One of the major mergers was between Daimler-Benz, a German company and a US producer of cars, Chrysler. Daimler needed to enter new markets and develop new products; Chrysler felt need for a partner to cater the over-capacity of the industry. This merger involved various socio-cultural issues: first of all, to reflect the German strength, the name chosen was DaimlerChrysler; American executives got better rewards as compared to German counterparts; differences in dress codes, travel policies, working patterns and even the behavior in business meetings was completely different for the two companies. There were cultural differences too; whole environment and the core purpose of both brands were completely different. One was a luxury brand while the other targeted the ‘blue collar’ purchaser. The company began to collapse financially and in 2001, it went into loss closing its plants and announcing job losses. Daimler sold its 80% stake to Chrysler at only $7.4 billion. The partnership failed where only Chrysler benefitted.
The merger was failed mainly due to the differences between the organizational cultures of both the companies. Daimler, being a German company can be described as being conservative with emphasis on safety and efficiency; on the other hand, Chrysler was believed to be “daring, diverse and creating” (Applebaum and Roberts et al., 2009). Daimler had a clear chain of command and emphasized authority; this was because of the national culture too. Chrysler belonged to US where team orientation is more favored and egalitarian approach was used in the company. Further, there was another cultural difference between the two: where Daimler focused on enhancing quality and valued reliability; Chrysler emphasized on catchy designs and offered competitive prices for its cars. So, there was a completely different goal inherent in each organization; with differing national values, and conflicting goals, both companies were moving in opposite directions. I believe, Chrysler had an adaptable culture in its organization where efficiency, empowerment and egalitarian relations were valued (Froese, 2010). Daimler had a centralized decision-making culture where authority was respected and trivial matters were given extreme attentions. Daimler had no room for flexibility and adaptability; rather, bureaucratic precision was practiced like militarists. Both organizations were completely different culturally; and it was because of the national cultures of the origin of these organizations.
Executive Decisions
Mergers and acquisitions take place often when companies see business opportunities. One of the mandatory processes that business must focus on is integration of the cultures when merging together. The culture of each organization has a significant influence on the performance of that organization (Schmid and Sánchez et al., 2012). The culture tends to support the mission, visions, goals and the strategies of the business. To integrate the cultures, the companies must conduct a cultural audit of both organizations. The audit must address these issues not only for the separate companies but also for the combined business: core values; vision and mission; strategic direction; policies pertaining to coordination, teamwork and integration; development of employee capabilities; employee empowerment; learning culture; and the ability to adapt change (Bitti, 2013).
When all this data is present with the management, it becomes easier to make a decision whether the merger should take place or not; in addition, with the help of this data, the critical issues and problems that could arise in case of merger can be anticipated; and it is better to use this data before the merger to address the problems that could arise after the merger takes place. It is imperative that the company understands own culture and takes enough time to study and analyze the culture of the other company before the merger takes place (Sarala, 2010). The integration of cultures is the key to make the merger or acquisition a success; and the data identified through the cultural audit can be used to eliminate all the possible issues that could hurt the M&A in the future.
References
Applebaum, S., Roberts, J. and Shapiro, B. (2009). "Cultural Strategies in M&As": Investigating Ten Case Studies. Journal of Executive Education, 8 (1).
Bitti, M. (2013). Culture fit key to M&A success. FINANCIAL POST, [online] 21st Jan. Retrieved from: http://business.financialpost.com/2013/01/21/culture-fit-key-to-ma-success/ [Accessed: 3 Nov 2013].
Froese, F. (2010). Success and failure in managing foreign acquisitions in South Korea and Japan: Lessons from Renault, General Motors, and DaimlerChrysler. Global Business and Organizational Excellence, 30 (1), pp. 50--59.
Sarala, R. (2010). The impact of cultural differences and acculturation factors on post-acquisition conflict. Scandinavian Journal of Management, 26 (1), pp. 38--56.
Schmid, A., Sánchez, C. and Goldberg, S. (2012). M&A today: Great challenges, but great opportunities. The Journal of Corporate Accounting & Finance, 23 (2), pp. 3-8.
