Académique Documents
Professionnel Documents
Culture Documents
Alexandra Dunda
LDR/531
October 3, 2010
Eric Heard
DAIMLER-CHRYSLER BUSINESS FAILURE 2
In 1998 Daimler-Benz paid $37 billion for Chrysler, changing the name to Daimler-
Chrysler. In 2007 Daimler then sold Chrysler for $7.4 billion to Cerberus Capital Management.
What happened?
Partnerships, of any form be such as mergers, acquisitions or joint ventures, are a viable
strategic option to achieve the objectives of growth, diversification, economics of scale, synergy
or a global presence The typical reason for failure was the partnership was based only on
financial and economic information or what is more commonly called "hard " data and rarely
involved data to support the meshing of the organizational cultures or the "soft" and "mushy"
issues (Badrtalei & Bates, 2007) The cultural compatibility was the big failure of this merger.
The most often cited reason for the failures is the total lack of understanding between the
two parties of the culture, personalities, nationality and technological systems. In a matter of two
years, all the top American executives have either retired, left, or were fired, and were replaced
by German employees. The morale among the American employees was at its lowest, causing
anxiety and low productivity. There was not partnership of equals in the combination of
domestic and international corporate. One member of the partnership will be dominant based on
financially or market position. Both parties come to the partnership table with difference
perceptions and contributions to the merge (Badrtalei & Bates, 2007). All these factors have
generated a poor job satisfaction, which is the core of subsequences turnover, absenteeism,
Behaviors can be explained using different variables of how individual perceive the environment
The expectations in individuals are elaborated according to the trust in the system
organization. To drive expectations is necessary from organization that managers have a clear
big picture of what teams and employees need to accomplish for the success of the teams and
employees in relation with the company’s goals. To do so, the organization must implement a
company strategic planning that define objectives, an adequate process that include evaluation
and feedback in which the employees can recognize what they are doing with the purpose of to
manage their own careers and improve themselves, the communication process needs to carry a
complete information about cultural environment goals as well the rewards to gain after the
Chrysler failed to detect the conception of individual equity and how it impacts team
performance because individual perception of fairness affects the team performance. Each
member provides different theories. Is not theory that shows for sure how the impact of
individual on team performance, but is clear that the contribution of individual affect the team
performance. Is very important from the organization to provide individuals with a trusting
environment that make them fell fairness from all the members in the organization. The equity
from individuals has too many perceptions, therefore is essential to develop an equity plan after
Chrysler did not use Strategies to discourage social loafing. Individual contributions
must be evaluated in order to discourage social loafing. One strategy for discouraging social
loafing is simply peer pressure. Offering some kind of incentive to the individual avoids social
loafing. Managers need to correct any kind of bad behavior associated with social loafing right
away.
DAIMLER-CHRYSLER BUSINESS FAILURE 4
An excellent evaluation opens the path to a good and positive feedback. Chrysler failed
to use behavior modeling and the practice model evaluation methods. “Behavior modeling tends
to increase when the model is rewarded for behavior and when the rewards (Cascio, 2005). The
practice makes perfect, and the inappropriate behaviors can be corrected immediately, before
they become ingrained in the trainee’s behavior. As part of any performance appraisal is
necessary to correct right away with an adequate feedback. Chrysler did not study the behavior
to see if matched the standards to improve performance, encouraging the team members and all
Chrysler failed to blend his mission and goals by attracting, motivate and retain the
most talent people because the philosophy that motivate employees attract satisfied customers is
the base to succeed in business mergers. Daimler’s philosophy that Chrysler didn’t need separate
dealerships for Dodge and Chrysler products was a big reason for the continuous dealerships
alienated owners and confused buyers. Consumers interested in a Jeep Wrangler didn’t need to
Chrysler failed because did not use an adequate measure to success in this learning culture.
Adding to this, Chrysler did not use technology to move information that allows sharing
information to get to know each other in this merger. Like a merge company was a need to
create a partnership that spans different corporate cultures because workers and managers on this
new merge need to understand and capitalize on diversity and combine efforts to offer the
product and services to customers in this open market with a changing labor force that needs to
learn the value of different races, ethnic groups, cultures, language, religion, sexual orientation,
levels of physical ability and family structures. It is essential to build trust among members that
create adaptability and acceptance. According to The Ethic Awareness Inventory (EAI) the new
DAIMLER-CHRYSLER BUSINESS FAILURE 5
environment of the 21st century calls us to better understand the dynamics of organizational
ethics and to assess the impact of inconsistencies between corporate policy and individual
thought because the values are based in the perceptions of and individual moral attribute, so is
complex to be generalized. Values are determined by what we think is right or wrong depending
Managers and leaders failed too, because now managers are being educated to guide,
train, support and teach employees rather than tell them what to do (McHugh, 2008)
The cooperation and integration among companies have increased and was needed from
Chrysler that managers allow freedom. Because the workforce was increasingly diverse, thus
Managers today emphasize teamwork and cooperation rather than discipline. They tend
to be friendly and treat employees as partners making the manager more progressive. Managers
50 years ago can stay in an organization for the whole labor life; in change today’s mangers
move from one company to another as their careers unfold. Managers today are using
costumer request. A manager plans, organizes, and controls functions within an organization. A
leader has a vision and inspires others to grasp that vision, establishes corporate values,
emphasizes corporate ethics, and doesn’t fear change (McHugh, 2008). A leader doesn’t need to
be a manager, but managers need to carry out the leadership style vision.
courses of action that may be used it if the primary plans don’t achieve the organization’s
objectives. Managers did not have an open mind at stress situation and did not how to deal with
To that effect, he reduced the management board from 17 to 13 by removing unwieldy board
members. The resulting board had eight Germans and five Americans. He further created three
vehicle divisions; Chrysler Brands headed by James Holden (Stall Kamp’s replacement),
Mercedes-Benz Division, and the Commercial Truck Division (Muller et. al., 1999).
The merger has a matrix structure that creates dual lines of authority and combines
functional and product departmentalization (Robbins & Judge, 2007) The choice of this design
include the size of the organization; its technical system of production; various characteristic of
its environment, such as stability and complexity; and its power system (Mintzberg et. al., 2003)
perception of their job, so encourage the employ to work and build the skills and competences
for to growth, which allow the employees to be more responsible for their tasks while are being
motivated for the empowerment from managers and the good quality of life. The discrimination
is going to be present while exist a diverse workforce, so the best way to go is implement
policies to avoid any kind of discrimination that attempts to the good work environment. It is
important to have a cosmopolitan perspective to avoid cultural shock and promote a cohesive
work environment that makes possible to melt two families in a merger. Intercultural
communication, training at all levels and cross-cultural marriage commitment must be present to
References
Badrtalei, J., & Bates, D. (2007). Effect of Organizational Cultures on Mergers and
Acquisitions:
Mucha, J., "Why Chrysler is smiling again," Business, 5(10), 2004. Muller, Joann, "Lessons
from
Cascio, W.F. (2005). Managing human resources: Productivity, quality of work life, profits.
Retrieved from the University of Phoenix (7th ed.). New York: McGraw-Hill.
Robbins, S. P., & Judge, T. A. (2007). Organizational Behavior. Upper Saddle River: Pearson
Education.
Yukl, G. (2006). Ethical Leadership and Diversity ( 6Th. Ed.). Prentice-Hall, Inc. A
McHugh, M.F. (2008). Human resources management: Finding and keeping the best employees.
Retrieved from University of Phoenix (8th ed.).New York: McGraw-Hill.
The Williams Institute for Ethic and Management. Retrieved from http://www.ethics-twi.org/