger came in 1998 when Daimler-Benz and U.S. based Chrysler Corporation, two leading global car manufacturers, agreed to combine their businesses which was then perceived to be a ‘merger of equals’ (Casestudy, 2008). This merger was supposed to be the third in the world in terms of revenues, market capitalization and earnings, ranking after GM and Ford.

It was also considered to be fifth in terms of the number of passenger cars and trucks sold, ranking GM, Ford, Toyota and Volkswagen. However, within two years of the Daimler-Chrysler merger, the company suffered third quarter losses of more than half a billion dollars and in 2001 they slashed about 26000 jobs at its ailing Chrysler division. What was described as ‘marriage made in heaven’ in 1998, the Daimler-Chrysler merger proved to be a costly mistake for both the companies. In early 2007, Daimler was forced to sell 80 percent of Chrysler to private equity firm Cerberus Capital Management LLC which ended a nine-year merger.

Critics believe that though strategically the merger made good business sense, the two organizations had contrasting culture and management styles that hindered the synergy. Organizations are no more constrained by national borders and partnerships are driven by the need to achieve economies of scale. The expected synergies fail because the cultural fit is ignored. Globalization may have brought companies and nations closer but the difference in organizational culture is perceivable. Culture has been recognized as a strong determinant of beliefs, attitudes and behavior.

Research suggests that decision-makers give disproportionate attention to strategic fit as compared to integration