Cultural Difficulties Leading to the Failed Merger of Daimler and Chrysler

This reading looks to explore reasons why two major car makers wound up not having a successful merger. The merger can be simply equated to a marriage and what each brings to it. There are certain expectations to which a merger as well as a marriage is predicated upon and when those expectations are not met then divorce is in the cards for both merger and marriage alike.

In the case of business what is essential for success is the process of “due diligence” in which all salient aspects of the business are carefully analyzed so that no surprises are found after the ceremony has been performed. But in the case of Daimler and Chrysler it is apparent that this was not the case. The merger was thought to be one of equals coming together but in actuality it was not. The reading raises a few questions such as how could Chrysler who was struggling to survive be considered on an equal footing with Daimler? Was the merger simply for the sake of empire building and not to enhance each others brand?

Obviously the failure to make a go of it lied more with the fact that the two companies had little knowledge of what the other was all about. When this is the prevailing situation problems will ensue. Daimler also viewed the marriage as temporary with no long term commitment which leads to instability from the start.

Overwhelmingly the problems experienced where ones of culture, German values and ideals verses American thinking and behavior. Charts and graphs tell one story in doing due diligence while the corporate culture and societal culture tell a different tale. With compensation disparities, decision making, attention to detail, and methodology of how to do business all contributed to cultural differences that created a chasm.

Neither company was about to conform to a new norm in their business culture or behavioral cultures which caused friction between the two. Thus both companies overlooked their cultural differences in determining if the merger would ever be able to work.

What was good about this reading was how clear culture plays a part in business and can have a profound effect. What I would have like more information on to make the article more interesting would be more background on each of the CEO’s, their comments and what they themselves had done prior to and after the merger had taken place.

The two questions I would ask are; how should corporations best view negotiating with how businesses of differing cultures? What are the crucial non-negotiable cultural points that can break a merger deal?