The Daimler Bens And Chrysler Merger Management Essay

The Daimler Bens And Chrysler Merger Management EssayDaimler-Benz was merged with Chrysler in May 1998. The CEO of Daimler-Benz, Jurgen Schrempp called this jointure as union of equals (Schein, 1996). The goal was to be in go across three companies of self-propelled industry. Bringing together both the companies with different refinement was not considered as a hurdle and there argon no chances of cultural clashes but behind the curtains things were entirely different. There were many campaigns for the troublesome conjugation but the roughly important was clash of co operate cultures. But beca engross of merger there were drastic salmagundis in the high society as well and the major change was stock prices were quadrupled and the guild had a paradigm shift from bankruptcy to realise making.Lee Iacocca showed a corking transformational leadership and implemented change management in go with that was precise helpful in getting financial st strength and expanding the marting space. He adopted the four encapablers which were platform teams, a mod center, a natural culture, CAD for the scheme. The merger changed the co operate culture of the company now the company is thought to have better positioned. It entered the growing competeion in small truck commercialize. (Anon., 1997).The only certainty in our modern world is change. The ability to survive and flourish depends on our flexibility and the willingness to constantly adapt to a changing world by Arthur.IntroductionChange management varies widely from organization to organization including various environments but among all closely relevant is organizational change management. It is a process of change in an organization in a systematic manner. Change management can be reactive. Most common places for change management implementation are technology management, strategic and process. However overcoming opposite to change is the gist value while implementing new procedures. Lee Iacocca, former CEO of the Chrysler Corporation showed transformational leadership he brought the company from bankruptcy to gatherability.About the companyDaimler AG is the most succesful German automotive manufacturing company founded in 1883.initially it was named as Daimler Motoren Geselleschaft. The Daimler root is worlds biggest manufacturer of premium cars.In 1998 Daimler merged with Chrysler Corporation and got a new name DiamlerChrysler AG.In 2007 Cerbeus Capital Management acquired Chrysler corporation as Chrysler was lacking the liquidity needed by the financial markets and again company was renamed as Diamler AG(Thornton Meyer-Larsen, 2000).Gottlieb Daimler and Carl Benz were the companys founder and automotive pioneer who introduced high quality products and safe mobility. Daimler is a company whose commitment is towards excellence and increased profitability.the investors of Diamler are majorly European, us and other investors internationally. The company has turn close to o f approx EUR 99.4 billion(IFRS, 2008). It has manufacturing units in 17 countries.Chrysler Group LLC is a automobile manufacturing industry was founded in 1925 by Walter Chrysler.It is worlds thirteen largest vehicle manufacturer(OICA, 2008). Chrysler Group was stuck in unstable financial state and was declare bankrupt.after that attempts were make to fuck off control of company by the largest shareholder Kirk Kirkorian in collaboration with Lee Lacocca. The headquarters of Chrysler group is in Detroit, Michigan (Turnock Cobbs, 2003).Major market area of Chrysler was US. There was a need to expand the market space to earn global revenue and increase profit but that required great investment and the company was in lack of funds this created a rise of merging the company with some strong stable company to increase the market space as passenger cars were sold widely out of US but the company had no plants abroad. So it choosed Daimler AG as a authorization company to merge with because of its wide access to international market and financial stability. (Geisst, 2004).Transformational leadershipLee lacocca is a designated leader whose leadership drastically turned around Chrysler organizational culture. Leadership is forged in time of crisis. Leadership qualities of lee Iacocca include the hook up withing 9 Cs which helped him to bring the cultural change in Chrysler group.1. CURIOSITY- lee iacocca always put his belief to test and get idea from people he was voracious reader as he wanted to keep up himself aware about the global changes.2.CREATIVE- lee Iacocca was always willing to try some innovative ideas. He believed in thinking out of the box. He was able to manage change in the company.3. COMMUNICATE- he was able to face the reality of bankruptcy of the company and tell stakeholders the truth about the merger. He could disseminate education fittingly.4. CHARACTER- lee Iacocca was a person of character he knew the difference between reclaim and w rong. He had all the powers still he had the guts to do the right thing.5.COURAGE- the best leadership quality of lee Iacocca is the courage and ability to do commitment and do negotiation by sitting and talking.6.CONVITION- he was a very passionate leader. His passion was the success of company and increased capital for which he had fire in the belly7.CHARISMA- lee Iacocca had certain qualities which made people follow him. He was able to inspire the employee during crisis and everyone trusted him.8.COMPETENT-he being a leader exactly knew what he was doing for the betterment of company moreover he always took suggestionfrom people.9.COMMON SENSE-It is the most obvious character of a leader as he should be able to know certain logical things in order to bring change. turn MANAGEMENTChange management is a sequential way of transiting organizations from its young state to desired future state. Changes are applied to any system accord to predefined model or framework. The main objec tive of change management is to maximize profit and minimize risk involved during implementation. Various types of changes areappendix 1Structural change dodging changeTechnological changeCultural changeMore over there are many models for change management that are very expedient for organizational development and prosperity. They are as followsappendix 2Adkar model.Formula for change.PCI(people centered implementation).John P Kotters eight steps to successful changeMerger and acquisitionsMergers and acquisitions is a moving in venture where dickens or more companies join together theirs resources and increase capital to create a new company with entire enhanced available capacity. Company can change there name and structure as well(Gaughan, 1999).An acquisition is a business tactic to buy and absorb one company by another .a proper strategy should be mean so conflict can be avoided and corporate culture of company is retained (Ireland, Harrison Hitt, 2001).When two companies with different culture, values and working methodologies integrate into one single unit to acquire expertise and increase synergies and profit revenues. According to a survey 55% to 70% of M A fails(Carleton cited in Schraeder and Self, 2003).mergers should be taken as in benefit of both external or internal environment of the company. most important during merging is to communicate in order to learn the cultural differences of both the companies. Relations before and after merging should be properly maintained and conflicts should be avoided(Herndon Galpin, 2000).To ensure a smooth transition during merger/acquisition process stability should be achieved by formulating strategies. Change management here focuses on minimizing employee attrition and to boost them for better work.Communication is most important to ensure stakeholders agreement and understanding. There are four phases of communication under change management(Mueller, 2003).Announcing the merger either stakeholders s hould know about merger by the company only not by the media. It makes them feel a part of company and they think for betterment. (Scherer Ravenscraft, 1987). favorable reception by authorityAll stakeholders should provided information about impact of merger and the reasons for merger there should be no conflict. Transparency and honesty are of great importance(Mueller, 2003).Closing the dealDont exaggerate the situation try to decrease the forethought of reducing jobs during merging. Prepare employees mentally and emotionally by providing factual information. (Ireland, Harrison Hitt, 2001).Changes completedAll stakeholders must know about the achieved promises to maintain a good image.It is evaluated to know the success ratio so it can be implemented in future(Scherer Ravenscraft, 1987).Reasons for mergerThe merger between Daimler and Chrysler happened on May, 7th 1998 both the companies wished to make a multi billion company to dominate car market so they got merged(Gaughan, 1 999). The main reason was to increase product range and expand global market. Both companies had diverse methodology of work so merger was considered a better option. (Fairfield-Sonn, 2001).The reasons for merger areMarket share of company fell from 16.2% to 12.2%.(IM survey,2007)Company went bankrupt because a group of bondholders rejected the companysTwo third of senior manager resigned because of financial instability.Chryslers profit decreased 90%.Chrysler ranked on seventh among seven automakers.Not invented here syndrome kept Chrysler from sharing ideas. capability and weakness before mergerDaimlerChryslerStrengthTechnological engineeringQuality strengthPremium luxry brand with rich heritageGerman efficiencyStrength flexibilityCreativitySelf accountabilityConcept carsMarket opportunityLow fruit costWeaknessHardly flexibleLow potentialHigh costLack of production abilityWeaknessLess disciplineNo investment in R DLoss of key playersNot able to compete global market.Difference between American and german business cultureAmerican and german haves different style of workConceptamericangermanhard-nosed experiencesTraining on job concept followedFocus on education and qualificationPragmatismMore goal point than germansFocuses on deeper associationFlexibilityCareer flexibility much bigger in americaJob security more importantInformalityFriendly impression by use of first names etcLess common in german as they believe in personalityJob securityEmployees can be set(p) off very easilyJudges on basis of individual performanceCultural changeMerger should be where culture of both companies are almost similar and had employee support as well (Chatterjee, Lubatkin, Schweiger, and Weber 320). For any organization culture is a vital element to decide how things are done and the manner new products are marketed and lot more things.(Weber and Camerer 401).Christine grosse carried a cultural knowledge survey and found 80% people were benefitted by imparting knowledge of local culture(Grosse 366).Diamler Benz was a rigid company with bureaucratic corporate culture with quality standards. Culture was too authoritarian.Chrysler was having a informal culture outward oriented and less rigid.Since Diamler and Chrysler was now a transnational company dealing with two cultures was a difficult task to manageOrganizational culture in recent trend in focused on external environment and more open focus oriented and risk tolerance is high. Employees are trained to go that extra mile for the companyNew cultureAfter change implementation there were five enablers that formed the basis of Chrysler new culture these areBetter communicationContinuous trainingBetter human resource systemAccurate practices.Improved process.in the new culture teams were formed at general level. In 1994 chrysler introduced new 360 degree type process in which everyone including peers rate you. The new culture gave the staff a feeling of ownership in the company and gave them a dynamic en vironment. For transformation several strategic plans were implemented. In the new culture young innovative youth was the captain and new experienced designersRESISTANCE TO CHANGEResistance to change is one of the basic reason for the failure of change process and its implementation. Resistance to change in general is present by nature. It is defined as a natural response to any reaction or threat of change(Block, 1989). There are number of factors that cause resitance including individual,factor group factor and organizational factors.In Chrysler group the resistance was basically seen in 3 areasTechnical systems resistance- Chrysler resistance in technical field included fear of change, loss of sunk costs and work oriented approach.Political systems resistance- it comes from internal coalitions against change. Chrysler group had limited resources and it admitted change was essential.Cultural systems resistance- Chrysler group was having a perceived raft that the whole merged co mpany is a single unit so current culture should not be sophisticated to accept cultural changes in the company.Factors causing resistance to changeCauseOutlineFear of the unknownBeing uncertain about the nature of a change, Chrysler group was uncertain about the future and on going impact of change.Loss of controlThe organization felt that changes are done to them but they are not able to take part in change.Loss of faceChrysler group felt very embarrassed because of change and it thought that work done by company in past was not futile. The company repo changed.Loss of competencyThe existing skills of the company after merger did not got changed.Need for securityCompany worried for its new role after mergingPoor timingIt was asked tochange at a time when they already feel overworkedForce of habitNot want to change existing ways of doing things, feeling comfortable in existingroutines and habitsLack of supportLacking important support from direct supervisors, not having cover res ources to properly implement change.For treating resistance as positive utility Chrysler group tried to be proactive but there was absence of appropriate change theories that incorporated this feature. So manager of the company engaged other people to identify the resistance, to test and to implement successful change. (Dettmer, 1998a Houle and Burton-Houle,1998).ConclusionFor overall activities of organization culture of an organization is very important and should be taken into consideration(Sicilia Lipartito, 2004). Conflicts should be avoided and activites affecting culture should be strategically arranged. Business acquisition and merger should be planned strategically as they are very important part of organization change.communication is the most vital element of organization. To ensure stakeholder participation there should be proper communication channels.Both the companies had different culture that was one of the reason that merger couldnt be that effective.There was def initely a need for change management at Daimler but merging with Chrysler was not only the best solution there were other alternativesStrategic alliances- it will increase global market but won be helpful for the development of R D Ddepartment.Outsourcing- I can improve the quality and innovation and reuce cost.Chrysler could have concenterated on core competencies and outsource non core values. Example development of vehicle platforms could be outsourced to Chrysler by diamler.