Cross-Cultural Challenges and Solutions in DaimlerChrysler Merger

This report critically analyzes the cross-cultural issues that arose during the DaimlerChrysler merger. The analysis highlights the cultural mismatch between Daimler-Benz and Chrysler Corporation, focusing on differences in decision-making processes, working methods, and leadership styles. The report examines how these differences led to conflicts and inefficiencies within the merged company. It explores the failure of the 'merger of equals' approach and the dominance of German management practices. The report discusses the formation of the Integration Council and its ineffectiveness due to cultural clashes. Furthermore, it delves into the consequences of these issues, including employee demoralization and loss of clients. Finally, the report proposes solutions such as changes in leadership and cultural adaptation to mitigate these challenges. The report concludes with an overview of the challenges and the need for effective cross-cultural management in mergers and acquisitions, and provides relevant references.

Solutions to DaimlerChrysler’s cross-cultural Issues 1
Solutions to DaimlerChrysler’s cross-cultural Issues
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Solutions to DaimlerChrysler’s cross-cultural Issues 2
ATTEMPT TO PICK A MIDDLE SPOT
Jürgen Schrempp, the former CEO of Daimler-Benz and Robert Eaton, former CEO of
the Chrysler, attempted to pick a middle spot where they could be equals (PaperAp.com,
2017). The managers tried to follow the notion of the merger of equals (Hollmann et al., 2010).
The post-merger integration resulted in several difficulties because of the cultural mismatch of
the two companies (Aggoud, et al., 2012). Schrempp and Eaton were always on different pages
about how and where to lead to the merged company. Chrysler’s management was highly
centralized, whereas Daimler was initially run as a conglomerate. It was clear Daimler the deal
was more about acquiring Chrysler than them working towards cross-cultural management.
The attempt to pick a middle spot failed since the German’s structure was dominant, and
the Americans were forced to adapt (PaperAp.com, 2017). The merger aimed to combine the
different cultures involved to generate a new cross-cultural management plan, but this was not
the case since one party imposed its organizational culture on its counterpart (Hollmann, et al.,
2010). The corporate cultures of the two companies were worlds apart, making the cross-
management unsuccessful (Habraken, 2017). They both had extreme differences in values and
morals that were regularly relieved. Management was ineffective in combining the two cultures
and laying a basis for a shared corporate culture. The merged company lost several of their
clients and competent employees. The employees that were left behind became demoralized
leading to less productivity in their performance.
Creation of an Integration Council
Routines and Rituals of an organization during a merger are hard to change, the
employment process, training program, promotion, and the way they carry out their duties at
work. Each company has its own culture on how it gets the job done (Aggoud, et al., 2012). The

Solutions to DaimlerChrysler’s cross-cultural Issues 3
Integration Council was formed to organize the merger in a fast process since it is dangerous to
move at a slow rate (PaperAp.com, 2017). It DaimlerChrysler’s executive source of power
intended to integrate the working cultures of both companies.
The attempt to apply cross-cultural management failed due to the differences in decision
making processes, methods of communication, diversity, and working norms (Habraken, 2017).
There was a lot of tension since Germans believed in getting approval from top management in
the final decisions made, but the Americans believed in their individual initiatives. In the case of
mergers, the integration of different corporate cultures is always tricky.If cultural differences are
not managed properly,it can be a primary source of conflicts in any organization.This type of
negativity would eventually lead to a decline in the company’s productivity. Each culture acts
and thinks differently but through using the proper cultural tools for mananging diversity,the
general performance of a company will be improved.

Solutions to DaimlerChrysler’s cross-cultural Issues 4
References:
Aggoud, R. and Bourgeois, E., 2012. The Mismanagement of Mergers and Acquisitions.
PaperAp.com. (2017). Daimler-Chrysler: A Cultural Mismatch. [Online]. Available
at: https://paperap.com/paper-on-daimler-chrysler-cultural-mismatch/[Accessed: 20 May. 2019]
Habraken, B., 2017. Strategic decision-making in the post-integration process of cross-border
mergers and acquisitions: a qualitative research synthesis (Master's thesis, University of
Twente).
Hollmann, J., Moura Carpes, A., and Beuron, T.A. (2010) The DaimlerChrysler Merger - A
Cultural Mismatch?. Revista ADM [online]. 3 (3), pp. 431- 440. [Accessed 20 May 2019].