Examining a Business Failure

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Examining a Business Failure

Christina M Gavula


September 27, 2012

Lynette Grizelle

Examining a Business Failure

Businesses fail, and mergers happen every day. Sometimes it is a marriage made in heaven and others the end to what could have been something remarkable. The paper will look into the Chrysler/Daimler-Benz merger of 1998 and how their organizational behaviors lead to the failure of management. In the paper I will compare and contrast how leadership, management, and organizations structures contributed to their failure.

The beginning of the end

What started as a handshake and a vision to create a partnership to combine Mercedes’s engineering with Chrysler’s marketing and design turned into a culture clash between the two organizations. The Chrysler/Daimler-Benz merger was one of the largest mergers in the automotive industry and the third largest deal ever. Vlasic and Stertz (2001), so what went wrong besides the 90% profit decrease in 2000?

The deal

In May 1998 Daimler chief Jürgen E. Schrempp and Chrylser CEO Bob Easton shook hands and created a “Merger of Equals.” The focus of the merger was to increase market share. With Daimler feeling pressure to merge, and Chrysler lacking management depth, and a very small overseas market, they went forward with the merger without considering it was not a merger of equals. Their cultures were as different as their personalities.

How Organizational Behaviors predicted the failure of management

According to Yukl (2010), there are six principal ways managers have to obtain information which, are

* Written Messages

* Telephone Messages

* Electronic Messages

* Scheduled Meetings

* Observational tours

The research shows oral communication is used to influence people. Without communication the organizations began to fail. In the German organization Schrempp was the head of Daimler-Benz. He seemed to be a jovial man who enjoyed life and those around him. He worked hard, but...