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December 19,2018 Change Management

Daimler Chrysler Change Management Experience

Daimler Chrysler Change Management Experience

Auto Giants

Walter Chrysler built the Chrysler Corporation in 1925. Most noteworthy, he grew the company into one of Detroit’s big three automakers. For that reason, he became one of the founding fathers of the early automobile.

Gottlieb Daimler was one of the first pioneers of the internal combustible engine. He took that idea to market and began a car company in the 1890s. The Benz and Daimler’s companies merged into one in 1926. As a result, Daimler-Benz was the main German automaker and noted luxury car throughout the twentieth century.

Merging

In May of 1998 Chrysler and Daimler-Benz merged to become DaimlerChrysler AG. The merger design was to create a new giant automaker that could stretch across Europe and the Americas. Due to a projected annual sales of over $150 Billion, this aimed to be the dominant automaker. This combination would address the full consumer auto market. While capitalizing on economies of scale by maximizing German efficiency and American innovation.

Culture Mismatch

The merger kicked off with rough beginnings with significant cultural differences. Chrysler had a reputation as an agile, action-oriented Company with a flat management hierarchy. However, Daimler was renowned for being methodical, analytical, and a management structure that was vertically organized. Compounding these differences was that the merger was discovered to be a takeover. Chrysler didn’t have a board seat of the new corporation and had reduced influence on how to become one company. Quickly the push was to adopt Daimler’s management, standard operations, and culture instead of creating a new work model.

Separate Directions

Over the following years, organizational disaster ensued with leadership misalignment. Leadership infighting became the norm. The infighting led to multiple reorganizations and layoffs which led to industry declared poor designs and lagging manufacturing practices. Eventually, this led to the board to run the companies as separate entities as to not negatively degrade the brands. By 2007 the gas crisis had swung into full effect and Chrysler could not survive. With a prime excuse, Daimler, sold Chrysler to Cerberus Capital Management to bring it back to life. This let Daimler wash its hands-free of one of the greatest change management failures. While on a massive scale, this takeover demonstrates the same behaviors of many change management failures: ignoring environmental differences, not engaging the stakeholders of who will be impacted, and forcing behavioral changes upon an embedded organizational culture. While this was a takeover the execution of their change management was the abject disaster for both parties.

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