Why the merger failed to realise synergies
Analysts felt that, strategically, the merger made good business sense. But opposing cultures and management styles proved to be a hindrance to the realisation of synergies. Daimler-Benz attempted to run Chrysler USA operations in the same way as it would run its German operations. This approach was doomed to failure. In September 2001, Business Week wrote, ‘The merger has so far fallen disastrously short of the goal.
Distrust between Auburn Hills and Stuttgart has made cooperation on even the simplest of matters difficult. Coming to terms with issues like which parts Mercedes-Benz would share with Chrysler was almost impossible. The Germans and the Americans had been out of sync from the start. The two proud management teams resisted working together, were wary of change and weren’t willing to compromise. Daimler- Chrysler have combined nothing beyond some administrative departments, such as finance and public relations.’
Questions
Mergers and acquisitions take place to realise the synergies between the two or more companies involved.
1. Using Cultural theories, explain why do you think the Daimler-Chrysler merger failed to realise the synergies that were expected from it?
2. Discuss some realistic recommendations which will help to address the issues that should be addressed to make cross-cultural merger a success.
