Cultural Differences and Mergers/Acquisitions

This assignment delves into the complexities of cultural differences and how they affect mergers and acquisitions. The student reflects on a past task where they encountered cultural differences in two companies, leading to the failure of merging and acquisition. They use Hofstede's cultural dimension theory and Gibbs' reflective model to analyze the situation, realizing that the differences in remuneration structure, relocation conditions, and corporate culture led to conflict between managers.

Running head: DAIMLER CHRYSLER
Daimler Chrysler
Name of the student:
Name of the university:
Author note

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The organizational culture
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

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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

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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.

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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

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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

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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.

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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.
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