The Issues At Daimler Benz Ag Management Essay

Daimler AG is one of the universe ‘s automotive companies. It distributes into Mercedes – Benz Cars, Daimler Trucks, Mercedes – Benz Vans, Daimler Buses and Daimler Financial Services. The Daimler Group is one of the biggest manufacturer of premium autos and the universe ‘s biggest maker of commercial vehicles with a planetary range. ( Daimler, 2011 )

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Daimler ‘s corporate end is to accomplish stainable profitable growing and to increase the value of the company. Daimler aims to be the universe ‘s prima automotive companies, intend to animate client with the trade names, merchandises and services and strive to busy the taking for sustainable thrust systems. ( Daimler, 2011 ) Figure 1 is shown the Daimler Target System.

1.2 History

Daimler AG has 125 old ages history. Gottlieb Daimler and Carl Benz were the innovators of the car industry in the nineteenth century. After the First World War, there was a universe economic crisis. The war caused a great depression for the universe economic system. It was a great challenge for Daimler-Benz. In 1937, Daimler-Benz AG started to bring forth armament points and aircraft engines. It was necessary to make Reconstruction after the war harm in 1945. In 1949 to 1960, Daimler-Benz AG succeeded in recovering the place in the car industry. In 1960s and 1970s, Daimler-Benz defended an outstanding place in international motor vehicle markets. In the terminal of 1970s, Daimler-Benz assessed carefully with the oil crisis and new Asiatic rivals. Since 1995, new strategic realignment concentrated on conveyance and services. The planetary economic crisis affected Daimler-Benz deeply in the terminal of 2008. ( Daimler, 2011 )

2. Issue Identified

The issue is the amalgamation between Daimler-Benz AG and the American car maker Chrysler Corporation, but the close decennary amalgamation was finished by DaimlerChrysler AG sold 80.1 % interest in 2007.

2.1 The Reason of taking this issue

Since Daimler and Chrysler located in different states that are Germany and United States severally. Both of them have their ain civilization. It is cross-culture. Through the amalgamation between Daimler and Chrysler, I find out that the civilization is one of the factor should be considered when two companies come from different states.

2.2 Brief description of the issue

In 1998, there was amalgamation between Daimler-Benz AG of Germany and Chrysler Corporation of the United States ( BBC News, 1998 ) .

On 6 May 1998, the amalgamation understanding between Daimler-Benz AG and Chrysler Corporation was signed in London. On 7 May, they announced the amalgamation to the worldwide and the new company called DaimlerChrysler AG. ( Sheltom, Hall and Darling, 2003 )

DaimlerChrysler became the universe ‘s 5th largest auto brand after amalgamation. Mr Schrempp described the amalgamation as a ‘marriage made in Eden ‘ . Besides, the new combined direction had promised that there will be no plant-closures or lay-offs after amalgamation. ( BBC News, 1998 )

In 2002, DaimlerChrysler implemented a restructuring plan that aims to convey it fighting Chrysler division back into the black by 2003. ( BBC News, 2002 )

In 2006, DaimlerChrysler ordered to pay former Daimler-Benz stockholders about 232m euros to settle a difference over its 1998 creative activity. This was non the first clip that DaimlerChrysler had been sued over its constitution. ( BBC News, 2006 )

Besides, in 2006, the company brought unwelcome information to investors by uncovering that Chrysler was losing money. This twelvemonth, Chrysler set to time up $ 1bn losingss ( BBC News, 2006 )

In 2007, there was profoundly concerned about its hapless public presentation, and the stockholders were coercing the company to sell it. ( BBC News, 2007a )

In 2007, the German-US house paid 5.5bn euros to purchase 80.1 % , much less than the $ 36bn paid for Chrysler ‘s 1998 amalgamation with Daimler-Benz. ( BBC News, 2007b )

In 1998, Daimler Chairman Juergen Schrempp promised a ‘merger of peers ‘ . But it was n’t long earlier Chrysler executives complained the bullet-headed Germans would non listen to the Americans. The relationship began to fall rapidly. Schrempp said that if he had been honest with the Americans about German laterality before the amalgamation, they ne’er would hold made a trade. ( abc News, 2010 )

Culture differences were blamed for the failure of DaimlerChrysler. This is like mentioning unreconcilable differences. DaimlerChrysler ‘s incapableness to unite the company cultures was one of the grounds of failure. ( Mann, 2007 )

3. Analysis of state of affairs

3.1 The Reason of utilizing this theoretical account

I will utilize Hofstede ‘s civilization different theoretical account to analyse this issue. It is because Hofstede ‘s civilization different theoretical account can hold a comparing between these two states. Besides, Hofstede collected over 116,000 people in 50 state ‘s research ( Deresky, 2003 ) about organisational behaviour. This information makes the theoretical account more credible. Besides, Hofstede used ‘constructed scaly indices ‘ to rank each of the state within the dimension based on cultural differences ( Signorini, Wiesemes and Murphy, 2009 )

3.2 Hofstede ‘s civilization different theoretical account

Hofstede ‘s civilization different theoretical account is a model that understand how basic values underlie organisational behaviour. Hofstede proposed four value dimensions, they are power distance, uncertainness turning away, individuality and maleness ( Deresky, 2003 ) .

First, the value dimensions is power distance, it is the degree of credence by a society of the unequal distribution of power in organisations. High power distance that employees accept the foreman ‘s authorization is larger than themselves in the hierarchy and they rarely bypass the concatenation of bid. The illustration of high power distance is Philippines. On the other manus, low power distance is that foreman and employees are holding equal power, and the relationship between foreman and employees are more harmony and cooperation, such as Austria. ( Deresky, 2003 )

For the 2nd dimension, it is uncertainness turning away that refers to the extent to which people feel threatened by ambiguity in the societal. High degree of uncertainness turning away causes that people tend to hold rigorous Torahs and processs, besides have a strong sense of patriotism. In concern side, the formal regulations and processs were designed to supply more security and greater calling stableness. Japan is the illustration of high degree of uncertainness turning away. However, low degree of uncertainness turning away causes that the patriotism is less distinct and protests is allowed, and so the company is less structured and less formal. United States is one of the low degree of uncertainness turning away. ( Deresky, 2003 )

The 3rd value dimension is individuality. It refers to the inclination of people to look after themselves and their household and to disregard the demand of society. Individuality is that accomplishment and democracy are extremely valued. The relationship is independency between single and organisations, the case of individuality is United States. Bolshevism that there is a strong belief in group determinations, believe the group more than the person. Japan is the 1 of states of Bolshevism. ( Deresky, 2003 )

Fourth, maleness is the grade of masculine values that assertiveness, philistinism and deficiency of concern for other. Masculine civilization considers cooperation more than individualistic. High masculine societies that one finds great occupation emphasis and organisational involvements by and large intrude on employees ‘ private lives. The illustration of extremely masculine societies is Japan. On the other manus, counties with low maleness that cause less struggle and occupation emphasis and cut down the demand for assertiveness, such as Switzerland. ( Deresky, 2003 )

The 5th dimension is the short-run orientation and long-run orientation, it is Hofstede added subsequently. Long-run orientation is furthering virtuousnesss about future wagess. Short-run orientation is furthering virtuousnesss about the past and present. ( Signorini, et al 2009 )

3.3 Analysis of the issue

Power distance

In term of power distance, larger power distance states are holding more privileges for high degree position, little power distance states are preferable classless ( Signorini et al. , 2009 ) . Harmonizing to Figure 2, the power distance ‘s mark of Germany and United States is 35 and 40 severally. Their consequence based on Hofstede ‘s analysis is about, the degree of accept unequal distribution of power in organisation is low ( Schneider and Barsoux, 2003 ) . About Daimler organisation, they embraced formality and hierarchy that mean the subsidiaries prefer to listen superior. Besides, the employee in Daimler needed to follow the hierarchy such as determination devising procedure. Employee needs to follow the formal channel, it shown the director relies on formal regulation. ( Badrtalei and Bates, 2007 ) Daimler-Benz had a more traditional manner in direction manner, they used top-down direction manner ( Anonymous, 2004 ) . German directors preferred bossy manner in leading manner. German employees are obedient to directors and follow them unquestioningly expect give the employee specific order, that average employee had high dependance. ( Sheltom et al. , 2003 ) Based on the above information, Daimler belongs the high power distance and became the tall organisation pyramids.

About Chrysler, they were ignored barriers and promoted cross-functional squads that favored free-form treatments and insouciant repartee that the subsidiaries wanted to be discussed to superior. Besides, the executives allowed mid-level director to travel frontward their ain sentiment. ( Badrtalei et al. , 2007 ) In term of direction manner, Chrysler had a repute for holding more freewheeling, unfastened civilization ( Anonymous, 2004 ) . Regard to the leading, their employees expect to be treated consequently that intend the employees enjoy the equal right. In organisation, employees can dispute their director that employees needed for low dependance. ( Shelton et al. , 2003 ) The organisation pyramids of Chrysler are flatter than Daimler.

Uncertainty turning away

Based on Figure 2, the mark of Germany is 65 and United States is 46. It shown that German was unhappiness with equivocal state of affairss and people wanted more way and less alteration and the equivocal state of affairs may develop anxiousness or emphasis. Because small way and considerable uncertainness would do work less efficaciously in the company, they wrote some regulations to cover the state of affairs. On the other manus, United States was more willing to take hazard and much less immune to alter. ( Brooks, 2003 ) In Daimler Organization, there was suit-and-tie frock codification and the employees should esteem their rubrics and proper names. About determination devising procedure, Daimler set up the formal channel and followed the hierarchy and complex decision-making procedures. ( Badrtalei et al. , 2007 ) Germans analyzed a job demand to utilize great item, happen a solution, so discussed with the spouses to do a determination ( Dorothee, 1999 ) . It shown that Daimler needs Torahs and regulations when manages the organisation.

Chrysler ‘s employees favored unfastened neckbands and they could convey out their thoughts freely ( Badrtalei et al. , 2007 ) . It shown they were less demand for regulation. Based on the mark of uncertainness turning away, United States is lower than Germany. The consequence fitted in the Daimler and Chrysler, because Daimler direction preferred more to follow the regulation and formal. Conversely, Chrysler was more insouciant direction manner that less emphasis and relax. When American discussed the job, they created the solution during the treatment, non follow the information. ( Dorothee, 1999 )

Individualism versus Bolshevism

In individualist states, the person is more independent in the group. In collectivized states, the group ‘s involvement is more of import that single ‘s involvement. ( Signorini et al. , 2009 ) Harmonizing to Figure 2, the consequence of Germany and United States is 67 and 91 severally. United States is the highest mark in the universe. Hofstede found that American civilization tend more individualistic and Asiatic civilizations tend to be much more corporate. ( Brooks, 2003 ) Germans preferred a tightly knit societal model in which persons look after one another and protect their members ‘ involvements. Luthans ( 1998 ) said that Geramns are less individualistic than people in the USA. ( Shelton et al. , 2003 ) That reflected Germans perform best in in-groups. Besides, Germans were more respectful of rubric, age and background connexions, for illustration civilization agreements position based on gender, age or societal connexions. ( Shelton et al. , 2003 ) The executives of Daimler had larger staffs and fatter disbursal histories ( Badrtalei et al. , 2007 ) , the duties of group were of import than ego.

On the other custodies, Chrysler is the American based company, so their civilization was affected by American civilization. USA ‘s companies were tended to allow position based on accomplishment ( Shelton et al. , 2003 ) , it reflected they engaging and publicity determinations based on accomplishments. In Chrysler, officers had broader duties and bigger wages and fillips ( Badrtalei et al. , 2007 ) , their duties of organisation were low.

Masculinity versus Femininity

Based on Figure 2, the mark of Germany and United States is 66 and 62 severally. Maleness states that people strengthen assertiveness and competition and involvement in stuff success. Femininity states that people concern more with life environment and relationship. ( Signorini et al. , 2009 )

In the consequence of Hofstede, Germany and United States ‘s consequence was attack. In order to keep the luxury image of Daimler, employees flew first-class during concern travel. ( Badrtalei et al. , 2007 ) Daimler had a emphasis on competition. However, merely top officers of Chrysler could wing first-class during the concern travel ( Badrtalei et al. , 2007 ) , it besides was the public presentation of the maleness. Because both of them preferred the maleness in the consequence of Hofstede, their value of work, money and accomplishment were likewise.

Long term orientation versus Short term orientation

In term of long term orientation, there are distinction between senior and younger sisters and brothers, in concern that edifice of relationships and market place, people should populate more every bit. Short term orientation that all siblings are equal, in concern that short-time consequences and the bottom line, economic and societal life to be ordered by abilities etc. ( Schneider and Barsoux, 2003 ) The consequence of long term orientation in Germany is 31, United States is 29 that shown in Figure 2. These two states belonged to short term orientation based on Hofstede. Actually, Luthans ( 1998 ) remarked that Germans had a longer-time orientation. About work force, Germany is more stable than United States. German employees preferred work for many old ages for the same company, they focused on edifice of relationships and a strong market place. ( Shelton et al. , 2003 ) Germans forced on full-year consequences of fiscal coverage system. ( Badrtalei et al. , 2007 )

On the other side, US employees were instable of the work force and they seldom worked many old ages in the same company ( Shelton et al. , 2003 ) , because they focus on short-run consequences. Besides, the fiscal coverage system is on a quarterly footing ( Badrtalei et al. , 2007 ) .

4. Decision

Daimler AG is one of the universe ‘s automotive companies and it has 125 old ages history. Gottlieb Daimler and Carl Benz was the laminitis of Daimler-Benz AG.

In 1998, there was the amalgamation between Daimler-Benz AG and Chrysler Corporation, these two companies located in Germany and United States severally. And the cooperation of Daimler and Chrysler was ‘merger of peers ‘ . At the beginning, their amalgamation was viewed a strong confederation by international market. However, their relationship of amalgamation maintained nine old ages. During the amalgamation, DaimlerChrysler had cultural clangs, since the employees of DaimlerChrysler were came from Daimler and Chrysler severally, they had some differences in work wonts, communicating manner, planning and determinations, dialogue schemes and leading.

The cultural clangs of DaimlerChrysler can utilize Hofstede ‘s cultural difference theoretical account to analyse. Hofstede ‘s cultural difference theoretical account has five value dimensions to analyse the cultural difference. They are power distance dimension, the uncertainness turning away dimension, individualist-collectivist dimension, masculinity-femininity dimension and long-run orientation – short-run orientation dimension. Harmonizing to Figure 2, the consequence of power distance dimension, masculinity-femininity and long-run orientation – short-run orientation on Germany and United States is closely. Conversely, there was evidently difference on individualism-collectivist dimension and uncertainness turning away dimension.

In term of power distance dimension, Daimler executed hierarchy in the direction manner that subordinates must follow superior. On the other side, Chrysler was more freewheeling in direction manner, such as employee can dispute their director.

About uncertainness turning away, Daimler was higher than Chrysler. Daimler was more traditional and need to utilize formal channel when doing determination. Conversely, Chrysler preferred unfastened neckbands, free-form treatments and insouciant repartee. ( Badrtalei et al. , 2007 )

Regard to individualism-collectivism, United States is the highest mark in the universe. Since Chrysler is the American based company, they were more force on themselves.

To sum up, the Germans regarded the entrepreneurial spirit and advanced thought, whereas the Americans valued the methodological technology proficient capablenesss. ( Darling, Seristo and Gabrielsson, 2005 )

5. Recommendations

Appendix

Daimler Target System

Figure 1

The consequence of Germany and United States

Figure 2