1. Introduction
The process of globalization and the intensification of competition, forces modern organizations to adapt themselves quickly and flexibly to changing market conditions. The concept of change by the change management is hence primarily implemented due to economic downturns, economic growth issues, political, societial or technical general conditions or due to the fact that some organizations do not have sufficient internal strength to sustain its position (Lauer, 2010).
By virtue of the merger between the Daimler-Benz AG and the Chrysler Corporation in 1998, the newly created concern DaimlerChrysler tried to build new organizational structures for more efficient competitiveness to expand into new markets and to reinforce it’s financial position, hence taking advantage from a “2+2=5 effect” (Cartwright and Cooper, 1992). Both companies were trying to move from a coordination growth stage to a collaboration growth stage (Clarke, 1994) by the establishment of one single operating entity which as we will see later on, led to the failure of DaimlerChrysler during its “Red Tape crisis” (Greiner, 1972). Goal of the change management was to implement a corporate transformation (Dunphy et al., 1993) by finding the best compromise for both companies in regard to the organizational structure, culture, firm philosophy, operational processes as well as the integration of employees (Waller, 2001).
However, in the course of time a strong antagonism and resistance to the merger arose in particular amongst former Chrysler employees. A study from IBM Global Business Services in 2008 shows that only 41% of all change projects achieve its goals, while 44% only achieve partially the aspired aims and 15% don’t lead to achievement or are abandoned ahead of schedule. The problems of change management adjustments are mostly justified by failures in the acquaintance with the factor human being (IBM Global Business Services, 2008); the partnership between Daimler-Benz and Chrysler also failed due to a primary focus on hard data such as e.g. financial information while forgetting the focus on soft (Cartwright and Cooper, 1995) data namely the support of an organizational culture establishment.
The following report critically evaluates the changes occuring in times of an international merger by the example of the 1998 merger between Daimler-Benz and Chrysler. Beginning with an explanation of the triggers and reasons for the necessity of change
Table of Contents
1. Introduction
2. The Daimler/Chrysler merger
3. Two cultures – one company
3.1 The Change Management
3.2 Lewin’s Model of Change
3.3 Cultural dimensions
4. Recommendation
5. Conclusion
6. References
6.1 Literature references
6.2 Internet references
7. Appendices
7.1 Appendix 1
7.2 Appendix 2
7.3 Appendix 3
Objectives and Core Themes
This report critically evaluates the dynamics of change management within international mergers, using the 1998 Daimler-Benz and Chrysler merger as a primary case study to highlight the challenges of organizational integration and cultural alignment.
- Strategic analysis of the Daimler/Chrysler merger process.
- Application of change management models (e.g., Lewin’s Model of Change).
- Investigation of cultural dimensions and organizational identity.
- Critical evaluation of leadership styles and communication failures.
- Recommendations for successful international organizational transitions.
Excerpt from the Book
3.1 The Change Management
Americans had great difficulties with the German management style that is affected from hierarchy and beaurocracy. Managers at Chrysler were able to take decisions at each level, thus influencing processes immediately whereas managers at Daimler were forced to take decisions only on advice of specialists, which is the reason, why they tend to execute an authoritarian leadership style. Initially the leadership was transferred to Jürgen Schrempp (Daimler-Benz) and Robert Eaton (Chrysler) with the same responsibility as CEO’s; only two years later Eaton resigned (Waller, 2001).
The paradigm of “power structure” (Johnson et al. 2008) therefore, changed significantly for Chrysler managers as Schrempp operated an uncontrolled and autocratic leadership like a “blind navigator”. Furthermore, Schrempp preferred German managers for top positions which turned the American partners increasingly resitant to change and which further determines the uncertainty of change. The only adaption towards the American business rituals was that German payments tripled by adjusting them to US conditions (Lauer, 2010). As a result the German side of the merger adopted the American “control system” (Johnson et al. 2008) in terms of the principle of shareholder value. The combination of corporate transformation and directive leadership hence, lead to a dictatorial transfomation of both companies (Dunphy and Stace, 1993). It is also important to mention that a negative outcome of change of the formal organization affects the informal organization negatively due to a lacking focus on embedded values of both organizations (Senior and Swailes, 2010).
Summary of Chapters
1. Introduction: Discusses the necessity of change management in the context of globalization and introduces the DaimlerChrysler merger as a case for corporate transformation failure.
2. The Daimler/Chrysler merger: Outlines the strategic motivations behind the 1998 merger and the subsequent integration efforts aimed at creating a global automotive leader.
3. Two cultures – one company: Analyzes the clash between German and American management styles and utilizes theoretical models to explain the failed integration process.
4. Recommendation: Provides strategic insights on mitigating employee resistance and emphasizes the importance of intercultural training and transparent communication.
5. Conclusion: Summarizes why the merger failed due to insufficient cultural planning and offers final thoughts on the necessity of proactive leadership in turbulent environments.
Key Terms
Change Management, DaimlerChrysler, Merger, Organizational Culture, Globalization, Lewin’s Model, Leadership Style, Intercultural Integration, Power Structure, Uncertainty Avoidance, Corporate Transformation, Post-Merger Integration, Communication, Strategic Analysis, Employee Resistance.
Frequently Asked Questions
What is the primary focus of this study?
The study examines the importance of change management in organizations, specifically focusing on how cultural and leadership factors contributed to the strategic failure of the 1998 DaimlerChrysler merger.
What are the central thematic areas?
The central themes include international merger strategies, the clash of organizational cultures, the role of leadership, and the psychological impact of change on employees.
What is the main research objective?
The objective is to critically evaluate why planned corporate changes often fail and to suggest better integration practices for international mergers.
Which scientific methods are employed?
The report utilizes a qualitative case study approach, synthesizing existing literature on management theory with a critical retrospective analysis of the DaimlerChrysler transition.
What topics are covered in the main section?
The main section covers the history of the merger, detailed comparisons of German and American management styles, the application of Lewin’s Three-Phase Model, and an analysis of Hofstede’s cultural dimensions.
Which keywords characterize this paper?
The paper is characterized by terms such as change management, corporate culture, post-merger integration, and strategic leadership.
Why did the author choose the DaimlerChrysler merger as a case study?
It serves as a prominent example of how "hard" financial and strategic objectives can be undermined by a failure to address "soft" factors like organizational culture and employee morale.
What role does Lewin’s model play in this analysis?
Lewin’s model is used to argue that DaimlerChrysler attempted a "Big Bang" approach, neglecting the necessary "moving" phase and the refreezing of company values, which led to an unstable transition.
How did German and American management styles differ in this merger?
German management was characterized by hierarchical, bureaucratic, and authoritarian structures, while American managers were accustomed to decentralized, independent decision-making processes.
- Quote paper
- C. Jung (Author), 2011, The Importance of Change Management in Organisations, Munich, GRIN Verlag, https://www.hausarbeiten.de/document/183144
