Description
Considering the above article, analyse the influence culture had on the organisation and the way it works as a whole. ‘An initial mistake of the Germans had been that, in order not to be seen as heavy-handed, they had “stayed away” from Detroit’ Do you think their solution was the correct one? What is your reasoning? How might the Integrated Cross Cultural Model of Leadership (Thomas & Perterson, 2018:149) help a manager in a similar situation?
Unformatted Attachment Preview
Assessment Task
Students are advised to review and adhere to the submission requirements documented after the
assessment task.
For this assignment, read the article below, and conduct further research were relevant, and answer
the questions that follow:
Cross-cultural issues relating to the DaimlerChrysler merge – Case Study
Case Study by Richard D. Lewis
In May 1998, when the impending merger of Daimler-Benz and Chrysler was announced, it
heralded the biggest cross-border industrial merger ever. The rationale was obvious.
Chrysler was perennially third in the Detroit Big Three and despite heroic efforts by Lee
Iacocca to revitalize the company it struggled to maintain its productivity and world ranking.
Daimler-Benz – more prestigious and dynamic – was essentially a specialist producer of
premium saloons and had made few efforts to widen its product range and customer base.
The amalgamation of the two companies produced an industrial giant with global sales of
more than $150 billion, making it fifth among the world’s car manufacturers. It was to be a
shining example of what globalization could achieve for an adventurous group combining
two well established brand names. A smooth integration of the two famous corporations
would enable the group to meet the demands of nearly all segments of the car market, and
sales could be expected to increase exponentially.
The phrase “smooth integration”, was a key challenge to Daimler-Chrysler as well as the
route to success.
Certain elements of the Daimler-Benz management were awake to the problems likely to
arise when German and American executives and work forces were to be united at various
levels of activity and responsibility: German and American mindsets and world views differ
sharply. There are worse cross-cultural mismatches, but there are also better ones. Wisely,
Daimler-Benz appointed a senior executive, Andreas Renschler, to supervise the
integration. He had worked several years in the United States and was sufficiently wellversed in both cultures to foresee and hopefully circumvent cultural difficulties which would
undoubtedly present themselves.
We had worked with Mercedes executives and teams in the years between 1975 and 1995.
Andreas Renschler contacted Richard Lewis Communications and arranged an initial
meeting in Stuttgart to discuss training programmes for executives who would be involved in
the early stages of cross-border activity. We sent a 3-man team to the headquarters in
Sindelfingen – two of our English consultants who had lived in Germany and one GermanAmerican who flew in from New York. We spent the whole day with Renschler, an
experienced and mature individual with a good grasp of cross-cultural issues and a keen
insight into American and German behavioural patterns. We were joined during the day with
a German HR team, assembled specially to facilitate the merger.
Communication styles
We made a presentation predicting the likely obstacles in the way of quick understanding. In
the early stages of the merger, differences in communication styles would be the first
major hurdles to be surmounted. In Germany the primary purpose of speech is to give and
receive information. Americans are also factual, but use speech emphatically to give
opinions and are more persuasive than Germans. In this respect they often use hype, which
Germans instinctively react against. Americans tend to evince optimism and put forward
best scenarios. Germans are more comfortable with a cautious, somewhat pessimistic view
which envisages worst scenarios. They want a lot of context before approaching any
important decision. The let’s get-on-with-it approach of the Americans often increases
German caution. “Yes, but what happens if …””? is a typically German attitude. Americans
are anxious to expound the grand strategy and mop up the details later. They seek
simplification of issues to clarify their route to action. Germans have a tendency to
complicate discussion (life is not simple, you know)
German formality is evident in their style of communication. When meeting strangers, they
usually enter a room with a serious look on their face, contrasting with the broad Hollywood
smiles of the Americans. Germans at this stage may seem stiff and distant to Americans.
Surnames are used for years and full titles are expected. Americans go for first names from
the start and have an informal way of conducting a discussion, using slang, irony and
kidding, which disconcerts most Germans, especially senior ones. Germans are used to
asking serious questions to which they expect serious answers. Americans, fond of humour,
often reply in a rather flippant or casual manner. Germans fail to appreciate jokes,
wisecracks or sarcasm during a business discussion. Germans are not fond of small talk
and often find Americans chatty. Charismatic Americans find Germans lacking in charisma
and perhaps dull. Germans in fact distrust charisma and instant smiles. As they generally
think in silence they are not quite sure how to react when Americans think aloud. Are they
making statements, suggestions, or are they trying to make their own mind up?
Brainstorming is popular with Americans but less so with Germans, who would be reluctant
to speak out in front of a superior. German ideas are expressed guardedly with
considerable caution. American speech is quick, mobile, opportunistic. Germans seldom
argue with a colleague’s remarks. Americans prefer a free-for-all discussion. Their speech
is loaded with clichés (Let’s get this show on the road”. “I can’t fly this by the seat of my
pants”.) or tough talk (“I tell you I can walk away from this deal”.) Both are absent from
German speech. American agreements are usually reached by persistent persuasion in
open discussion; Germans find agreement through thorough analysis of details, leading to
clarification and justification.
Listening habits, too, are part of the communication process. How would Germans and
Americans listen to each other? The American (audience) demands initial entertainment
and tends to listen in snatches if not amused. The next phase is “What’s new?” Time is
money so get on with it. Don’t complicate issues – tell it like it is! Slogans and catch phrases
are readily absorbed by Americans. Germans don’t use them.
The German listener does not yet wish to know about the present; the past must come first.
Consequently all the context leading up to the deal must be gone into. When this need has
been satisfied, then one can describe the present situation, before edging cautiously
forward. Questions in the mind of the German listener are “Does this sound too simple?”
“What happens if …?” “Am I getting the hard sell?” “Aren’t we rushing into things?” “Can I
have more (technical) information, please?”
Other differences
Diversity in communication styles would lead to early misunderstandings, but later
procedural and structural differences would raise their heads. US corporations usually
have strictly centralized reporting. Large German companies often feature decentralisation
and compartmentalisation. Each department reports vertically to its department head.
Horizontal communication across departments at different levels is practically taboo.
Departmental rivalry is much more acute than in the US. In this area German managers
tend to be extremely touchy. Americans are more thick-skinned. Americans go from office to
office in their gregarious manner. German offices are
strongholds of privacy, usually with doors shut. American managers chase their staff around
the building exchanging views (“Say, Jack I’ve just had a great idea”). Germans by contrast
like to do the job on their own. (No monitoring, please, until the end of the day). American
managers like to shower good executives with praise (“You’re doing a heckuva job!”)
German staff expect no praise from the boss. They are paid to do the job efficiently.
Germans are class conscious. Senior managers are usually intellectuals. In classless
America intellectuals are often called “egg-heads”. American managers speak out loud.
Senior Germans command in a low voice. Americans prize spontaneity, flexibility and
adaptability in reaching their goals. Germans give pride of place to well-tested procedures
and processes. If these structures have brought the company so far, why change things?
Renschler and the Mercedes training officers concurred with the points made in our
presentation. What should be done in terms of training to facilitate the merger? Our basic
reply was that many mergers fail because both sides are not sufficiently versed in the
historical values, core beliefs, communication patterns, behavioural habits and world view of
the other. Training would address these issues systematically according to the model we
would put forward. An important target in such training is to make one side like the other.
This transcends simple knowledge of the other culture.
It was agreed that we would refine our training model to fit the proposed merger of the two
companies and would return to Stuttgart one month later with a detailed programme.
The Training Model
When we returned the following month, Renschler had assembled a somewhat larger HR
team (6 or 7 people) including one professor from “DaimlerChrysler University”.
They had formed various executive teams who would tackle various projects in the merger.
In Stuttgart the teams consisted largely of Germans with a sprinkling of Americans and
British. Other teams, with more American members, were being formed in Detroit.
Our model envisaged a 6-month training period where teams would be exposed to full-day
seminars, workshops, special briefings and a home study programme. We have formalized
cross-cultural studies under the following sub-headings:
Culture: general
Religion
Cultural classification
Languages
Values and core beliefs
Cultural black holes
Concept of Space
Concept of Time
Self-image
Culture: communication
Communication patterns and use of language
Listening habits
Audience expectations
Body language and non-verbal communication
Culture: interaction
Concept of status
The position of women
Leadership style
Language of management
Motivation factors
General behaviour at meetings
Negotiating characteristics
Contracts and commitments
Manners and Taboos
How to empathize with them
Renschler and his “committee” were sufficiently pleased with the programme. It was agreed
that 50-60 per cent of the activity would be carried out in Stuttgart with the aim of
familiarizing the largely German teams with American mindsets and business culture, and
similar “mirror” seminars would be held in Detroit to help Americans understand Germans.
The emphasis throughout would be the fostering of a favourable view of the foreign partner.
As we all agreed on general principles we discussed a starting date with Renschler. In view
of the urgency of the consummation of the merger, he was anxious to start as soon as
possible. There was only one obstacle – the programme would first have to be approved by
DaimlerChrysler University. The professor on our committee promised to submit the
programme to the University the following week. Soon after Renschler changed jobs. We
never heard from DaimlerChrysler again.
Five years later
Five years later, after addressing the annual conference of the G100 group in New York, I
attended a cocktail party hosted by Jack Welch and Raymond Gilmartin. At this function I
met a German DaimlerChrysler board member who had been one of the first Germans to be
sent to the United States where he had worked from 1998 – 2003. He gave me an account
of the unfolding of events after the merger was consummated. The time taken by the
DaimlerChrysler University in considering the content of a cross cultural training programme
resulted in most executive teams being sent from Stuttgart to the United States with no
training at all. The cultural clashes we had forecast in 1998 took place in the first few
months of joint operations. Differing behavioural habits and attitudes irritated both sides; this
situation was exacerbated by the maintenance of the fiction that the amalgamation was a
merger of equals. It was nothing of the sort. Daimler could not afford a merger formula, with
a jointly-owned company based in the Netherlands, since this would have triggered a huge
tax charge. This meant that Chrysler had to become part of a German Aktiengesellschaft. It
was in fact a quiet takeover, in compensation of which the Chrysler shareholders were paid
a 28% premium over the then market price. Managers maintained the “merger” fiction for
some time; this was relatively harmless in itself except that American staff continued to
believe that there would be “joint control”. It took years to achieve any measure of
integration of two different ways of working. Neither side had been given time or training to
study the other’s mindset.
It is true that the Germans learnt to be less formal and to cut down on paper work; the
Americans, for their part, learnt more discipline in their meetings and decision-making.
German and American commonalities such as work ethic, bluntness, lack of tact, a linear
approach to tasks and time, punctuality, following agendas, results-orientation and
emphasis on competitive prices and reliable delivery dates created a potential modus
operandi, but two different mindsets led to irritation and misunderstanding on both sides.
The German board member listed dozens of incidents. He opined that the Americans he
was working with showed a complete lack of understanding of German values, methods
and working culture. They found that Germans shook hands too much, were often too
intense and followed rigid manuals and rule books which deflated American spontaneity.
German meetings were boring, American meetings were exciting; the German drive
towards conformity clashed with American invention, innovation and opportunism. Germans
adhered to old traditions and well-tried procedures; Americans preferred a DIY ambience.
Germans who stayed on sought deep friendships, not segmented ones like the Americans
(tennis friend, bridge friend, drinking friend, etc.). Americans got annoyed by the German
habit of offering constructive criticism. Half the time Germans and Americans just talked
past each other. Germans took long holidays, unthinkable in American eyes, especially
when there was a crisis, but when difficulties arose, who was in control? For one year the
group had 2 chairmen, Mr Schrempp from Daimler and Bob Eaton, who had been boss of
Chrysler. Within one year Eaton was fired and his American successor lasted less than 12
months. DaimlerChrysler’s share price fell from $108 in January 1999 to $38 in November
2000. Nobody was quite sure how the combined companies should be run. Cultural
differences led to divisions of opinion and methods at all levels. In German eyes, Chrysler
was a company with problems in every department, not least productivity. Each vehicle took
Chrysler 40 hours to make. Honda and Toyota produce a car every 20 hours. The
Germans, with their emphasis on quality found Chrysler quality control way out of line. Even
worse there was no plan in place to improve it. Chrysler swung from a profit of $2.5 billion in
the first half of the merger year to a loss of $2 billion in the second.
The German solution was to import a crack German executive – Dieter Zetsche – to apply
German principles to the problem. He set a target of 30 hours per vehicle in 2007; he
slashed spending from$42 billion (five year plan) to $28 billion; he brought new models
forward 6 months faster; he shut 6 factories and cut 45,000 jobs – one third of the total.
Under Zetsche’s efficient control, Chrysler was in 2006 perhaps the healthiest car company
in Detroit. However a second important factor emerged from the troublesome acquisition of
the American company. An initial mistake of the Germans had been that, in order not to be
seen as heavy-handed, they had “stayed away” from Detroit. For this reason it took them 2
years to get to grips with the American company’s fragility. Then when Zetsche
concentrated all out on rescuing his ailing colleague, Mercedes itself slipped badly. Neglect
led to its reputation for quality being dented by unfavourable consumer reports and the
company’s move down-market into Smart cars piled up huge losses.
Ironically Zetsche himself was moved back to Germany to assume control of the whole
group. It was then the turn of the German end of the DaimlerChrysler group to undergo
painful restructuring similar to that which had taken place in the previous 4-5 years in
Detroit. Zetsche joked that since a Chrysler boss (himself) was now running the show in
Stuttgart, everyone could at last see clearly that it was a takeover.
Source: Lewis, Richard, D (2013) Cross-cultural issues relating to the DaimlerChrysler merge – Case
Study Cross Culture Available at: https://www.crossculture.com/cross-cultural-issues-at-thedaimlerchrysler-merge-case-study/ [Accessed on: 7 April 2023]
Answer the following:
1. Considering the above article, analyse the influence culture had on the organisation and the way it
works as a whole.
1. ‘An initial mistake of the Germans had been that, in order not to be seen as heavy-handed, they
had “stayed away” from Detroit’ Do you think their solution was the correct one? What is your
reasoning?
1. How might the Integrated Cross Cultural Model of Leadership (Thomas & Perterson, 2018:149)
help a manager in a similar situation?
Marking Scheme
1.
Considering the above article,
analyse the influence culture had on the
organisation and the way it works as a
whole.
1.
‘An initial mistake of the Germans
had been that, in order not to be seen as
heavy-handed, they had “stayed away”
from Detroit’ Do you think their solution
was the correct one? What is your
reasoning?
1.
How might the Integrated Cross
Cultural Model of Leadership (Thomas &
Perterson, 2018:149) help a manager in a
similar situation?
Marking will look at:
Knowledge e.g. shows command of the
subject (supported by evidence); critical
analysis skills; organise, analyse and
express ideas; express insight, originality
and creativity
Know-how and skill (subject specific skills)
e.g. application of theory and technique;
focus on clear line of argument in response
to the question; showing awareness of the
complexities and wider ramifications of the
issues raised; critical reflection
Slides:
Impactful slide design, use of images,
visuals etc to enhance the talk and engage
your audience; layout, uncluttered slides,
readable font size by all,
Presentation skills:
Competence – presentation skills; using
resources to inform, use of language to
articulate, present and engage well. Clear
introduction and conclusion.
References: Use and quality (scholarly
skills); reference list shown on final slide
15%
20%
20%
25%
10%
10%
Submission Requirements
•
Microsoft Powerpoint, with recorded narration on each slide.
•
Presentation length: 12 minutes (+/- 2 minutes)
•
Use Harvard Referencing when citing third party material (on the final slide)
Purchase answer to see full
attachment
