Cross border merger and acquisition can bring great advantages but also high risk of failure. Research shows, that the failure rate is as high as 50% (Valant, 2008). The main reason for that are cultural differences (Badrtalei and Bates, 2007). One of the biggest merger which has failed is the merger between Daimler and Chrysler.
The aim of this group assignment is to show differences of the corporate culture of Daimler-Benz and Chrysler as well as the main intercultural communication issues within DaimlerChrysler. Finally some recommendation will be giving in order to minimize the mentioned issues. The culture models by Geert Hofstede and Fons Trompenaars are used for a critical analysis in this work.
5. Recommendations and Conclusion
Organisational culture is a key factor for business success of companies. Our definition of organisational culture is an understanding for members of an organization and their beliefs which influence perceptions, thoughts, action and feelings of the members of the organization and manifest in their actions and artefacts. In mergers and acquisitions, companies have two different organisational cultures which have to ensure success. This integration process is not without problems, especially when it comes to international mergers with different national cultures. Insufficient attention of cultural differences might lead to resistance and conflicts. This causes significant additional costs and in extreme cases it leads even to failure. This is shown in the example of the failed takeover of Chrysler by Daimler-Benz.
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In order to avoid a failure, Daimler-Benz and Chrysler should have focused on organisational culture already in the preparatory phase. A bicultural audit may provide in this early phase a cultural analysis of both organisations based on information from the internet, statements from clients or former employees of initial findings on potential risk factors. More reliable information may be obtained only after the announcement of the deal through interviews with managers and staff, through interviews and focus groups. Then they could have worked out the basis of pre-defined dimensions, such as customer orientation, management style and communication behaviour, the similarities and differences in the parties.
The decision on the depth of integration largely determined the form of cultural unification. The options are summarised as follows: (O'Reilley, C. 2001)
- Adoption of a culture (usually the buyer's culture)
- Symbiosis of cultures ("Best of Both")
- Cultural pluralism (both cultures remain side by side)
Crucial for success is creation of clarity how quickly the target culture of the newly created company looks like - what norms, values and principles to use and how to implement those into the daily work.
Figure 1 provides information about the action which should have been taken into consideration by Daimler-Benz during the preparation stage towards cultural fit and during the integration stage towards a common target culture.
During the integration stage there are a couple of points essential for successful cultural integration: (O'Reilley, C. 2001)
- Communication and information
- Personal contact and cooperation of employees of both companies
- Supporting activities, contribution in the long term and ensuring sustainability
The lack of information and communication are quickly replaced by rumours and stir up uncertainty and fear. The management must face presence in the workers and explain their strategy and the objectives of the newly formed organisation. Staff meetings, information stands in front of the canteen or breakfast meetings are a useful tool. Furthermore, communication activities are targeted to create acceptance of the new situation among the employees. Communication is an important lever to develop the readiness for change in direction of the target culture and to achieve identification with the new organisation. This requires that the benefits of this process of change are made clear for each individual. Therefore the meaning, advantages and objectives of the transaction should have been communicated clearly.
In addition, a good communication and personal contacts between employees, exchange visits to sites, the mix of teams, team development, integration and management training workshops are important and supportive tools on the way to a common culture.
Finally, integration workshops are suitable as launch events for the cultural integration. The employees, the new corporate strategy as well as the values and principles of the new organisational culture can be introduced and explained. This integration workshop should give room for discussion to enable an exploration of the content and also the introduction of team-specific issues. Strategy and values must not continue to open questions of management, but should be brought in the influence area of each employee. This process takes time and it is not done with a single workshop. To promote the development of the new culture and to ensure sustainability DaimlerChrysler should have been triggered the entire process.
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