Business_Failure_Papert

Examining a Business Failure Paper Examining a Business Failure Paper University of Phoenix LDR 531 Organizational Leadership Kevin Harris March 22, 2010 Examining a Business Failure Paper The purpose of this paper is to describe how specific organizational behavior theories could have predicted or can explain the failure of Chrysler/Daimler-Benz Company. The attempt to compare and contrast the contributions of leadership, management, and organizational structures to the organizational failure is the results of why this partnership ended. 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. Overall the merger made good business sense. But opposing cultures and management styles proved to be a barrier between both companies. However, the merger between the two companies raised several important issues needed to be addressed. The most significant of these was organizational culture. The styles of management differed amongst the German and Americans. A clash of culture would be a major hurdle to the realization of the synergies identified before the merger. Both groups were allowed to maintain their existing cultures. The former Chrysler group could continue to manufacture huge amounts of market cars and trucks, while the Germans would continue to build extravagance Mercedes. This may be reference to A form of indirect leadership involves leader influence over the organization culture, which is defined as the shared beliefs and values of members (Trice & Beyer, 1991; Schein, 1992). Leaders may attempt either to strengthen existing cultural beliefs and values or to change them. There are many ways to influence culture, and they may involve direct influence (e.g., communicating a compelling vision or leading by example) or other forms of indirect influence, such as changing the organization structure or reward systems. Through the course of the merger two highly regarded Chrysler executives were fired from their CEO positions in the space of nineteen months. This may have directly affected the overall direction of the company. Therefore, looking at the situation, DCX’s integrations of Chrysler failed because Schremp’s strategy and vision for the new company fell apart before it began. In the end, Schremp forced out and Chrysler is once again a stand-alone entity under private ownership. 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 disharmonious from the start. One view is that all groups have role specialization that includes a leadership role with some responsibilities and functions that cannot be shared too widely without jeopardizing the effectiveness of the group. The company’s success depended on integrating two starkly different corporate cultures. "If they can't create a climate of learning from each other”, they could be heading for an unbelievable catastrophe”. Daimler-Benz characterized by methodical decision-making while Chrysler encouraged creativity. Chrysler was the very symbol of American adaptability and resilience. Chrysler valued efficiency, empowerment, and open relations among staff whereas Daimler-Benz seemed to value respect for authority, bureaucratic precision, and centralized decision-making. These cultural differences soon became manifest in the daily activities of the company. Daimler-Benz executives were equally perplexed when Eaton showed his emotions with tears in a speech to other executives. Chrysler was one of the leanest and agile car companies in the world; while Daimler-Benz had long represented the essence of German industrial might, (its Mercedes cars were arguably the best example of German quality and engineering). Another key issue was the differences in pay structures between the two pre-merger entities. Germans disliked huge pay and were unlikely to accept any steep revision of top management salaries. During earlier restructurings under Daimler, Chrysler never recovered from their pre-merger highs as the financial results show.  Chrysler continued to operate as a separate entity within DCX. Chrysler’s financial problems since the merger were generated by their own hand.  Chrysler separated from the Mercedes Group and the parent organization. Once the companies were split and parted ways both brands became very competitive and once again attitudes of employees and management were on the defensive. Customers were still treated with the utmost respect but the stress was poured on to achieve as much monies as possible from past due and leased accounts. In regards to leadership behavioral theories other scholars (e.g., Bass, 1990; Hickman, 1990; Kotter, 1988; Mintzberg, 1973; Rost, 1991) view leading and managing as distinct processes, but they do not assume that leaders and managers are different types of people. How the two processes are defined varies somewhat, depending on the scholar. For example, Mintzberg (1973) described leadership as one of ten managerial roles (see Chapter 2). Leadership includes motivating subordinates and creating favorable conditions for doing the work. The other nine roles (e.g., resource allocate, negotiator) involve distinct managing responsibilities, but leadership is viewed as an essential managerial role that pervades the other roles. Clearly, with the complicated problems in the leadership and not being able to come together when making any type of decisions set the stage for failure. Not allowing the organization as a whole to come together as a team, keeping an open mind, and executing strategies created an environment not conducive to productivity and progress where a difference could have reflected their bottom line. Reference http://www.icmrindia.org TIME, May 24, 1999, commenting on Daimler-Chrysler CEO, Jorgen Schrempp's style of management The DaimlerChrysler Merger, Dartmouth, 2002 Daimler and Chrysler: What the Deal Could Mean, Business Week, May 7, 1998 Leadership in Organizations, Sixth Edition, by Gary Yukl. Published by Pearson Prentice Hall. Copyright 2006 by Pearson Education, Inc.