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International Business : The Challenge of Global Competition, 8/e
Donald Ball
Wendell H. McCulloch, California State University Long Beach
Paul L. Frantz, California State University Long Beach
Michael Geringer, California Polytechnic State University
Michael S. Minor, University of Texas Pan American
Sociocultural Forces

Internet Assignments

Students:

Included here are some internet/case assignments that you can use to review or that your instructor may give as assignments. Your instructors have been given the answers to these questions and may choose to give them out to you or not.

This case is designed to:
  • Give you insight into the mergers of international companies;
  • Provide you with insight into different cultural aspects of US and German companies; and
  • Allow you to explore the relationship between the culture and job function within the realm of a US company that became part of a German company.
Many viewed the creation of DaimlerChrysler as a triumph of the global economy. Business Week called it "a marriage made in automotive heaven ... (that) is set to transform the way the auto industry operates worldwide."

The story began in May of 1998, when the German industrial giant, Daimler-Benz AG and number three US auto manufacturer Chrysler Corporation announced plans to merge in a $92 billion dollar deal. Touted as the world's largest industrial merger ever, the new company named DaimlerChrysler AG formally debuted on Tuesday, November 13, 1998. That date marked the beginning of the ambitious goal of merging two styles of auto-making, two approaches to business and the proud but distinct cultures of two nations.

Even though the DaimlerChrysler merger was viewed as a marriage of equals, in many respects it was everything but equal. For example, only around 200 shareholders actually attended the two-hour Chrysler meeting where the official yes or no vote for the merger was actually cast. The remaining shareholders who voted did so by proxy. A simple majority of "yes" votes was all that is needed to approve the deal. More than 10,000 Daimler-Benz shareholders attended the ten-hour meeting where the German votes were cast. German law requires not only that shareholders vote their shares in person, but also that 75% vote "yes". Another area of inequality dealt with executive compensation. While the exact figures are unknown, it is estimated that total compensation of the top ten executives at Daimler-Benz would not even cover the total compensation of the top two executives at Chrysler Corporation. The former shareholders did not end up in equal positions either with 57% of the stock of the newly formed company going to Daimler-Benz shareholders and the remaining 43% going to the Chrysler shareholders. In addition, DaimlerChrysler AG is a German company, not an American company. This means that it is subject to the laws and regulations in Germany, not in America.

Several years after the "marriage made in automotive heaven", it would appear that the honeymoon ended abruptly as the clash of two cultures began showing its face. For example, DaimlerChrysler AG decided to pare its management board. In doing so, it appeared to favor the German managers over the American managers. DaimlerChrysler's stock price has been on a downward spiraling roller coaster ride this year. Go here to see how the stock price has been moving.

http://www.bigcharts.com/custom/hoovers-com/hoovers-new.asp?symb=DCX

Case Instructions:

 Assume that you were an employee of Chrysler Corp. and are now an employee of DaimlerChrysler AG. Answer the following questions. In addition to the information presented above, you may find the additional resources located at the end of this case helpful.

  1. Culture is defined in your text as the "sum total of beliefs, rules, techniques, institutions, and artifacts that characterize human populations." Identify as many cultural differences as you can between the US and Germany which have likely had an impact on the merged company. For each difference, indicate what the probable impact has been.
  2. What is your job position in the DaimlerChrysler AG? (This can be any position that you desire).
  3. How has the DaimlerChrysler merger impacted your job and your future? Be creative here.
  4. How do you think that DaimlerChrysler AG will be different a year from now that it is right now? Why do you think this?
Additional Resources:

German Business Culture Needs Learning. http://www.andyfeinmarketing.com/Docs/SBMJan98.htm

The Importance of International Protocol in a Global Economy

http://www.wtc-no.org/speakers/ip-sppro.htm

Doing Business Abroad: Germanyhttp://www.getcustoms.com/omnibus/oag_6.html

Doing Business in Germanyhttp://www.getcustoms.com/omnibus/kb_ger.html

Sources:

 "A Suit to Undo the Chrysler Merger". November 27, 2000. CBS News. http://www.cbsnews.com/now/story/0,1597,252539-412,00.shtml

Ball, Jeffery and Scott Miller. September 24, 1999. "Shakeup at DaimlerChrysler Gives Stuttgart the Upper Hand." Wall Street Journal."

Garten, Jeffery E. July 20, 1998. "Daimler Has to Steer the Chrysler Merger". Business Week.

Simson, Robert L. and Scott Miller. September 24, 1999. "DaimlerChrysler's Chief Explains His Tough Calls". Wall Street Journal.




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