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Daimler-Chrysler Merger: Leadership Issue Report

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Updated: Apr 10th, 2022


The merger of Daimler and Chrysler encountered various difficulties. These difficulties entailed the managerial policies adopted. They failed to motivate employees in one organization while the culture clash resulted in the decline of one of the organizations. Some of the models discussed can assist in the understanding of the issues, which Daimler-Chrysler encountered.

The managers’ failure to provide leadership in the above situations also contributed to Chrysler’s decline. Additionally, manager failed to enact a learning and development model, which would have promoted career development in Daimler-Chrysler.


Motivation denotes an intrinsic or extrinsic drive to undertake an activity. It has become an imperative aspect of management. Motivation increases employees’ productivity and that of the entire organization. There are various theories that have analysed motivation among employees.

The resultant assertions by researchers have provided vital details pertaining to motivation. However, their conclusions have differed owing to the environment in which the research was undertaken and the samples utilized. One of the models on motivations is the Maslow’s hierarchy of needs. The theory establishes five levels of needs that are fulfilled in a sequence (McGuire 2012, p. 174).

Fulfilling needs requires income that will finance the resultant expenses. As such, remuneration becomes the most imperative factor in the application of this model. If Daimler-Chrysler adopted this model, then it would have to increase its wage bill massively. Nonetheless, the corporation in question Daimler-Chrysler, is a profit motivated entity.

Hence, it has to manage its wage bill to sustainable levels, which will ensure that it maintains a certain level of profitability. The possible increase in the wage levels would be minimal. This is further compounded by the fact that the entity’s performance was deplorable. Thus, increasing expenses through wages would be a managerial choice that would worsen the crisis in this entity.

According to current management theories, modern employees are motivated more by non-financial aspects of their careers than monetary aspects. Therefore, managerial policies that encourage career development, recognition of contribution at work places and other desirable working conditions would be key to motivating employees.

Motivation of employees has changed. This has made the recommendations of classical managerial theories irrelevant since they treated employees as machines. Thus, according to classical theories the only way to motivate employees was through finances.

The applicability of this model in the motivation of employees at Daimler-Chrysler is limited. Employees are motivated by many factors other than remuneration, which is central in this classical motivation model. Reduced motivation emanated from issues such one organization dominating the other in the merger and the resultant change in managerial policies after the merger. Maslow’s model does not address such issues.

Hence, its applicability in this case study is limited. Motivation of employees in this institution would entail each organization having some autonomy on certain aspects of it operations. Merges generate a lot of anxiety among employees. The anxiety exists since most employees are uncertain of the outcomes of the merger. This was a key trigger of the reduced motivation. Such issues should have been addressed by constant briefings on what is transpiring in the organization.


Teams are vital in organizations. Teams bring employees with different skills and knowledge together. They integrate their skills and knowledge in undertaking tasks. The working of teams is hindered by various factors such as domination and lack of understanding among the team members. Consequently, there are ideal ways of constituting teams such as the Tuckman’s process. The Tuckman’s process only includes four stages. These stages are forming, storming, norming and performing (O’connell & Cuthbertson 2009, p. 78).

Daimler-Chrysler had employees from the two organizations. Daimler and Chrysler had been successful on their own merit in two different markets. Daimler in Europe while Chrysler was in America. Merging these two organizations should have resulted in a large organization that was backed by an efficient workforce.

The efficient workforce should have been the source of the team members. Daimler’s workforce was largely of German ancestry while Chrysler’s workforce was largely American. If teams were constituted among the two organizations, there would be a myriad of problems. First, communication would be problematic. Nonetheless, they would form very efficient teams since the employees come from successful organizations.

Teams in the Daimler-Chrysler would encounter many challenges in the initial stages owing to language and cultural disparities. The initial stages of the teams’ meeting would be characterized by tension and uneasiness. As interaction increases, the employees become comfortable in the group setting.

To ensure that the teams function appropriately, the top managers should appoint leaders who can steer the teams through the conflict that arise in such group settings. The teams would have played a vital role since there would have presented the management with a first-hand account of what would transpire after the merger. This would have enabled the managers address some of the workforce related problems that would arise.

In the merger, Chrysler was the firm that deteriorated. Hence, the teams formed should have contained some of the key employees who were responsible for Daimler’s success. However, this can also be counterproductive since employees would view it as one organization dominating the other.

Teams would have been an appropriate way of blending policies of the organizations. They would have been an understudy of the impacts of the merger on the two organizations. Constant wrangling among the managers in this cross border merger highlighted the lack of cohesion among employees in the two entities. Evidently, these two entities were too distinct with regard to their individual philosophies and heritage. Hence, the merge was to be a tough undertaking.

Organization culture

Organization culture is a vital aspect of an entity. It denotes the values that an organization employs in its operations. The organizational culture also defines the mannerism that the employees in the organization have adopted. An organization’s culture has many ramifications on its progress. There are many organizational culture models. The models include the power model, task culture model, person culture model and role culture model (Alvesson 2013, p. 245).

The power model is one of the most popular structures. In this model, a few people wield power in the organization. Having additional authority means that such individuals have more responsibilities. This organization culture results in a narrow organization where many people are answerable to few employees.

In a culture where certain people wield excess power, dissatisfaction among employees is likely to increase. This was evident in Daimler-Chrysler since the merged organization adopted an official culture. In an official organizational culture, the interaction between employees and managers is limited and is characterized by tension or anxiety. Daimler became powerful since Chrysler had to do away with its culture so as to adopt Daimler’s culture. Daimler managers had gained an edge over their counterparts owing to this policy.

Each of the organization culture has its disadvantages. The relaxed culture allows employees to interact freely with their managers. Employees have the freedom to make decisions, which pertain to the operations of the entity. In contrast, the official organisation culture limits the ability of employees to make decisions. The interaction between managers and employees is limited.

In the merger of the two entities, this was a key concern among employees. Chrysler’s employees were unwilling to conform to the official organizational culture adopted. Daimler’s employees were contented since their organization culture was adopted. This was once of the factors which set the stage for one organization to dominate and the other to deteriorate (Koontz & Weihrich 2012, p. 214).

In the Daimler-Chrysler merger, the impact of organization culture on the organization was revealed in a massive way. The organization opted to adopt a formal organization culture. This did not suit the American employees in Chrysler who preferred a relaxed managerial approach (Martin 2002, p. 67).

In the above scenario, the top managers should have adopted a cautious approach when merging the two organizations. First, all employees should have been involved in the merger process via consultations. The consultations with employees should have addressed the organization culture that the resultant organization will assume.

Such a measure would have prevented the emergence of workforce related problems. The problems include low morale and job dissatisfaction which bred high employee turnover. The organization culture is a vital aspect of an organization that the managers cannot overlook (The economist 2007).

Learning and development

Learning and development are imperative in entities. An organization always seeks employees who can constantly contribute to its progress via their creativity and innovation (Johnson 2009, p.34). As such, it is vital for employees to engage in further learning and refresher courses.

The learning and development models adopted by an organization depends largely on the organization’s constrains such as financing (Wilson2005 p. 321). Some of the organization will opt to send their employees on refresher courses or seminars periodically. The period may be after two or three years.

However, such factors largely depend on the policies of an entity. Some organizations will opt to adopt learning models based on the job description. Therefore, the learning and development process of the workforce depends on the challenges and requirements of a job. A learning and development model based on job description has its advantages since it fails to generalise the learning and development needs of its employees.

It provides a particulate model for each of the job descriptions. However, this model may increase the overheads in an entry. Since Daimler-Chrysler is an automotive entity, a periodic development and learning model would be suitable. This is because the entity would send its employees for career advancement or refresher training periodically.

Learning and development would have assisted the merged entity solve some of their problems. Some of Daimler’s employees should have relocated to Chrysler so as to learn some of its process. Similarly, some of the Chrysler’s employees should have relocated to Daimler. This would have been central in demystifying the impacts of the merger (Rainbird, Fuller& Munro 2004, p. 271).


The above models address pertinent issues in management which affected the progress of Daimler-Chrysler. The matters related to motivation of employees who were clearly unmotivated and teams in the merged entity whose members were not working cohesively. The problems witnessed after the merger revealed that management is a multi-discipline undertaking. Evidently, Daimler-Chrysler had managers, but it lacked leaders.

Leaders would have motivated their employees irrespective of the problems they were facing thus; turning around the fortunes of the entity. Additionally, the management should have not permitted one organizational culture to prevail. The two organizations should have maintained some autonomy on certain aspects of the organization.

One such issue should have been the organizational culture. Another aspect of the merge that might have contributed to the downturn of this deal which looked good on paper was heritage and philosophical disparities. Chrysler prided itself in providing powerful and at times tough automobiles while Daimler provided sleek and stylish vehicles. Merging the above heritages was tough resulting in the confusion that enveloped the union of Daimler and Chrysler.


Alvesson, M 2013, Understanding organizational culture, SAGE Publications, London.

Johnson, J 2009, Health organizations: theory, behavior, and development.Jones and Bartlett Publishers, Sudbury.

Koontz, H & Weihrich, H 2012, Essentials of Management International Perspective, Tata McGraw-Hill, New Delhi.

Martin, J 2002, Organizational culture: mapping the terrain, Sage Publications, Thousand Oaks.

McGuire, K 2012, Maslow’s hierarchy of needs, Grin Verlag, Muchen.

O’connell, T & Cuthbertson, B 2009, Group dynamics in recreation and leisure: creating conscious groups through an experiential approach, Human Kinetics, Champaign.

Rainbird, H, Fuller, A & Munro, A 2004, Workplace learning in context, Routledge, London.

The Economist, The DaimlerChrysler emulsion, Retrieved form <>

Wilson, P 2005, Human resource development: learning & training for individuals & organizations, Kogan Page Ltd, London.

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