DTU ProjectLab - User contributions [en-gb]

Talk:Analyzing the failure of the DaimlerChrysler merger from a project management perspective

2014-12-01T22:22:07Z

Lyngby: /* Comments for each section */

== Feedback - Char ==

FORMAL ASPECTA
*The structure creates a good and clear understanding of what the wiki pages is about.
*In general the article is well written and understandable
*The main Title describe the subject and the focus of the article good, but it is a little long in relation to this is a wiki-page and you want it to show up in the search field. [[You are right but I do not know how to make it briefer and still understandable...]]
*You sometimes write “we”(see section “The perspective of subject group”), try to avoid this, as it sounds unprofessional [[You are totally right, I will change it.]]
*Missing table number and related text [[Right, I will add it.]]
*Many assumptions are taken through the article and these need to be supported.
*Missing references [[You are right, I will add the references to support my ideas.]]

CONTENT ASPECTS
The perspective of subject group (ISO 21500:2012)
*The section could start with a little longer and deeper explanation of the ISO standard, in order create a better understanding of what the ISO 21500 standard is and what it actually is doing. I can see that you are focused on the subject groups, but a general explanation of the whole ISO standard would be beneficial. [[One again you are right, I will add it]]
*You are writing that the ISO split the method into 39 processes and later are grouped into five processes, depending of the perspective. This should be explained. What do you mean with perspective? Which perspectives? How is the appropriate process selected relative to the perspective? Etc. [[Yes, it may not be clear... I will improve it and add a table.]]

DaimlerChrysler merger project
The genesis of the project.
*“The table shows the complementary of the two companies, which seems to make them a perfect matching set” This needs an explanation. The table does not show explicit why the two companies is a perfect match.
[[All right, I will change it to make it more clear]]
The project characteristics
*The two tables (Characteristics of DaimlerChrysler right after the merger and Expected results) are not comparable. It cannot be seen from the two tables that the achieved result is good or bad compared with the expected result, as the tables shows and describes different parameters. [[It is true the tables are not comparable BUT I introduced them to provide more details about the merger project. My aim was not to show the failre of the project here. ]]

The mismanagement of some subject groups
*This section describes what went wrong in the four subject groups: the integration, time, communication and stakeholder. What would you rather have done? Write advice and suggestions in relation to the theory. [[I added some lines about it within the paragraphs]]

Integration
*The cultural table creates a good overview and understanding of the different culture in Germany and USA.

Stakeholders
*Interest and power-matrix. Describe why this it important, what it helps with and how you make one. [[I provided a Power-Matrix, thanks.]]
*Have a figure of the Interest and power-matrix [[Done :)]]
*Are there only three stakeholders related to the merge? Employees, Clients, Stockholders? Explain why you have focus on them and who the other stakeholders are. [[No, there are not the only one. I cannot provide examples about all of them. (I think 3 examples explaining why the Stakeholder process was mismanaged are enough BUT I will explain why I choose these three and who are the others in the Power-Interest Matrix.]]

Discussion section
*A discussion section should be added, where you discus the advantages and disadvantages of the ISO standard, since you are concluding in the conclusion that the standard is useful to analyze a project management. You could also do a discussion on how to perform a successful merge. [[I totally agree, I will add it. It makes sense]]

[[Thanks a lot for these usefull advices]]

== from johnjohn ==

=== General ===
* The abstract should according to Christian be called a summary.
* Overall I think it is a really interesting topic and the structure and language of the article is well-organized and well-written.
* It is very interesting to have a concrete example analyzed throughout the article and you d a fine job making it interesting all the way.
* I however miss a discussion section and a "sum up of important learnings" from this example. Based on this analysis what should other companies do in future mergers? How can we learn from it? I suggest this to be brief and in a bullet format. You could also include benefits and challenges from using the ISO-standard. [[You are totally right, I will add it.]]

Format:
* Nice and fluent language. Easy understandable.
* No obvious grammatical errors
* References are missing “to do” it says. [[Yes, I will do it]]
* In general I miss some illustrations. Especially the Stakeholder go-through could be displayed visually.[[Good idea, I will a visual for the stakeholders.]]

=== Comments for each section ===

Abstract/Summary:
* Good summary stating the interesting aspects of this analysis.
* I felt intrigued to read more.
* Could you reference to the term “merger of equal” I am not aware of what context this expression comes from? [[Relevant, I will add a reference]]

Introduction:
* I like this because it is precise, and gives a good introduction.
* I like that you pose a question: But how to practically apply ISO 21500 to a project? But I miss the fact that you actively adress this later in a discussion or in sum up of best practice. [[I will add a discussion at the end of the article]]
* I miss that you in this section state your approach of how you have structured your article? You mention later that you have 3 parts, could you clarify this?

ISO:
* I would suggest that the introduction goes a bit more in-depth. You could also make links or references to external resources.[[I will go deeper and provide more information.]]

Perspectives of subject groups:
* You refer to the ”third part” this could be clarified better what part you mean? As mentioned could your abstract/summary maybe state your approach and how the article is structured. [[Right. I will introduce the structure more clearly.]]

DaimlerCHrysler merger project:
* I like that you use a tables to give an overview.

The mismanagement of some subject groups:
* Why don’t you go into all subject groups? Maybe you should explain why they are not relevant for you analysis? Why are only 4 of them addressed? [[I will explain why I focused on these stakeholders.]] Maybe this section: “Four Subject groups are successively addressed: Integration, Time, Communication and Stakeholders. The Integration Subject group includes the processes required to identify, define, combine, unify, coordinate, control and close the various activities and processes related to the project (ISO 21500:2012 - 4.2.3.2).” Should go above the "integration" headline? [[I do not agree since I need some details provided in the integration part are required to better understand the paragraph about Stakeholders ]]

Stakeholders
*Could you introduce why you have chosen these stakeholders?
* As mentioned could a comparison of the stakeholders described be displayed visually.
[[I agree for both of these comments about the stakeholders. I will add a Power-Interest Matrix and explain why I choosed those one]]

[[Thank you for your help. It really helps me.]]

Talk:Analyzing the failure of the DaimlerChrysler merger from a project management perspective

2014-12-01T22:21:33Z

Lyngby: /* Comments for each section */

== Feedback - Char ==

FORMAL ASPECTA
*The structure creates a good and clear understanding of what the wiki pages is about.
*In general the article is well written and understandable
*The main Title describe the subject and the focus of the article good, but it is a little long in relation to this is a wiki-page and you want it to show up in the search field. [[You are right but I do not know how to make it briefer and still understandable...]]
*You sometimes write “we”(see section “The perspective of subject group”), try to avoid this, as it sounds unprofessional [[You are totally right, I will change it.]]
*Missing table number and related text [[Right, I will add it.]]
*Many assumptions are taken through the article and these need to be supported.
*Missing references [[You are right, I will add the references to support my ideas.]]

CONTENT ASPECTS
The perspective of subject group (ISO 21500:2012)
*The section could start with a little longer and deeper explanation of the ISO standard, in order create a better understanding of what the ISO 21500 standard is and what it actually is doing. I can see that you are focused on the subject groups, but a general explanation of the whole ISO standard would be beneficial. [[One again you are right, I will add it]]
*You are writing that the ISO split the method into 39 processes and later are grouped into five processes, depending of the perspective. This should be explained. What do you mean with perspective? Which perspectives? How is the appropriate process selected relative to the perspective? Etc. [[Yes, it may not be clear... I will improve it and add a table.]]

DaimlerChrysler merger project
The genesis of the project.
*“The table shows the complementary of the two companies, which seems to make them a perfect matching set” This needs an explanation. The table does not show explicit why the two companies is a perfect match.
[[All right, I will change it to make it more clear]]
The project characteristics
*The two tables (Characteristics of DaimlerChrysler right after the merger and Expected results) are not comparable. It cannot be seen from the two tables that the achieved result is good or bad compared with the expected result, as the tables shows and describes different parameters. [[It is true the tables are not comparable BUT I introduced them to provide more details about the merger project. My aim was not to show the failre of the project here. ]]

The mismanagement of some subject groups
*This section describes what went wrong in the four subject groups: the integration, time, communication and stakeholder. What would you rather have done? Write advice and suggestions in relation to the theory. [[I added some lines about it within the paragraphs]]

Integration
*The cultural table creates a good overview and understanding of the different culture in Germany and USA.

Stakeholders
*Interest and power-matrix. Describe why this it important, what it helps with and how you make one. [[I provided a Power-Matrix, thanks.]]
*Have a figure of the Interest and power-matrix [[Done :)]]
*Are there only three stakeholders related to the merge? Employees, Clients, Stockholders? Explain why you have focus on them and who the other stakeholders are. [[No, there are not the only one. I cannot provide examples about all of them. (I think 3 examples explaining why the Stakeholder process was mismanaged are enough BUT I will explain why I choose these three and who are the others in the Power-Interest Matrix.]]

Discussion section
*A discussion section should be added, where you discus the advantages and disadvantages of the ISO standard, since you are concluding in the conclusion that the standard is useful to analyze a project management. You could also do a discussion on how to perform a successful merge. [[I totally agree, I will add it. It makes sense]]

[[Thanks a lot for these usefull advices]]

== from johnjohn ==

=== General ===
* The abstract should according to Christian be called a summary.
* Overall I think it is a really interesting topic and the structure and language of the article is well-organized and well-written.
* It is very interesting to have a concrete example analyzed throughout the article and you d a fine job making it interesting all the way.
* I however miss a discussion section and a "sum up of important learnings" from this example. Based on this analysis what should other companies do in future mergers? How can we learn from it? I suggest this to be brief and in a bullet format. You could also include benefits and challenges from using the ISO-standard. [[You are totally right, I will add it.]]

Format:
* Nice and fluent language. Easy understandable.
* No obvious grammatical errors
* References are missing “to do” it says. [[Yes, I will do it]]
* In general I miss some illustrations. Especially the Stakeholder go-through could be displayed visually.[[Good idea, I will a visual for the stakeholders.]]

=== Comments for each section ===

Abstract/Summary:
* Good summary stating the interesting aspects of this analysis.
* I felt intrigued to read more.
* Could you reference to the term “merger of equal” I am not aware of what context this expression comes from? [[Relevant, I will add a reference]]

Introduction:
* I like this because it is precise, and gives a good introduction.
* I like that you pose a question: But how to practically apply ISO 21500 to a project? But I miss the fact that you actively adress this later in a discussion or in sum up of best practice. [[I will add a discussion at the end of the article]]
* I miss that you in this section state your approach of how you have structured your article? You mention later that you have 3 parts, could you clarify this?

ISO:
* I would suggest that the introduction goes a bit more in-depth. You could also make links or references to external resources.[[I will go deeper and provide more information.]]

Perspectives of subject groups:
* You refer to the ”third part” this could be clarified better what part you mean? As mentioned could your abstract/summary maybe state your approach and how the article is structured. [[Right. I will introduce the structure more clearly.]]

DaimlerCHrysler merger project:
* I like that you use a tables to give an overview.

The mismanagement of some subject groups:
* Why don’t you go into all subject groups? Maybe you should explain why they are not relevant for you analysis? Why are only 4 of them addressed? [[I will explain I focused on these stakeholders.]] Maybe this section: “Four Subject groups are successively addressed: Integration, Time, Communication and Stakeholders. The Integration Subject group includes the processes required to identify, define, combine, unify, coordinate, control and close the various activities and processes related to the project (ISO 21500:2012 - 4.2.3.2).” Should go above the "integration" headline? [[I do not agree since I need some details provided in the integration part are required to better understand the paragraph about Stakeholders ]]

Stakeholders
*Could you introduce why you have chosen these stakeholders?
* As mentioned could a comparison of the stakeholders described be displayed visually.
[[I agree for both of these comments about the stakeholders. I will add a Power-Interest Matrix and explain why I choosed those one]]

[[Thank you for your help. It really helps me.]]

Talk:Analyzing the failure of the DaimlerChrysler merger from a project management perspective

2014-12-01T22:20:52Z

Lyngby: /* Comments for each section */

== Feedback - Char ==

FORMAL ASPECTA
*The structure creates a good and clear understanding of what the wiki pages is about.
*In general the article is well written and understandable
*The main Title describe the subject and the focus of the article good, but it is a little long in relation to this is a wiki-page and you want it to show up in the search field. [[You are right but I do not know how to make it briefer and still understandable...]]
*You sometimes write “we”(see section “The perspective of subject group”), try to avoid this, as it sounds unprofessional [[You are totally right, I will change it.]]
*Missing table number and related text [[Right, I will add it.]]
*Many assumptions are taken through the article and these need to be supported.
*Missing references [[You are right, I will add the references to support my ideas.]]

CONTENT ASPECTS
The perspective of subject group (ISO 21500:2012)
*The section could start with a little longer and deeper explanation of the ISO standard, in order create a better understanding of what the ISO 21500 standard is and what it actually is doing. I can see that you are focused on the subject groups, but a general explanation of the whole ISO standard would be beneficial. [[One again you are right, I will add it]]
*You are writing that the ISO split the method into 39 processes and later are grouped into five processes, depending of the perspective. This should be explained. What do you mean with perspective? Which perspectives? How is the appropriate process selected relative to the perspective? Etc. [[Yes, it may not be clear... I will improve it and add a table.]]

DaimlerChrysler merger project
The genesis of the project.
*“The table shows the complementary of the two companies, which seems to make them a perfect matching set” This needs an explanation. The table does not show explicit why the two companies is a perfect match.
[[All right, I will change it to make it more clear]]
The project characteristics
*The two tables (Characteristics of DaimlerChrysler right after the merger and Expected results) are not comparable. It cannot be seen from the two tables that the achieved result is good or bad compared with the expected result, as the tables shows and describes different parameters. [[It is true the tables are not comparable BUT I introduced them to provide more details about the merger project. My aim was not to show the failre of the project here. ]]

The mismanagement of some subject groups
*This section describes what went wrong in the four subject groups: the integration, time, communication and stakeholder. What would you rather have done? Write advice and suggestions in relation to the theory. [[I added some lines about it within the paragraphs]]

Integration
*The cultural table creates a good overview and understanding of the different culture in Germany and USA.

Stakeholders
*Interest and power-matrix. Describe why this it important, what it helps with and how you make one. [[I provided a Power-Matrix, thanks.]]
*Have a figure of the Interest and power-matrix [[Done :)]]
*Are there only three stakeholders related to the merge? Employees, Clients, Stockholders? Explain why you have focus on them and who the other stakeholders are. [[No, there are not the only one. I cannot provide examples about all of them. (I think 3 examples explaining why the Stakeholder process was mismanaged are enough BUT I will explain why I choose these three and who are the others in the Power-Interest Matrix.]]

Discussion section
*A discussion section should be added, where you discus the advantages and disadvantages of the ISO standard, since you are concluding in the conclusion that the standard is useful to analyze a project management. You could also do a discussion on how to perform a successful merge. [[I totally agree, I will add it. It makes sense]]

[[Thanks a lot for these usefull advices]]

== from johnjohn ==

=== General ===
* The abstract should according to Christian be called a summary.
* Overall I think it is a really interesting topic and the structure and language of the article is well-organized and well-written.
* It is very interesting to have a concrete example analyzed throughout the article and you d a fine job making it interesting all the way.
* I however miss a discussion section and a "sum up of important learnings" from this example. Based on this analysis what should other companies do in future mergers? How can we learn from it? I suggest this to be brief and in a bullet format. You could also include benefits and challenges from using the ISO-standard. [[You are totally right, I will add it.]]

Format:
* Nice and fluent language. Easy understandable.
* No obvious grammatical errors
* References are missing “to do” it says. [[Yes, I will do it]]
* In general I miss some illustrations. Especially the Stakeholder go-through could be displayed visually.[[Good idea, I will a visual for the stakeholders.]]

=== Comments for each section ===

Abstract/Summary:
* Good summary stating the interesting aspects of this analysis.
* I felt intrigued to read more.
* Could you reference to the term “merger of equal” I am not aware of what context this expression comes from? [[Relevant, I will add a reference]]

Introduction:
* I like this because it is precise, and gives a good introduction.
* I like that you pose a question: But how to practically apply ISO 21500 to a project? But I miss the fact that you actively adress this later in a discussion or in sum up of best practice. [[I will add a discussion at the end of the article]]
* I miss that you in this section state your approach of how you have structured your article? You mention later that you have 3 parts, could you clarify this?

ISO:
* I would suggest that the introduction goes a bit more in-depth. You could also make links or references to external resources.[[I will go deeper and provide more information.]]

Perspectives of subject groups:
* You refer to the ”third part” this could be clarified better what part you mean? As mentioned could your abstract/summary maybe state your approach and how the article is structured. [[Right. I will introduce the structure more clearly.]]

DaimlerCHrysler merger project:
* I like that you use a tables to give an overview.

The mismanagement of some subject groups:
* Why don’t you go into all subject groups? Maybe you should explain why they are not relevant for you analysis? Why are only 4 of them addressed? [[I will explain I focused on these stakeholders.]] Maybe this section: “Four Subject groups are successively addressed: Integration, Time, Communication and Stakeholders. The Integration Subject group includes the processes required to identify, define, combine, unify, coordinate, control and close the various activities and processes related to the project (ISO 21500:2012 - 4.2.3.2).” Should go above the "integration" headline? [[I do not agree since I need some details provided in the integration part are required to better understand the paragraph about Stakeholders ]]

Stakeholders
*Could you introduce why you have chosen these stakeholders?
* As mentioned could a comparison of the stakeholders described be displayed visually.
[[I agree for both of these comments about the stakeholders.]]

[[Thank you for your help. It really helps me.]]

Talk:Analyzing the failure of the DaimlerChrysler merger from a project management perspective

2014-12-01T22:20:15Z

Lyngby: /* Feedback - Char */

== Feedback - Char ==

FORMAL ASPECTA
*The structure creates a good and clear understanding of what the wiki pages is about.
*In general the article is well written and understandable
*The main Title describe the subject and the focus of the article good, but it is a little long in relation to this is a wiki-page and you want it to show up in the search field. [[You are right but I do not know how to make it briefer and still understandable...]]
*You sometimes write “we”(see section “The perspective of subject group”), try to avoid this, as it sounds unprofessional [[You are totally right, I will change it.]]
*Missing table number and related text [[Right, I will add it.]]
*Many assumptions are taken through the article and these need to be supported.
*Missing references [[You are right, I will add the references to support my ideas.]]

CONTENT ASPECTS
The perspective of subject group (ISO 21500:2012)
*The section could start with a little longer and deeper explanation of the ISO standard, in order create a better understanding of what the ISO 21500 standard is and what it actually is doing. I can see that you are focused on the subject groups, but a general explanation of the whole ISO standard would be beneficial. [[One again you are right, I will add it]]
*You are writing that the ISO split the method into 39 processes and later are grouped into five processes, depending of the perspective. This should be explained. What do you mean with perspective? Which perspectives? How is the appropriate process selected relative to the perspective? Etc. [[Yes, it may not be clear... I will improve it and add a table.]]

DaimlerChrysler merger project
The genesis of the project.
*“The table shows the complementary of the two companies, which seems to make them a perfect matching set” This needs an explanation. The table does not show explicit why the two companies is a perfect match.
[[All right, I will change it to make it more clear]]
The project characteristics
*The two tables (Characteristics of DaimlerChrysler right after the merger and Expected results) are not comparable. It cannot be seen from the two tables that the achieved result is good or bad compared with the expected result, as the tables shows and describes different parameters. [[It is true the tables are not comparable BUT I introduced them to provide more details about the merger project. My aim was not to show the failre of the project here. ]]

The mismanagement of some subject groups
*This section describes what went wrong in the four subject groups: the integration, time, communication and stakeholder. What would you rather have done? Write advice and suggestions in relation to the theory. [[I added some lines about it within the paragraphs]]

Integration
*The cultural table creates a good overview and understanding of the different culture in Germany and USA.

Stakeholders
*Interest and power-matrix. Describe why this it important, what it helps with and how you make one. [[I provided a Power-Matrix, thanks.]]
*Have a figure of the Interest and power-matrix [[Done :)]]
*Are there only three stakeholders related to the merge? Employees, Clients, Stockholders? Explain why you have focus on them and who the other stakeholders are. [[No, there are not the only one. I cannot provide examples about all of them. (I think 3 examples explaining why the Stakeholder process was mismanaged are enough BUT I will explain why I choose these three and who are the others in the Power-Interest Matrix.]]

Discussion section
*A discussion section should be added, where you discus the advantages and disadvantages of the ISO standard, since you are concluding in the conclusion that the standard is useful to analyze a project management. You could also do a discussion on how to perform a successful merge. [[I totally agree, I will add it. It makes sense]]

[[Thanks a lot for these usefull advices]]

== from johnjohn ==

=== General ===
* The abstract should according to Christian be called a summary.
* Overall I think it is a really interesting topic and the structure and language of the article is well-organized and well-written.
* It is very interesting to have a concrete example analyzed throughout the article and you d a fine job making it interesting all the way.
* I however miss a discussion section and a "sum up of important learnings" from this example. Based on this analysis what should other companies do in future mergers? How can we learn from it? I suggest this to be brief and in a bullet format. You could also include benefits and challenges from using the ISO-standard. [[You are totally right, I will add it.]]

Format:
* Nice and fluent language. Easy understandable.
* No obvious grammatical errors
* References are missing “to do” it says. [[Yes, I will do it]]
* In general I miss some illustrations. Especially the Stakeholder go-through could be displayed visually.[[Good idea, I will a visual for the stakeholders.]]

=== Comments for each section ===

Abstract/Summary:
* Good summary stating the interesting aspects of this analysis.
* I felt intrigued to read more.
* Could you reference to the term “merger of equal” I am not aware of what context this expression comes from? [[Relvant, I will add a reference]]

Introduction:
* I like this because it is precise, and gives a good introduction.
* I like that you pose a question: But how to practically apply ISO 21500 to a project? But I miss the fact that you actively adress this later in a discussion or in sum up of best practice. [[I will add a discussion at the end of the article]]
* I miss that you in this section state your approach of how you have structured your article? You mention later that you have 3 parts, could you clarify this?

ISO:
* I would suggest that the introduction goes a bit more in-depth. You could also make links or references to external resources.[[I will go deeper and provide more information.]]

Perspectives of subject groups:
* You refer to the ”third part” this could be clarified better what part you mean? As mentioned could your abstract/summary maybe state your approach and how the article is structured. [[Right. I will introduce the structure more clearly.]]

DaimlerCHrysler merger project:
* I like that you use a tables to give an overview.

The mismanagement of some subject groups:
* Why don’t you go into all subject groups? Maybe you should explain why they are not relevant for you analysis? Why are only 4 of them addressed? [[I will explain I focused on these stakeholders.]] Maybe this section: “Four Subject groups are successively addressed: Integration, Time, Communication and Stakeholders. The Integration Subject group includes the processes required to identify, define, combine, unify, coordinate, control and close the various activities and processes related to the project (ISO 21500:2012 - 4.2.3.2).” Should go above the "integration" headline? [[I do not agree since I need some details provided in the integration part are required to better understand the paragraph about Stakeholders ]]

Stakeholders
*Could you introduce why you have chosen these stakeholders?
* As mentioned could a comparison of the stakeholders described be displayed visually.
[[I agree for both of these comments about the stakeholders.]]

[[Thank you for your help. It really helps me.]]

Analyzing the failure of the DaimlerChrysler merger from a project management perspective

2014-12-01T22:11:52Z

Lyngby: /* ISO 21500 : 2012, A focus on processes ISO 21500:2012 Guidance on project management Anton Zandhuis, Rommert Stellingwerf. ISO 215000, Guidance on Project managenent, A Pocket Guide. Van Haren Publishing. 2013 */

'''Abstract'''

In the late 90´s, German Daimler-Benz AG and American Chrysler Corporation announced their intention to combine their strengths within a so-called `merger of equals´ <ref> Grässlin, Jürgen. ''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> . Becoming the fifth largest automaker in the world, both companies hoped to overcome together the automotive industry crisis. However, nothing worked out as planned, so much so that in 2007 Daimler-Benz sold all its shares of the Chrysler division.

Could the use of a norm have guaranteed the success of the DaimlerChrysler merger ? This question will be answered with regard to the ISO 21500:2012 guideline for project management.

According to the latter, a definition of project management and the processes it involves will be provided.Then, an analysis of the origin of DaimlerChrysler project will be carried out. It will also be shown to what extent this fusion was mismanaged with regard to the subject groups defined in the ISO 21500:2012. Last but not least the benefits of using this standard to successfully conduct a complex project will be discussed.

=Introduction=
In the early 21st century, no comprehensive standard on project management was accepted despite the substantial demand for project management skills. However, in 2006, the need for a unifying international approach was recognized by the International Organization for Standard (ISO). The work of over hundreds experts in project management from around the globe resulted in ''ISO 21500: 2012 -Guidance on project management''. This norm defines universal project management terminologies, as well as the principles and processes it involves. It provides a basic guide against which any organization can compare its current project management practices and determine areas in need of improvement. But how to practically apply it to a project? A specific example of project failure prior to introducing ISO 21500 will be provided to analyze which project management processes were disregarded. More particularly, the merger of the German automaker Daimler-Benz with the American Chrysler Corporation will be examined with the perspective of subject group.

= ISO 21500 : 2012, a focus on processes <ref> ISO 21500:2012 ''Guidance on project management'' </ref> <ref> Anton Zandhuis, Rommert Stellingwerf. ''ISO 215000, Guidance on Project managenent, A Pocket Guide''. Van Haren Publishing. 2013 </ref>=

What is a project? A definition is provided by the ISO 21500: “A unique set of processes consisting of coordinated and controlled activities with start and end dates, performed to achieve project objectives.” The concept of processes seems to be at the crux of project management issues. The definition of how to manage a project stresses this point: “Project management is performed through processes”.

Specifically, the norm splits the method of managing a project into 39 elementary processes. Depending on the perspective, the latter are grouped into five process groups (Initiating, Planning, Controlling and Closing) or into ten subject groups (Integration, Stakeholder, Scope, Resource, Time, Cost, Risk, Quality, Procurement and Communication). The classification of these processes is provided in the following table.

{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 1 : Project management cross-referenced to process and subject groups (ISO 21500 : 2012)'''
|-
! rowspan="2" style="background: #ffedd3;" | SUBJECT GROUPS
! colspan="5" style="background: #ffedd3;" | PROCESS GROUPS
|-
|style="background: #fff4d3;" align=center | '''Initiating'''
|style="background: #fff4d3;" align=center| '''Planning'''
|style="background: #fff4d3;" align=center| '''Implementing'''
|style="background: #fff4d3;" align=center | '''Controlling'''
|style="background: #fff4d3;" align=center | '''Closing'''
|-
|style="background: #fff4d3;" |'''Integration'''
|
4.3.2 Develop project chart
|
4.3.3. Develop project plans
|
4.3.4 Direct project work
|
4.3.5 Control project work

4.3.6 Control changes
|
4.3.7 Close project or phase

4.3.8 Collect lessons learned
|-
|style="background: #fff4d3;" |'''Stakeholder'''
|
4.3.9 Identify stakeholders
|

|
4.3.10 Manage stakeholders
|

|

|-
|style="background: #fff4d3;" |'''Scope'''
|

|
4.3.11 Define scope

4.3.12 Create work breakdown structure

4.3.13 Define activities
|

|
4.3.14 Control scope
|

|-
|style="background: #fff4d3;" |'''Resource'''
|
4.3.15 Establish project team
|
4.3.16 Estimate resources

4.3.17 Define project organization
|
4.3.18 Develop project team
|
4.3.19 Control resources

4.3.20 Manage project team
|

|-
|style="background: #fff4d3;" |'''Time'''
|

|
4.3.21 Sequence activities

4.3.22 Estimate activity durations

4.3.23 Develop schedule
|

|
4.3.24 Control schedule
|

|-
|style="background: #fff4d3;" |'''Cost'''
|

|
4.3.25 Estimate costs

4.3.26 Develop budget
|

|
4.3.27 Control costs
|

|-
|style="background: #fff4d3;" |'''Risk'''
|

|
4.3.28 Identify risks

4.3.29 Asses risks
|
4.3.30 Treat risks
|
4.3.31 Control risks
|
|-
|style="background: #fff4d3;" |'''Quality'''
|

|
4.3.32 Plan quality
|
4.3.33 Perform quality assurance
|
4.3.34 Perform quality control
|

|-
|style="background: #fff4d3;" |'''Procurement'''
|

|
4.3.35 Plan procurements
|
4.3.36 Select suppliers
|
4.3.37 Administer procurements
|

|-
|style="background: #fff4d3;" |'''Communication'''
|

|
4.3.38 Plan communications
|
4.3.39 Distribute information
|
4.3.40 Manage communications
|

|}

The perspective of subject groups will be adopted to consider the management of DaimlerChrysler project. A subject is a theme in which processes are classified according to its related activities.

But before that, the project of DaimlerChrysler merger is regarded.

=DaimlerChrysler merger project <ref> Julia Hollmann, Aletéia de Moura Carpes, Thiago Antonio Beuron. ''The DaimlerChrylser Merger- A cultural mismatch ?'' Faculty Sponsor : Universität Paderborn- Germany, Department of International Business Studies. Universidade Federal de Santa Maria- Brazil, Department of Administration. 2010 </ref> =
==The genesis of the project==
In the late 90´s, the automotive industry had to face multiples challenges due to the excess manufacturing capacity, the growth of ecological awareness, and the retail revolution that empowered buyers. To strengthen their position during this crisis, the automakers Daimler-Benz and Chrysler Corporation decided to merge. This project aimed to combine each other´s product designs, manufacturing resources and distribution systems.
The following table shows the complementary of the two companies, which wanted to unit their knowledge and their market in order to gain a competitive advantage.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 2 : The complementary of the two companies '''
|
! style="background: #ffedd3;" |'''Daimler-Benz AG'''
! style="background: #ffedd3;" |'''Chrysler Corporation'''
|-
! style="background: #ffedd3;" |'''Head office location'''
|
Germany
|
United States
|-
! style="background: #ffedd3;" |'''Geographical reach'''
|
European market
|
U.S. American market
|-
! style="background: #ffedd3;" |'''Product ranges'''
|
Uncompromising quality products
|
Car models that meet the American demand for adventurousness
|}


Both synergies and economies of scale were likely to proliferate.

How the project was set up is explained in the following paragraph. However, its detailed description falls outside the scope of this article.

==The execution of the project==
On May 7th, 1998 the signing of the combination agreement between Daimler-Benz and Chrysler was publicly announced. Daimler-Benz CEO Jürgen Schrempp described the union as "a merger of equals, a merger of growth, and a merger of unprecedented strength".
The equal status of the two organizations was reflected in the newly established entity name, DaimlerChrysler, as well as in the combination of the two former boards of management to form the one of DaimlerChrysler. Furthermore, it was agreed that Schrempp and Eaton, former CEO of the Chrysler Corporation, would jointly led the entity as co-chairmen and co-CEOs. It was also decided that Eaton would stay up to three years.
The two following tables provide more data about DaimlerChrysler right after the merger and the expected results of this project.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 3 : Characteristics of DaimlerChrysler right after the merger'''
|-
! style="background: #ffedd3;" |'''Number of employees '''
|442,000 employees
½ in Germany

1/3 in North America

1/6 spread across 200 countries around the world
|-
! style="background: #ffedd3;" |'''Daimler-Benz AG Market capitalization'''
|$ 92 billion
|}



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 4 : Expected results'''
! style="background: #ffedd3;" |Annual revenues of the combined company
|$ 132 billion
|-
! style="background: #ffedd3;" |Increase in sales
|13%
|-
! style="background: #ffedd3;" |Cost savings brought within 2 or 3 years
|$ 3,5 billion a year
|}


So far, this fusion appears to be very beneficial for all parties involved. However the wish for synergy effects never came true and the project drove Chrysler into chaos. In May 2007, the merger of Chrysler and Daimler-Benz was dissolved. Can this failure be ascribed to mismanagement?

The purpose of this article is now to point out which processes, related to the different subject groups definied in ISO 21500:2012 were disregarded and may have led to the project failure.

=The mismanagement of some subject groups <ref> Wanda Curlee, Robert L. Gordon . ''Complexity Theory and Project Management. ''. New York : Wiley, 2011, p. 129-133 </ref> =

Four subject groups will successively be considered : Integration, Time, Communication and Stakeholders. A mismanagement of some processes related to these four specific subject groups is namely to be seen.

==Integration <ref> Grässlin, Jürgen.''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> <ref> ''DaimlerChrysler confronts the challenges of global integration'', Human Resource Management International Digest, Vol 12 Iss :2 P.5-8</ref> ==

The Integration subject group includes the processes required to identify, define, combine, unify, coordinate, control and close the various activities and processes related to the project (ISO 21500:2012 - 4.2.3.2).

Within this merger, the unification and combination of all operations within the established entity needed to be achieved. To meet this target, a newly corporate culture had to be defined to align working styles. The latter namely radically differ due to major cultural differences, as shown in the following table.



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 5 : Comparison between the German and the American working styles'''
|-
|
! style="background: #ffedd3;" | '''Germany'''
! style="background: #ffedd3;"|'''United States'''
|-
! style="background: #ffedd3;" align="left" |'''Employee working style'''
| Work in a team-oriented environment
| Work individually
|-
! style="background: #ffedd3;" align="left" |'''Writing report'''
| Lengthy reports
| Little paper
|-
! style="background: #ffedd3;" align="left" |'''Decision-making process'''
|
Methodical, based on very detailed plans
|
Using creativity, based on trial-and-error method
|-
! style="background: #ffedd3;" align="left" |'''Meeting'''
|
Extended discussions
|
Short meeting
|-
! style="background: #ffedd3;" align="left" |'''Organizational structure'''
|
Pronounced hierarchy based on top-down-management
|
Flat organizational hierarchy stimulating empowerment of the employees
|-
! style="background: #ffedd3;" align="left" |'''Risk appetite'''
|
Risk adverse culture
|
Risk takers
|}


Due to the fact that this merger was a so-called `merger of equals´, the integration of the two cultures was to combine them to generate a new shared corporate one. It was namely vital that both organizations learn from each other to generate synergy effects. Managers have here a central role to play to define and coordinate the development of this new culture.

Eaton affirmed that it was at the top of the agenda and Thomas Stallkamp, Chrysler President during the negotiation phase, was charged with overseeing this integration process. Some effort went into harmonizing the two corporate cultures. Many seminars and workshops were organized to sensitizing the employees for working with new colleagues with diverging working methods. Furthermore, German was taught to many American managers.

However, given the large gap between the two organizations, it would appear that managers should have undertaken more activities and CEOs should have allocated more resources to bridge the chasm of cultural differences.

In fact, no strong and cohesive organizational culture was created, as illustrated in daily misunderstandings. For instance, the attention Daimler-Benz leaders paid to writing a leaflet sent to employee annoyed Chrysler executives. At the end of 1999, the resignation of Thomas Stallkamp, a 19-year veteran of Chrysler who was highly regarded, might be seen as a failure of the merger integration process after all the effort. Stallkamp is quoted as saying: <nowiki>“</nowiki>The majority of my career has been spent implementing supply chain management. I would like to continue to explore those areas at a less hectic pace<nowiki>”</nowiki>. Were both parties truly willing to cooperate wholeheartedly and to enter compromises to succeed in the numerous integration processes? A negative answer is the root cause of an unachieved integration.

==Time<ref> Sue Cartwright, Cary L. Cooper. ''Mergers and Acquisitions: The Human Factor Paperback'' . January 1, 1992 </ref>==

The Time subject group is all about managing the timely completion of the project. Feasible deadlines taking all known constraints into account need to be set. Processes covered by the latter subject group are the development of schedule for project activities estimating each activity duration, the progress monitoring and the schedule control.

One failure in managing time in DaimlerChrysler merger was that too little time was devoted to each activity. Let´s take a concrete example: Daimler-Benz and Chrysler began formal negotiations on January 12, 1998 and only five months later, the merger was announced worldwide. Susan Cartwright – past President of the British Academy Management – asserts that the period of time from the germ of the merger idea till an agreement is reached is estimated to last around two years. Speeding up the pre-merger preparation, the precise objectives of the fusion and the way to achieve them could not have been defined accurately.
Furthermore, the merger was completed on November 12, 1998. Time needed by employees to adapt to the new circumstances was not taken into account in the deadlines. One more mismanagement which is added to the others.

==Communication==
In the standard ISO 21500:2012, three key processes are defined to ensure appropriate exchange of project information: Plan communications, Distribute information and Manage communications. But within DaimlerChrysler project none of them were totally met. In order to appreciate the scale of the problem, it should be point out that even managers and CEOs experienced serious difficulties in discussing solutions and achieving a consensus. According to a Daimler-Benz executive, <nowiki>"</nowiki>Eaton went weeks without speaking with Jürgen [Schrempp]. He preferred to maintain lower-level contact. Jürgen, meanwhile, left Chrysler alone.<nowiki>"</nowiki> <ref> [http://mba.tuck.dartmouth.edu/pdf/2002-1-0071.pdf] Professor Sydney Finkelstein. ''The DaimlerChrysler Merger.''Tuck School of Business at Dartmouth. 2002 </ref> One would have expected that both CEOs would have shared their different views in order to discover common goal and operate as an effective team at the top. Given the seeming clash of culture described in the first paragraph, it was crucial to start the discussion to create healthy relationship and release the company´s potential. The clearer the communication, the better issues are addressed. But with such a lack of communication among leaders, no far-reaching communication plan could be implemented among all stakeholders involved, not to mention the distribution of the information. Both internal and external communications were chaotic. It is likely that the standard ISO 21500 would have made managers more aware of the processes related to communication which requires to be efficiently tackled.

==Stakeholders==
The stakeholder subject group is concerned with identifying and managing all parties involved. To classify them, both their expectations and influence on the project need to be analyzed. The table 6 provides a power-interest matrix, which is crucial to draw up appropriate management strategies for effectively engaging with them. The external stakeholders are written in italics, the others are internal.

{| border="1" cellpadding="3" cellspacing="0" style="margin:auto;"
|+ '''Table 6 : Power and interest matrix'''
|-
! rowspan="2" style="background: #ffedd3;" | Level of interest
! colspan="5" style="background: #ffedd3;" | Level of power
|-
|style="background: #fff4d3;" align=center | ''' Low '''
|style="background: #fff4d3;" align=center| ''' High '''
|-
|style="background: #fff4d3;" align=center |'''High'''
|
'''Employees'''

Trade Union

'''''Clients'''''

''Suppliers''

''Government''

''Society''
|
Directors

Managers

'''''Stockholders'''''
|-
|style="background: #fff4d3;" align=center |'''Low'''
|
''Competitors''
|

|-
|}

To analyze the management of all of these stakeholders one by one would be tedious. However it is relevant to focus on several categories according to the table 6. Special focus will be laid on the stakeholders written in bold. Therefore, both high power/high interest and low power/high interest stakeholders will be looked at. Two of them are internal, whereas the other is internal.

It will be shown that all of them were significantly affected by the DaimlerChrysler project due to mismanagement.

===Employees===
Employees, low-power and high-interest stakeholders, must be kept informed and managers should ensure that no major issues are arising.
However, this was not the case in the DaimlerChrysler merger: employees felt overlooked, disregarded and left out of the merger process. But to what extent CEOs and managers were responsible in this climate of distrust and dislike?

First, soon after the merger, it became obvious that Daimler was taking over the whole company´s management. Chrysler President Stallkamp retirement at the end of 1999 was followed by the one of James P. Holdem, top-level executive of the Chrysler Group. They were replaced by two German managers: Dieter Zetsche and Wolfgang Bernhard. Being lowered to divisional status, it is understandable that American´s morale suffered from this German hegemony. Employee felt eclipsed and were disgusted. They also were worried that DaimlerChrysler would dismiss some of them. But the problems were not confined to be here. Indeed, Jürgen Schrempp attitude only made the situation worse. In autumn 2000, DaimlerChrysler CEO acknowledged in the German financial daily Handelsblatt that <nowiki>“</nowiki>The Merger of Equals statement was necessary in order to earn the support of Chrysler's workers and the American public, but it was never reality<nowiki>"</nowiki>. Many Americans regarded this statement as a betrayal, since Schrempp intended to deceive them from the outset. It appears clear that it is due to the board of directors´ failure in acting responsibly towards the workers that deep-seated distrust ran deep.

Furthermore, such a mismanagement of the employees can lead to far-reaching consequences on the project success itself. Indeed, it could have been that some workers simply did not work as efficiently because they supposed the board of directors did not care about the Chrysler entity – so why should they? Decreased performance would have resulted in it.

It is to notice that even though the standard ''ISO 21500: 2012'' did not exist at that time, the fact that employee influence was of importance to succeed such a process was already known. MaryAnn Keller, founder and managing partner of MaryAnn Keller & Associates LLC, namely stated in June 1998 that <nowiki>“</nowiki>The success of any combination depends on the ability of the new organization to win over the hearts and minds of employees.<nowiki>”</nowiki> <ref> [http://murphylibrary.uwlax.edu/digital/jur/2002/carpiaux.pdf] Nicole Carpiaux. ''DaimlerChrysler : Wunderkind or Problem Child ?'' Faculty Sponsor : Leticia Peña, Department of Management. </ref> The managers of DaimlerChrysler should then be aware that is really a management issue to embrace workers instead to neglect them in order to obtain the best they can offer.

===Clients===
And what about the customers, low-power and high interest stakeholders?

Once again, one could argue that managers failed to define as well as to meet their needs.
One example is given for illustration. At the time, the DaimlerChrysler A-Class was 1.25 to 2 times more expensive than similar vehicles sold by Volkswagen, Renault or Fiat. This higher price was not deterrent since clients were aware that Daimler-Benz primarily asset was quality and safety. However, in 1999, the A-class failed an emergency maneuver test conducted by a Swedish television station. <ref> Bill Vlasic, Bradley A. Stertz. ''Taken for a Ride: How Daimler-Benz Drove off with Chrysler''. Harper Paperbacks,
2001, p. 300.
</ref> Consequently, customers´ satisfaction suddenly drop off the map. The DaimlerChrysler vehicle was considered as an overpriced car which did not achieve engineering excellence compared to the highly competitive European compact market. The crux of the problem may be that the German entity had tried to implant the American low development costs into its entities, disregarding the high expectations of the clients. This paragraph appears to prove that trying to generate synergy savings, the managers failed in responding the customer´s needs.

===Stockholders===
Last but not least, the management of both high power and high interest stakeholders needs to be considered. Take the stockholders.

An overwhelming majority of them favored the project of merger in 1998. Approvals ratings reached 99.9% at Daimler-Benz and 97.5% at Chrysler. It may be inferred that, at the outset of the project, managers successfully took into account the processes required to satisfy the shareholders. It did not take long, however, for some of them to express their disappointment. This was the case for Kirk Kerkorian, the third largest proprietor of DailerChrysler stock and largest Chrysler shareholder before the merger. In November 2000, the latter filed a $9 billion lawsuit against DaimlerChrysler for falsifying the terms of the fusion as a “merger of equals”. He was upset with the German hegemony and stated he had voted to turn its shares for stock in DaimlerChrysler without having considered the American entity would be reduced to a mere division. Two months later, he cut his take in the merged company by a third. Even though the managers were not directly involved in this discontent, the lack of acting responsibly of the Board of the director is obvious.

To conclude, the completion of the processes related to each of these three stakeholders lacked efficiency. The managers failed in implementing the required activities to satisfy them and this will become a major hindrance to the project completion.

=The benefits of using ISO 21500: 2012=

This case study clearly shows the numerous issues than need to be tackled while managing a project. The introduction of a guide that describes processes and methods - whose application would directly enhance the project´s chance of success - would be of great benefit to managers. ISO 21500:2012 appears to be very relevant as highlighted in the previous part since managers can ensure that they are going through all of the processes defined. It namely looks like a “checklist”.
Furthermore, transparency in management can be raised using this norm. This is all the more important when different organizations are involved, as in DaimlerChrylser merger case, since the different activities can be coordinated.

It is worth pointed out that the aim of ISO 21500:2012 is to provide a generic and international guideline. Whatever project a manager conducts, it is applicable. But, the downside is that some additional other specific standards may be used to deal with special purposes. Therefore, ISO 21500:2012 must be comprehended as a general norm that should be supplemented with more detailed standards in certain complex cases.

=Conclusion=
Many factors may affect the failure of the DaimlerChrysler project, but most of them may have been due to its mismanagement. Such a union was notoriously risky, especially due to the opposite companies it combined. To deliver the intent benefits, particular care should then have been taken by managers to tackle all the project management processes.

The use of the standard ''ISO 21500 : 2012'' has been made to group the processes within subject groups. It appears clear that there were some omissions, particularly regarding Integration, Time, Communication and Stakeholders. This standard has proven to be useful to analyze a project management, especially in case of cross-boarders project.

= References =

<references />

[[Category:Project Management]]
[[Category:Human Behaviour]]
[[Category:Complexity]]

Analyzing the failure of the DaimlerChrysler merger from a project management perspective

2014-12-01T22:11:28Z

Lyngby: /* Stockholders */

'''Abstract'''

In the late 90´s, German Daimler-Benz AG and American Chrysler Corporation announced their intention to combine their strengths within a so-called `merger of equals´ <ref> Grässlin, Jürgen. ''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> . Becoming the fifth largest automaker in the world, both companies hoped to overcome together the automotive industry crisis. However, nothing worked out as planned, so much so that in 2007 Daimler-Benz sold all its shares of the Chrysler division.

Could the use of a norm have guaranteed the success of the DaimlerChrysler merger ? This question will be answered with regard to the ISO 21500:2012 guideline for project management.

According to the latter, a definition of project management and the processes it involves will be provided.Then, an analysis of the origin of DaimlerChrysler project will be carried out. It will also be shown to what extent this fusion was mismanaged with regard to the subject groups defined in the ISO 21500:2012. Last but not least the benefits of using this standard to successfully conduct a complex project will be discussed.

=Introduction=
In the early 21st century, no comprehensive standard on project management was accepted despite the substantial demand for project management skills. However, in 2006, the need for a unifying international approach was recognized by the International Organization for Standard (ISO). The work of over hundreds experts in project management from around the globe resulted in ''ISO 21500: 2012 -Guidance on project management''. This norm defines universal project management terminologies, as well as the principles and processes it involves. It provides a basic guide against which any organization can compare its current project management practices and determine areas in need of improvement. But how to practically apply it to a project? A specific example of project failure prior to introducing ISO 21500 will be provided to analyze which project management processes were disregarded. More particularly, the merger of the German automaker Daimler-Benz with the American Chrysler Corporation will be examined with the perspective of subject group.

= ISO 21500 : 2012, A focus on processes <ref> ISO 21500:2012 ''Guidance on project management'' </ref> <ref> Anton Zandhuis, Rommert Stellingwerf. ''ISO 215000, Guidance on Project managenent, A Pocket Guide''. Van Haren Publishing. 2013 </ref>=

What is a project? A definition is provided by the ISO 21500: “A unique set of processes consisting of coordinated and controlled activities with start and end dates, performed to achieve project objectives.” The concept of processes seems to be at the crux of project management issues. The definition of how to manage a project stresses this point: “Project management is performed through processes”.

Specifically, the norm splits the method of managing a project into 39 elementary processes. Depending on the perspective, the latter are grouped into five process groups (Initiating, Planning, Controlling and Closing) or into ten subject groups (Integration, Stakeholder, Scope, Resource, Time, Cost, Risk, Quality, Procurement and Communication). The classification of these processes is provided in the following table.

{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 1 : Project management cross-referenced to process and subject groups (ISO 21500 : 2012)'''
|-
! rowspan="2" style="background: #ffedd3;" | SUBJECT GROUPS
! colspan="5" style="background: #ffedd3;" | PROCESS GROUPS
|-
|style="background: #fff4d3;" align=center | '''Initiating'''
|style="background: #fff4d3;" align=center| '''Planning'''
|style="background: #fff4d3;" align=center| '''Implementing'''
|style="background: #fff4d3;" align=center | '''Controlling'''
|style="background: #fff4d3;" align=center | '''Closing'''
|-
|style="background: #fff4d3;" |'''Integration'''
|
4.3.2 Develop project chart
|
4.3.3. Develop project plans
|
4.3.4 Direct project work
|
4.3.5 Control project work

4.3.6 Control changes
|
4.3.7 Close project or phase

4.3.8 Collect lessons learned
|-
|style="background: #fff4d3;" |'''Stakeholder'''
|
4.3.9 Identify stakeholders
|

|
4.3.10 Manage stakeholders
|

|

|-
|style="background: #fff4d3;" |'''Scope'''
|

|
4.3.11 Define scope

4.3.12 Create work breakdown structure

4.3.13 Define activities
|

|
4.3.14 Control scope
|

|-
|style="background: #fff4d3;" |'''Resource'''
|
4.3.15 Establish project team
|
4.3.16 Estimate resources

4.3.17 Define project organization
|
4.3.18 Develop project team
|
4.3.19 Control resources

4.3.20 Manage project team
|

|-
|style="background: #fff4d3;" |'''Time'''
|

|
4.3.21 Sequence activities

4.3.22 Estimate activity durations

4.3.23 Develop schedule
|

|
4.3.24 Control schedule
|

|-
|style="background: #fff4d3;" |'''Cost'''
|

|
4.3.25 Estimate costs

4.3.26 Develop budget
|

|
4.3.27 Control costs
|

|-
|style="background: #fff4d3;" |'''Risk'''
|

|
4.3.28 Identify risks

4.3.29 Asses risks
|
4.3.30 Treat risks
|
4.3.31 Control risks
|
|-
|style="background: #fff4d3;" |'''Quality'''
|

|
4.3.32 Plan quality
|
4.3.33 Perform quality assurance
|
4.3.34 Perform quality control
|

|-
|style="background: #fff4d3;" |'''Procurement'''
|

|
4.3.35 Plan procurements
|
4.3.36 Select suppliers
|
4.3.37 Administer procurements
|

|-
|style="background: #fff4d3;" |'''Communication'''
|

|
4.3.38 Plan communications
|
4.3.39 Distribute information
|
4.3.40 Manage communications
|

|}

The perspective of subject groups will be adopted to consider the management of DaimlerChrysler project. A subject is a theme in which processes are classified according to its related activities.

But before that, the project of DaimlerChrysler merger is regarded.

=DaimlerChrysler merger project <ref> Julia Hollmann, Aletéia de Moura Carpes, Thiago Antonio Beuron. ''The DaimlerChrylser Merger- A cultural mismatch ?'' Faculty Sponsor : Universität Paderborn- Germany, Department of International Business Studies. Universidade Federal de Santa Maria- Brazil, Department of Administration. 2010 </ref> =
==The genesis of the project==
In the late 90´s, the automotive industry had to face multiples challenges due to the excess manufacturing capacity, the growth of ecological awareness, and the retail revolution that empowered buyers. To strengthen their position during this crisis, the automakers Daimler-Benz and Chrysler Corporation decided to merge. This project aimed to combine each other´s product designs, manufacturing resources and distribution systems.
The following table shows the complementary of the two companies, which wanted to unit their knowledge and their market in order to gain a competitive advantage.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 2 : The complementary of the two companies '''
|
! style="background: #ffedd3;" |'''Daimler-Benz AG'''
! style="background: #ffedd3;" |'''Chrysler Corporation'''
|-
! style="background: #ffedd3;" |'''Head office location'''
|
Germany
|
United States
|-
! style="background: #ffedd3;" |'''Geographical reach'''
|
European market
|
U.S. American market
|-
! style="background: #ffedd3;" |'''Product ranges'''
|
Uncompromising quality products
|
Car models that meet the American demand for adventurousness
|}


Both synergies and economies of scale were likely to proliferate.

How the project was set up is explained in the following paragraph. However, its detailed description falls outside the scope of this article.

==The execution of the project==
On May 7th, 1998 the signing of the combination agreement between Daimler-Benz and Chrysler was publicly announced. Daimler-Benz CEO Jürgen Schrempp described the union as "a merger of equals, a merger of growth, and a merger of unprecedented strength".
The equal status of the two organizations was reflected in the newly established entity name, DaimlerChrysler, as well as in the combination of the two former boards of management to form the one of DaimlerChrysler. Furthermore, it was agreed that Schrempp and Eaton, former CEO of the Chrysler Corporation, would jointly led the entity as co-chairmen and co-CEOs. It was also decided that Eaton would stay up to three years.
The two following tables provide more data about DaimlerChrysler right after the merger and the expected results of this project.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 3 : Characteristics of DaimlerChrysler right after the merger'''
|-
! style="background: #ffedd3;" |'''Number of employees '''
|442,000 employees
½ in Germany

1/3 in North America

1/6 spread across 200 countries around the world
|-
! style="background: #ffedd3;" |'''Daimler-Benz AG Market capitalization'''
|$ 92 billion
|}



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 4 : Expected results'''
! style="background: #ffedd3;" |Annual revenues of the combined company
|$ 132 billion
|-
! style="background: #ffedd3;" |Increase in sales
|13%
|-
! style="background: #ffedd3;" |Cost savings brought within 2 or 3 years
|$ 3,5 billion a year
|}


So far, this fusion appears to be very beneficial for all parties involved. However the wish for synergy effects never came true and the project drove Chrysler into chaos. In May 2007, the merger of Chrysler and Daimler-Benz was dissolved. Can this failure be ascribed to mismanagement?

The purpose of this article is now to point out which processes, related to the different subject groups definied in ISO 21500:2012 were disregarded and may have led to the project failure.

=The mismanagement of some subject groups <ref> Wanda Curlee, Robert L. Gordon . ''Complexity Theory and Project Management. ''. New York : Wiley, 2011, p. 129-133 </ref> =

Four subject groups will successively be considered : Integration, Time, Communication and Stakeholders. A mismanagement of some processes related to these four specific subject groups is namely to be seen.

==Integration <ref> Grässlin, Jürgen.''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> <ref> ''DaimlerChrysler confronts the challenges of global integration'', Human Resource Management International Digest, Vol 12 Iss :2 P.5-8</ref> ==

The Integration subject group includes the processes required to identify, define, combine, unify, coordinate, control and close the various activities and processes related to the project (ISO 21500:2012 - 4.2.3.2).

Within this merger, the unification and combination of all operations within the established entity needed to be achieved. To meet this target, a newly corporate culture had to be defined to align working styles. The latter namely radically differ due to major cultural differences, as shown in the following table.



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 5 : Comparison between the German and the American working styles'''
|-
|
! style="background: #ffedd3;" | '''Germany'''
! style="background: #ffedd3;"|'''United States'''
|-
! style="background: #ffedd3;" align="left" |'''Employee working style'''
| Work in a team-oriented environment
| Work individually
|-
! style="background: #ffedd3;" align="left" |'''Writing report'''
| Lengthy reports
| Little paper
|-
! style="background: #ffedd3;" align="left" |'''Decision-making process'''
|
Methodical, based on very detailed plans
|
Using creativity, based on trial-and-error method
|-
! style="background: #ffedd3;" align="left" |'''Meeting'''
|
Extended discussions
|
Short meeting
|-
! style="background: #ffedd3;" align="left" |'''Organizational structure'''
|
Pronounced hierarchy based on top-down-management
|
Flat organizational hierarchy stimulating empowerment of the employees
|-
! style="background: #ffedd3;" align="left" |'''Risk appetite'''
|
Risk adverse culture
|
Risk takers
|}


Due to the fact that this merger was a so-called `merger of equals´, the integration of the two cultures was to combine them to generate a new shared corporate one. It was namely vital that both organizations learn from each other to generate synergy effects. Managers have here a central role to play to define and coordinate the development of this new culture.

Eaton affirmed that it was at the top of the agenda and Thomas Stallkamp, Chrysler President during the negotiation phase, was charged with overseeing this integration process. Some effort went into harmonizing the two corporate cultures. Many seminars and workshops were organized to sensitizing the employees for working with new colleagues with diverging working methods. Furthermore, German was taught to many American managers.

However, given the large gap between the two organizations, it would appear that managers should have undertaken more activities and CEOs should have allocated more resources to bridge the chasm of cultural differences.

In fact, no strong and cohesive organizational culture was created, as illustrated in daily misunderstandings. For instance, the attention Daimler-Benz leaders paid to writing a leaflet sent to employee annoyed Chrysler executives. At the end of 1999, the resignation of Thomas Stallkamp, a 19-year veteran of Chrysler who was highly regarded, might be seen as a failure of the merger integration process after all the effort. Stallkamp is quoted as saying: <nowiki>“</nowiki>The majority of my career has been spent implementing supply chain management. I would like to continue to explore those areas at a less hectic pace<nowiki>”</nowiki>. Were both parties truly willing to cooperate wholeheartedly and to enter compromises to succeed in the numerous integration processes? A negative answer is the root cause of an unachieved integration.

==Time<ref> Sue Cartwright, Cary L. Cooper. ''Mergers and Acquisitions: The Human Factor Paperback'' . January 1, 1992 </ref>==

The Time subject group is all about managing the timely completion of the project. Feasible deadlines taking all known constraints into account need to be set. Processes covered by the latter subject group are the development of schedule for project activities estimating each activity duration, the progress monitoring and the schedule control.

One failure in managing time in DaimlerChrysler merger was that too little time was devoted to each activity. Let´s take a concrete example: Daimler-Benz and Chrysler began formal negotiations on January 12, 1998 and only five months later, the merger was announced worldwide. Susan Cartwright – past President of the British Academy Management – asserts that the period of time from the germ of the merger idea till an agreement is reached is estimated to last around two years. Speeding up the pre-merger preparation, the precise objectives of the fusion and the way to achieve them could not have been defined accurately.
Furthermore, the merger was completed on November 12, 1998. Time needed by employees to adapt to the new circumstances was not taken into account in the deadlines. One more mismanagement which is added to the others.

==Communication==
In the standard ISO 21500:2012, three key processes are defined to ensure appropriate exchange of project information: Plan communications, Distribute information and Manage communications. But within DaimlerChrysler project none of them were totally met. In order to appreciate the scale of the problem, it should be point out that even managers and CEOs experienced serious difficulties in discussing solutions and achieving a consensus. According to a Daimler-Benz executive, <nowiki>"</nowiki>Eaton went weeks without speaking with Jürgen [Schrempp]. He preferred to maintain lower-level contact. Jürgen, meanwhile, left Chrysler alone.<nowiki>"</nowiki> <ref> [http://mba.tuck.dartmouth.edu/pdf/2002-1-0071.pdf] Professor Sydney Finkelstein. ''The DaimlerChrysler Merger.''Tuck School of Business at Dartmouth. 2002 </ref> One would have expected that both CEOs would have shared their different views in order to discover common goal and operate as an effective team at the top. Given the seeming clash of culture described in the first paragraph, it was crucial to start the discussion to create healthy relationship and release the company´s potential. The clearer the communication, the better issues are addressed. But with such a lack of communication among leaders, no far-reaching communication plan could be implemented among all stakeholders involved, not to mention the distribution of the information. Both internal and external communications were chaotic. It is likely that the standard ISO 21500 would have made managers more aware of the processes related to communication which requires to be efficiently tackled.

==Stakeholders==
The stakeholder subject group is concerned with identifying and managing all parties involved. To classify them, both their expectations and influence on the project need to be analyzed. The table 6 provides a power-interest matrix, which is crucial to draw up appropriate management strategies for effectively engaging with them. The external stakeholders are written in italics, the others are internal.

{| border="1" cellpadding="3" cellspacing="0" style="margin:auto;"
|+ '''Table 6 : Power and interest matrix'''
|-
! rowspan="2" style="background: #ffedd3;" | Level of interest
! colspan="5" style="background: #ffedd3;" | Level of power
|-
|style="background: #fff4d3;" align=center | ''' Low '''
|style="background: #fff4d3;" align=center| ''' High '''
|-
|style="background: #fff4d3;" align=center |'''High'''
|
'''Employees'''

Trade Union

'''''Clients'''''

''Suppliers''

''Government''

''Society''
|
Directors

Managers

'''''Stockholders'''''
|-
|style="background: #fff4d3;" align=center |'''Low'''
|
''Competitors''
|

|-
|}

To analyze the management of all of these stakeholders one by one would be tedious. However it is relevant to focus on several categories according to the table 6. Special focus will be laid on the stakeholders written in bold. Therefore, both high power/high interest and low power/high interest stakeholders will be looked at. Two of them are internal, whereas the other is internal.

It will be shown that all of them were significantly affected by the DaimlerChrysler project due to mismanagement.

===Employees===
Employees, low-power and high-interest stakeholders, must be kept informed and managers should ensure that no major issues are arising.
However, this was not the case in the DaimlerChrysler merger: employees felt overlooked, disregarded and left out of the merger process. But to what extent CEOs and managers were responsible in this climate of distrust and dislike?

First, soon after the merger, it became obvious that Daimler was taking over the whole company´s management. Chrysler President Stallkamp retirement at the end of 1999 was followed by the one of James P. Holdem, top-level executive of the Chrysler Group. They were replaced by two German managers: Dieter Zetsche and Wolfgang Bernhard. Being lowered to divisional status, it is understandable that American´s morale suffered from this German hegemony. Employee felt eclipsed and were disgusted. They also were worried that DaimlerChrysler would dismiss some of them. But the problems were not confined to be here. Indeed, Jürgen Schrempp attitude only made the situation worse. In autumn 2000, DaimlerChrysler CEO acknowledged in the German financial daily Handelsblatt that <nowiki>“</nowiki>The Merger of Equals statement was necessary in order to earn the support of Chrysler's workers and the American public, but it was never reality<nowiki>"</nowiki>. Many Americans regarded this statement as a betrayal, since Schrempp intended to deceive them from the outset. It appears clear that it is due to the board of directors´ failure in acting responsibly towards the workers that deep-seated distrust ran deep.

Furthermore, such a mismanagement of the employees can lead to far-reaching consequences on the project success itself. Indeed, it could have been that some workers simply did not work as efficiently because they supposed the board of directors did not care about the Chrysler entity – so why should they? Decreased performance would have resulted in it.

It is to notice that even though the standard ''ISO 21500: 2012'' did not exist at that time, the fact that employee influence was of importance to succeed such a process was already known. MaryAnn Keller, founder and managing partner of MaryAnn Keller & Associates LLC, namely stated in June 1998 that <nowiki>“</nowiki>The success of any combination depends on the ability of the new organization to win over the hearts and minds of employees.<nowiki>”</nowiki> <ref> [http://murphylibrary.uwlax.edu/digital/jur/2002/carpiaux.pdf] Nicole Carpiaux. ''DaimlerChrysler : Wunderkind or Problem Child ?'' Faculty Sponsor : Leticia Peña, Department of Management. </ref> The managers of DaimlerChrysler should then be aware that is really a management issue to embrace workers instead to neglect them in order to obtain the best they can offer.

===Clients===
And what about the customers, low-power and high interest stakeholders?

Once again, one could argue that managers failed to define as well as to meet their needs.
One example is given for illustration. At the time, the DaimlerChrysler A-Class was 1.25 to 2 times more expensive than similar vehicles sold by Volkswagen, Renault or Fiat. This higher price was not deterrent since clients were aware that Daimler-Benz primarily asset was quality and safety. However, in 1999, the A-class failed an emergency maneuver test conducted by a Swedish television station. <ref> Bill Vlasic, Bradley A. Stertz. ''Taken for a Ride: How Daimler-Benz Drove off with Chrysler''. Harper Paperbacks,
2001, p. 300.
</ref> Consequently, customers´ satisfaction suddenly drop off the map. The DaimlerChrysler vehicle was considered as an overpriced car which did not achieve engineering excellence compared to the highly competitive European compact market. The crux of the problem may be that the German entity had tried to implant the American low development costs into its entities, disregarding the high expectations of the clients. This paragraph appears to prove that trying to generate synergy savings, the managers failed in responding the customer´s needs.

===Stockholders===
Last but not least, the management of both high power and high interest stakeholders needs to be considered. Take the stockholders.

An overwhelming majority of them favored the project of merger in 1998. Approvals ratings reached 99.9% at Daimler-Benz and 97.5% at Chrysler. It may be inferred that, at the outset of the project, managers successfully took into account the processes required to satisfy the shareholders. It did not take long, however, for some of them to express their disappointment. This was the case for Kirk Kerkorian, the third largest proprietor of DailerChrysler stock and largest Chrysler shareholder before the merger. In November 2000, the latter filed a $9 billion lawsuit against DaimlerChrysler for falsifying the terms of the fusion as a “merger of equals”. He was upset with the German hegemony and stated he had voted to turn its shares for stock in DaimlerChrysler without having considered the American entity would be reduced to a mere division. Two months later, he cut his take in the merged company by a third. Even though the managers were not directly involved in this discontent, the lack of acting responsibly of the Board of the director is obvious.

To conclude, the completion of the processes related to each of these three stakeholders lacked efficiency. The managers failed in implementing the required activities to satisfy them and this will become a major hindrance to the project completion.

=The benefits of using ISO 21500: 2012=

This case study clearly shows the numerous issues than need to be tackled while managing a project. The introduction of a guide that describes processes and methods - whose application would directly enhance the project´s chance of success - would be of great benefit to managers. ISO 21500:2012 appears to be very relevant as highlighted in the previous part since managers can ensure that they are going through all of the processes defined. It namely looks like a “checklist”.
Furthermore, transparency in management can be raised using this norm. This is all the more important when different organizations are involved, as in DaimlerChrylser merger case, since the different activities can be coordinated.

It is worth pointed out that the aim of ISO 21500:2012 is to provide a generic and international guideline. Whatever project a manager conducts, it is applicable. But, the downside is that some additional other specific standards may be used to deal with special purposes. Therefore, ISO 21500:2012 must be comprehended as a general norm that should be supplemented with more detailed standards in certain complex cases.

=Conclusion=
Many factors may affect the failure of the DaimlerChrysler project, but most of them may have been due to its mismanagement. Such a union was notoriously risky, especially due to the opposite companies it combined. To deliver the intent benefits, particular care should then have been taken by managers to tackle all the project management processes.

The use of the standard ''ISO 21500 : 2012'' has been made to group the processes within subject groups. It appears clear that there were some omissions, particularly regarding Integration, Time, Communication and Stakeholders. This standard has proven to be useful to analyze a project management, especially in case of cross-boarders project.

= References =

<references />

[[Category:Project Management]]
[[Category:Human Behaviour]]
[[Category:Complexity]]

Analyzing the failure of the DaimlerChrysler merger from a project management perspective

2014-12-01T20:26:13Z

Lyngby: /* Stakeholders */

'''Abstract'''

In the late 90´s, German Daimler-Benz AG and American Chrysler Corporation announced their intention to combine their strengths within a so-called `merger of equals´ <ref> Grässlin, Jürgen. ''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> . Becoming the fifth largest automaker in the world, both companies hoped to overcome together the automotive industry crisis. However, nothing worked out as planned, so much so that in 2007 Daimler-Benz sold all its shares of the Chrysler division.

Could the use of a norm have guaranteed the success of the DaimlerChrysler merger ? This question will be answered with regard to the ISO 21500:2012 guideline for project management.

According to the latter, a definition of project management and the processes it involves will be provided.Then, an analysis of the origin of DaimlerChrysler project will be carried out. It will also be shown to what extent this fusion was mismanaged with regard to the subject groups defined in the ISO 21500:2012. Last but not least the benefits of using this standard to successfully conduct a complex project will be discussed.

=Introduction=
In the early 21st century, no comprehensive standard on project management was accepted despite the substantial demand for project management skills. However, in 2006, the need for a unifying international approach was recognized by the International Organization for Standard (ISO). The work of over hundreds experts in project management from around the globe resulted in ''ISO 21500: 2012 -Guidance on project management''. This norm defines universal project management terminologies, as well as the principles and processes it involves. It provides a basic guide against which any organization can compare its current project management practices and determine areas in need of improvement. But how to practically apply it to a project? A specific example of project failure prior to introducing ISO 21500 will be provided to analyze which project management processes were disregarded. More particularly, the merger of the German automaker Daimler-Benz with the American Chrysler Corporation will be examined with the perspective of subject group.

= ISO 21500 : 2012, A focus on processes <ref> ISO 21500:2012 ''Guidance on project management'' </ref> <ref> Anton Zandhuis, Rommert Stellingwerf. ''ISO 215000, Guidance on Project managenent, A Pocket Guide''. Van Haren Publishing. 2013 </ref>=

What is a project? A definition is provided by the ISO 21500: “A unique set of processes consisting of coordinated and controlled activities with start and end dates, performed to achieve project objectives.” The concept of processes seems to be at the crux of project management issues. The definition of how to manage a project stresses this point: “Project management is performed through processes”.

Specifically, the norm splits the method of managing a project into 39 elementary processes. Depending on the perspective, the latter are grouped into five process groups (Initiating, Planning, Controlling and Closing) or into ten subject groups (Integration, Stakeholder, Scope, Resource, Time, Cost, Risk, Quality, Procurement and Communication). The classification of these processes is provided in the following table.

{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 1 : Project management cross-referenced to process and subject groups (ISO 21500 : 2012)'''
|-
! rowspan="2" style="background: #ffedd3;" | SUBJECT GROUPS
! colspan="5" style="background: #ffedd3;" | PROCESS GROUPS
|-
|style="background: #fff4d3;" align=center | '''Initiating'''
|style="background: #fff4d3;" align=center| '''Planning'''
|style="background: #fff4d3;" align=center| '''Implementing'''
|style="background: #fff4d3;" align=center | '''Controlling'''
|style="background: #fff4d3;" align=center | '''Closing'''
|-
|style="background: #fff4d3;" |'''Integration'''
|
4.3.2 Develop project chart
|
4.3.3. Develop project plans
|
4.3.4 Direct project work
|
4.3.5 Control project work

4.3.6 Control changes
|
4.3.7 Close project or phase

4.3.8 Collect lessons learned
|-
|style="background: #fff4d3;" |'''Stakeholder'''
|
4.3.9 Identify stakeholders
|

|
4.3.10 Manage stakeholders
|

|

|-
|style="background: #fff4d3;" |'''Scope'''
|

|
4.3.11 Define scope

4.3.12 Create work breakdown structure

4.3.13 Define activities
|

|
4.3.14 Control scope
|

|-
|style="background: #fff4d3;" |'''Resource'''
|
4.3.15 Establish project team
|
4.3.16 Estimate resources

4.3.17 Define project organization
|
4.3.18 Develop project team
|
4.3.19 Control resources

4.3.20 Manage project team
|

|-
|style="background: #fff4d3;" |'''Time'''
|

|
4.3.21 Sequence activities

4.3.22 Estimate activity durations

4.3.23 Develop schedule
|

|
4.3.24 Control schedule
|

|-
|style="background: #fff4d3;" |'''Cost'''
|

|
4.3.25 Estimate costs

4.3.26 Develop budget
|

|
4.3.27 Control costs
|

|-
|style="background: #fff4d3;" |'''Risk'''
|

|
4.3.28 Identify risks

4.3.29 Asses risks
|
4.3.30 Treat risks
|
4.3.31 Control risks
|
|-
|style="background: #fff4d3;" |'''Quality'''
|

|
4.3.32 Plan quality
|
4.3.33 Perform quality assurance
|
4.3.34 Perform quality control
|

|-
|style="background: #fff4d3;" |'''Procurement'''
|

|
4.3.35 Plan procurements
|
4.3.36 Select suppliers
|
4.3.37 Administer procurements
|

|-
|style="background: #fff4d3;" |'''Communication'''
|

|
4.3.38 Plan communications
|
4.3.39 Distribute information
|
4.3.40 Manage communications
|

|}

The perspective of subject groups will be adopted to consider the management of DaimlerChrysler project. A subject is a theme in which processes are classified according to its related activities.

But before that, the project of DaimlerChrysler merger is regarded.

=DaimlerChrysler merger project <ref> Julia Hollmann, Aletéia de Moura Carpes, Thiago Antonio Beuron. ''The DaimlerChrylser Merger- A cultural mismatch ?'' Faculty Sponsor : Universität Paderborn- Germany, Department of International Business Studies. Universidade Federal de Santa Maria- Brazil, Department of Administration. 2010 </ref> =
==The genesis of the project==
In the late 90´s, the automotive industry had to face multiples challenges due to the excess manufacturing capacity, the growth of ecological awareness, and the retail revolution that empowered buyers. To strengthen their position during this crisis, the automakers Daimler-Benz and Chrysler Corporation decided to merge. This project aimed to combine each other´s product designs, manufacturing resources and distribution systems.
The following table shows the complementary of the two companies, which wanted to unit their knowledge and their market in order to gain a competitive advantage.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 2 : The complementary of the two companies '''
|
! style="background: #ffedd3;" |'''Daimler-Benz AG'''
! style="background: #ffedd3;" |'''Chrysler Corporation'''
|-
! style="background: #ffedd3;" |'''Head office location'''
|
Germany
|
United States
|-
! style="background: #ffedd3;" |'''Geographical reach'''
|
European market
|
U.S. American market
|-
! style="background: #ffedd3;" |'''Product ranges'''
|
Uncompromising quality products
|
Car models that meet the American demand for adventurousness
|}


Both synergies and economies of scale were likely to proliferate.

How the project was set up is explained in the following paragraph. However, its detailed description falls outside the scope of this article.

==The execution of the project==
On May 7th, 1998 the signing of the combination agreement between Daimler-Benz and Chrysler was publicly announced. Daimler-Benz CEO Jürgen Schrempp described the union as "a merger of equals, a merger of growth, and a merger of unprecedented strength".
The equal status of the two organizations was reflected in the newly established entity name, DaimlerChrysler, as well as in the combination of the two former boards of management to form the one of DaimlerChrysler. Furthermore, it was agreed that Schrempp and Eaton, former CEO of the Chrysler Corporation, would jointly led the entity as co-chairmen and co-CEOs. It was also decided that Eaton would stay up to three years.
The two following tables provide more data about DaimlerChrysler right after the merger and the expected results of this project.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 3 : Characteristics of DaimlerChrysler right after the merger'''
|-
! style="background: #ffedd3;" |'''Number of employees '''
|442,000 employees
½ in Germany

1/3 in North America

1/6 spread across 200 countries around the world
|-
! style="background: #ffedd3;" |'''Daimler-Benz AG Market capitalization'''
|$ 92 billion
|}



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 4 : Expected results'''
! style="background: #ffedd3;" |Annual revenues of the combined company
|$ 132 billion
|-
! style="background: #ffedd3;" |Increase in sales
|13%
|-
! style="background: #ffedd3;" |Cost savings brought within 2 or 3 years
|$ 3,5 billion a year
|}


So far, this fusion appears to be very beneficial for all parties involved. However the wish for synergy effects never came true and the project drove Chrysler into chaos. In May 2007, the merger of Chrysler and Daimler-Benz was dissolved. Can this failure be ascribed to mismanagement?

The purpose of this article is now to point out which processes, related to the different subject groups definied in ISO 21500:2012 were disregarded and may have led to the project failure.

=The mismanagement of some subject groups <ref> Wanda Curlee, Robert L. Gordon . ''Complexity Theory and Project Management. ''. New York : Wiley, 2011, p. 129-133 </ref> =

Four subject groups will successively be considered : Integration, Time, Communication and Stakeholders. A mismanagement of some processes related to these four specific subject groups is namely to be seen.

==Integration <ref> Grässlin, Jürgen.''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> <ref> ''DaimlerChrysler confronts the challenges of global integration'', Human Resource Management International Digest, Vol 12 Iss :2 P.5-8</ref> ==

The Integration subject group includes the processes required to identify, define, combine, unify, coordinate, control and close the various activities and processes related to the project (ISO 21500:2012 - 4.2.3.2).

Within this merger, the unification and combination of all operations within the established entity needed to be achieved. To meet this target, a newly corporate culture had to be defined to align working styles. The latter namely radically differ due to major cultural differences, as shown in the following table.



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 5 : Comparison between the German and the American working styles'''
|-
|
! style="background: #ffedd3;" | '''Germany'''
! style="background: #ffedd3;"|'''United States'''
|-
! style="background: #ffedd3;" align="left" |'''Employee working style'''
| Work in a team-oriented environment
| Work individually
|-
! style="background: #ffedd3;" align="left" |'''Writing report'''
| Lengthy reports
| Little paper
|-
! style="background: #ffedd3;" align="left" |'''Decision-making process'''
|
Methodical, based on very detailed plans
|
Using creativity, based on trial-and-error method
|-
! style="background: #ffedd3;" align="left" |'''Meeting'''
|
Extended discussions
|
Short meeting
|-
! style="background: #ffedd3;" align="left" |'''Organizational structure'''
|
Pronounced hierarchy based on top-down-management
|
Flat organizational hierarchy stimulating empowerment of the employees
|-
! style="background: #ffedd3;" align="left" |'''Risk appetite'''
|
Risk adverse culture
|
Risk takers
|}


Due to the fact that this merger was a so-called `merger of equals´, the integration of the two cultures was to combine them to generate a new shared corporate one. It was namely vital that both organizations learn from each other to generate synergy effects. Managers have here a central role to play to define and coordinate the development of this new culture.

Eaton affirmed that it was at the top of the agenda and Thomas Stallkamp, Chrysler President during the negotiation phase, was charged with overseeing this integration process. Some effort went into harmonizing the two corporate cultures. Many seminars and workshops were organized to sensitizing the employees for working with new colleagues with diverging working methods. Furthermore, German was taught to many American managers.

However, given the large gap between the two organizations, it would appear that managers should have undertaken more activities and CEOs should have allocated more resources to bridge the chasm of cultural differences.

In fact, no strong and cohesive organizational culture was created, as illustrated in daily misunderstandings. For instance, the attention Daimler-Benz leaders paid to writing a leaflet sent to employee annoyed Chrysler executives. At the end of 1999, the resignation of Thomas Stallkamp, a 19-year veteran of Chrysler who was highly regarded, might be seen as a failure of the merger integration process after all the effort. Stallkamp is quoted as saying: <nowiki>“</nowiki>The majority of my career has been spent implementing supply chain management. I would like to continue to explore those areas at a less hectic pace<nowiki>”</nowiki>. Were both parties truly willing to cooperate wholeheartedly and to enter compromises to succeed in the numerous integration processes? A negative answer is the root cause of an unachieved integration.

==Time<ref> Sue Cartwright, Cary L. Cooper. ''Mergers and Acquisitions: The Human Factor Paperback'' . January 1, 1992 </ref>==

The Time subject group is all about managing the timely completion of the project. Feasible deadlines taking all known constraints into account need to be set. Processes covered by the latter subject group are the development of schedule for project activities estimating each activity duration, the progress monitoring and the schedule control.

One failure in managing time in DaimlerChrysler merger was that too little time was devoted to each activity. Let´s take a concrete example: Daimler-Benz and Chrysler began formal negotiations on January 12, 1998 and only five months later, the merger was announced worldwide. Susan Cartwright – past President of the British Academy Management – asserts that the period of time from the germ of the merger idea till an agreement is reached is estimated to last around two years. Speeding up the pre-merger preparation, the precise objectives of the fusion and the way to achieve them could not have been defined accurately.
Furthermore, the merger was completed on November 12, 1998. Time needed by employees to adapt to the new circumstances was not taken into account in the deadlines. One more mismanagement which is added to the others.

==Communication==
In the standard ISO 21500:2012, three key processes are defined to ensure appropriate exchange of project information: Plan communications, Distribute information and Manage communications. But within DaimlerChrysler project none of them were totally met. In order to appreciate the scale of the problem, it should be point out that even managers and CEOs experienced serious difficulties in discussing solutions and achieving a consensus. According to a Daimler-Benz executive, <nowiki>"</nowiki>Eaton went weeks without speaking with Jürgen [Schrempp]. He preferred to maintain lower-level contact. Jürgen, meanwhile, left Chrysler alone.<nowiki>"</nowiki> <ref> [http://mba.tuck.dartmouth.edu/pdf/2002-1-0071.pdf] Professor Sydney Finkelstein. ''The DaimlerChrysler Merger.''Tuck School of Business at Dartmouth. 2002 </ref> One would have expected that both CEOs would have shared their different views in order to discover common goal and operate as an effective team at the top. Given the seeming clash of culture described in the first paragraph, it was crucial to start the discussion to create healthy relationship and release the company´s potential. The clearer the communication, the better issues are addressed. But with such a lack of communication among leaders, no far-reaching communication plan could be implemented among all stakeholders involved, not to mention the distribution of the information. Both internal and external communications were chaotic. It is likely that the standard ISO 21500 would have made managers more aware of the processes related to communication which requires to be efficiently tackled.

==Stakeholders==
The stakeholder subject group is concerned with identifying and managing all parties involved. To classify them, both their expectations and influence on the project need to be analyzed. The table 6 provides a power-interest matrix, which is crucial to draw up appropriate management strategies for effectively engaging with them. The external stakeholders are written in italics, the others are internal.

{| border="1" cellpadding="3" cellspacing="0" style="margin:auto;"
|+ '''Table 6 : Power and interest matrix'''
|-
! rowspan="2" style="background: #ffedd3;" | Level of interest
! colspan="5" style="background: #ffedd3;" | Level of power
|-
|style="background: #fff4d3;" align=center | ''' Low '''
|style="background: #fff4d3;" align=center| ''' High '''
|-
|style="background: #fff4d3;" align=center |'''High'''
|
'''Employees'''

Trade Union

'''''Clients'''''

''Suppliers''

''Government''

''Society''
|
Directors

Managers

'''''Stockholders'''''
|-
|style="background: #fff4d3;" align=center |'''Low'''
|
''Competitors''
|

|-
|}

To analyze the management of all of these stakeholders one by one would be tedious. However it is relevant to focus on several categories according to the table 6. Special focus will be laid on the stakeholders written in bold. Therefore, both high power/high interest and low power/high interest stakeholders will be looked at. Two of them are internal, whereas the other is internal.

It will be shown that all of them were significantly affected by the DaimlerChrysler project due to mismanagement.

===Employees===
Employees, low-power and high-interest stakeholders, must be kept informed and managers should ensure that no major issues are arising.
However, this was not the case in the DaimlerChrysler merger: employees felt overlooked, disregarded and left out of the merger process. But to what extent CEOs and managers were responsible in this climate of distrust and dislike?

First, soon after the merger, it became obvious that Daimler was taking over the whole company´s management. Chrysler President Stallkamp retirement at the end of 1999 was followed by the one of James P. Holdem, top-level executive of the Chrysler Group. They were replaced by two German managers: Dieter Zetsche and Wolfgang Bernhard. Being lowered to divisional status, it is understandable that American´s morale suffered from this German hegemony. Employee felt eclipsed and were disgusted. They also were worried that DaimlerChrysler would dismiss some of them. But the problems were not confined to be here. Indeed, Jürgen Schrempp attitude only made the situation worse. In autumn 2000, DaimlerChrysler CEO acknowledged in the German financial daily Handelsblatt that <nowiki>“</nowiki>The Merger of Equals statement was necessary in order to earn the support of Chrysler's workers and the American public, but it was never reality<nowiki>"</nowiki>. Many Americans regarded this statement as a betrayal, since Schrempp intended to deceive them from the outset. It appears clear that it is due to the board of directors´ failure in acting responsibly towards the workers that deep-seated distrust ran deep.

Furthermore, such a mismanagement of the employees can lead to far-reaching consequences on the project success itself. Indeed, it could have been that some workers simply did not work as efficiently because they supposed the board of directors did not care about the Chrysler entity – so why should they? Decreased performance would have resulted in it.

It is to notice that even though the standard ''ISO 21500: 2012'' did not exist at that time, the fact that employee influence was of importance to succeed such a process was already known. MaryAnn Keller, founder and managing partner of MaryAnn Keller & Associates LLC, namely stated in June 1998 that <nowiki>“</nowiki>The success of any combination depends on the ability of the new organization to win over the hearts and minds of employees.<nowiki>”</nowiki> <ref> [http://murphylibrary.uwlax.edu/digital/jur/2002/carpiaux.pdf] Nicole Carpiaux. ''DaimlerChrysler : Wunderkind or Problem Child ?'' Faculty Sponsor : Leticia Peña, Department of Management. </ref> The managers of DaimlerChrysler should then be aware that is really a management issue to embrace workers instead to neglect them in order to obtain the best they can offer.

===Clients===
And what about the customers, low-power and high interest stakeholders?

Once again, one could argue that managers failed to define as well as to meet their needs.
One example is given for illustration. At the time, the DaimlerChrysler A-Class was 1.25 to 2 times more expensive than similar vehicles sold by Volkswagen, Renault or Fiat. This higher price was not deterrent since clients were aware that Daimler-Benz primarily asset was quality and safety. However, in 1999, the A-class failed an emergency maneuver test conducted by a Swedish television station. <ref> Bill Vlasic, Bradley A. Stertz. ''Taken for a Ride: How Daimler-Benz Drove off with Chrysler''. Harper Paperbacks,
2001, p. 300.
</ref> Consequently, customers´ satisfaction suddenly drop off the map. The DaimlerChrysler vehicle was considered as an overpriced car which did not achieve engineering excellence compared to the highly competitive European compact market. The crux of the problem may be that the German entity had tried to implant the American low development costs into its entities, disregarding the high expectations of the clients. This paragraph appears to prove that trying to generate synergy savings, the managers failed in responding the customer´s needs.

===Stockholders===
Last but not least, the management of both high power and high interest stakeholders needs to be considered. Take the stockholders.

An overwhelming majority of them favored the project of merger in 1998. Approvals ratings reached 99.9% at Daimler-Benz and 97.5% at Chrysler. It may be inferred that, at the outset of the project, managers successfully took into account the processes required to satisfy the shareholders. It did not take long, however, for some of them to express their disappointment. This was the case for Kirk Kerkorian, the third largest proprietor of DailerChrysler stock and largest Chrysler shareholder before the merger. In November 2000, the latter filed a $9 billion lawsuit against DaimlerChrysler for falsifying the terms of the fusion as a “merger of equals”. He was upset with the German hegemony and stated he had voted to turn its shares for stock in DaimlerChrysler without having considered the American entity would be reduced to a mere division. Two months later, he cut his take in the merged company by a third. Even though the managers were not directly involved in this discontent, the lack of acting responsibly of the Board of the director is obvious.

To conclude, the completion of the processes related to each of these three stakeholders lacked efficiency. The managers failed in implementing the required activities to satisfy them and this will become a major hindrance to the project completion.

=Conclusion=
Many factors may affect the failure of the DaimlerChrysler project, but most of them may have been due to its mismanagement. Such a union was notoriously risky, especially due to the opposite companies it combined. To deliver the intent benefits, particular care should then have been taken by managers to tackle all the project management processes.

The use of the standard ''ISO 21500 : 2012'' has been made to group the processes within subject groups. It appears clear that there were some omissions, particularly regarding Integration, Time, Communication and Stakeholders. This standard has proven to be useful to analyze a project management, especially in case of cross-boarders project.

= References =

<references />

[[Category:Project Management]]
[[Category:Human Behaviour]]
[[Category:Complexity]]

Analyzing the failure of the DaimlerChrysler merger from a project management perspective

2014-12-01T20:20:46Z

Lyngby: /* Conclusion */

'''Abstract'''

In the late 90´s, German Daimler-Benz AG and American Chrysler Corporation announced their intention to combine their strengths within a so-called `merger of equals´ <ref> Grässlin, Jürgen. ''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> . Becoming the fifth largest automaker in the world, both companies hoped to overcome together the automotive industry crisis. However, nothing worked out as planned, so much so that in 2007 Daimler-Benz sold all its shares of the Chrysler division.

Could the use of a norm have guaranteed the success of the DaimlerChrysler merger ? This question will be answered with regard to the ISO 21500:2012 guideline for project management.

According to the latter, a definition of project management and the processes it involves will be provided.Then, an analysis of the origin of DaimlerChrysler project will be carried out. It will also be shown to what extent this fusion was mismanaged with regard to the subject groups defined in the ISO 21500:2012. Last but not least the benefits of using this standard to successfully conduct a complex project will be discussed.

=Introduction=
In the early 21st century, no comprehensive standard on project management was accepted despite the substantial demand for project management skills. However, in 2006, the need for a unifying international approach was recognized by the International Organization for Standard (ISO). The work of over hundreds experts in project management from around the globe resulted in ''ISO 21500: 2012 -Guidance on project management''. This norm defines universal project management terminologies, as well as the principles and processes it involves. It provides a basic guide against which any organization can compare its current project management practices and determine areas in need of improvement. But how to practically apply it to a project? A specific example of project failure prior to introducing ISO 21500 will be provided to analyze which project management processes were disregarded. More particularly, the merger of the German automaker Daimler-Benz with the American Chrysler Corporation will be examined with the perspective of subject group.

= ISO 21500 : 2012, A focus on processes <ref> ISO 21500:2012 ''Guidance on project management'' </ref> <ref> Anton Zandhuis, Rommert Stellingwerf. ''ISO 215000, Guidance on Project managenent, A Pocket Guide''. Van Haren Publishing. 2013 </ref>=

What is a project? A definition is provided by the ISO 21500: “A unique set of processes consisting of coordinated and controlled activities with start and end dates, performed to achieve project objectives.” The concept of processes seems to be at the crux of project management issues. The definition of how to manage a project stresses this point: “Project management is performed through processes”.

Specifically, the norm splits the method of managing a project into 39 elementary processes. Depending on the perspective, the latter are grouped into five process groups (Initiating, Planning, Controlling and Closing) or into ten subject groups (Integration, Stakeholder, Scope, Resource, Time, Cost, Risk, Quality, Procurement and Communication). The classification of these processes is provided in the following table.

{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 1 : Project management cross-referenced to process and subject groups (ISO 21500 : 2012)'''
|-
! rowspan="2" style="background: #ffedd3;" | SUBJECT GROUPS
! colspan="5" style="background: #ffedd3;" | PROCESS GROUPS
|-
|style="background: #fff4d3;" align=center | '''Initiating'''
|style="background: #fff4d3;" align=center| '''Planning'''
|style="background: #fff4d3;" align=center| '''Implementing'''
|style="background: #fff4d3;" align=center | '''Controlling'''
|style="background: #fff4d3;" align=center | '''Closing'''
|-
|style="background: #fff4d3;" |'''Integration'''
|
4.3.2 Develop project chart
|
4.3.3. Develop project plans
|
4.3.4 Direct project work
|
4.3.5 Control project work

4.3.6 Control changes
|
4.3.7 Close project or phase

4.3.8 Collect lessons learned
|-
|style="background: #fff4d3;" |'''Stakeholder'''
|
4.3.9 Identify stakeholders
|

|
4.3.10 Manage stakeholders
|

|

|-
|style="background: #fff4d3;" |'''Scope'''
|

|
4.3.11 Define scope

4.3.12 Create work breakdown structure

4.3.13 Define activities
|

|
4.3.14 Control scope
|

|-
|style="background: #fff4d3;" |'''Resource'''
|
4.3.15 Establish project team
|
4.3.16 Estimate resources

4.3.17 Define project organization
|
4.3.18 Develop project team
|
4.3.19 Control resources

4.3.20 Manage project team
|

|-
|style="background: #fff4d3;" |'''Time'''
|

|
4.3.21 Sequence activities

4.3.22 Estimate activity durations

4.3.23 Develop schedule
|

|
4.3.24 Control schedule
|

|-
|style="background: #fff4d3;" |'''Cost'''
|

|
4.3.25 Estimate costs

4.3.26 Develop budget
|

|
4.3.27 Control costs
|

|-
|style="background: #fff4d3;" |'''Risk'''
|

|
4.3.28 Identify risks

4.3.29 Asses risks
|
4.3.30 Treat risks
|
4.3.31 Control risks
|
|-
|style="background: #fff4d3;" |'''Quality'''
|

|
4.3.32 Plan quality
|
4.3.33 Perform quality assurance
|
4.3.34 Perform quality control
|

|-
|style="background: #fff4d3;" |'''Procurement'''
|

|
4.3.35 Plan procurements
|
4.3.36 Select suppliers
|
4.3.37 Administer procurements
|

|-
|style="background: #fff4d3;" |'''Communication'''
|

|
4.3.38 Plan communications
|
4.3.39 Distribute information
|
4.3.40 Manage communications
|

|}

The perspective of subject groups will be adopted to consider the management of DaimlerChrysler project. A subject is a theme in which processes are classified according to its related activities.

But before that, the project of DaimlerChrysler merger is regarded.

=DaimlerChrysler merger project <ref> Julia Hollmann, Aletéia de Moura Carpes, Thiago Antonio Beuron. ''The DaimlerChrylser Merger- A cultural mismatch ?'' Faculty Sponsor : Universität Paderborn- Germany, Department of International Business Studies. Universidade Federal de Santa Maria- Brazil, Department of Administration. 2010 </ref> =
==The genesis of the project==
In the late 90´s, the automotive industry had to face multiples challenges due to the excess manufacturing capacity, the growth of ecological awareness, and the retail revolution that empowered buyers. To strengthen their position during this crisis, the automakers Daimler-Benz and Chrysler Corporation decided to merge. This project aimed to combine each other´s product designs, manufacturing resources and distribution systems.
The following table shows the complementary of the two companies, which wanted to unit their knowledge and their market in order to gain a competitive advantage.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 2 : The complementary of the two companies '''
|
! style="background: #ffedd3;" |'''Daimler-Benz AG'''
! style="background: #ffedd3;" |'''Chrysler Corporation'''
|-
! style="background: #ffedd3;" |'''Head office location'''
|
Germany
|
United States
|-
! style="background: #ffedd3;" |'''Geographical reach'''
|
European market
|
U.S. American market
|-
! style="background: #ffedd3;" |'''Product ranges'''
|
Uncompromising quality products
|
Car models that meet the American demand for adventurousness
|}


Both synergies and economies of scale were likely to proliferate.

How the project was set up is explained in the following paragraph. However, its detailed description falls outside the scope of this article.

==The execution of the project==
On May 7th, 1998 the signing of the combination agreement between Daimler-Benz and Chrysler was publicly announced. Daimler-Benz CEO Jürgen Schrempp described the union as "a merger of equals, a merger of growth, and a merger of unprecedented strength".
The equal status of the two organizations was reflected in the newly established entity name, DaimlerChrysler, as well as in the combination of the two former boards of management to form the one of DaimlerChrysler. Furthermore, it was agreed that Schrempp and Eaton, former CEO of the Chrysler Corporation, would jointly led the entity as co-chairmen and co-CEOs. It was also decided that Eaton would stay up to three years.
The two following tables provide more data about DaimlerChrysler right after the merger and the expected results of this project.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 3 : Characteristics of DaimlerChrysler right after the merger'''
|-
! style="background: #ffedd3;" |'''Number of employees '''
|442,000 employees
½ in Germany

1/3 in North America

1/6 spread across 200 countries around the world
|-
! style="background: #ffedd3;" |'''Daimler-Benz AG Market capitalization'''
|$ 92 billion
|}



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 4 : Expected results'''
! style="background: #ffedd3;" |Annual revenues of the combined company
|$ 132 billion
|-
! style="background: #ffedd3;" |Increase in sales
|13%
|-
! style="background: #ffedd3;" |Cost savings brought within 2 or 3 years
|$ 3,5 billion a year
|}


So far, this fusion appears to be very beneficial for all parties involved. However the wish for synergy effects never came true and the project drove Chrysler into chaos. In May 2007, the merger of Chrysler and Daimler-Benz was dissolved. Can this failure be ascribed to mismanagement?

The purpose of this article is now to point out which processes, related to the different subject groups definied in ISO 21500:2012 were disregarded and may have led to the project failure.

=The mismanagement of some subject groups <ref> Wanda Curlee, Robert L. Gordon . ''Complexity Theory and Project Management. ''. New York : Wiley, 2011, p. 129-133 </ref> =

Four subject groups will successively be considered : Integration, Time, Communication and Stakeholders. A mismanagement of some processes related to these four specific subject groups is namely to be seen.

==Integration <ref> Grässlin, Jürgen.''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> <ref> ''DaimlerChrysler confronts the challenges of global integration'', Human Resource Management International Digest, Vol 12 Iss :2 P.5-8</ref> ==

The Integration subject group includes the processes required to identify, define, combine, unify, coordinate, control and close the various activities and processes related to the project (ISO 21500:2012 - 4.2.3.2).

Within this merger, the unification and combination of all operations within the established entity needed to be achieved. To meet this target, a newly corporate culture had to be defined to align working styles. The latter namely radically differ due to major cultural differences, as shown in the following table.



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 5 : Comparison between the German and the American working styles'''
|-
|
! style="background: #ffedd3;" | '''Germany'''
! style="background: #ffedd3;"|'''United States'''
|-
! style="background: #ffedd3;" align="left" |'''Employee working style'''
| Work in a team-oriented environment
| Work individually
|-
! style="background: #ffedd3;" align="left" |'''Writing report'''
| Lengthy reports
| Little paper
|-
! style="background: #ffedd3;" align="left" |'''Decision-making process'''
|
Methodical, based on very detailed plans
|
Using creativity, based on trial-and-error method
|-
! style="background: #ffedd3;" align="left" |'''Meeting'''
|
Extended discussions
|
Short meeting
|-
! style="background: #ffedd3;" align="left" |'''Organizational structure'''
|
Pronounced hierarchy based on top-down-management
|
Flat organizational hierarchy stimulating empowerment of the employees
|-
! style="background: #ffedd3;" align="left" |'''Risk appetite'''
|
Risk adverse culture
|
Risk takers
|}


Due to the fact that this merger was a so-called `merger of equals´, the integration of the two cultures was to combine them to generate a new shared corporate one. It was namely vital that both organizations learn from each other to generate synergy effects. Managers have here a central role to play to define and coordinate the development of this new culture.

Eaton affirmed that it was at the top of the agenda and Thomas Stallkamp, Chrysler President during the negotiation phase, was charged with overseeing this integration process. Some effort went into harmonizing the two corporate cultures. Many seminars and workshops were organized to sensitizing the employees for working with new colleagues with diverging working methods. Furthermore, German was taught to many American managers.

However, given the large gap between the two organizations, it would appear that managers should have undertaken more activities and CEOs should have allocated more resources to bridge the chasm of cultural differences.

In fact, no strong and cohesive organizational culture was created, as illustrated in daily misunderstandings. For instance, the attention Daimler-Benz leaders paid to writing a leaflet sent to employee annoyed Chrysler executives. At the end of 1999, the resignation of Thomas Stallkamp, a 19-year veteran of Chrysler who was highly regarded, might be seen as a failure of the merger integration process after all the effort. Stallkamp is quoted as saying: <nowiki>“</nowiki>The majority of my career has been spent implementing supply chain management. I would like to continue to explore those areas at a less hectic pace<nowiki>”</nowiki>. Were both parties truly willing to cooperate wholeheartedly and to enter compromises to succeed in the numerous integration processes? A negative answer is the root cause of an unachieved integration.

==Time<ref> Sue Cartwright, Cary L. Cooper. ''Mergers and Acquisitions: The Human Factor Paperback'' . January 1, 1992 </ref>==

The Time subject group is all about managing the timely completion of the project. Feasible deadlines taking all known constraints into account need to be set. Processes covered by the latter subject group are the development of schedule for project activities estimating each activity duration, the progress monitoring and the schedule control.

One failure in managing time in DaimlerChrysler merger was that too little time was devoted to each activity. Let´s take a concrete example: Daimler-Benz and Chrysler began formal negotiations on January 12, 1998 and only five months later, the merger was announced worldwide. Susan Cartwright – past President of the British Academy Management – asserts that the period of time from the germ of the merger idea till an agreement is reached is estimated to last around two years. Speeding up the pre-merger preparation, the precise objectives of the fusion and the way to achieve them could not have been defined accurately.
Furthermore, the merger was completed on November 12, 1998. Time needed by employees to adapt to the new circumstances was not taken into account in the deadlines. One more mismanagement which is added to the others.

==Communication==
In the standard ISO 21500:2012, three key processes are defined to ensure appropriate exchange of project information: Plan communications, Distribute information and Manage communications. But within DaimlerChrysler project none of them were totally met. In order to appreciate the scale of the problem, it should be point out that even managers and CEOs experienced serious difficulties in discussing solutions and achieving a consensus. According to a Daimler-Benz executive, <nowiki>"</nowiki>Eaton went weeks without speaking with Jürgen [Schrempp]. He preferred to maintain lower-level contact. Jürgen, meanwhile, left Chrysler alone.<nowiki>"</nowiki> <ref> [http://mba.tuck.dartmouth.edu/pdf/2002-1-0071.pdf] Professor Sydney Finkelstein. ''The DaimlerChrysler Merger.''Tuck School of Business at Dartmouth. 2002 </ref> One would have expected that both CEOs would have shared their different views in order to discover common goal and operate as an effective team at the top. Given the seeming clash of culture described in the first paragraph, it was crucial to start the discussion to create healthy relationship and release the company´s potential. The clearer the communication, the better issues are addressed. But with such a lack of communication among leaders, no far-reaching communication plan could be implemented among all stakeholders involved, not to mention the distribution of the information. Both internal and external communications were chaotic. It is likely that the standard ISO 21500 would have made managers more aware of the processes related to communication which requires to be efficiently tackled.

==Stakeholders==
The stakeholder subject group is concerned with identifying and managing all parties involved. To classify them, both their expectations and influence on the project need to be analyzed. The table 6 provides a power-interest matrix, which is crucial to draw up appropriate management strategies for effectively engaging with them. The external stakeholders are written in italics, the others are internal.

{| border="1" cellpadding="3" cellspacing="0" style="margin:auto;"
|+ '''Table 6 : Power and interest matrix'''
|-
! rowspan="2" style="background: #ffedd3;" | Level of interest
! colspan="5" style="background: #ffedd3;" | Level of power
|-
|style="background: #fff4d3;" align=center | ''' Low '''
|style="background: #fff4d3;" align=center| ''' High '''
|-
|style="background: #fff4d3;" align=center |'''High'''
|
'''Employee'''

Trade Union

'''''Clients'''''

''Suppliers''

''Government''

''Society''
|
Directors

Managers

'''''Stockholders'''''
|-
|style="background: #fff4d3;" align=center |'''Low'''
|
''Competitors''
|

|-
|}

To analyze the management of all of these stakeholders one by one would be tedious. However it is relevant to focus on several categories according to the table 6. Special focus will be laid on the stakeholders written in bold. Therefore, both high power/high interest and low power/high interest stakeholders will be looked at. Two of them are internal, whereas the other is internal.

It will be shown that all of them were significantly affected by the DaimlerChrysler project due to mismanagement.

===Employees===
Employees, low-power and high-interest stakeholders, must be kept informed and managers should ensure that no major issues are arising.
However, this was not the case in the DaimlerChrysler merger: employees felt overlooked, disregarded and left out of the merger process. But to what extent CEOs and managers were responsible in this climate of distrust and dislike?

First, soon after the merger, it became obvious that Daimler was taking over the whole company´s management. Chrysler President Stallkamp retirement at the end of 1999 was followed by the one of James P. Holdem, top-level executive of the Chrysler Group. They were replaced by two German managers: Dieter Zetsche and Wolfgang Bernhard. Being lowered to divisional status, it is understandable that American´s morale suffered from this German hegemony. Employee felt eclipsed and were disgusted. They also were worried that DaimlerChrysler would dismiss some of them. But the problems were not confined to be here. Indeed, Jürgen Schrempp attitude only made the situation worse. In autumn 2000, DaimlerChrysler CEO acknowledged in the German financial daily Handelsblatt that <nowiki>“</nowiki>The Merger of Equals statement was necessary in order to earn the support of Chrysler's workers and the American public, but it was never reality<nowiki>"</nowiki>. Many Americans regarded this statement as a betrayal, since Schrempp intended to deceive them from the outset. It appears clear that it is due to the board of directors´ failure in acting responsibly towards the workers that deep-seated distrust ran deep.

Furthermore, such a mismanagement of the employees can lead to far-reaching consequences on the project success itself. Indeed, it could have been that some workers simply did not work as efficiently because they supposed the board of directors did not care about the Chrysler entity – so why should they? Decreased performance would have resulted in it.

It is to notice that even though the standard ''ISO 21500: 2012'' did not exist at that time, the fact that employee influence was of importance to succeed such a process was already known. MaryAnn Keller, founder and managing partner of MaryAnn Keller & Associates LLC, namely stated in June 1998 that <nowiki>“</nowiki>The success of any combination depends on the ability of the new organization to win over the hearts and minds of employees.<nowiki>”</nowiki> <ref> [http://murphylibrary.uwlax.edu/digital/jur/2002/carpiaux.pdf] Nicole Carpiaux. ''DaimlerChrysler : Wunderkind or Problem Child ?'' Faculty Sponsor : Leticia Peña, Department of Management. </ref> The managers of DaimlerChrysler should then be aware that is really a management issue to embrace workers instead to neglect them in order to obtain the best they can offer.

===Clients===
And what about the customers, low-power and high interest stakeholders?

Once again, one could argue that managers failed to define as well as to meet their needs.
One example is given for illustration. At the time, the DaimlerChrysler A-Class was 1.25 to 2 times more expensive than similar vehicles sold by Volkswagen, Renault or Fiat. This higher price was not deterrent since clients were aware that Daimler-Benz primarily asset was quality and safety. However, in 1999, the A-class failed an emergency maneuver test conducted by a Swedish television station. <ref> Bill Vlasic, Bradley A. Stertz. ''Taken for a Ride: How Daimler-Benz Drove off with Chrysler''. Harper Paperbacks,
2001, p. 300.
</ref> Consequently, customers´ satisfaction suddenly drop off the map. The DaimlerChrysler vehicle was considered as an overpriced car which did not achieve engineering excellence compared to the highly competitive European compact market. The crux of the problem may be that the German entity had tried to implant the American low development costs into its entities, disregarding the high expectations of the clients. This paragraph appears to prove that trying to generate synergy savings, the managers failed in responding the customer´s needs.

===Stockholders===
Last but not least, the management of both high power and high interest stakeholders needs to be considered. Take the stockholders.

An overwhelming majority of them favored the project of merger in 1998. Approvals ratings reached 99.9% at Daimler-Benz and 97.5% at Chrysler. It may be inferred that, at the outset of the project, managers successfully took into account the processes required to satisfy the shareholders. It did not take long, however, for some of them to express their disappointment. This was the case for Kirk Kerkorian, the third largest proprietor of DailerChrysler stock and largest Chrysler shareholder before the merger. In November 2000, the latter filed a $9 billion lawsuit against DaimlerChrysler for falsifying the terms of the fusion as a “merger of equals”. He was upset with the German hegemony and stated he had voted to turn its shares for stock in DaimlerChrysler without having considered the American entity would be reduced to a mere division. Two months later, he cut his take in the merged company by a third. Even though the managers were not directly involved in this discontent, the lack of acting responsibly of the Board of the director is obvious.

To conclude, the completion of the processes related to each of these three stakeholders lacked efficiency. The managers failed in implementing the required activities to satisfy them and this will become a major hindrance to the project completion.

=Conclusion=
Many factors may affect the failure of the DaimlerChrysler project, but most of them may have been due to its mismanagement. Such a union was notoriously risky, especially due to the opposite companies it combined. To deliver the intent benefits, particular care should then have been taken by managers to tackle all the project management processes.

The use of the standard ''ISO 21500 : 2012'' has been made to group the processes within subject groups. It appears clear that there were some omissions, particularly regarding Integration, Time, Communication and Stakeholders. This standard has proven to be useful to analyze a project management, especially in case of cross-boarders project.

= References =

<references />

[[Category:Project Management]]
[[Category:Human Behaviour]]
[[Category:Complexity]]

Analyzing the failure of the DaimlerChrysler merger from a project management perspective

2014-12-01T20:19:51Z

Lyngby: /* Conclusion */

'''Abstract'''

In the late 90´s, German Daimler-Benz AG and American Chrysler Corporation announced their intention to combine their strengths within a so-called `merger of equals´ <ref> Grässlin, Jürgen. ''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> . Becoming the fifth largest automaker in the world, both companies hoped to overcome together the automotive industry crisis. However, nothing worked out as planned, so much so that in 2007 Daimler-Benz sold all its shares of the Chrysler division.

Could the use of a norm have guaranteed the success of the DaimlerChrysler merger ? This question will be answered with regard to the ISO 21500:2012 guideline for project management.

According to the latter, a definition of project management and the processes it involves will be provided.Then, an analysis of the origin of DaimlerChrysler project will be carried out. It will also be shown to what extent this fusion was mismanaged with regard to the subject groups defined in the ISO 21500:2012. Last but not least the benefits of using this standard to successfully conduct a complex project will be discussed.

=Introduction=
In the early 21st century, no comprehensive standard on project management was accepted despite the substantial demand for project management skills. However, in 2006, the need for a unifying international approach was recognized by the International Organization for Standard (ISO). The work of over hundreds experts in project management from around the globe resulted in ''ISO 21500: 2012 -Guidance on project management''. This norm defines universal project management terminologies, as well as the principles and processes it involves. It provides a basic guide against which any organization can compare its current project management practices and determine areas in need of improvement. But how to practically apply it to a project? A specific example of project failure prior to introducing ISO 21500 will be provided to analyze which project management processes were disregarded. More particularly, the merger of the German automaker Daimler-Benz with the American Chrysler Corporation will be examined with the perspective of subject group.

= ISO 21500 : 2012, A focus on processes <ref> ISO 21500:2012 ''Guidance on project management'' </ref> <ref> Anton Zandhuis, Rommert Stellingwerf. ''ISO 215000, Guidance on Project managenent, A Pocket Guide''. Van Haren Publishing. 2013 </ref>=

What is a project? A definition is provided by the ISO 21500: “A unique set of processes consisting of coordinated and controlled activities with start and end dates, performed to achieve project objectives.” The concept of processes seems to be at the crux of project management issues. The definition of how to manage a project stresses this point: “Project management is performed through processes”.

Specifically, the norm splits the method of managing a project into 39 elementary processes. Depending on the perspective, the latter are grouped into five process groups (Initiating, Planning, Controlling and Closing) or into ten subject groups (Integration, Stakeholder, Scope, Resource, Time, Cost, Risk, Quality, Procurement and Communication). The classification of these processes is provided in the following table.

{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 1 : Project management cross-referenced to process and subject groups (ISO 21500 : 2012)'''
|-
! rowspan="2" style="background: #ffedd3;" | SUBJECT GROUPS
! colspan="5" style="background: #ffedd3;" | PROCESS GROUPS
|-
|style="background: #fff4d3;" align=center | '''Initiating'''
|style="background: #fff4d3;" align=center| '''Planning'''
|style="background: #fff4d3;" align=center| '''Implementing'''
|style="background: #fff4d3;" align=center | '''Controlling'''
|style="background: #fff4d3;" align=center | '''Closing'''
|-
|style="background: #fff4d3;" |'''Integration'''
|
4.3.2 Develop project chart
|
4.3.3. Develop project plans
|
4.3.4 Direct project work
|
4.3.5 Control project work

4.3.6 Control changes
|
4.3.7 Close project or phase

4.3.8 Collect lessons learned
|-
|style="background: #fff4d3;" |'''Stakeholder'''
|
4.3.9 Identify stakeholders
|

|
4.3.10 Manage stakeholders
|

|

|-
|style="background: #fff4d3;" |'''Scope'''
|

|
4.3.11 Define scope

4.3.12 Create work breakdown structure

4.3.13 Define activities
|

|
4.3.14 Control scope
|

|-
|style="background: #fff4d3;" |'''Resource'''
|
4.3.15 Establish project team
|
4.3.16 Estimate resources

4.3.17 Define project organization
|
4.3.18 Develop project team
|
4.3.19 Control resources

4.3.20 Manage project team
|

|-
|style="background: #fff4d3;" |'''Time'''
|

|
4.3.21 Sequence activities

4.3.22 Estimate activity durations

4.3.23 Develop schedule
|

|
4.3.24 Control schedule
|

|-
|style="background: #fff4d3;" |'''Cost'''
|

|
4.3.25 Estimate costs

4.3.26 Develop budget
|

|
4.3.27 Control costs
|

|-
|style="background: #fff4d3;" |'''Risk'''
|

|
4.3.28 Identify risks

4.3.29 Asses risks
|
4.3.30 Treat risks
|
4.3.31 Control risks
|
|-
|style="background: #fff4d3;" |'''Quality'''
|

|
4.3.32 Plan quality
|
4.3.33 Perform quality assurance
|
4.3.34 Perform quality control
|

|-
|style="background: #fff4d3;" |'''Procurement'''
|

|
4.3.35 Plan procurements
|
4.3.36 Select suppliers
|
4.3.37 Administer procurements
|

|-
|style="background: #fff4d3;" |'''Communication'''
|

|
4.3.38 Plan communications
|
4.3.39 Distribute information
|
4.3.40 Manage communications
|

|}

The perspective of subject groups will be adopted to consider the management of DaimlerChrysler project. A subject is a theme in which processes are classified according to its related activities.

But before that, the project of DaimlerChrysler merger is regarded.

=DaimlerChrysler merger project <ref> Julia Hollmann, Aletéia de Moura Carpes, Thiago Antonio Beuron. ''The DaimlerChrylser Merger- A cultural mismatch ?'' Faculty Sponsor : Universität Paderborn- Germany, Department of International Business Studies. Universidade Federal de Santa Maria- Brazil, Department of Administration. 2010 </ref> =
==The genesis of the project==
In the late 90´s, the automotive industry had to face multiples challenges due to the excess manufacturing capacity, the growth of ecological awareness, and the retail revolution that empowered buyers. To strengthen their position during this crisis, the automakers Daimler-Benz and Chrysler Corporation decided to merge. This project aimed to combine each other´s product designs, manufacturing resources and distribution systems.
The following table shows the complementary of the two companies, which wanted to unit their knowledge and their market in order to gain a competitive advantage.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 2 : The complementary of the two companies '''
|
! style="background: #ffedd3;" |'''Daimler-Benz AG'''
! style="background: #ffedd3;" |'''Chrysler Corporation'''
|-
! style="background: #ffedd3;" |'''Head office location'''
|
Germany
|
United States
|-
! style="background: #ffedd3;" |'''Geographical reach'''
|
European market
|
U.S. American market
|-
! style="background: #ffedd3;" |'''Product ranges'''
|
Uncompromising quality products
|
Car models that meet the American demand for adventurousness
|}


Both synergies and economies of scale were likely to proliferate.

How the project was set up is explained in the following paragraph. However, its detailed description falls outside the scope of this article.

==The execution of the project==
On May 7th, 1998 the signing of the combination agreement between Daimler-Benz and Chrysler was publicly announced. Daimler-Benz CEO Jürgen Schrempp described the union as "a merger of equals, a merger of growth, and a merger of unprecedented strength".
The equal status of the two organizations was reflected in the newly established entity name, DaimlerChrysler, as well as in the combination of the two former boards of management to form the one of DaimlerChrysler. Furthermore, it was agreed that Schrempp and Eaton, former CEO of the Chrysler Corporation, would jointly led the entity as co-chairmen and co-CEOs. It was also decided that Eaton would stay up to three years.
The two following tables provide more data about DaimlerChrysler right after the merger and the expected results of this project.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 3 : Characteristics of DaimlerChrysler right after the merger'''
|-
! style="background: #ffedd3;" |'''Number of employees '''
|442,000 employees
½ in Germany

1/3 in North America

1/6 spread across 200 countries around the world
|-
! style="background: #ffedd3;" |'''Daimler-Benz AG Market capitalization'''
|$ 92 billion
|}



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 4 : Expected results'''
! style="background: #ffedd3;" |Annual revenues of the combined company
|$ 132 billion
|-
! style="background: #ffedd3;" |Increase in sales
|13%
|-
! style="background: #ffedd3;" |Cost savings brought within 2 or 3 years
|$ 3,5 billion a year
|}


So far, this fusion appears to be very beneficial for all parties involved. However the wish for synergy effects never came true and the project drove Chrysler into chaos. In May 2007, the merger of Chrysler and Daimler-Benz was dissolved. Can this failure be ascribed to mismanagement?

The purpose of this article is now to point out which processes, related to the different subject groups definied in ISO 21500:2012 were disregarded and may have led to the project failure.

=The mismanagement of some subject groups <ref> Wanda Curlee, Robert L. Gordon . ''Complexity Theory and Project Management. ''. New York : Wiley, 2011, p. 129-133 </ref> =

Four subject groups will successively be considered : Integration, Time, Communication and Stakeholders. A mismanagement of some processes related to these four specific subject groups is namely to be seen.

==Integration <ref> Grässlin, Jürgen.''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> <ref> ''DaimlerChrysler confronts the challenges of global integration'', Human Resource Management International Digest, Vol 12 Iss :2 P.5-8</ref> ==

The Integration subject group includes the processes required to identify, define, combine, unify, coordinate, control and close the various activities and processes related to the project (ISO 21500:2012 - 4.2.3.2).

Within this merger, the unification and combination of all operations within the established entity needed to be achieved. To meet this target, a newly corporate culture had to be defined to align working styles. The latter namely radically differ due to major cultural differences, as shown in the following table.



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 5 : Comparison between the German and the American working styles'''
|-
|
! style="background: #ffedd3;" | '''Germany'''
! style="background: #ffedd3;"|'''United States'''
|-
! style="background: #ffedd3;" align="left" |'''Employee working style'''
| Work in a team-oriented environment
| Work individually
|-
! style="background: #ffedd3;" align="left" |'''Writing report'''
| Lengthy reports
| Little paper
|-
! style="background: #ffedd3;" align="left" |'''Decision-making process'''
|
Methodical, based on very detailed plans
|
Using creativity, based on trial-and-error method
|-
! style="background: #ffedd3;" align="left" |'''Meeting'''
|
Extended discussions
|
Short meeting
|-
! style="background: #ffedd3;" align="left" |'''Organizational structure'''
|
Pronounced hierarchy based on top-down-management
|
Flat organizational hierarchy stimulating empowerment of the employees
|-
! style="background: #ffedd3;" align="left" |'''Risk appetite'''
|
Risk adverse culture
|
Risk takers
|}


Due to the fact that this merger was a so-called `merger of equals´, the integration of the two cultures was to combine them to generate a new shared corporate one. It was namely vital that both organizations learn from each other to generate synergy effects. Managers have here a central role to play to define and coordinate the development of this new culture.

Eaton affirmed that it was at the top of the agenda and Thomas Stallkamp, Chrysler President during the negotiation phase, was charged with overseeing this integration process. Some effort went into harmonizing the two corporate cultures. Many seminars and workshops were organized to sensitizing the employees for working with new colleagues with diverging working methods. Furthermore, German was taught to many American managers.

However, given the large gap between the two organizations, it would appear that managers should have undertaken more activities and CEOs should have allocated more resources to bridge the chasm of cultural differences.

In fact, no strong and cohesive organizational culture was created, as illustrated in daily misunderstandings. For instance, the attention Daimler-Benz leaders paid to writing a leaflet sent to employee annoyed Chrysler executives. At the end of 1999, the resignation of Thomas Stallkamp, a 19-year veteran of Chrysler who was highly regarded, might be seen as a failure of the merger integration process after all the effort. Stallkamp is quoted as saying: <nowiki>“</nowiki>The majority of my career has been spent implementing supply chain management. I would like to continue to explore those areas at a less hectic pace<nowiki>”</nowiki>. Were both parties truly willing to cooperate wholeheartedly and to enter compromises to succeed in the numerous integration processes? A negative answer is the root cause of an unachieved integration.

==Time<ref> Sue Cartwright, Cary L. Cooper. ''Mergers and Acquisitions: The Human Factor Paperback'' . January 1, 1992 </ref>==

The Time subject group is all about managing the timely completion of the project. Feasible deadlines taking all known constraints into account need to be set. Processes covered by the latter subject group are the development of schedule for project activities estimating each activity duration, the progress monitoring and the schedule control.

One failure in managing time in DaimlerChrysler merger was that too little time was devoted to each activity. Let´s take a concrete example: Daimler-Benz and Chrysler began formal negotiations on January 12, 1998 and only five months later, the merger was announced worldwide. Susan Cartwright – past President of the British Academy Management – asserts that the period of time from the germ of the merger idea till an agreement is reached is estimated to last around two years. Speeding up the pre-merger preparation, the precise objectives of the fusion and the way to achieve them could not have been defined accurately.
Furthermore, the merger was completed on November 12, 1998. Time needed by employees to adapt to the new circumstances was not taken into account in the deadlines. One more mismanagement which is added to the others.

==Communication==
In the standard ISO 21500:2012, three key processes are defined to ensure appropriate exchange of project information: Plan communications, Distribute information and Manage communications. But within DaimlerChrysler project none of them were totally met. In order to appreciate the scale of the problem, it should be point out that even managers and CEOs experienced serious difficulties in discussing solutions and achieving a consensus. According to a Daimler-Benz executive, <nowiki>"</nowiki>Eaton went weeks without speaking with Jürgen [Schrempp]. He preferred to maintain lower-level contact. Jürgen, meanwhile, left Chrysler alone.<nowiki>"</nowiki> <ref> [http://mba.tuck.dartmouth.edu/pdf/2002-1-0071.pdf] Professor Sydney Finkelstein. ''The DaimlerChrysler Merger.''Tuck School of Business at Dartmouth. 2002 </ref> One would have expected that both CEOs would have shared their different views in order to discover common goal and operate as an effective team at the top. Given the seeming clash of culture described in the first paragraph, it was crucial to start the discussion to create healthy relationship and release the company´s potential. The clearer the communication, the better issues are addressed. But with such a lack of communication among leaders, no far-reaching communication plan could be implemented among all stakeholders involved, not to mention the distribution of the information. Both internal and external communications were chaotic. It is likely that the standard ISO 21500 would have made managers more aware of the processes related to communication which requires to be efficiently tackled.

==Stakeholders==
The stakeholder subject group is concerned with identifying and managing all parties involved. To classify them, both their expectations and influence on the project need to be analyzed. The table 6 provides a power-interest matrix, which is crucial to draw up appropriate management strategies for effectively engaging with them. The external stakeholders are written in italics, the others are internal.

{| border="1" cellpadding="3" cellspacing="0" style="margin:auto;"
|+ '''Table 6 : Power and interest matrix'''
|-
! rowspan="2" style="background: #ffedd3;" | Level of interest
! colspan="5" style="background: #ffedd3;" | Level of power
|-
|style="background: #fff4d3;" align=center | ''' Low '''
|style="background: #fff4d3;" align=center| ''' High '''
|-
|style="background: #fff4d3;" align=center |'''High'''
|
'''Employee'''

Trade Union

'''''Clients'''''

''Suppliers''

''Government''

''Society''
|
Directors

Managers

'''''Stockholders'''''
|-
|style="background: #fff4d3;" align=center |'''Low'''
|
''Competitors''
|

|-
|}

To analyze the management of all of these stakeholders one by one would be tedious. However it is relevant to focus on several categories according to the table 6. Special focus will be laid on the stakeholders written in bold. Therefore, both high power/high interest and low power/high interest stakeholders will be looked at. Two of them are internal, whereas the other is internal.

It will be shown that all of them were significantly affected by the DaimlerChrysler project due to mismanagement.

===Employees===
Employees, low-power and high-interest stakeholders, must be kept informed and managers should ensure that no major issues are arising.
However, this was not the case in the DaimlerChrysler merger: employees felt overlooked, disregarded and left out of the merger process. But to what extent CEOs and managers were responsible in this climate of distrust and dislike?

First, soon after the merger, it became obvious that Daimler was taking over the whole company´s management. Chrysler President Stallkamp retirement at the end of 1999 was followed by the one of James P. Holdem, top-level executive of the Chrysler Group. They were replaced by two German managers: Dieter Zetsche and Wolfgang Bernhard. Being lowered to divisional status, it is understandable that American´s morale suffered from this German hegemony. Employee felt eclipsed and were disgusted. They also were worried that DaimlerChrysler would dismiss some of them. But the problems were not confined to be here. Indeed, Jürgen Schrempp attitude only made the situation worse. In autumn 2000, DaimlerChrysler CEO acknowledged in the German financial daily Handelsblatt that <nowiki>“</nowiki>The Merger of Equals statement was necessary in order to earn the support of Chrysler's workers and the American public, but it was never reality<nowiki>"</nowiki>. Many Americans regarded this statement as a betrayal, since Schrempp intended to deceive them from the outset. It appears clear that it is due to the board of directors´ failure in acting responsibly towards the workers that deep-seated distrust ran deep.

Furthermore, such a mismanagement of the employees can lead to far-reaching consequences on the project success itself. Indeed, it could have been that some workers simply did not work as efficiently because they supposed the board of directors did not care about the Chrysler entity – so why should they? Decreased performance would have resulted in it.

It is to notice that even though the standard ''ISO 21500: 2012'' did not exist at that time, the fact that employee influence was of importance to succeed such a process was already known. MaryAnn Keller, founder and managing partner of MaryAnn Keller & Associates LLC, namely stated in June 1998 that <nowiki>“</nowiki>The success of any combination depends on the ability of the new organization to win over the hearts and minds of employees.<nowiki>”</nowiki> <ref> [http://murphylibrary.uwlax.edu/digital/jur/2002/carpiaux.pdf] Nicole Carpiaux. ''DaimlerChrysler : Wunderkind or Problem Child ?'' Faculty Sponsor : Leticia Peña, Department of Management. </ref> The managers of DaimlerChrysler should then be aware that is really a management issue to embrace workers instead to neglect them in order to obtain the best they can offer.

===Clients===
And what about the customers, low-power and high interest stakeholders?

Once again, one could argue that managers failed to define as well as to meet their needs.
One example is given for illustration. At the time, the DaimlerChrysler A-Class was 1.25 to 2 times more expensive than similar vehicles sold by Volkswagen, Renault or Fiat. This higher price was not deterrent since clients were aware that Daimler-Benz primarily asset was quality and safety. However, in 1999, the A-class failed an emergency maneuver test conducted by a Swedish television station. <ref> Bill Vlasic, Bradley A. Stertz. ''Taken for a Ride: How Daimler-Benz Drove off with Chrysler''. Harper Paperbacks,
2001, p. 300.
</ref> Consequently, customers´ satisfaction suddenly drop off the map. The DaimlerChrysler vehicle was considered as an overpriced car which did not achieve engineering excellence compared to the highly competitive European compact market. The crux of the problem may be that the German entity had tried to implant the American low development costs into its entities, disregarding the high expectations of the clients. This paragraph appears to prove that trying to generate synergy savings, the managers failed in responding the customer´s needs.

===Stockholders===
Last but not least, the management of both high power and high interest stakeholders needs to be considered. Take the stockholders.

An overwhelming majority of them favored the project of merger in 1998. Approvals ratings reached 99.9% at Daimler-Benz and 97.5% at Chrysler. It may be inferred that, at the outset of the project, managers successfully took into account the processes required to satisfy the shareholders. It did not take long, however, for some of them to express their disappointment. This was the case for Kirk Kerkorian, the third largest proprietor of DailerChrysler stock and largest Chrysler shareholder before the merger. In November 2000, the latter filed a $9 billion lawsuit against DaimlerChrysler for falsifying the terms of the fusion as a “merger of equals”. He was upset with the German hegemony and stated he had voted to turn its shares for stock in DaimlerChrysler without having considered the American entity would be reduced to a mere division. Two months later, he cut his take in the merged company by a third. Even though the managers were not directly involved in this discontent, the lack of acting responsibly of the Board of the director is obvious.

To conclude, the completion of the processes related to each of these three stakeholders lacked efficiency. The managers failed in implementing the required activities to satisfy them and this will become a major hindrance to the project completion.

=Conclusion=
Many factors may affect the failure of the DaimlerChrysler project, but most of them may have been due to its mismanagement. Such a union was notoriously risky, especially due to the opposite companies it combined. To deliver the intent benefits, particular care should then have been taken by managers to tackle all the project management processes.

The use of the standard ''ISO 21500 : 2012'' has been made to group the processes in term of Subject Group. It appears clear that there were some omissions, particularly regarding Integration, Time, Communication and Stakeholders. This standard has proven to be useful to analyze a project management, especially in case of cross-boarders project.

= References =

<references />

[[Category:Project Management]]
[[Category:Human Behaviour]]
[[Category:Complexity]]

Analyzing the failure of the DaimlerChrysler merger from a project management perspective

2014-12-01T20:19:32Z

Lyngby: /* Conclusion */

'''Abstract'''

In the late 90´s, German Daimler-Benz AG and American Chrysler Corporation announced their intention to combine their strengths within a so-called `merger of equals´ <ref> Grässlin, Jürgen. ''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> . Becoming the fifth largest automaker in the world, both companies hoped to overcome together the automotive industry crisis. However, nothing worked out as planned, so much so that in 2007 Daimler-Benz sold all its shares of the Chrysler division.

Could the use of a norm have guaranteed the success of the DaimlerChrysler merger ? This question will be answered with regard to the ISO 21500:2012 guideline for project management.

According to the latter, a definition of project management and the processes it involves will be provided.Then, an analysis of the origin of DaimlerChrysler project will be carried out. It will also be shown to what extent this fusion was mismanaged with regard to the subject groups defined in the ISO 21500:2012. Last but not least the benefits of using this standard to successfully conduct a complex project will be discussed.

=Introduction=
In the early 21st century, no comprehensive standard on project management was accepted despite the substantial demand for project management skills. However, in 2006, the need for a unifying international approach was recognized by the International Organization for Standard (ISO). The work of over hundreds experts in project management from around the globe resulted in ''ISO 21500: 2012 -Guidance on project management''. This norm defines universal project management terminologies, as well as the principles and processes it involves. It provides a basic guide against which any organization can compare its current project management practices and determine areas in need of improvement. But how to practically apply it to a project? A specific example of project failure prior to introducing ISO 21500 will be provided to analyze which project management processes were disregarded. More particularly, the merger of the German automaker Daimler-Benz with the American Chrysler Corporation will be examined with the perspective of subject group.

= ISO 21500 : 2012, A focus on processes <ref> ISO 21500:2012 ''Guidance on project management'' </ref> <ref> Anton Zandhuis, Rommert Stellingwerf. ''ISO 215000, Guidance on Project managenent, A Pocket Guide''. Van Haren Publishing. 2013 </ref>=

What is a project? A definition is provided by the ISO 21500: “A unique set of processes consisting of coordinated and controlled activities with start and end dates, performed to achieve project objectives.” The concept of processes seems to be at the crux of project management issues. The definition of how to manage a project stresses this point: “Project management is performed through processes”.

Specifically, the norm splits the method of managing a project into 39 elementary processes. Depending on the perspective, the latter are grouped into five process groups (Initiating, Planning, Controlling and Closing) or into ten subject groups (Integration, Stakeholder, Scope, Resource, Time, Cost, Risk, Quality, Procurement and Communication). The classification of these processes is provided in the following table.

{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 1 : Project management cross-referenced to process and subject groups (ISO 21500 : 2012)'''
|-
! rowspan="2" style="background: #ffedd3;" | SUBJECT GROUPS
! colspan="5" style="background: #ffedd3;" | PROCESS GROUPS
|-
|style="background: #fff4d3;" align=center | '''Initiating'''
|style="background: #fff4d3;" align=center| '''Planning'''
|style="background: #fff4d3;" align=center| '''Implementing'''
|style="background: #fff4d3;" align=center | '''Controlling'''
|style="background: #fff4d3;" align=center | '''Closing'''
|-
|style="background: #fff4d3;" |'''Integration'''
|
4.3.2 Develop project chart
|
4.3.3. Develop project plans
|
4.3.4 Direct project work
|
4.3.5 Control project work

4.3.6 Control changes
|
4.3.7 Close project or phase

4.3.8 Collect lessons learned
|-
|style="background: #fff4d3;" |'''Stakeholder'''
|
4.3.9 Identify stakeholders
|

|
4.3.10 Manage stakeholders
|

|

|-
|style="background: #fff4d3;" |'''Scope'''
|

|
4.3.11 Define scope

4.3.12 Create work breakdown structure

4.3.13 Define activities
|

|
4.3.14 Control scope
|

|-
|style="background: #fff4d3;" |'''Resource'''
|
4.3.15 Establish project team
|
4.3.16 Estimate resources

4.3.17 Define project organization
|
4.3.18 Develop project team
|
4.3.19 Control resources

4.3.20 Manage project team
|

|-
|style="background: #fff4d3;" |'''Time'''
|

|
4.3.21 Sequence activities

4.3.22 Estimate activity durations

4.3.23 Develop schedule
|

|
4.3.24 Control schedule
|

|-
|style="background: #fff4d3;" |'''Cost'''
|

|
4.3.25 Estimate costs

4.3.26 Develop budget
|

|
4.3.27 Control costs
|

|-
|style="background: #fff4d3;" |'''Risk'''
|

|
4.3.28 Identify risks

4.3.29 Asses risks
|
4.3.30 Treat risks
|
4.3.31 Control risks
|
|-
|style="background: #fff4d3;" |'''Quality'''
|

|
4.3.32 Plan quality
|
4.3.33 Perform quality assurance
|
4.3.34 Perform quality control
|

|-
|style="background: #fff4d3;" |'''Procurement'''
|

|
4.3.35 Plan procurements
|
4.3.36 Select suppliers
|
4.3.37 Administer procurements
|

|-
|style="background: #fff4d3;" |'''Communication'''
|

|
4.3.38 Plan communications
|
4.3.39 Distribute information
|
4.3.40 Manage communications
|

|}

The perspective of subject groups will be adopted to consider the management of DaimlerChrysler project. A subject is a theme in which processes are classified according to its related activities.

But before that, the project of DaimlerChrysler merger is regarded.

=DaimlerChrysler merger project <ref> Julia Hollmann, Aletéia de Moura Carpes, Thiago Antonio Beuron. ''The DaimlerChrylser Merger- A cultural mismatch ?'' Faculty Sponsor : Universität Paderborn- Germany, Department of International Business Studies. Universidade Federal de Santa Maria- Brazil, Department of Administration. 2010 </ref> =
==The genesis of the project==
In the late 90´s, the automotive industry had to face multiples challenges due to the excess manufacturing capacity, the growth of ecological awareness, and the retail revolution that empowered buyers. To strengthen their position during this crisis, the automakers Daimler-Benz and Chrysler Corporation decided to merge. This project aimed to combine each other´s product designs, manufacturing resources and distribution systems.
The following table shows the complementary of the two companies, which wanted to unit their knowledge and their market in order to gain a competitive advantage.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 2 : The complementary of the two companies '''
|
! style="background: #ffedd3;" |'''Daimler-Benz AG'''
! style="background: #ffedd3;" |'''Chrysler Corporation'''
|-
! style="background: #ffedd3;" |'''Head office location'''
|
Germany
|
United States
|-
! style="background: #ffedd3;" |'''Geographical reach'''
|
European market
|
U.S. American market
|-
! style="background: #ffedd3;" |'''Product ranges'''
|
Uncompromising quality products
|
Car models that meet the American demand for adventurousness
|}


Both synergies and economies of scale were likely to proliferate.

How the project was set up is explained in the following paragraph. However, its detailed description falls outside the scope of this article.

==The execution of the project==
On May 7th, 1998 the signing of the combination agreement between Daimler-Benz and Chrysler was publicly announced. Daimler-Benz CEO Jürgen Schrempp described the union as "a merger of equals, a merger of growth, and a merger of unprecedented strength".
The equal status of the two organizations was reflected in the newly established entity name, DaimlerChrysler, as well as in the combination of the two former boards of management to form the one of DaimlerChrysler. Furthermore, it was agreed that Schrempp and Eaton, former CEO of the Chrysler Corporation, would jointly led the entity as co-chairmen and co-CEOs. It was also decided that Eaton would stay up to three years.
The two following tables provide more data about DaimlerChrysler right after the merger and the expected results of this project.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 3 : Characteristics of DaimlerChrysler right after the merger'''
|-
! style="background: #ffedd3;" |'''Number of employees '''
|442,000 employees
½ in Germany

1/3 in North America

1/6 spread across 200 countries around the world
|-
! style="background: #ffedd3;" |'''Daimler-Benz AG Market capitalization'''
|$ 92 billion
|}



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 4 : Expected results'''
! style="background: #ffedd3;" |Annual revenues of the combined company
|$ 132 billion
|-
! style="background: #ffedd3;" |Increase in sales
|13%
|-
! style="background: #ffedd3;" |Cost savings brought within 2 or 3 years
|$ 3,5 billion a year
|}


So far, this fusion appears to be very beneficial for all parties involved. However the wish for synergy effects never came true and the project drove Chrysler into chaos. In May 2007, the merger of Chrysler and Daimler-Benz was dissolved. Can this failure be ascribed to mismanagement?

The purpose of this article is now to point out which processes, related to the different subject groups definied in ISO 21500:2012 were disregarded and may have led to the project failure.

=The mismanagement of some subject groups <ref> Wanda Curlee, Robert L. Gordon . ''Complexity Theory and Project Management. ''. New York : Wiley, 2011, p. 129-133 </ref> =

Four subject groups will successively be considered : Integration, Time, Communication and Stakeholders. A mismanagement of some processes related to these four specific subject groups is namely to be seen.

==Integration <ref> Grässlin, Jürgen.''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> <ref> ''DaimlerChrysler confronts the challenges of global integration'', Human Resource Management International Digest, Vol 12 Iss :2 P.5-8</ref> ==

The Integration subject group includes the processes required to identify, define, combine, unify, coordinate, control and close the various activities and processes related to the project (ISO 21500:2012 - 4.2.3.2).

Within this merger, the unification and combination of all operations within the established entity needed to be achieved. To meet this target, a newly corporate culture had to be defined to align working styles. The latter namely radically differ due to major cultural differences, as shown in the following table.



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 5 : Comparison between the German and the American working styles'''
|-
|
! style="background: #ffedd3;" | '''Germany'''
! style="background: #ffedd3;"|'''United States'''
|-
! style="background: #ffedd3;" align="left" |'''Employee working style'''
| Work in a team-oriented environment
| Work individually
|-
! style="background: #ffedd3;" align="left" |'''Writing report'''
| Lengthy reports
| Little paper
|-
! style="background: #ffedd3;" align="left" |'''Decision-making process'''
|
Methodical, based on very detailed plans
|
Using creativity, based on trial-and-error method
|-
! style="background: #ffedd3;" align="left" |'''Meeting'''
|
Extended discussions
|
Short meeting
|-
! style="background: #ffedd3;" align="left" |'''Organizational structure'''
|
Pronounced hierarchy based on top-down-management
|
Flat organizational hierarchy stimulating empowerment of the employees
|-
! style="background: #ffedd3;" align="left" |'''Risk appetite'''
|
Risk adverse culture
|
Risk takers
|}


Due to the fact that this merger was a so-called `merger of equals´, the integration of the two cultures was to combine them to generate a new shared corporate one. It was namely vital that both organizations learn from each other to generate synergy effects. Managers have here a central role to play to define and coordinate the development of this new culture.

Eaton affirmed that it was at the top of the agenda and Thomas Stallkamp, Chrysler President during the negotiation phase, was charged with overseeing this integration process. Some effort went into harmonizing the two corporate cultures. Many seminars and workshops were organized to sensitizing the employees for working with new colleagues with diverging working methods. Furthermore, German was taught to many American managers.

However, given the large gap between the two organizations, it would appear that managers should have undertaken more activities and CEOs should have allocated more resources to bridge the chasm of cultural differences.

In fact, no strong and cohesive organizational culture was created, as illustrated in daily misunderstandings. For instance, the attention Daimler-Benz leaders paid to writing a leaflet sent to employee annoyed Chrysler executives. At the end of 1999, the resignation of Thomas Stallkamp, a 19-year veteran of Chrysler who was highly regarded, might be seen as a failure of the merger integration process after all the effort. Stallkamp is quoted as saying: <nowiki>“</nowiki>The majority of my career has been spent implementing supply chain management. I would like to continue to explore those areas at a less hectic pace<nowiki>”</nowiki>. Were both parties truly willing to cooperate wholeheartedly and to enter compromises to succeed in the numerous integration processes? A negative answer is the root cause of an unachieved integration.

==Time<ref> Sue Cartwright, Cary L. Cooper. ''Mergers and Acquisitions: The Human Factor Paperback'' . January 1, 1992 </ref>==

The Time subject group is all about managing the timely completion of the project. Feasible deadlines taking all known constraints into account need to be set. Processes covered by the latter subject group are the development of schedule for project activities estimating each activity duration, the progress monitoring and the schedule control.

One failure in managing time in DaimlerChrysler merger was that too little time was devoted to each activity. Let´s take a concrete example: Daimler-Benz and Chrysler began formal negotiations on January 12, 1998 and only five months later, the merger was announced worldwide. Susan Cartwright – past President of the British Academy Management – asserts that the period of time from the germ of the merger idea till an agreement is reached is estimated to last around two years. Speeding up the pre-merger preparation, the precise objectives of the fusion and the way to achieve them could not have been defined accurately.
Furthermore, the merger was completed on November 12, 1998. Time needed by employees to adapt to the new circumstances was not taken into account in the deadlines. One more mismanagement which is added to the others.

==Communication==
In the standard ISO 21500:2012, three key processes are defined to ensure appropriate exchange of project information: Plan communications, Distribute information and Manage communications. But within DaimlerChrysler project none of them were totally met. In order to appreciate the scale of the problem, it should be point out that even managers and CEOs experienced serious difficulties in discussing solutions and achieving a consensus. According to a Daimler-Benz executive, <nowiki>"</nowiki>Eaton went weeks without speaking with Jürgen [Schrempp]. He preferred to maintain lower-level contact. Jürgen, meanwhile, left Chrysler alone.<nowiki>"</nowiki> <ref> [http://mba.tuck.dartmouth.edu/pdf/2002-1-0071.pdf] Professor Sydney Finkelstein. ''The DaimlerChrysler Merger.''Tuck School of Business at Dartmouth. 2002 </ref> One would have expected that both CEOs would have shared their different views in order to discover common goal and operate as an effective team at the top. Given the seeming clash of culture described in the first paragraph, it was crucial to start the discussion to create healthy relationship and release the company´s potential. The clearer the communication, the better issues are addressed. But with such a lack of communication among leaders, no far-reaching communication plan could be implemented among all stakeholders involved, not to mention the distribution of the information. Both internal and external communications were chaotic. It is likely that the standard ISO 21500 would have made managers more aware of the processes related to communication which requires to be efficiently tackled.

==Stakeholders==
The stakeholder subject group is concerned with identifying and managing all parties involved. To classify them, both their expectations and influence on the project need to be analyzed. The table 6 provides a power-interest matrix, which is crucial to draw up appropriate management strategies for effectively engaging with them. The external stakeholders are written in italics, the others are internal.

{| border="1" cellpadding="3" cellspacing="0" style="margin:auto;"
|+ '''Table 6 : Power and interest matrix'''
|-
! rowspan="2" style="background: #ffedd3;" | Level of interest
! colspan="5" style="background: #ffedd3;" | Level of power
|-
|style="background: #fff4d3;" align=center | ''' Low '''
|style="background: #fff4d3;" align=center| ''' High '''
|-
|style="background: #fff4d3;" align=center |'''High'''
|
'''Employee'''

Trade Union

'''''Clients'''''

''Suppliers''

''Government''

''Society''
|
Directors

Managers

'''''Stockholders'''''
|-
|style="background: #fff4d3;" align=center |'''Low'''
|
''Competitors''
|

|-
|}

To analyze the management of all of these stakeholders one by one would be tedious. However it is relevant to focus on several categories according to the table 6. Special focus will be laid on the stakeholders written in bold. Therefore, both high power/high interest and low power/high interest stakeholders will be looked at. Two of them are internal, whereas the other is internal.

It will be shown that all of them were significantly affected by the DaimlerChrysler project due to mismanagement.

===Employees===
Employees, low-power and high-interest stakeholders, must be kept informed and managers should ensure that no major issues are arising.
However, this was not the case in the DaimlerChrysler merger: employees felt overlooked, disregarded and left out of the merger process. But to what extent CEOs and managers were responsible in this climate of distrust and dislike?

First, soon after the merger, it became obvious that Daimler was taking over the whole company´s management. Chrysler President Stallkamp retirement at the end of 1999 was followed by the one of James P. Holdem, top-level executive of the Chrysler Group. They were replaced by two German managers: Dieter Zetsche and Wolfgang Bernhard. Being lowered to divisional status, it is understandable that American´s morale suffered from this German hegemony. Employee felt eclipsed and were disgusted. They also were worried that DaimlerChrysler would dismiss some of them. But the problems were not confined to be here. Indeed, Jürgen Schrempp attitude only made the situation worse. In autumn 2000, DaimlerChrysler CEO acknowledged in the German financial daily Handelsblatt that <nowiki>“</nowiki>The Merger of Equals statement was necessary in order to earn the support of Chrysler's workers and the American public, but it was never reality<nowiki>"</nowiki>. Many Americans regarded this statement as a betrayal, since Schrempp intended to deceive them from the outset. It appears clear that it is due to the board of directors´ failure in acting responsibly towards the workers that deep-seated distrust ran deep.

Furthermore, such a mismanagement of the employees can lead to far-reaching consequences on the project success itself. Indeed, it could have been that some workers simply did not work as efficiently because they supposed the board of directors did not care about the Chrysler entity – so why should they? Decreased performance would have resulted in it.

It is to notice that even though the standard ''ISO 21500: 2012'' did not exist at that time, the fact that employee influence was of importance to succeed such a process was already known. MaryAnn Keller, founder and managing partner of MaryAnn Keller & Associates LLC, namely stated in June 1998 that <nowiki>“</nowiki>The success of any combination depends on the ability of the new organization to win over the hearts and minds of employees.<nowiki>”</nowiki> <ref> [http://murphylibrary.uwlax.edu/digital/jur/2002/carpiaux.pdf] Nicole Carpiaux. ''DaimlerChrysler : Wunderkind or Problem Child ?'' Faculty Sponsor : Leticia Peña, Department of Management. </ref> The managers of DaimlerChrysler should then be aware that is really a management issue to embrace workers instead to neglect them in order to obtain the best they can offer.

===Clients===
And what about the customers, low-power and high interest stakeholders?

Once again, one could argue that managers failed to define as well as to meet their needs.
One example is given for illustration. At the time, the DaimlerChrysler A-Class was 1.25 to 2 times more expensive than similar vehicles sold by Volkswagen, Renault or Fiat. This higher price was not deterrent since clients were aware that Daimler-Benz primarily asset was quality and safety. However, in 1999, the A-class failed an emergency maneuver test conducted by a Swedish television station. <ref> Bill Vlasic, Bradley A. Stertz. ''Taken for a Ride: How Daimler-Benz Drove off with Chrysler''. Harper Paperbacks,
2001, p. 300.
</ref> Consequently, customers´ satisfaction suddenly drop off the map. The DaimlerChrysler vehicle was considered as an overpriced car which did not achieve engineering excellence compared to the highly competitive European compact market. The crux of the problem may be that the German entity had tried to implant the American low development costs into its entities, disregarding the high expectations of the clients. This paragraph appears to prove that trying to generate synergy savings, the managers failed in responding the customer´s needs.

===Stockholders===
Last but not least, the management of both high power and high interest stakeholders needs to be considered. Take the stockholders.

An overwhelming majority of them favored the project of merger in 1998. Approvals ratings reached 99.9% at Daimler-Benz and 97.5% at Chrysler. It may be inferred that, at the outset of the project, managers successfully took into account the processes required to satisfy the shareholders. It did not take long, however, for some of them to express their disappointment. This was the case for Kirk Kerkorian, the third largest proprietor of DailerChrysler stock and largest Chrysler shareholder before the merger. In November 2000, the latter filed a $9 billion lawsuit against DaimlerChrysler for falsifying the terms of the fusion as a “merger of equals”. He was upset with the German hegemony and stated he had voted to turn its shares for stock in DaimlerChrysler without having considered the American entity would be reduced to a mere division. Two months later, he cut his take in the merged company by a third. Even though the managers were not directly involved in this discontent, the lack of acting responsibly of the Board of the director is obvious.

To conclude, the completion of the processes related to each of these three stakeholders lacked efficiency. The managers failed in implementing the required activities to satisfy them and this will become a major hindrance to the project completion.

=Conclusion=
Many factors may affect the failure of the DaimlerChrysler project, but most of them may have been due to its mismanagement. Such a union was notoriously risky, especially due to the opposite companies it combined. To deliver the intent benefits, particular care should then have been taken by managers to tackle all the project management processes.

The use of the standard ''ISO 21500 : 2012'' was made to group the processes in term of Subject Group. It appears clear that there were some omissions, particularly regarding Integration, Time, Communication and Stakeholders. This standard has proven to be useful to analyze a project management, especially in case of cross-boarders project.

= References =

<references />

[[Category:Project Management]]
[[Category:Human Behaviour]]
[[Category:Complexity]]

Analyzing the failure of the DaimlerChrysler merger from a project management perspective

2014-12-01T20:16:34Z

Lyngby: /* Clients */

'''Abstract'''

In the late 90´s, German Daimler-Benz AG and American Chrysler Corporation announced their intention to combine their strengths within a so-called `merger of equals´ <ref> Grässlin, Jürgen. ''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> . Becoming the fifth largest automaker in the world, both companies hoped to overcome together the automotive industry crisis. However, nothing worked out as planned, so much so that in 2007 Daimler-Benz sold all its shares of the Chrysler division.

Could the use of a norm have guaranteed the success of the DaimlerChrysler merger ? This question will be answered with regard to the ISO 21500:2012 guideline for project management.

According to the latter, a definition of project management and the processes it involves will be provided.Then, an analysis of the origin of DaimlerChrysler project will be carried out. It will also be shown to what extent this fusion was mismanaged with regard to the subject groups defined in the ISO 21500:2012. Last but not least the benefits of using this standard to successfully conduct a complex project will be discussed.

=Introduction=
In the early 21st century, no comprehensive standard on project management was accepted despite the substantial demand for project management skills. However, in 2006, the need for a unifying international approach was recognized by the International Organization for Standard (ISO). The work of over hundreds experts in project management from around the globe resulted in ''ISO 21500: 2012 -Guidance on project management''. This norm defines universal project management terminologies, as well as the principles and processes it involves. It provides a basic guide against which any organization can compare its current project management practices and determine areas in need of improvement. But how to practically apply it to a project? A specific example of project failure prior to introducing ISO 21500 will be provided to analyze which project management processes were disregarded. More particularly, the merger of the German automaker Daimler-Benz with the American Chrysler Corporation will be examined with the perspective of subject group.

= ISO 21500 : 2012, A focus on processes <ref> ISO 21500:2012 ''Guidance on project management'' </ref> <ref> Anton Zandhuis, Rommert Stellingwerf. ''ISO 215000, Guidance on Project managenent, A Pocket Guide''. Van Haren Publishing. 2013 </ref>=

What is a project? A definition is provided by the ISO 21500: “A unique set of processes consisting of coordinated and controlled activities with start and end dates, performed to achieve project objectives.” The concept of processes seems to be at the crux of project management issues. The definition of how to manage a project stresses this point: “Project management is performed through processes”.

Specifically, the norm splits the method of managing a project into 39 elementary processes. Depending on the perspective, the latter are grouped into five process groups (Initiating, Planning, Controlling and Closing) or into ten subject groups (Integration, Stakeholder, Scope, Resource, Time, Cost, Risk, Quality, Procurement and Communication). The classification of these processes is provided in the following table.

{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 1 : Project management cross-referenced to process and subject groups (ISO 21500 : 2012)'''
|-
! rowspan="2" style="background: #ffedd3;" | SUBJECT GROUPS
! colspan="5" style="background: #ffedd3;" | PROCESS GROUPS
|-
|style="background: #fff4d3;" align=center | '''Initiating'''
|style="background: #fff4d3;" align=center| '''Planning'''
|style="background: #fff4d3;" align=center| '''Implementing'''
|style="background: #fff4d3;" align=center | '''Controlling'''
|style="background: #fff4d3;" align=center | '''Closing'''
|-
|style="background: #fff4d3;" |'''Integration'''
|
4.3.2 Develop project chart
|
4.3.3. Develop project plans
|
4.3.4 Direct project work
|
4.3.5 Control project work

4.3.6 Control changes
|
4.3.7 Close project or phase

4.3.8 Collect lessons learned
|-
|style="background: #fff4d3;" |'''Stakeholder'''
|
4.3.9 Identify stakeholders
|

|
4.3.10 Manage stakeholders
|

|

|-
|style="background: #fff4d3;" |'''Scope'''
|

|
4.3.11 Define scope

4.3.12 Create work breakdown structure

4.3.13 Define activities
|

|
4.3.14 Control scope
|

|-
|style="background: #fff4d3;" |'''Resource'''
|
4.3.15 Establish project team
|
4.3.16 Estimate resources

4.3.17 Define project organization
|
4.3.18 Develop project team
|
4.3.19 Control resources

4.3.20 Manage project team
|

|-
|style="background: #fff4d3;" |'''Time'''
|

|
4.3.21 Sequence activities

4.3.22 Estimate activity durations

4.3.23 Develop schedule
|

|
4.3.24 Control schedule
|

|-
|style="background: #fff4d3;" |'''Cost'''
|

|
4.3.25 Estimate costs

4.3.26 Develop budget
|

|
4.3.27 Control costs
|

|-
|style="background: #fff4d3;" |'''Risk'''
|

|
4.3.28 Identify risks

4.3.29 Asses risks
|
4.3.30 Treat risks
|
4.3.31 Control risks
|
|-
|style="background: #fff4d3;" |'''Quality'''
|

|
4.3.32 Plan quality
|
4.3.33 Perform quality assurance
|
4.3.34 Perform quality control
|

|-
|style="background: #fff4d3;" |'''Procurement'''
|

|
4.3.35 Plan procurements
|
4.3.36 Select suppliers
|
4.3.37 Administer procurements
|

|-
|style="background: #fff4d3;" |'''Communication'''
|

|
4.3.38 Plan communications
|
4.3.39 Distribute information
|
4.3.40 Manage communications
|

|}

The perspective of subject groups will be adopted to consider the management of DaimlerChrysler project. A subject is a theme in which processes are classified according to its related activities.

But before that, the project of DaimlerChrysler merger is regarded.

=DaimlerChrysler merger project <ref> Julia Hollmann, Aletéia de Moura Carpes, Thiago Antonio Beuron. ''The DaimlerChrylser Merger- A cultural mismatch ?'' Faculty Sponsor : Universität Paderborn- Germany, Department of International Business Studies. Universidade Federal de Santa Maria- Brazil, Department of Administration. 2010 </ref> =
==The genesis of the project==
In the late 90´s, the automotive industry had to face multiples challenges due to the excess manufacturing capacity, the growth of ecological awareness, and the retail revolution that empowered buyers. To strengthen their position during this crisis, the automakers Daimler-Benz and Chrysler Corporation decided to merge. This project aimed to combine each other´s product designs, manufacturing resources and distribution systems.
The following table shows the complementary of the two companies, which wanted to unit their knowledge and their market in order to gain a competitive advantage.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 2 : The complementary of the two companies '''
|
! style="background: #ffedd3;" |'''Daimler-Benz AG'''
! style="background: #ffedd3;" |'''Chrysler Corporation'''
|-
! style="background: #ffedd3;" |'''Head office location'''
|
Germany
|
United States
|-
! style="background: #ffedd3;" |'''Geographical reach'''
|
European market
|
U.S. American market
|-
! style="background: #ffedd3;" |'''Product ranges'''
|
Uncompromising quality products
|
Car models that meet the American demand for adventurousness
|}


Both synergies and economies of scale were likely to proliferate.

How the project was set up is explained in the following paragraph. However, its detailed description falls outside the scope of this article.

==The execution of the project==
On May 7th, 1998 the signing of the combination agreement between Daimler-Benz and Chrysler was publicly announced. Daimler-Benz CEO Jürgen Schrempp described the union as "a merger of equals, a merger of growth, and a merger of unprecedented strength".
The equal status of the two organizations was reflected in the newly established entity name, DaimlerChrysler, as well as in the combination of the two former boards of management to form the one of DaimlerChrysler. Furthermore, it was agreed that Schrempp and Eaton, former CEO of the Chrysler Corporation, would jointly led the entity as co-chairmen and co-CEOs. It was also decided that Eaton would stay up to three years.
The two following tables provide more data about DaimlerChrysler right after the merger and the expected results of this project.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 3 : Characteristics of DaimlerChrysler right after the merger'''
|-
! style="background: #ffedd3;" |'''Number of employees '''
|442,000 employees
½ in Germany

1/3 in North America

1/6 spread across 200 countries around the world
|-
! style="background: #ffedd3;" |'''Daimler-Benz AG Market capitalization'''
|$ 92 billion
|}



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 4 : Expected results'''
! style="background: #ffedd3;" |Annual revenues of the combined company
|$ 132 billion
|-
! style="background: #ffedd3;" |Increase in sales
|13%
|-
! style="background: #ffedd3;" |Cost savings brought within 2 or 3 years
|$ 3,5 billion a year
|}


So far, this fusion appears to be very beneficial for all parties involved. However the wish for synergy effects never came true and the project drove Chrysler into chaos. In May 2007, the merger of Chrysler and Daimler-Benz was dissolved. Can this failure be ascribed to mismanagement?

The purpose of this article is now to point out which processes, related to the different subject groups definied in ISO 21500:2012 were disregarded and may have led to the project failure.

=The mismanagement of some subject groups <ref> Wanda Curlee, Robert L. Gordon . ''Complexity Theory and Project Management. ''. New York : Wiley, 2011, p. 129-133 </ref> =

Four subject groups will successively be considered : Integration, Time, Communication and Stakeholders. A mismanagement of some processes related to these four specific subject groups is namely to be seen.

==Integration <ref> Grässlin, Jürgen.''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> <ref> ''DaimlerChrysler confronts the challenges of global integration'', Human Resource Management International Digest, Vol 12 Iss :2 P.5-8</ref> ==

The Integration subject group includes the processes required to identify, define, combine, unify, coordinate, control and close the various activities and processes related to the project (ISO 21500:2012 - 4.2.3.2).

Within this merger, the unification and combination of all operations within the established entity needed to be achieved. To meet this target, a newly corporate culture had to be defined to align working styles. The latter namely radically differ due to major cultural differences, as shown in the following table.



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 5 : Comparison between the German and the American working styles'''
|-
|
! style="background: #ffedd3;" | '''Germany'''
! style="background: #ffedd3;"|'''United States'''
|-
! style="background: #ffedd3;" align="left" |'''Employee working style'''
| Work in a team-oriented environment
| Work individually
|-
! style="background: #ffedd3;" align="left" |'''Writing report'''
| Lengthy reports
| Little paper
|-
! style="background: #ffedd3;" align="left" |'''Decision-making process'''
|
Methodical, based on very detailed plans
|
Using creativity, based on trial-and-error method
|-
! style="background: #ffedd3;" align="left" |'''Meeting'''
|
Extended discussions
|
Short meeting
|-
! style="background: #ffedd3;" align="left" |'''Organizational structure'''
|
Pronounced hierarchy based on top-down-management
|
Flat organizational hierarchy stimulating empowerment of the employees
|-
! style="background: #ffedd3;" align="left" |'''Risk appetite'''
|
Risk adverse culture
|
Risk takers
|}


Due to the fact that this merger was a so-called `merger of equals´, the integration of the two cultures was to combine them to generate a new shared corporate one. It was namely vital that both organizations learn from each other to generate synergy effects. Managers have here a central role to play to define and coordinate the development of this new culture.

Eaton affirmed that it was at the top of the agenda and Thomas Stallkamp, Chrysler President during the negotiation phase, was charged with overseeing this integration process. Some effort went into harmonizing the two corporate cultures. Many seminars and workshops were organized to sensitizing the employees for working with new colleagues with diverging working methods. Furthermore, German was taught to many American managers.

However, given the large gap between the two organizations, it would appear that managers should have undertaken more activities and CEOs should have allocated more resources to bridge the chasm of cultural differences.

In fact, no strong and cohesive organizational culture was created, as illustrated in daily misunderstandings. For instance, the attention Daimler-Benz leaders paid to writing a leaflet sent to employee annoyed Chrysler executives. At the end of 1999, the resignation of Thomas Stallkamp, a 19-year veteran of Chrysler who was highly regarded, might be seen as a failure of the merger integration process after all the effort. Stallkamp is quoted as saying: <nowiki>“</nowiki>The majority of my career has been spent implementing supply chain management. I would like to continue to explore those areas at a less hectic pace<nowiki>”</nowiki>. Were both parties truly willing to cooperate wholeheartedly and to enter compromises to succeed in the numerous integration processes? A negative answer is the root cause of an unachieved integration.

==Time<ref> Sue Cartwright, Cary L. Cooper. ''Mergers and Acquisitions: The Human Factor Paperback'' . January 1, 1992 </ref>==

The Time subject group is all about managing the timely completion of the project. Feasible deadlines taking all known constraints into account need to be set. Processes covered by the latter subject group are the development of schedule for project activities estimating each activity duration, the progress monitoring and the schedule control.

One failure in managing time in DaimlerChrysler merger was that too little time was devoted to each activity. Let´s take a concrete example: Daimler-Benz and Chrysler began formal negotiations on January 12, 1998 and only five months later, the merger was announced worldwide. Susan Cartwright – past President of the British Academy Management – asserts that the period of time from the germ of the merger idea till an agreement is reached is estimated to last around two years. Speeding up the pre-merger preparation, the precise objectives of the fusion and the way to achieve them could not have been defined accurately.
Furthermore, the merger was completed on November 12, 1998. Time needed by employees to adapt to the new circumstances was not taken into account in the deadlines. One more mismanagement which is added to the others.

==Communication==
In the standard ISO 21500:2012, three key processes are defined to ensure appropriate exchange of project information: Plan communications, Distribute information and Manage communications. But within DaimlerChrysler project none of them were totally met. In order to appreciate the scale of the problem, it should be point out that even managers and CEOs experienced serious difficulties in discussing solutions and achieving a consensus. According to a Daimler-Benz executive, <nowiki>"</nowiki>Eaton went weeks without speaking with Jürgen [Schrempp]. He preferred to maintain lower-level contact. Jürgen, meanwhile, left Chrysler alone.<nowiki>"</nowiki> <ref> [http://mba.tuck.dartmouth.edu/pdf/2002-1-0071.pdf] Professor Sydney Finkelstein. ''The DaimlerChrysler Merger.''Tuck School of Business at Dartmouth. 2002 </ref> One would have expected that both CEOs would have shared their different views in order to discover common goal and operate as an effective team at the top. Given the seeming clash of culture described in the first paragraph, it was crucial to start the discussion to create healthy relationship and release the company´s potential. The clearer the communication, the better issues are addressed. But with such a lack of communication among leaders, no far-reaching communication plan could be implemented among all stakeholders involved, not to mention the distribution of the information. Both internal and external communications were chaotic. It is likely that the standard ISO 21500 would have made managers more aware of the processes related to communication which requires to be efficiently tackled.

==Stakeholders==
The stakeholder subject group is concerned with identifying and managing all parties involved. To classify them, both their expectations and influence on the project need to be analyzed. The table 6 provides a power-interest matrix, which is crucial to draw up appropriate management strategies for effectively engaging with them. The external stakeholders are written in italics, the others are internal.

{| border="1" cellpadding="3" cellspacing="0" style="margin:auto;"
|+ '''Table 6 : Power and interest matrix'''
|-
! rowspan="2" style="background: #ffedd3;" | Level of interest
! colspan="5" style="background: #ffedd3;" | Level of power
|-
|style="background: #fff4d3;" align=center | ''' Low '''
|style="background: #fff4d3;" align=center| ''' High '''
|-
|style="background: #fff4d3;" align=center |'''High'''
|
'''Employee'''

Trade Union

'''''Clients'''''

''Suppliers''

''Government''

''Society''
|
Directors

Managers

'''''Stockholders'''''
|-
|style="background: #fff4d3;" align=center |'''Low'''
|
''Competitors''
|

|-
|}

To analyze the management of all of these stakeholders one by one would be tedious. However it is relevant to focus on several categories according to the table 6. Special focus will be laid on the stakeholders written in bold. Therefore, both high power/high interest and low power/high interest stakeholders will be looked at. Two of them are internal, whereas the other is internal.

It will be shown that all of them were significantly affected by the DaimlerChrysler project due to mismanagement.

===Employees===
Employees, low-power and high-interest stakeholders, must be kept informed and managers should ensure that no major issues are arising.
However, this was not the case in the DaimlerChrysler merger: employees felt overlooked, disregarded and left out of the merger process. But to what extent CEOs and managers were responsible in this climate of distrust and dislike?

First, soon after the merger, it became obvious that Daimler was taking over the whole company´s management. Chrysler President Stallkamp retirement at the end of 1999 was followed by the one of James P. Holdem, top-level executive of the Chrysler Group. They were replaced by two German managers: Dieter Zetsche and Wolfgang Bernhard. Being lowered to divisional status, it is understandable that American´s morale suffered from this German hegemony. Employee felt eclipsed and were disgusted. They also were worried that DaimlerChrysler would dismiss some of them. But the problems were not confined to be here. Indeed, Jürgen Schrempp attitude only made the situation worse. In autumn 2000, DaimlerChrysler CEO acknowledged in the German financial daily Handelsblatt that <nowiki>“</nowiki>The Merger of Equals statement was necessary in order to earn the support of Chrysler's workers and the American public, but it was never reality<nowiki>"</nowiki>. Many Americans regarded this statement as a betrayal, since Schrempp intended to deceive them from the outset. It appears clear that it is due to the board of directors´ failure in acting responsibly towards the workers that deep-seated distrust ran deep.

Furthermore, such a mismanagement of the employees can lead to far-reaching consequences on the project success itself. Indeed, it could have been that some workers simply did not work as efficiently because they supposed the board of directors did not care about the Chrysler entity – so why should they? Decreased performance would have resulted in it.

It is to notice that even though the standard ''ISO 21500: 2012'' did not exist at that time, the fact that employee influence was of importance to succeed such a process was already known. MaryAnn Keller, founder and managing partner of MaryAnn Keller & Associates LLC, namely stated in June 1998 that <nowiki>“</nowiki>The success of any combination depends on the ability of the new organization to win over the hearts and minds of employees.<nowiki>”</nowiki> <ref> [http://murphylibrary.uwlax.edu/digital/jur/2002/carpiaux.pdf] Nicole Carpiaux. ''DaimlerChrysler : Wunderkind or Problem Child ?'' Faculty Sponsor : Leticia Peña, Department of Management. </ref> The managers of DaimlerChrysler should then be aware that is really a management issue to embrace workers instead to neglect them in order to obtain the best they can offer.

===Clients===
And what about the customers, low-power and high interest stakeholders?

Once again, one could argue that managers failed to define as well as to meet their needs.
One example is given for illustration. At the time, the DaimlerChrysler A-Class was 1.25 to 2 times more expensive than similar vehicles sold by Volkswagen, Renault or Fiat. This higher price was not deterrent since clients were aware that Daimler-Benz primarily asset was quality and safety. However, in 1999, the A-class failed an emergency maneuver test conducted by a Swedish television station. <ref> Bill Vlasic, Bradley A. Stertz. ''Taken for a Ride: How Daimler-Benz Drove off with Chrysler''. Harper Paperbacks,
2001, p. 300.
</ref> Consequently, customers´ satisfaction suddenly drop off the map. The DaimlerChrysler vehicle was considered as an overpriced car which did not achieve engineering excellence compared to the highly competitive European compact market. The crux of the problem may be that the German entity had tried to implant the American low development costs into its entities, disregarding the high expectations of the clients. This paragraph appears to prove that trying to generate synergy savings, the managers failed in responding the customer´s needs.

===Stockholders===
Last but not least, the management of both high power and high interest stakeholders needs to be considered. Take the stockholders.

An overwhelming majority of them favored the project of merger in 1998. Approvals ratings reached 99.9% at Daimler-Benz and 97.5% at Chrysler. It may be inferred that, at the outset of the project, managers successfully took into account the processes required to satisfy the shareholders. It did not take long, however, for some of them to express their disappointment. This was the case for Kirk Kerkorian, the third largest proprietor of DailerChrysler stock and largest Chrysler shareholder before the merger. In November 2000, the latter filed a $9 billion lawsuit against DaimlerChrysler for falsifying the terms of the fusion as a “merger of equals”. He was upset with the German hegemony and stated he had voted to turn its shares for stock in DaimlerChrysler without having considered the American entity would be reduced to a mere division. Two months later, he cut his take in the merged company by a third. Even though the managers were not directly involved in this discontent, the lack of acting responsibly of the Board of the director is obvious.

To conclude, the completion of the processes related to each of these three stakeholders lacked efficiency. The managers failed in implementing the required activities to satisfy them and this will become a major hindrance to the project completion.

=Conclusion=
Many factors may affect the failure of the DaimlerChrysler project, but most of them may have been due to its mismanagement. Such a union was notoriously risky, especially due to the opposite companies it combined. To deliver the intent benefits, particular care should then have been taken by managers to tackle all the project management processes.

The use of the standard ''ISO 21500 : 2012'' was made to group the processes in term of Subject Group. It appears clear that there were some omissions, particularly regarding Integration, Time, Communication and Stakeholders. This standard has proven to be useful to analyze a project management, especially in case of cross-boarders project. It is a shame that such a unifying international approach was only established in 2012.

= References =

<references />

[[Category:Project Management]]
[[Category:Human Behaviour]]
[[Category:Complexity]]

Analyzing the failure of the DaimlerChrysler merger from a project management perspective

2014-12-01T20:15:47Z

Lyngby: /* Clients */

'''Abstract'''

In the late 90´s, German Daimler-Benz AG and American Chrysler Corporation announced their intention to combine their strengths within a so-called `merger of equals´ <ref> Grässlin, Jürgen. ''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> . Becoming the fifth largest automaker in the world, both companies hoped to overcome together the automotive industry crisis. However, nothing worked out as planned, so much so that in 2007 Daimler-Benz sold all its shares of the Chrysler division.

Could the use of a norm have guaranteed the success of the DaimlerChrysler merger ? This question will be answered with regard to the ISO 21500:2012 guideline for project management.

According to the latter, a definition of project management and the processes it involves will be provided.Then, an analysis of the origin of DaimlerChrysler project will be carried out. It will also be shown to what extent this fusion was mismanaged with regard to the subject groups defined in the ISO 21500:2012. Last but not least the benefits of using this standard to successfully conduct a complex project will be discussed.

=Introduction=
In the early 21st century, no comprehensive standard on project management was accepted despite the substantial demand for project management skills. However, in 2006, the need for a unifying international approach was recognized by the International Organization for Standard (ISO). The work of over hundreds experts in project management from around the globe resulted in ''ISO 21500: 2012 -Guidance on project management''. This norm defines universal project management terminologies, as well as the principles and processes it involves. It provides a basic guide against which any organization can compare its current project management practices and determine areas in need of improvement. But how to practically apply it to a project? A specific example of project failure prior to introducing ISO 21500 will be provided to analyze which project management processes were disregarded. More particularly, the merger of the German automaker Daimler-Benz with the American Chrysler Corporation will be examined with the perspective of subject group.

= ISO 21500 : 2012, A focus on processes <ref> ISO 21500:2012 ''Guidance on project management'' </ref> <ref> Anton Zandhuis, Rommert Stellingwerf. ''ISO 215000, Guidance on Project managenent, A Pocket Guide''. Van Haren Publishing. 2013 </ref>=

What is a project? A definition is provided by the ISO 21500: “A unique set of processes consisting of coordinated and controlled activities with start and end dates, performed to achieve project objectives.” The concept of processes seems to be at the crux of project management issues. The definition of how to manage a project stresses this point: “Project management is performed through processes”.

Specifically, the norm splits the method of managing a project into 39 elementary processes. Depending on the perspective, the latter are grouped into five process groups (Initiating, Planning, Controlling and Closing) or into ten subject groups (Integration, Stakeholder, Scope, Resource, Time, Cost, Risk, Quality, Procurement and Communication). The classification of these processes is provided in the following table.

{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 1 : Project management cross-referenced to process and subject groups (ISO 21500 : 2012)'''
|-
! rowspan="2" style="background: #ffedd3;" | SUBJECT GROUPS
! colspan="5" style="background: #ffedd3;" | PROCESS GROUPS
|-
|style="background: #fff4d3;" align=center | '''Initiating'''
|style="background: #fff4d3;" align=center| '''Planning'''
|style="background: #fff4d3;" align=center| '''Implementing'''
|style="background: #fff4d3;" align=center | '''Controlling'''
|style="background: #fff4d3;" align=center | '''Closing'''
|-
|style="background: #fff4d3;" |'''Integration'''
|
4.3.2 Develop project chart
|
4.3.3. Develop project plans
|
4.3.4 Direct project work
|
4.3.5 Control project work

4.3.6 Control changes
|
4.3.7 Close project or phase

4.3.8 Collect lessons learned
|-
|style="background: #fff4d3;" |'''Stakeholder'''
|
4.3.9 Identify stakeholders
|

|
4.3.10 Manage stakeholders
|

|

|-
|style="background: #fff4d3;" |'''Scope'''
|

|
4.3.11 Define scope

4.3.12 Create work breakdown structure

4.3.13 Define activities
|

|
4.3.14 Control scope
|

|-
|style="background: #fff4d3;" |'''Resource'''
|
4.3.15 Establish project team
|
4.3.16 Estimate resources

4.3.17 Define project organization
|
4.3.18 Develop project team
|
4.3.19 Control resources

4.3.20 Manage project team
|

|-
|style="background: #fff4d3;" |'''Time'''
|

|
4.3.21 Sequence activities

4.3.22 Estimate activity durations

4.3.23 Develop schedule
|

|
4.3.24 Control schedule
|

|-
|style="background: #fff4d3;" |'''Cost'''
|

|
4.3.25 Estimate costs

4.3.26 Develop budget
|

|
4.3.27 Control costs
|

|-
|style="background: #fff4d3;" |'''Risk'''
|

|
4.3.28 Identify risks

4.3.29 Asses risks
|
4.3.30 Treat risks
|
4.3.31 Control risks
|
|-
|style="background: #fff4d3;" |'''Quality'''
|

|
4.3.32 Plan quality
|
4.3.33 Perform quality assurance
|
4.3.34 Perform quality control
|

|-
|style="background: #fff4d3;" |'''Procurement'''
|

|
4.3.35 Plan procurements
|
4.3.36 Select suppliers
|
4.3.37 Administer procurements
|

|-
|style="background: #fff4d3;" |'''Communication'''
|

|
4.3.38 Plan communications
|
4.3.39 Distribute information
|
4.3.40 Manage communications
|

|}

The perspective of subject groups will be adopted to consider the management of DaimlerChrysler project. A subject is a theme in which processes are classified according to its related activities.

But before that, the project of DaimlerChrysler merger is regarded.

=DaimlerChrysler merger project <ref> Julia Hollmann, Aletéia de Moura Carpes, Thiago Antonio Beuron. ''The DaimlerChrylser Merger- A cultural mismatch ?'' Faculty Sponsor : Universität Paderborn- Germany, Department of International Business Studies. Universidade Federal de Santa Maria- Brazil, Department of Administration. 2010 </ref> =
==The genesis of the project==
In the late 90´s, the automotive industry had to face multiples challenges due to the excess manufacturing capacity, the growth of ecological awareness, and the retail revolution that empowered buyers. To strengthen their position during this crisis, the automakers Daimler-Benz and Chrysler Corporation decided to merge. This project aimed to combine each other´s product designs, manufacturing resources and distribution systems.
The following table shows the complementary of the two companies, which wanted to unit their knowledge and their market in order to gain a competitive advantage.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 2 : The complementary of the two companies '''
|
! style="background: #ffedd3;" |'''Daimler-Benz AG'''
! style="background: #ffedd3;" |'''Chrysler Corporation'''
|-
! style="background: #ffedd3;" |'''Head office location'''
|
Germany
|
United States
|-
! style="background: #ffedd3;" |'''Geographical reach'''
|
European market
|
U.S. American market
|-
! style="background: #ffedd3;" |'''Product ranges'''
|
Uncompromising quality products
|
Car models that meet the American demand for adventurousness
|}


Both synergies and economies of scale were likely to proliferate.

How the project was set up is explained in the following paragraph. However, its detailed description falls outside the scope of this article.

==The execution of the project==
On May 7th, 1998 the signing of the combination agreement between Daimler-Benz and Chrysler was publicly announced. Daimler-Benz CEO Jürgen Schrempp described the union as "a merger of equals, a merger of growth, and a merger of unprecedented strength".
The equal status of the two organizations was reflected in the newly established entity name, DaimlerChrysler, as well as in the combination of the two former boards of management to form the one of DaimlerChrysler. Furthermore, it was agreed that Schrempp and Eaton, former CEO of the Chrysler Corporation, would jointly led the entity as co-chairmen and co-CEOs. It was also decided that Eaton would stay up to three years.
The two following tables provide more data about DaimlerChrysler right after the merger and the expected results of this project.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 3 : Characteristics of DaimlerChrysler right after the merger'''
|-
! style="background: #ffedd3;" |'''Number of employees '''
|442,000 employees
½ in Germany

1/3 in North America

1/6 spread across 200 countries around the world
|-
! style="background: #ffedd3;" |'''Daimler-Benz AG Market capitalization'''
|$ 92 billion
|}



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 4 : Expected results'''
! style="background: #ffedd3;" |Annual revenues of the combined company
|$ 132 billion
|-
! style="background: #ffedd3;" |Increase in sales
|13%
|-
! style="background: #ffedd3;" |Cost savings brought within 2 or 3 years
|$ 3,5 billion a year
|}


So far, this fusion appears to be very beneficial for all parties involved. However the wish for synergy effects never came true and the project drove Chrysler into chaos. In May 2007, the merger of Chrysler and Daimler-Benz was dissolved. Can this failure be ascribed to mismanagement?

The purpose of this article is now to point out which processes, related to the different subject groups definied in ISO 21500:2012 were disregarded and may have led to the project failure.

=The mismanagement of some subject groups <ref> Wanda Curlee, Robert L. Gordon . ''Complexity Theory and Project Management. ''. New York : Wiley, 2011, p. 129-133 </ref> =

Four subject groups will successively be considered : Integration, Time, Communication and Stakeholders. A mismanagement of some processes related to these four specific subject groups is namely to be seen.

==Integration <ref> Grässlin, Jürgen.''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> <ref> ''DaimlerChrysler confronts the challenges of global integration'', Human Resource Management International Digest, Vol 12 Iss :2 P.5-8</ref> ==

The Integration subject group includes the processes required to identify, define, combine, unify, coordinate, control and close the various activities and processes related to the project (ISO 21500:2012 - 4.2.3.2).

Within this merger, the unification and combination of all operations within the established entity needed to be achieved. To meet this target, a newly corporate culture had to be defined to align working styles. The latter namely radically differ due to major cultural differences, as shown in the following table.



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 5 : Comparison between the German and the American working styles'''
|-
|
! style="background: #ffedd3;" | '''Germany'''
! style="background: #ffedd3;"|'''United States'''
|-
! style="background: #ffedd3;" align="left" |'''Employee working style'''
| Work in a team-oriented environment
| Work individually
|-
! style="background: #ffedd3;" align="left" |'''Writing report'''
| Lengthy reports
| Little paper
|-
! style="background: #ffedd3;" align="left" |'''Decision-making process'''
|
Methodical, based on very detailed plans
|
Using creativity, based on trial-and-error method
|-
! style="background: #ffedd3;" align="left" |'''Meeting'''
|
Extended discussions
|
Short meeting
|-
! style="background: #ffedd3;" align="left" |'''Organizational structure'''
|
Pronounced hierarchy based on top-down-management
|
Flat organizational hierarchy stimulating empowerment of the employees
|-
! style="background: #ffedd3;" align="left" |'''Risk appetite'''
|
Risk adverse culture
|
Risk takers
|}


Due to the fact that this merger was a so-called `merger of equals´, the integration of the two cultures was to combine them to generate a new shared corporate one. It was namely vital that both organizations learn from each other to generate synergy effects. Managers have here a central role to play to define and coordinate the development of this new culture.

Eaton affirmed that it was at the top of the agenda and Thomas Stallkamp, Chrysler President during the negotiation phase, was charged with overseeing this integration process. Some effort went into harmonizing the two corporate cultures. Many seminars and workshops were organized to sensitizing the employees for working with new colleagues with diverging working methods. Furthermore, German was taught to many American managers.

However, given the large gap between the two organizations, it would appear that managers should have undertaken more activities and CEOs should have allocated more resources to bridge the chasm of cultural differences.

In fact, no strong and cohesive organizational culture was created, as illustrated in daily misunderstandings. For instance, the attention Daimler-Benz leaders paid to writing a leaflet sent to employee annoyed Chrysler executives. At the end of 1999, the resignation of Thomas Stallkamp, a 19-year veteran of Chrysler who was highly regarded, might be seen as a failure of the merger integration process after all the effort. Stallkamp is quoted as saying: <nowiki>“</nowiki>The majority of my career has been spent implementing supply chain management. I would like to continue to explore those areas at a less hectic pace<nowiki>”</nowiki>. Were both parties truly willing to cooperate wholeheartedly and to enter compromises to succeed in the numerous integration processes? A negative answer is the root cause of an unachieved integration.

==Time<ref> Sue Cartwright, Cary L. Cooper. ''Mergers and Acquisitions: The Human Factor Paperback'' . January 1, 1992 </ref>==

The Time subject group is all about managing the timely completion of the project. Feasible deadlines taking all known constraints into account need to be set. Processes covered by the latter subject group are the development of schedule for project activities estimating each activity duration, the progress monitoring and the schedule control.

One failure in managing time in DaimlerChrysler merger was that too little time was devoted to each activity. Let´s take a concrete example: Daimler-Benz and Chrysler began formal negotiations on January 12, 1998 and only five months later, the merger was announced worldwide. Susan Cartwright – past President of the British Academy Management – asserts that the period of time from the germ of the merger idea till an agreement is reached is estimated to last around two years. Speeding up the pre-merger preparation, the precise objectives of the fusion and the way to achieve them could not have been defined accurately.
Furthermore, the merger was completed on November 12, 1998. Time needed by employees to adapt to the new circumstances was not taken into account in the deadlines. One more mismanagement which is added to the others.

==Communication==
In the standard ISO 21500:2012, three key processes are defined to ensure appropriate exchange of project information: Plan communications, Distribute information and Manage communications. But within DaimlerChrysler project none of them were totally met. In order to appreciate the scale of the problem, it should be point out that even managers and CEOs experienced serious difficulties in discussing solutions and achieving a consensus. According to a Daimler-Benz executive, <nowiki>"</nowiki>Eaton went weeks without speaking with Jürgen [Schrempp]. He preferred to maintain lower-level contact. Jürgen, meanwhile, left Chrysler alone.<nowiki>"</nowiki> <ref> [http://mba.tuck.dartmouth.edu/pdf/2002-1-0071.pdf] Professor Sydney Finkelstein. ''The DaimlerChrysler Merger.''Tuck School of Business at Dartmouth. 2002 </ref> One would have expected that both CEOs would have shared their different views in order to discover common goal and operate as an effective team at the top. Given the seeming clash of culture described in the first paragraph, it was crucial to start the discussion to create healthy relationship and release the company´s potential. The clearer the communication, the better issues are addressed. But with such a lack of communication among leaders, no far-reaching communication plan could be implemented among all stakeholders involved, not to mention the distribution of the information. Both internal and external communications were chaotic. It is likely that the standard ISO 21500 would have made managers more aware of the processes related to communication which requires to be efficiently tackled.

==Stakeholders==
The stakeholder subject group is concerned with identifying and managing all parties involved. To classify them, both their expectations and influence on the project need to be analyzed. The table 6 provides a power-interest matrix, which is crucial to draw up appropriate management strategies for effectively engaging with them. The external stakeholders are written in italics, the others are internal.

{| border="1" cellpadding="3" cellspacing="0" style="margin:auto;"
|+ '''Table 6 : Power and interest matrix'''
|-
! rowspan="2" style="background: #ffedd3;" | Level of interest
! colspan="5" style="background: #ffedd3;" | Level of power
|-
|style="background: #fff4d3;" align=center | ''' Low '''
|style="background: #fff4d3;" align=center| ''' High '''
|-
|style="background: #fff4d3;" align=center |'''High'''
|
'''Employee'''

Trade Union

'''''Clients'''''

''Suppliers''

''Government''

''Society''
|
Directors

Managers

'''''Stockholders'''''
|-
|style="background: #fff4d3;" align=center |'''Low'''
|
''Competitors''
|

|-
|}

To analyze the management of all of these stakeholders one by one would be tedious. However it is relevant to focus on several categories according to the table 6. Special focus will be laid on the stakeholders written in bold. Therefore, both high power/high interest and low power/high interest stakeholders will be looked at. Two of them are internal, whereas the other is internal.

It will be shown that all of them were significantly affected by the DaimlerChrysler project due to mismanagement.

===Employees===
Employees, low-power and high-interest stakeholders, must be kept informed and managers should ensure that no major issues are arising.
However, this was not the case in the DaimlerChrysler merger: employees felt overlooked, disregarded and left out of the merger process. But to what extent CEOs and managers were responsible in this climate of distrust and dislike?

First, soon after the merger, it became obvious that Daimler was taking over the whole company´s management. Chrysler President Stallkamp retirement at the end of 1999 was followed by the one of James P. Holdem, top-level executive of the Chrysler Group. They were replaced by two German managers: Dieter Zetsche and Wolfgang Bernhard. Being lowered to divisional status, it is understandable that American´s morale suffered from this German hegemony. Employee felt eclipsed and were disgusted. They also were worried that DaimlerChrysler would dismiss some of them. But the problems were not confined to be here. Indeed, Jürgen Schrempp attitude only made the situation worse. In autumn 2000, DaimlerChrysler CEO acknowledged in the German financial daily Handelsblatt that <nowiki>“</nowiki>The Merger of Equals statement was necessary in order to earn the support of Chrysler's workers and the American public, but it was never reality<nowiki>"</nowiki>. Many Americans regarded this statement as a betrayal, since Schrempp intended to deceive them from the outset. It appears clear that it is due to the board of directors´ failure in acting responsibly towards the workers that deep-seated distrust ran deep.

Furthermore, such a mismanagement of the employees can lead to far-reaching consequences on the project success itself. Indeed, it could have been that some workers simply did not work as efficiently because they supposed the board of directors did not care about the Chrysler entity – so why should they? Decreased performance would have resulted in it.

It is to notice that even though the standard ''ISO 21500: 2012'' did not exist at that time, the fact that employee influence was of importance to succeed such a process was already known. MaryAnn Keller, founder and managing partner of MaryAnn Keller & Associates LLC, namely stated in June 1998 that <nowiki>“</nowiki>The success of any combination depends on the ability of the new organization to win over the hearts and minds of employees.<nowiki>”</nowiki> <ref> [http://murphylibrary.uwlax.edu/digital/jur/2002/carpiaux.pdf] Nicole Carpiaux. ''DaimlerChrysler : Wunderkind or Problem Child ?'' Faculty Sponsor : Leticia Peña, Department of Management. </ref> The managers of DaimlerChrysler should then be aware that is really a management issue to embrace workers instead to neglect them in order to obtain the best they can offer.

===Clients===
And what about the customers, low-power and high interest stakeholders?

Once again, one could argue that managers failed to define as well as to meet their needs.
One example is given for illustration. At the time, the DaimlerChrysler A-Class was 1.25 to 2 times more expensive than similar vehicles sold by Volkswagen, Renault or Fiat. This higher price was not deterrent since clients were aware that Daimler-Benz primarily asset was quality and safety. However, in 1999, the A-class failed an emergency maneuver test conducted by a Swedish television station. <ref> Bill Vlasic, Bradley A. Stertz. ''Taken for a Ride: How Daimler-Benz Drove off with Chrysler''. Harper Paperbacks,
2001, p. 300.
</ref> Consequently, client´s satisfaction suddenly drop off the map. The DaimlerChrysler vehicle was considered as an overpriced car which did not achieve engineering excellence compared to the highly competitive European compact market. The crux of the problem may be that the German entity had tried to implant the American low development costs into its entities, disregarding the high expectations of the clients. This paragraph appears to prove that trying to generate synergy savings, the managers failed in responding the customer´s needs.

===Stockholders===
Last but not least, the management of both high power and high interest stakeholders needs to be considered. Take the stockholders.

An overwhelming majority of them favored the project of merger in 1998. Approvals ratings reached 99.9% at Daimler-Benz and 97.5% at Chrysler. It may be inferred that, at the outset of the project, managers successfully took into account the processes required to satisfy the shareholders. It did not take long, however, for some of them to express their disappointment. This was the case for Kirk Kerkorian, the third largest proprietor of DailerChrysler stock and largest Chrysler shareholder before the merger. In November 2000, the latter filed a $9 billion lawsuit against DaimlerChrysler for falsifying the terms of the fusion as a “merger of equals”. He was upset with the German hegemony and stated he had voted to turn its shares for stock in DaimlerChrysler without having considered the American entity would be reduced to a mere division. Two months later, he cut his take in the merged company by a third. Even though the managers were not directly involved in this discontent, the lack of acting responsibly of the Board of the director is obvious.

To conclude, the completion of the processes related to each of these three stakeholders lacked efficiency. The managers failed in implementing the required activities to satisfy them and this will become a major hindrance to the project completion.

=Conclusion=
Many factors may affect the failure of the DaimlerChrysler project, but most of them may have been due to its mismanagement. Such a union was notoriously risky, especially due to the opposite companies it combined. To deliver the intent benefits, particular care should then have been taken by managers to tackle all the project management processes.

The use of the standard ''ISO 21500 : 2012'' was made to group the processes in term of Subject Group. It appears clear that there were some omissions, particularly regarding Integration, Time, Communication and Stakeholders. This standard has proven to be useful to analyze a project management, especially in case of cross-boarders project. It is a shame that such a unifying international approach was only established in 2012.

= References =

<references />

[[Category:Project Management]]
[[Category:Human Behaviour]]
[[Category:Complexity]]

Analyzing the failure of the DaimlerChrysler merger from a project management perspective

2014-12-01T20:15:15Z

Lyngby: /* Clients */

'''Abstract'''

In the late 90´s, German Daimler-Benz AG and American Chrysler Corporation announced their intention to combine their strengths within a so-called `merger of equals´ <ref> Grässlin, Jürgen. ''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> . Becoming the fifth largest automaker in the world, both companies hoped to overcome together the automotive industry crisis. However, nothing worked out as planned, so much so that in 2007 Daimler-Benz sold all its shares of the Chrysler division.

Could the use of a norm have guaranteed the success of the DaimlerChrysler merger ? This question will be answered with regard to the ISO 21500:2012 guideline for project management.

According to the latter, a definition of project management and the processes it involves will be provided.Then, an analysis of the origin of DaimlerChrysler project will be carried out. It will also be shown to what extent this fusion was mismanaged with regard to the subject groups defined in the ISO 21500:2012. Last but not least the benefits of using this standard to successfully conduct a complex project will be discussed.

=Introduction=
In the early 21st century, no comprehensive standard on project management was accepted despite the substantial demand for project management skills. However, in 2006, the need for a unifying international approach was recognized by the International Organization for Standard (ISO). The work of over hundreds experts in project management from around the globe resulted in ''ISO 21500: 2012 -Guidance on project management''. This norm defines universal project management terminologies, as well as the principles and processes it involves. It provides a basic guide against which any organization can compare its current project management practices and determine areas in need of improvement. But how to practically apply it to a project? A specific example of project failure prior to introducing ISO 21500 will be provided to analyze which project management processes were disregarded. More particularly, the merger of the German automaker Daimler-Benz with the American Chrysler Corporation will be examined with the perspective of subject group.

= ISO 21500 : 2012, A focus on processes <ref> ISO 21500:2012 ''Guidance on project management'' </ref> <ref> Anton Zandhuis, Rommert Stellingwerf. ''ISO 215000, Guidance on Project managenent, A Pocket Guide''. Van Haren Publishing. 2013 </ref>=

What is a project? A definition is provided by the ISO 21500: “A unique set of processes consisting of coordinated and controlled activities with start and end dates, performed to achieve project objectives.” The concept of processes seems to be at the crux of project management issues. The definition of how to manage a project stresses this point: “Project management is performed through processes”.

Specifically, the norm splits the method of managing a project into 39 elementary processes. Depending on the perspective, the latter are grouped into five process groups (Initiating, Planning, Controlling and Closing) or into ten subject groups (Integration, Stakeholder, Scope, Resource, Time, Cost, Risk, Quality, Procurement and Communication). The classification of these processes is provided in the following table.

{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 1 : Project management cross-referenced to process and subject groups (ISO 21500 : 2012)'''
|-
! rowspan="2" style="background: #ffedd3;" | SUBJECT GROUPS
! colspan="5" style="background: #ffedd3;" | PROCESS GROUPS
|-
|style="background: #fff4d3;" align=center | '''Initiating'''
|style="background: #fff4d3;" align=center| '''Planning'''
|style="background: #fff4d3;" align=center| '''Implementing'''
|style="background: #fff4d3;" align=center | '''Controlling'''
|style="background: #fff4d3;" align=center | '''Closing'''
|-
|style="background: #fff4d3;" |'''Integration'''
|
4.3.2 Develop project chart
|
4.3.3. Develop project plans
|
4.3.4 Direct project work
|
4.3.5 Control project work

4.3.6 Control changes
|
4.3.7 Close project or phase

4.3.8 Collect lessons learned
|-
|style="background: #fff4d3;" |'''Stakeholder'''
|
4.3.9 Identify stakeholders
|

|
4.3.10 Manage stakeholders
|

|

|-
|style="background: #fff4d3;" |'''Scope'''
|

|
4.3.11 Define scope

4.3.12 Create work breakdown structure

4.3.13 Define activities
|

|
4.3.14 Control scope
|

|-
|style="background: #fff4d3;" |'''Resource'''
|
4.3.15 Establish project team
|
4.3.16 Estimate resources

4.3.17 Define project organization
|
4.3.18 Develop project team
|
4.3.19 Control resources

4.3.20 Manage project team
|

|-
|style="background: #fff4d3;" |'''Time'''
|

|
4.3.21 Sequence activities

4.3.22 Estimate activity durations

4.3.23 Develop schedule
|

|
4.3.24 Control schedule
|

|-
|style="background: #fff4d3;" |'''Cost'''
|

|
4.3.25 Estimate costs

4.3.26 Develop budget
|

|
4.3.27 Control costs
|

|-
|style="background: #fff4d3;" |'''Risk'''
|

|
4.3.28 Identify risks

4.3.29 Asses risks
|
4.3.30 Treat risks
|
4.3.31 Control risks
|
|-
|style="background: #fff4d3;" |'''Quality'''
|

|
4.3.32 Plan quality
|
4.3.33 Perform quality assurance
|
4.3.34 Perform quality control
|

|-
|style="background: #fff4d3;" |'''Procurement'''
|

|
4.3.35 Plan procurements
|
4.3.36 Select suppliers
|
4.3.37 Administer procurements
|

|-
|style="background: #fff4d3;" |'''Communication'''
|

|
4.3.38 Plan communications
|
4.3.39 Distribute information
|
4.3.40 Manage communications
|

|}

The perspective of subject groups will be adopted to consider the management of DaimlerChrysler project. A subject is a theme in which processes are classified according to its related activities.

But before that, the project of DaimlerChrysler merger is regarded.

=DaimlerChrysler merger project <ref> Julia Hollmann, Aletéia de Moura Carpes, Thiago Antonio Beuron. ''The DaimlerChrylser Merger- A cultural mismatch ?'' Faculty Sponsor : Universität Paderborn- Germany, Department of International Business Studies. Universidade Federal de Santa Maria- Brazil, Department of Administration. 2010 </ref> =
==The genesis of the project==
In the late 90´s, the automotive industry had to face multiples challenges due to the excess manufacturing capacity, the growth of ecological awareness, and the retail revolution that empowered buyers. To strengthen their position during this crisis, the automakers Daimler-Benz and Chrysler Corporation decided to merge. This project aimed to combine each other´s product designs, manufacturing resources and distribution systems.
The following table shows the complementary of the two companies, which wanted to unit their knowledge and their market in order to gain a competitive advantage.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 2 : The complementary of the two companies '''
|
! style="background: #ffedd3;" |'''Daimler-Benz AG'''
! style="background: #ffedd3;" |'''Chrysler Corporation'''
|-
! style="background: #ffedd3;" |'''Head office location'''
|
Germany
|
United States
|-
! style="background: #ffedd3;" |'''Geographical reach'''
|
European market
|
U.S. American market
|-
! style="background: #ffedd3;" |'''Product ranges'''
|
Uncompromising quality products
|
Car models that meet the American demand for adventurousness
|}


Both synergies and economies of scale were likely to proliferate.

How the project was set up is explained in the following paragraph. However, its detailed description falls outside the scope of this article.

==The execution of the project==
On May 7th, 1998 the signing of the combination agreement between Daimler-Benz and Chrysler was publicly announced. Daimler-Benz CEO Jürgen Schrempp described the union as "a merger of equals, a merger of growth, and a merger of unprecedented strength".
The equal status of the two organizations was reflected in the newly established entity name, DaimlerChrysler, as well as in the combination of the two former boards of management to form the one of DaimlerChrysler. Furthermore, it was agreed that Schrempp and Eaton, former CEO of the Chrysler Corporation, would jointly led the entity as co-chairmen and co-CEOs. It was also decided that Eaton would stay up to three years.
The two following tables provide more data about DaimlerChrysler right after the merger and the expected results of this project.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 3 : Characteristics of DaimlerChrysler right after the merger'''
|-
! style="background: #ffedd3;" |'''Number of employees '''
|442,000 employees
½ in Germany

1/3 in North America

1/6 spread across 200 countries around the world
|-
! style="background: #ffedd3;" |'''Daimler-Benz AG Market capitalization'''
|$ 92 billion
|}



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 4 : Expected results'''
! style="background: #ffedd3;" |Annual revenues of the combined company
|$ 132 billion
|-
! style="background: #ffedd3;" |Increase in sales
|13%
|-
! style="background: #ffedd3;" |Cost savings brought within 2 or 3 years
|$ 3,5 billion a year
|}


So far, this fusion appears to be very beneficial for all parties involved. However the wish for synergy effects never came true and the project drove Chrysler into chaos. In May 2007, the merger of Chrysler and Daimler-Benz was dissolved. Can this failure be ascribed to mismanagement?

The purpose of this article is now to point out which processes, related to the different subject groups definied in ISO 21500:2012 were disregarded and may have led to the project failure.

=The mismanagement of some subject groups <ref> Wanda Curlee, Robert L. Gordon . ''Complexity Theory and Project Management. ''. New York : Wiley, 2011, p. 129-133 </ref> =

Four subject groups will successively be considered : Integration, Time, Communication and Stakeholders. A mismanagement of some processes related to these four specific subject groups is namely to be seen.

==Integration <ref> Grässlin, Jürgen.''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> <ref> ''DaimlerChrysler confronts the challenges of global integration'', Human Resource Management International Digest, Vol 12 Iss :2 P.5-8</ref> ==

The Integration subject group includes the processes required to identify, define, combine, unify, coordinate, control and close the various activities and processes related to the project (ISO 21500:2012 - 4.2.3.2).

Within this merger, the unification and combination of all operations within the established entity needed to be achieved. To meet this target, a newly corporate culture had to be defined to align working styles. The latter namely radically differ due to major cultural differences, as shown in the following table.



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 5 : Comparison between the German and the American working styles'''
|-
|
! style="background: #ffedd3;" | '''Germany'''
! style="background: #ffedd3;"|'''United States'''
|-
! style="background: #ffedd3;" align="left" |'''Employee working style'''
| Work in a team-oriented environment
| Work individually
|-
! style="background: #ffedd3;" align="left" |'''Writing report'''
| Lengthy reports
| Little paper
|-
! style="background: #ffedd3;" align="left" |'''Decision-making process'''
|
Methodical, based on very detailed plans
|
Using creativity, based on trial-and-error method
|-
! style="background: #ffedd3;" align="left" |'''Meeting'''
|
Extended discussions
|
Short meeting
|-
! style="background: #ffedd3;" align="left" |'''Organizational structure'''
|
Pronounced hierarchy based on top-down-management
|
Flat organizational hierarchy stimulating empowerment of the employees
|-
! style="background: #ffedd3;" align="left" |'''Risk appetite'''
|
Risk adverse culture
|
Risk takers
|}


Due to the fact that this merger was a so-called `merger of equals´, the integration of the two cultures was to combine them to generate a new shared corporate one. It was namely vital that both organizations learn from each other to generate synergy effects. Managers have here a central role to play to define and coordinate the development of this new culture.

Eaton affirmed that it was at the top of the agenda and Thomas Stallkamp, Chrysler President during the negotiation phase, was charged with overseeing this integration process. Some effort went into harmonizing the two corporate cultures. Many seminars and workshops were organized to sensitizing the employees for working with new colleagues with diverging working methods. Furthermore, German was taught to many American managers.

However, given the large gap between the two organizations, it would appear that managers should have undertaken more activities and CEOs should have allocated more resources to bridge the chasm of cultural differences.

In fact, no strong and cohesive organizational culture was created, as illustrated in daily misunderstandings. For instance, the attention Daimler-Benz leaders paid to writing a leaflet sent to employee annoyed Chrysler executives. At the end of 1999, the resignation of Thomas Stallkamp, a 19-year veteran of Chrysler who was highly regarded, might be seen as a failure of the merger integration process after all the effort. Stallkamp is quoted as saying: <nowiki>“</nowiki>The majority of my career has been spent implementing supply chain management. I would like to continue to explore those areas at a less hectic pace<nowiki>”</nowiki>. Were both parties truly willing to cooperate wholeheartedly and to enter compromises to succeed in the numerous integration processes? A negative answer is the root cause of an unachieved integration.

==Time<ref> Sue Cartwright, Cary L. Cooper. ''Mergers and Acquisitions: The Human Factor Paperback'' . January 1, 1992 </ref>==

The Time subject group is all about managing the timely completion of the project. Feasible deadlines taking all known constraints into account need to be set. Processes covered by the latter subject group are the development of schedule for project activities estimating each activity duration, the progress monitoring and the schedule control.

One failure in managing time in DaimlerChrysler merger was that too little time was devoted to each activity. Let´s take a concrete example: Daimler-Benz and Chrysler began formal negotiations on January 12, 1998 and only five months later, the merger was announced worldwide. Susan Cartwright – past President of the British Academy Management – asserts that the period of time from the germ of the merger idea till an agreement is reached is estimated to last around two years. Speeding up the pre-merger preparation, the precise objectives of the fusion and the way to achieve them could not have been defined accurately.
Furthermore, the merger was completed on November 12, 1998. Time needed by employees to adapt to the new circumstances was not taken into account in the deadlines. One more mismanagement which is added to the others.

==Communication==
In the standard ISO 21500:2012, three key processes are defined to ensure appropriate exchange of project information: Plan communications, Distribute information and Manage communications. But within DaimlerChrysler project none of them were totally met. In order to appreciate the scale of the problem, it should be point out that even managers and CEOs experienced serious difficulties in discussing solutions and achieving a consensus. According to a Daimler-Benz executive, <nowiki>"</nowiki>Eaton went weeks without speaking with Jürgen [Schrempp]. He preferred to maintain lower-level contact. Jürgen, meanwhile, left Chrysler alone.<nowiki>"</nowiki> <ref> [http://mba.tuck.dartmouth.edu/pdf/2002-1-0071.pdf] Professor Sydney Finkelstein. ''The DaimlerChrysler Merger.''Tuck School of Business at Dartmouth. 2002 </ref> One would have expected that both CEOs would have shared their different views in order to discover common goal and operate as an effective team at the top. Given the seeming clash of culture described in the first paragraph, it was crucial to start the discussion to create healthy relationship and release the company´s potential. The clearer the communication, the better issues are addressed. But with such a lack of communication among leaders, no far-reaching communication plan could be implemented among all stakeholders involved, not to mention the distribution of the information. Both internal and external communications were chaotic. It is likely that the standard ISO 21500 would have made managers more aware of the processes related to communication which requires to be efficiently tackled.

==Stakeholders==
The stakeholder subject group is concerned with identifying and managing all parties involved. To classify them, both their expectations and influence on the project need to be analyzed. The table 6 provides a power-interest matrix, which is crucial to draw up appropriate management strategies for effectively engaging with them. The external stakeholders are written in italics, the others are internal.

{| border="1" cellpadding="3" cellspacing="0" style="margin:auto;"
|+ '''Table 6 : Power and interest matrix'''
|-
! rowspan="2" style="background: #ffedd3;" | Level of interest
! colspan="5" style="background: #ffedd3;" | Level of power
|-
|style="background: #fff4d3;" align=center | ''' Low '''
|style="background: #fff4d3;" align=center| ''' High '''
|-
|style="background: #fff4d3;" align=center |'''High'''
|
'''Employee'''

Trade Union

'''''Clients'''''

''Suppliers''

''Government''

''Society''
|
Directors

Managers

'''''Stockholders'''''
|-
|style="background: #fff4d3;" align=center |'''Low'''
|
''Competitors''
|

|-
|}

To analyze the management of all of these stakeholders one by one would be tedious. However it is relevant to focus on several categories according to the table 6. Special focus will be laid on the stakeholders written in bold. Therefore, both high power/high interest and low power/high interest stakeholders will be looked at. Two of them are internal, whereas the other is internal.

It will be shown that all of them were significantly affected by the DaimlerChrysler project due to mismanagement.

===Employees===
Employees, low-power and high-interest stakeholders, must be kept informed and managers should ensure that no major issues are arising.
However, this was not the case in the DaimlerChrysler merger: employees felt overlooked, disregarded and left out of the merger process. But to what extent CEOs and managers were responsible in this climate of distrust and dislike?

First, soon after the merger, it became obvious that Daimler was taking over the whole company´s management. Chrysler President Stallkamp retirement at the end of 1999 was followed by the one of James P. Holdem, top-level executive of the Chrysler Group. They were replaced by two German managers: Dieter Zetsche and Wolfgang Bernhard. Being lowered to divisional status, it is understandable that American´s morale suffered from this German hegemony. Employee felt eclipsed and were disgusted. They also were worried that DaimlerChrysler would dismiss some of them. But the problems were not confined to be here. Indeed, Jürgen Schrempp attitude only made the situation worse. In autumn 2000, DaimlerChrysler CEO acknowledged in the German financial daily Handelsblatt that <nowiki>“</nowiki>The Merger of Equals statement was necessary in order to earn the support of Chrysler's workers and the American public, but it was never reality<nowiki>"</nowiki>. Many Americans regarded this statement as a betrayal, since Schrempp intended to deceive them from the outset. It appears clear that it is due to the board of directors´ failure in acting responsibly towards the workers that deep-seated distrust ran deep.

Furthermore, such a mismanagement of the employees can lead to far-reaching consequences on the project success itself. Indeed, it could have been that some workers simply did not work as efficiently because they supposed the board of directors did not care about the Chrysler entity – so why should they? Decreased performance would have resulted in it.

It is to notice that even though the standard ''ISO 21500: 2012'' did not exist at that time, the fact that employee influence was of importance to succeed such a process was already known. MaryAnn Keller, founder and managing partner of MaryAnn Keller & Associates LLC, namely stated in June 1998 that <nowiki>“</nowiki>The success of any combination depends on the ability of the new organization to win over the hearts and minds of employees.<nowiki>”</nowiki> <ref> [http://murphylibrary.uwlax.edu/digital/jur/2002/carpiaux.pdf] Nicole Carpiaux. ''DaimlerChrysler : Wunderkind or Problem Child ?'' Faculty Sponsor : Leticia Peña, Department of Management. </ref> The managers of DaimlerChrysler should then be aware that is really a management issue to embrace workers instead to neglect them in order to obtain the best they can offer.

===Clients===
And what about the customers, low-power and high interest stakeholders?

Once again, one could argue that managers failed to define as well as to meet their needs.
One example is given for illustration. At the time, the DaimlerChrysler A-Class was 1.25 to 2 times more expensive than similar vehicles sold by Volkswagen, Renault or Fiat. This higher price was not deterrent since clients were aware that Daimler-Benz primarily asset was quality and safety. However, in 1999, the A-class failed an emergency maneuver test conducted by a Swedish television station. <ref> Bill Vlasic, Bradley A. Stertz. ''Taken for a Ride: How Daimler-Benz Drove off with Chrysler''. Harper Paperbacks,
2001, p. 300.
</ref> Consequently, client´s satisfaction suddenly drop off the map. The DaimlerChrysler vehicle was considered as an overpriced car which did not achieve engineering excellence compared to the highly competitive European compact market. The crux of the problem may be that the German entity had tried to implant the American low development costs into its entities, disregarding the high expectations of the clients. This paragraph appears to prove that trying to generate synergy savings the managers failed in responding the customer´s needs.

===Stockholders===
Last but not least, the management of both high power and high interest stakeholders needs to be considered. Take the stockholders.

An overwhelming majority of them favored the project of merger in 1998. Approvals ratings reached 99.9% at Daimler-Benz and 97.5% at Chrysler. It may be inferred that, at the outset of the project, managers successfully took into account the processes required to satisfy the shareholders. It did not take long, however, for some of them to express their disappointment. This was the case for Kirk Kerkorian, the third largest proprietor of DailerChrysler stock and largest Chrysler shareholder before the merger. In November 2000, the latter filed a $9 billion lawsuit against DaimlerChrysler for falsifying the terms of the fusion as a “merger of equals”. He was upset with the German hegemony and stated he had voted to turn its shares for stock in DaimlerChrysler without having considered the American entity would be reduced to a mere division. Two months later, he cut his take in the merged company by a third. Even though the managers were not directly involved in this discontent, the lack of acting responsibly of the Board of the director is obvious.

To conclude, the completion of the processes related to each of these three stakeholders lacked efficiency. The managers failed in implementing the required activities to satisfy them and this will become a major hindrance to the project completion.

=Conclusion=
Many factors may affect the failure of the DaimlerChrysler project, but most of them may have been due to its mismanagement. Such a union was notoriously risky, especially due to the opposite companies it combined. To deliver the intent benefits, particular care should then have been taken by managers to tackle all the project management processes.

The use of the standard ''ISO 21500 : 2012'' was made to group the processes in term of Subject Group. It appears clear that there were some omissions, particularly regarding Integration, Time, Communication and Stakeholders. This standard has proven to be useful to analyze a project management, especially in case of cross-boarders project. It is a shame that such a unifying international approach was only established in 2012.

= References =

<references />

[[Category:Project Management]]
[[Category:Human Behaviour]]
[[Category:Complexity]]

Analyzing the failure of the DaimlerChrysler merger from a project management perspective

2014-12-01T20:13:18Z

Lyngby: /* Stakeholders */

'''Abstract'''

In the late 90´s, German Daimler-Benz AG and American Chrysler Corporation announced their intention to combine their strengths within a so-called `merger of equals´ <ref> Grässlin, Jürgen. ''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> . Becoming the fifth largest automaker in the world, both companies hoped to overcome together the automotive industry crisis. However, nothing worked out as planned, so much so that in 2007 Daimler-Benz sold all its shares of the Chrysler division.

Could the use of a norm have guaranteed the success of the DaimlerChrysler merger ? This question will be answered with regard to the ISO 21500:2012 guideline for project management.

According to the latter, a definition of project management and the processes it involves will be provided.Then, an analysis of the origin of DaimlerChrysler project will be carried out. It will also be shown to what extent this fusion was mismanaged with regard to the subject groups defined in the ISO 21500:2012. Last but not least the benefits of using this standard to successfully conduct a complex project will be discussed.

=Introduction=
In the early 21st century, no comprehensive standard on project management was accepted despite the substantial demand for project management skills. However, in 2006, the need for a unifying international approach was recognized by the International Organization for Standard (ISO). The work of over hundreds experts in project management from around the globe resulted in ''ISO 21500: 2012 -Guidance on project management''. This norm defines universal project management terminologies, as well as the principles and processes it involves. It provides a basic guide against which any organization can compare its current project management practices and determine areas in need of improvement. But how to practically apply it to a project? A specific example of project failure prior to introducing ISO 21500 will be provided to analyze which project management processes were disregarded. More particularly, the merger of the German automaker Daimler-Benz with the American Chrysler Corporation will be examined with the perspective of subject group.

= ISO 21500 : 2012, A focus on processes <ref> ISO 21500:2012 ''Guidance on project management'' </ref> <ref> Anton Zandhuis, Rommert Stellingwerf. ''ISO 215000, Guidance on Project managenent, A Pocket Guide''. Van Haren Publishing. 2013 </ref>=

What is a project? A definition is provided by the ISO 21500: “A unique set of processes consisting of coordinated and controlled activities with start and end dates, performed to achieve project objectives.” The concept of processes seems to be at the crux of project management issues. The definition of how to manage a project stresses this point: “Project management is performed through processes”.

Specifically, the norm splits the method of managing a project into 39 elementary processes. Depending on the perspective, the latter are grouped into five process groups (Initiating, Planning, Controlling and Closing) or into ten subject groups (Integration, Stakeholder, Scope, Resource, Time, Cost, Risk, Quality, Procurement and Communication). The classification of these processes is provided in the following table.

{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 1 : Project management cross-referenced to process and subject groups (ISO 21500 : 2012)'''
|-
! rowspan="2" style="background: #ffedd3;" | SUBJECT GROUPS
! colspan="5" style="background: #ffedd3;" | PROCESS GROUPS
|-
|style="background: #fff4d3;" align=center | '''Initiating'''
|style="background: #fff4d3;" align=center| '''Planning'''
|style="background: #fff4d3;" align=center| '''Implementing'''
|style="background: #fff4d3;" align=center | '''Controlling'''
|style="background: #fff4d3;" align=center | '''Closing'''
|-
|style="background: #fff4d3;" |'''Integration'''
|
4.3.2 Develop project chart
|
4.3.3. Develop project plans
|
4.3.4 Direct project work
|
4.3.5 Control project work

4.3.6 Control changes
|
4.3.7 Close project or phase

4.3.8 Collect lessons learned
|-
|style="background: #fff4d3;" |'''Stakeholder'''
|
4.3.9 Identify stakeholders
|

|
4.3.10 Manage stakeholders
|

|

|-
|style="background: #fff4d3;" |'''Scope'''
|

|
4.3.11 Define scope

4.3.12 Create work breakdown structure

4.3.13 Define activities
|

|
4.3.14 Control scope
|

|-
|style="background: #fff4d3;" |'''Resource'''
|
4.3.15 Establish project team
|
4.3.16 Estimate resources

4.3.17 Define project organization
|
4.3.18 Develop project team
|
4.3.19 Control resources

4.3.20 Manage project team
|

|-
|style="background: #fff4d3;" |'''Time'''
|

|
4.3.21 Sequence activities

4.3.22 Estimate activity durations

4.3.23 Develop schedule
|

|
4.3.24 Control schedule
|

|-
|style="background: #fff4d3;" |'''Cost'''
|

|
4.3.25 Estimate costs

4.3.26 Develop budget
|

|
4.3.27 Control costs
|

|-
|style="background: #fff4d3;" |'''Risk'''
|

|
4.3.28 Identify risks

4.3.29 Asses risks
|
4.3.30 Treat risks
|
4.3.31 Control risks
|
|-
|style="background: #fff4d3;" |'''Quality'''
|

|
4.3.32 Plan quality
|
4.3.33 Perform quality assurance
|
4.3.34 Perform quality control
|

|-
|style="background: #fff4d3;" |'''Procurement'''
|

|
4.3.35 Plan procurements
|
4.3.36 Select suppliers
|
4.3.37 Administer procurements
|

|-
|style="background: #fff4d3;" |'''Communication'''
|

|
4.3.38 Plan communications
|
4.3.39 Distribute information
|
4.3.40 Manage communications
|

|}

The perspective of subject groups will be adopted to consider the management of DaimlerChrysler project. A subject is a theme in which processes are classified according to its related activities.

But before that, the project of DaimlerChrysler merger is regarded.

=DaimlerChrysler merger project <ref> Julia Hollmann, Aletéia de Moura Carpes, Thiago Antonio Beuron. ''The DaimlerChrylser Merger- A cultural mismatch ?'' Faculty Sponsor : Universität Paderborn- Germany, Department of International Business Studies. Universidade Federal de Santa Maria- Brazil, Department of Administration. 2010 </ref> =
==The genesis of the project==
In the late 90´s, the automotive industry had to face multiples challenges due to the excess manufacturing capacity, the growth of ecological awareness, and the retail revolution that empowered buyers. To strengthen their position during this crisis, the automakers Daimler-Benz and Chrysler Corporation decided to merge. This project aimed to combine each other´s product designs, manufacturing resources and distribution systems.
The following table shows the complementary of the two companies, which wanted to unit their knowledge and their market in order to gain a competitive advantage.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 2 : The complementary of the two companies '''
|
! style="background: #ffedd3;" |'''Daimler-Benz AG'''
! style="background: #ffedd3;" |'''Chrysler Corporation'''
|-
! style="background: #ffedd3;" |'''Head office location'''
|
Germany
|
United States
|-
! style="background: #ffedd3;" |'''Geographical reach'''
|
European market
|
U.S. American market
|-
! style="background: #ffedd3;" |'''Product ranges'''
|
Uncompromising quality products
|
Car models that meet the American demand for adventurousness
|}


Both synergies and economies of scale were likely to proliferate.

How the project was set up is explained in the following paragraph. However, its detailed description falls outside the scope of this article.

==The execution of the project==
On May 7th, 1998 the signing of the combination agreement between Daimler-Benz and Chrysler was publicly announced. Daimler-Benz CEO Jürgen Schrempp described the union as "a merger of equals, a merger of growth, and a merger of unprecedented strength".
The equal status of the two organizations was reflected in the newly established entity name, DaimlerChrysler, as well as in the combination of the two former boards of management to form the one of DaimlerChrysler. Furthermore, it was agreed that Schrempp and Eaton, former CEO of the Chrysler Corporation, would jointly led the entity as co-chairmen and co-CEOs. It was also decided that Eaton would stay up to three years.
The two following tables provide more data about DaimlerChrysler right after the merger and the expected results of this project.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 3 : Characteristics of DaimlerChrysler right after the merger'''
|-
! style="background: #ffedd3;" |'''Number of employees '''
|442,000 employees
½ in Germany

1/3 in North America

1/6 spread across 200 countries around the world
|-
! style="background: #ffedd3;" |'''Daimler-Benz AG Market capitalization'''
|$ 92 billion
|}



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 4 : Expected results'''
! style="background: #ffedd3;" |Annual revenues of the combined company
|$ 132 billion
|-
! style="background: #ffedd3;" |Increase in sales
|13%
|-
! style="background: #ffedd3;" |Cost savings brought within 2 or 3 years
|$ 3,5 billion a year
|}


So far, this fusion appears to be very beneficial for all parties involved. However the wish for synergy effects never came true and the project drove Chrysler into chaos. In May 2007, the merger of Chrysler and Daimler-Benz was dissolved. Can this failure be ascribed to mismanagement?

The purpose of this article is now to point out which processes, related to the different subject groups definied in ISO 21500:2012 were disregarded and may have led to the project failure.

=The mismanagement of some subject groups <ref> Wanda Curlee, Robert L. Gordon . ''Complexity Theory and Project Management. ''. New York : Wiley, 2011, p. 129-133 </ref> =

Four subject groups will successively be considered : Integration, Time, Communication and Stakeholders. A mismanagement of some processes related to these four specific subject groups is namely to be seen.

==Integration <ref> Grässlin, Jürgen.''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> <ref> ''DaimlerChrysler confronts the challenges of global integration'', Human Resource Management International Digest, Vol 12 Iss :2 P.5-8</ref> ==

The Integration subject group includes the processes required to identify, define, combine, unify, coordinate, control and close the various activities and processes related to the project (ISO 21500:2012 - 4.2.3.2).

Within this merger, the unification and combination of all operations within the established entity needed to be achieved. To meet this target, a newly corporate culture had to be defined to align working styles. The latter namely radically differ due to major cultural differences, as shown in the following table.



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 5 : Comparison between the German and the American working styles'''
|-
|
! style="background: #ffedd3;" | '''Germany'''
! style="background: #ffedd3;"|'''United States'''
|-
! style="background: #ffedd3;" align="left" |'''Employee working style'''
| Work in a team-oriented environment
| Work individually
|-
! style="background: #ffedd3;" align="left" |'''Writing report'''
| Lengthy reports
| Little paper
|-
! style="background: #ffedd3;" align="left" |'''Decision-making process'''
|
Methodical, based on very detailed plans
|
Using creativity, based on trial-and-error method
|-
! style="background: #ffedd3;" align="left" |'''Meeting'''
|
Extended discussions
|
Short meeting
|-
! style="background: #ffedd3;" align="left" |'''Organizational structure'''
|
Pronounced hierarchy based on top-down-management
|
Flat organizational hierarchy stimulating empowerment of the employees
|-
! style="background: #ffedd3;" align="left" |'''Risk appetite'''
|
Risk adverse culture
|
Risk takers
|}


Due to the fact that this merger was a so-called `merger of equals´, the integration of the two cultures was to combine them to generate a new shared corporate one. It was namely vital that both organizations learn from each other to generate synergy effects. Managers have here a central role to play to define and coordinate the development of this new culture.

Eaton affirmed that it was at the top of the agenda and Thomas Stallkamp, Chrysler President during the negotiation phase, was charged with overseeing this integration process. Some effort went into harmonizing the two corporate cultures. Many seminars and workshops were organized to sensitizing the employees for working with new colleagues with diverging working methods. Furthermore, German was taught to many American managers.

However, given the large gap between the two organizations, it would appear that managers should have undertaken more activities and CEOs should have allocated more resources to bridge the chasm of cultural differences.

In fact, no strong and cohesive organizational culture was created, as illustrated in daily misunderstandings. For instance, the attention Daimler-Benz leaders paid to writing a leaflet sent to employee annoyed Chrysler executives. At the end of 1999, the resignation of Thomas Stallkamp, a 19-year veteran of Chrysler who was highly regarded, might be seen as a failure of the merger integration process after all the effort. Stallkamp is quoted as saying: <nowiki>“</nowiki>The majority of my career has been spent implementing supply chain management. I would like to continue to explore those areas at a less hectic pace<nowiki>”</nowiki>. Were both parties truly willing to cooperate wholeheartedly and to enter compromises to succeed in the numerous integration processes? A negative answer is the root cause of an unachieved integration.

==Time<ref> Sue Cartwright, Cary L. Cooper. ''Mergers and Acquisitions: The Human Factor Paperback'' . January 1, 1992 </ref>==

The Time subject group is all about managing the timely completion of the project. Feasible deadlines taking all known constraints into account need to be set. Processes covered by the latter subject group are the development of schedule for project activities estimating each activity duration, the progress monitoring and the schedule control.

One failure in managing time in DaimlerChrysler merger was that too little time was devoted to each activity. Let´s take a concrete example: Daimler-Benz and Chrysler began formal negotiations on January 12, 1998 and only five months later, the merger was announced worldwide. Susan Cartwright – past President of the British Academy Management – asserts that the period of time from the germ of the merger idea till an agreement is reached is estimated to last around two years. Speeding up the pre-merger preparation, the precise objectives of the fusion and the way to achieve them could not have been defined accurately.
Furthermore, the merger was completed on November 12, 1998. Time needed by employees to adapt to the new circumstances was not taken into account in the deadlines. One more mismanagement which is added to the others.

==Communication==
In the standard ISO 21500:2012, three key processes are defined to ensure appropriate exchange of project information: Plan communications, Distribute information and Manage communications. But within DaimlerChrysler project none of them were totally met. In order to appreciate the scale of the problem, it should be point out that even managers and CEOs experienced serious difficulties in discussing solutions and achieving a consensus. According to a Daimler-Benz executive, <nowiki>"</nowiki>Eaton went weeks without speaking with Jürgen [Schrempp]. He preferred to maintain lower-level contact. Jürgen, meanwhile, left Chrysler alone.<nowiki>"</nowiki> <ref> [http://mba.tuck.dartmouth.edu/pdf/2002-1-0071.pdf] Professor Sydney Finkelstein. ''The DaimlerChrysler Merger.''Tuck School of Business at Dartmouth. 2002 </ref> One would have expected that both CEOs would have shared their different views in order to discover common goal and operate as an effective team at the top. Given the seeming clash of culture described in the first paragraph, it was crucial to start the discussion to create healthy relationship and release the company´s potential. The clearer the communication, the better issues are addressed. But with such a lack of communication among leaders, no far-reaching communication plan could be implemented among all stakeholders involved, not to mention the distribution of the information. Both internal and external communications were chaotic. It is likely that the standard ISO 21500 would have made managers more aware of the processes related to communication which requires to be efficiently tackled.

==Stakeholders==
The stakeholder subject group is concerned with identifying and managing all parties involved. To classify them, both their expectations and influence on the project need to be analyzed. The table 6 provides a power-interest matrix, which is crucial to draw up appropriate management strategies for effectively engaging with them. The external stakeholders are written in italics, the others are internal.

{| border="1" cellpadding="3" cellspacing="0" style="margin:auto;"
|+ '''Table 6 : Power and interest matrix'''
|-
! rowspan="2" style="background: #ffedd3;" | Level of interest
! colspan="5" style="background: #ffedd3;" | Level of power
|-
|style="background: #fff4d3;" align=center | ''' Low '''
|style="background: #fff4d3;" align=center| ''' High '''
|-
|style="background: #fff4d3;" align=center |'''High'''
|
'''Employee'''

Trade Union

'''''Clients'''''

''Suppliers''

''Government''

''Society''
|
Directors

Managers

'''''Stockholders'''''
|-
|style="background: #fff4d3;" align=center |'''Low'''
|
''Competitors''
|

|-
|}

To analyze the management of all of these stakeholders one by one would be tedious. However it is relevant to focus on several categories according to the table 6. Special focus will be laid on the stakeholders written in bold. Therefore, both high power/high interest and low power/high interest stakeholders will be looked at. Two of them are internal, whereas the other is internal.

It will be shown that all of them were significantly affected by the DaimlerChrysler project due to mismanagement.

===Employees===
Employees, low-power and high-interest stakeholders, must be kept informed and managers should ensure that no major issues are arising.
However, this was not the case in the DaimlerChrysler merger: employees felt overlooked, disregarded and left out of the merger process. But to what extent CEOs and managers were responsible in this climate of distrust and dislike?

First, soon after the merger, it became obvious that Daimler was taking over the whole company´s management. Chrysler President Stallkamp retirement at the end of 1999 was followed by the one of James P. Holdem, top-level executive of the Chrysler Group. They were replaced by two German managers: Dieter Zetsche and Wolfgang Bernhard. Being lowered to divisional status, it is understandable that American´s morale suffered from this German hegemony. Employee felt eclipsed and were disgusted. They also were worried that DaimlerChrysler would dismiss some of them. But the problems were not confined to be here. Indeed, Jürgen Schrempp attitude only made the situation worse. In autumn 2000, DaimlerChrysler CEO acknowledged in the German financial daily Handelsblatt that <nowiki>“</nowiki>The Merger of Equals statement was necessary in order to earn the support of Chrysler's workers and the American public, but it was never reality<nowiki>"</nowiki>. Many Americans regarded this statement as a betrayal, since Schrempp intended to deceive them from the outset. It appears clear that it is due to the board of directors´ failure in acting responsibly towards the workers that deep-seated distrust ran deep.

Furthermore, such a mismanagement of the employees can lead to far-reaching consequences on the project success itself. Indeed, it could have been that some workers simply did not work as efficiently because they supposed the board of directors did not care about the Chrysler entity – so why should they? Decreased performance would have resulted in it.

It is to notice that even though the standard ''ISO 21500: 2012'' did not exist at that time, the fact that employee influence was of importance to succeed such a process was already known. MaryAnn Keller, founder and managing partner of MaryAnn Keller & Associates LLC, namely stated in June 1998 that <nowiki>“</nowiki>The success of any combination depends on the ability of the new organization to win over the hearts and minds of employees.<nowiki>”</nowiki> <ref> [http://murphylibrary.uwlax.edu/digital/jur/2002/carpiaux.pdf] Nicole Carpiaux. ''DaimlerChrysler : Wunderkind or Problem Child ?'' Faculty Sponsor : Leticia Peña, Department of Management. </ref> The managers of DaimlerChrysler should then be aware that is really a management issue to embrace workers instead to neglect them in order to obtain the best they can offer.

===Clients===
And what about the customers, low-power and high interest stakeholders?

Once again, one could argue that managers failed to define as well as to meet their needs.
One example is given for illustration. At the time, the DaimlerChrysler A-Class was 1.25 to 2 times more expensive than similar vehicles sold by Volkswagen, Renault or Fiat. This higher price was not deterrent since clients were aware that Daimler-Benz primarily asset was quality and safety. However, in 1999, the A-class failed an emergency maneuver test conducted by a Swedish television station. <ref> Bill Vlasic, Bradley A. Stertz. ''Taken for a Ride: How Daimler-Benz Drove off with Chrysler''. Harper Paperbacks,
2001, p. 300.
</ref> Consequently, client´s satisfaction suddenly drop off the map. The DaimlerChrysler vehicle was considered as an overpriced car which did not achieve engineering excellence compared to the highly competitive European compact market. The crux of the problem may be that the German entity have tried to implant the American low development costs into its entities, disregarding the high expectations of the clients. This paragraph appears to prove that trying to generate synergy savings the managers failed in responding the customer´s needs.

===Stockholders===
Last but not least, the management of both high power and high interest stakeholders needs to be considered. Take the stockholders.

An overwhelming majority of them favored the project of merger in 1998. Approvals ratings reached 99.9% at Daimler-Benz and 97.5% at Chrysler. It may be inferred that, at the outset of the project, managers successfully took into account the processes required to satisfy the shareholders. It did not take long, however, for some of them to express their disappointment. This was the case for Kirk Kerkorian, the third largest proprietor of DailerChrysler stock and largest Chrysler shareholder before the merger. In November 2000, the latter filed a $9 billion lawsuit against DaimlerChrysler for falsifying the terms of the fusion as a “merger of equals”. He was upset with the German hegemony and stated he had voted to turn its shares for stock in DaimlerChrysler without having considered the American entity would be reduced to a mere division. Two months later, he cut his take in the merged company by a third. Even though the managers were not directly involved in this discontent, the lack of acting responsibly of the Board of the director is obvious.

To conclude, the completion of the processes related to each of these three stakeholders lacked efficiency. The managers failed in implementing the required activities to satisfy them and this will become a major hindrance to the project completion.

=Conclusion=
Many factors may affect the failure of the DaimlerChrysler project, but most of them may have been due to its mismanagement. Such a union was notoriously risky, especially due to the opposite companies it combined. To deliver the intent benefits, particular care should then have been taken by managers to tackle all the project management processes.

The use of the standard ''ISO 21500 : 2012'' was made to group the processes in term of Subject Group. It appears clear that there were some omissions, particularly regarding Integration, Time, Communication and Stakeholders. This standard has proven to be useful to analyze a project management, especially in case of cross-boarders project. It is a shame that such a unifying international approach was only established in 2012.

= References =

<references />

[[Category:Project Management]]
[[Category:Human Behaviour]]
[[Category:Complexity]]

Analyzing the failure of the DaimlerChrysler merger from a project management perspective

2014-12-01T20:13:01Z

Lyngby: /* Stakeholders */

'''Abstract'''

In the late 90´s, German Daimler-Benz AG and American Chrysler Corporation announced their intention to combine their strengths within a so-called `merger of equals´ <ref> Grässlin, Jürgen. ''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> . Becoming the fifth largest automaker in the world, both companies hoped to overcome together the automotive industry crisis. However, nothing worked out as planned, so much so that in 2007 Daimler-Benz sold all its shares of the Chrysler division.

Could the use of a norm have guaranteed the success of the DaimlerChrysler merger ? This question will be answered with regard to the ISO 21500:2012 guideline for project management.

According to the latter, a definition of project management and the processes it involves will be provided.Then, an analysis of the origin of DaimlerChrysler project will be carried out. It will also be shown to what extent this fusion was mismanaged with regard to the subject groups defined in the ISO 21500:2012. Last but not least the benefits of using this standard to successfully conduct a complex project will be discussed.

=Introduction=
In the early 21st century, no comprehensive standard on project management was accepted despite the substantial demand for project management skills. However, in 2006, the need for a unifying international approach was recognized by the International Organization for Standard (ISO). The work of over hundreds experts in project management from around the globe resulted in ''ISO 21500: 2012 -Guidance on project management''. This norm defines universal project management terminologies, as well as the principles and processes it involves. It provides a basic guide against which any organization can compare its current project management practices and determine areas in need of improvement. But how to practically apply it to a project? A specific example of project failure prior to introducing ISO 21500 will be provided to analyze which project management processes were disregarded. More particularly, the merger of the German automaker Daimler-Benz with the American Chrysler Corporation will be examined with the perspective of subject group.

= ISO 21500 : 2012, A focus on processes <ref> ISO 21500:2012 ''Guidance on project management'' </ref> <ref> Anton Zandhuis, Rommert Stellingwerf. ''ISO 215000, Guidance on Project managenent, A Pocket Guide''. Van Haren Publishing. 2013 </ref>=

What is a project? A definition is provided by the ISO 21500: “A unique set of processes consisting of coordinated and controlled activities with start and end dates, performed to achieve project objectives.” The concept of processes seems to be at the crux of project management issues. The definition of how to manage a project stresses this point: “Project management is performed through processes”.

Specifically, the norm splits the method of managing a project into 39 elementary processes. Depending on the perspective, the latter are grouped into five process groups (Initiating, Planning, Controlling and Closing) or into ten subject groups (Integration, Stakeholder, Scope, Resource, Time, Cost, Risk, Quality, Procurement and Communication). The classification of these processes is provided in the following table.

{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 1 : Project management cross-referenced to process and subject groups (ISO 21500 : 2012)'''
|-
! rowspan="2" style="background: #ffedd3;" | SUBJECT GROUPS
! colspan="5" style="background: #ffedd3;" | PROCESS GROUPS
|-
|style="background: #fff4d3;" align=center | '''Initiating'''
|style="background: #fff4d3;" align=center| '''Planning'''
|style="background: #fff4d3;" align=center| '''Implementing'''
|style="background: #fff4d3;" align=center | '''Controlling'''
|style="background: #fff4d3;" align=center | '''Closing'''
|-
|style="background: #fff4d3;" |'''Integration'''
|
4.3.2 Develop project chart
|
4.3.3. Develop project plans
|
4.3.4 Direct project work
|
4.3.5 Control project work

4.3.6 Control changes
|
4.3.7 Close project or phase

4.3.8 Collect lessons learned
|-
|style="background: #fff4d3;" |'''Stakeholder'''
|
4.3.9 Identify stakeholders
|

|
4.3.10 Manage stakeholders
|

|

|-
|style="background: #fff4d3;" |'''Scope'''
|

|
4.3.11 Define scope

4.3.12 Create work breakdown structure

4.3.13 Define activities
|

|
4.3.14 Control scope
|

|-
|style="background: #fff4d3;" |'''Resource'''
|
4.3.15 Establish project team
|
4.3.16 Estimate resources

4.3.17 Define project organization
|
4.3.18 Develop project team
|
4.3.19 Control resources

4.3.20 Manage project team
|

|-
|style="background: #fff4d3;" |'''Time'''
|

|
4.3.21 Sequence activities

4.3.22 Estimate activity durations

4.3.23 Develop schedule
|

|
4.3.24 Control schedule
|

|-
|style="background: #fff4d3;" |'''Cost'''
|

|
4.3.25 Estimate costs

4.3.26 Develop budget
|

|
4.3.27 Control costs
|

|-
|style="background: #fff4d3;" |'''Risk'''
|

|
4.3.28 Identify risks

4.3.29 Asses risks
|
4.3.30 Treat risks
|
4.3.31 Control risks
|
|-
|style="background: #fff4d3;" |'''Quality'''
|

|
4.3.32 Plan quality
|
4.3.33 Perform quality assurance
|
4.3.34 Perform quality control
|

|-
|style="background: #fff4d3;" |'''Procurement'''
|

|
4.3.35 Plan procurements
|
4.3.36 Select suppliers
|
4.3.37 Administer procurements
|

|-
|style="background: #fff4d3;" |'''Communication'''
|

|
4.3.38 Plan communications
|
4.3.39 Distribute information
|
4.3.40 Manage communications
|

|}

The perspective of subject groups will be adopted to consider the management of DaimlerChrysler project. A subject is a theme in which processes are classified according to its related activities.

But before that, the project of DaimlerChrysler merger is regarded.

=DaimlerChrysler merger project <ref> Julia Hollmann, Aletéia de Moura Carpes, Thiago Antonio Beuron. ''The DaimlerChrylser Merger- A cultural mismatch ?'' Faculty Sponsor : Universität Paderborn- Germany, Department of International Business Studies. Universidade Federal de Santa Maria- Brazil, Department of Administration. 2010 </ref> =
==The genesis of the project==
In the late 90´s, the automotive industry had to face multiples challenges due to the excess manufacturing capacity, the growth of ecological awareness, and the retail revolution that empowered buyers. To strengthen their position during this crisis, the automakers Daimler-Benz and Chrysler Corporation decided to merge. This project aimed to combine each other´s product designs, manufacturing resources and distribution systems.
The following table shows the complementary of the two companies, which wanted to unit their knowledge and their market in order to gain a competitive advantage.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 2 : The complementary of the two companies '''
|
! style="background: #ffedd3;" |'''Daimler-Benz AG'''
! style="background: #ffedd3;" |'''Chrysler Corporation'''
|-
! style="background: #ffedd3;" |'''Head office location'''
|
Germany
|
United States
|-
! style="background: #ffedd3;" |'''Geographical reach'''
|
European market
|
U.S. American market
|-
! style="background: #ffedd3;" |'''Product ranges'''
|
Uncompromising quality products
|
Car models that meet the American demand for adventurousness
|}


Both synergies and economies of scale were likely to proliferate.

How the project was set up is explained in the following paragraph. However, its detailed description falls outside the scope of this article.

==The execution of the project==
On May 7th, 1998 the signing of the combination agreement between Daimler-Benz and Chrysler was publicly announced. Daimler-Benz CEO Jürgen Schrempp described the union as "a merger of equals, a merger of growth, and a merger of unprecedented strength".
The equal status of the two organizations was reflected in the newly established entity name, DaimlerChrysler, as well as in the combination of the two former boards of management to form the one of DaimlerChrysler. Furthermore, it was agreed that Schrempp and Eaton, former CEO of the Chrysler Corporation, would jointly led the entity as co-chairmen and co-CEOs. It was also decided that Eaton would stay up to three years.
The two following tables provide more data about DaimlerChrysler right after the merger and the expected results of this project.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 3 : Characteristics of DaimlerChrysler right after the merger'''
|-
! style="background: #ffedd3;" |'''Number of employees '''
|442,000 employees
½ in Germany

1/3 in North America

1/6 spread across 200 countries around the world
|-
! style="background: #ffedd3;" |'''Daimler-Benz AG Market capitalization'''
|$ 92 billion
|}



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 4 : Expected results'''
! style="background: #ffedd3;" |Annual revenues of the combined company
|$ 132 billion
|-
! style="background: #ffedd3;" |Increase in sales
|13%
|-
! style="background: #ffedd3;" |Cost savings brought within 2 or 3 years
|$ 3,5 billion a year
|}


So far, this fusion appears to be very beneficial for all parties involved. However the wish for synergy effects never came true and the project drove Chrysler into chaos. In May 2007, the merger of Chrysler and Daimler-Benz was dissolved. Can this failure be ascribed to mismanagement?

The purpose of this article is now to point out which processes, related to the different subject groups definied in ISO 21500:2012 were disregarded and may have led to the project failure.

=The mismanagement of some subject groups <ref> Wanda Curlee, Robert L. Gordon . ''Complexity Theory and Project Management. ''. New York : Wiley, 2011, p. 129-133 </ref> =

Four subject groups will successively be considered : Integration, Time, Communication and Stakeholders. A mismanagement of some processes related to these four specific subject groups is namely to be seen.

==Integration <ref> Grässlin, Jürgen.''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> <ref> ''DaimlerChrysler confronts the challenges of global integration'', Human Resource Management International Digest, Vol 12 Iss :2 P.5-8</ref> ==

The Integration subject group includes the processes required to identify, define, combine, unify, coordinate, control and close the various activities and processes related to the project (ISO 21500:2012 - 4.2.3.2).

Within this merger, the unification and combination of all operations within the established entity needed to be achieved. To meet this target, a newly corporate culture had to be defined to align working styles. The latter namely radically differ due to major cultural differences, as shown in the following table.



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 5 : Comparison between the German and the American working styles'''
|-
|
! style="background: #ffedd3;" | '''Germany'''
! style="background: #ffedd3;"|'''United States'''
|-
! style="background: #ffedd3;" align="left" |'''Employee working style'''
| Work in a team-oriented environment
| Work individually
|-
! style="background: #ffedd3;" align="left" |'''Writing report'''
| Lengthy reports
| Little paper
|-
! style="background: #ffedd3;" align="left" |'''Decision-making process'''
|
Methodical, based on very detailed plans
|
Using creativity, based on trial-and-error method
|-
! style="background: #ffedd3;" align="left" |'''Meeting'''
|
Extended discussions
|
Short meeting
|-
! style="background: #ffedd3;" align="left" |'''Organizational structure'''
|
Pronounced hierarchy based on top-down-management
|
Flat organizational hierarchy stimulating empowerment of the employees
|-
! style="background: #ffedd3;" align="left" |'''Risk appetite'''
|
Risk adverse culture
|
Risk takers
|}


Due to the fact that this merger was a so-called `merger of equals´, the integration of the two cultures was to combine them to generate a new shared corporate one. It was namely vital that both organizations learn from each other to generate synergy effects. Managers have here a central role to play to define and coordinate the development of this new culture.

Eaton affirmed that it was at the top of the agenda and Thomas Stallkamp, Chrysler President during the negotiation phase, was charged with overseeing this integration process. Some effort went into harmonizing the two corporate cultures. Many seminars and workshops were organized to sensitizing the employees for working with new colleagues with diverging working methods. Furthermore, German was taught to many American managers.

However, given the large gap between the two organizations, it would appear that managers should have undertaken more activities and CEOs should have allocated more resources to bridge the chasm of cultural differences.

In fact, no strong and cohesive organizational culture was created, as illustrated in daily misunderstandings. For instance, the attention Daimler-Benz leaders paid to writing a leaflet sent to employee annoyed Chrysler executives. At the end of 1999, the resignation of Thomas Stallkamp, a 19-year veteran of Chrysler who was highly regarded, might be seen as a failure of the merger integration process after all the effort. Stallkamp is quoted as saying: <nowiki>“</nowiki>The majority of my career has been spent implementing supply chain management. I would like to continue to explore those areas at a less hectic pace<nowiki>”</nowiki>. Were both parties truly willing to cooperate wholeheartedly and to enter compromises to succeed in the numerous integration processes? A negative answer is the root cause of an unachieved integration.

==Time<ref> Sue Cartwright, Cary L. Cooper. ''Mergers and Acquisitions: The Human Factor Paperback'' . January 1, 1992 </ref>==

The Time subject group is all about managing the timely completion of the project. Feasible deadlines taking all known constraints into account need to be set. Processes covered by the latter subject group are the development of schedule for project activities estimating each activity duration, the progress monitoring and the schedule control.

One failure in managing time in DaimlerChrysler merger was that too little time was devoted to each activity. Let´s take a concrete example: Daimler-Benz and Chrysler began formal negotiations on January 12, 1998 and only five months later, the merger was announced worldwide. Susan Cartwright – past President of the British Academy Management – asserts that the period of time from the germ of the merger idea till an agreement is reached is estimated to last around two years. Speeding up the pre-merger preparation, the precise objectives of the fusion and the way to achieve them could not have been defined accurately.
Furthermore, the merger was completed on November 12, 1998. Time needed by employees to adapt to the new circumstances was not taken into account in the deadlines. One more mismanagement which is added to the others.

==Communication==
In the standard ISO 21500:2012, three key processes are defined to ensure appropriate exchange of project information: Plan communications, Distribute information and Manage communications. But within DaimlerChrysler project none of them were totally met. In order to appreciate the scale of the problem, it should be point out that even managers and CEOs experienced serious difficulties in discussing solutions and achieving a consensus. According to a Daimler-Benz executive, <nowiki>"</nowiki>Eaton went weeks without speaking with Jürgen [Schrempp]. He preferred to maintain lower-level contact. Jürgen, meanwhile, left Chrysler alone.<nowiki>"</nowiki> <ref> [http://mba.tuck.dartmouth.edu/pdf/2002-1-0071.pdf] Professor Sydney Finkelstein. ''The DaimlerChrysler Merger.''Tuck School of Business at Dartmouth. 2002 </ref> One would have expected that both CEOs would have shared their different views in order to discover common goal and operate as an effective team at the top. Given the seeming clash of culture described in the first paragraph, it was crucial to start the discussion to create healthy relationship and release the company´s potential. The clearer the communication, the better issues are addressed. But with such a lack of communication among leaders, no far-reaching communication plan could be implemented among all stakeholders involved, not to mention the distribution of the information. Both internal and external communications were chaotic. It is likely that the standard ISO 21500 would have made managers more aware of the processes related to communication which requires to be efficiently tackled.

==Stakeholders==
The stakeholder subject group is concerned with identifying and managing all parties involved. To classify them, both their expectations and influence on the project need to be analyzed. The table 6 provides a power-interest matrix, which is crucial to draw up appropriate management strategies for effectively engaging with them. The external stakeholders are written in italics, the others are internal.

{| border="1" cellpadding="3" cellspacing="0" style="margin:auto;"
|+ '''Table 6 : Power and interest matrix'''
|-
! rowspan="2" style="background: #ffedd3;" | Level of interest
! colspan="5" style="background: #ffedd3;" | Level of power
|-
|style="background: #fff4d3;" align=center | ''' Low '''
|style="background: #fff4d3;" align=center| ''' High '''
|-
|style="background: #fff4d3;" align=center |'''High'''
|
'''Employee'''

Trade Union

'''''Clients'''''

''Suppliers''

''Government''

''Society''
|
Directors

Managers

'''''Stockholders'''''
|-
|style="background: #fff4d3;" align=center |'''Low'''
|
''Competitors''
|

|-
|}

To analyze the management of all of these stakeholders one by one would be tedious. However it is relevant to focus on several categories according to the table 6. Special focus will be laid on the stakeholders written in red. Therefore, both high power/high interest and low power/high interest stakeholders will be looked at. Two of them are internal, whereas the other is internal.

It will be shown that all of them were significantly affected by the DaimlerChrysler project due to mismanagement.

===Employees===
Employees, low-power and high-interest stakeholders, must be kept informed and managers should ensure that no major issues are arising.
However, this was not the case in the DaimlerChrysler merger: employees felt overlooked, disregarded and left out of the merger process. But to what extent CEOs and managers were responsible in this climate of distrust and dislike?

First, soon after the merger, it became obvious that Daimler was taking over the whole company´s management. Chrysler President Stallkamp retirement at the end of 1999 was followed by the one of James P. Holdem, top-level executive of the Chrysler Group. They were replaced by two German managers: Dieter Zetsche and Wolfgang Bernhard. Being lowered to divisional status, it is understandable that American´s morale suffered from this German hegemony. Employee felt eclipsed and were disgusted. They also were worried that DaimlerChrysler would dismiss some of them. But the problems were not confined to be here. Indeed, Jürgen Schrempp attitude only made the situation worse. In autumn 2000, DaimlerChrysler CEO acknowledged in the German financial daily Handelsblatt that <nowiki>“</nowiki>The Merger of Equals statement was necessary in order to earn the support of Chrysler's workers and the American public, but it was never reality<nowiki>"</nowiki>. Many Americans regarded this statement as a betrayal, since Schrempp intended to deceive them from the outset. It appears clear that it is due to the board of directors´ failure in acting responsibly towards the workers that deep-seated distrust ran deep.

Furthermore, such a mismanagement of the employees can lead to far-reaching consequences on the project success itself. Indeed, it could have been that some workers simply did not work as efficiently because they supposed the board of directors did not care about the Chrysler entity – so why should they? Decreased performance would have resulted in it.

It is to notice that even though the standard ''ISO 21500: 2012'' did not exist at that time, the fact that employee influence was of importance to succeed such a process was already known. MaryAnn Keller, founder and managing partner of MaryAnn Keller & Associates LLC, namely stated in June 1998 that <nowiki>“</nowiki>The success of any combination depends on the ability of the new organization to win over the hearts and minds of employees.<nowiki>”</nowiki> <ref> [http://murphylibrary.uwlax.edu/digital/jur/2002/carpiaux.pdf] Nicole Carpiaux. ''DaimlerChrysler : Wunderkind or Problem Child ?'' Faculty Sponsor : Leticia Peña, Department of Management. </ref> The managers of DaimlerChrysler should then be aware that is really a management issue to embrace workers instead to neglect them in order to obtain the best they can offer.

===Clients===
And what about the customers, low-power and high interest stakeholders?

Once again, one could argue that managers failed to define as well as to meet their needs.
One example is given for illustration. At the time, the DaimlerChrysler A-Class was 1.25 to 2 times more expensive than similar vehicles sold by Volkswagen, Renault or Fiat. This higher price was not deterrent since clients were aware that Daimler-Benz primarily asset was quality and safety. However, in 1999, the A-class failed an emergency maneuver test conducted by a Swedish television station. <ref> Bill Vlasic, Bradley A. Stertz. ''Taken for a Ride: How Daimler-Benz Drove off with Chrysler''. Harper Paperbacks,
2001, p. 300.
</ref> Consequently, client´s satisfaction suddenly drop off the map. The DaimlerChrysler vehicle was considered as an overpriced car which did not achieve engineering excellence compared to the highly competitive European compact market. The crux of the problem may be that the German entity have tried to implant the American low development costs into its entities, disregarding the high expectations of the clients. This paragraph appears to prove that trying to generate synergy savings the managers failed in responding the customer´s needs.

===Stockholders===
Last but not least, the management of both high power and high interest stakeholders needs to be considered. Take the stockholders.

An overwhelming majority of them favored the project of merger in 1998. Approvals ratings reached 99.9% at Daimler-Benz and 97.5% at Chrysler. It may be inferred that, at the outset of the project, managers successfully took into account the processes required to satisfy the shareholders. It did not take long, however, for some of them to express their disappointment. This was the case for Kirk Kerkorian, the third largest proprietor of DailerChrysler stock and largest Chrysler shareholder before the merger. In November 2000, the latter filed a $9 billion lawsuit against DaimlerChrysler for falsifying the terms of the fusion as a “merger of equals”. He was upset with the German hegemony and stated he had voted to turn its shares for stock in DaimlerChrysler without having considered the American entity would be reduced to a mere division. Two months later, he cut his take in the merged company by a third. Even though the managers were not directly involved in this discontent, the lack of acting responsibly of the Board of the director is obvious.

To conclude, the completion of the processes related to each of these three stakeholders lacked efficiency. The managers failed in implementing the required activities to satisfy them and this will become a major hindrance to the project completion.

=Conclusion=
Many factors may affect the failure of the DaimlerChrysler project, but most of them may have been due to its mismanagement. Such a union was notoriously risky, especially due to the opposite companies it combined. To deliver the intent benefits, particular care should then have been taken by managers to tackle all the project management processes.

The use of the standard ''ISO 21500 : 2012'' was made to group the processes in term of Subject Group. It appears clear that there were some omissions, particularly regarding Integration, Time, Communication and Stakeholders. This standard has proven to be useful to analyze a project management, especially in case of cross-boarders project. It is a shame that such a unifying international approach was only established in 2012.

= References =

<references />

[[Category:Project Management]]
[[Category:Human Behaviour]]
[[Category:Complexity]]

Analyzing the failure of the DaimlerChrysler merger from a project management perspective

2014-12-01T20:12:12Z

Lyngby: /* Clients */

'''Abstract'''

In the late 90´s, German Daimler-Benz AG and American Chrysler Corporation announced their intention to combine their strengths within a so-called `merger of equals´ <ref> Grässlin, Jürgen. ''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> . Becoming the fifth largest automaker in the world, both companies hoped to overcome together the automotive industry crisis. However, nothing worked out as planned, so much so that in 2007 Daimler-Benz sold all its shares of the Chrysler division.

Could the use of a norm have guaranteed the success of the DaimlerChrysler merger ? This question will be answered with regard to the ISO 21500:2012 guideline for project management.

According to the latter, a definition of project management and the processes it involves will be provided.Then, an analysis of the origin of DaimlerChrysler project will be carried out. It will also be shown to what extent this fusion was mismanaged with regard to the subject groups defined in the ISO 21500:2012. Last but not least the benefits of using this standard to successfully conduct a complex project will be discussed.

=Introduction=
In the early 21st century, no comprehensive standard on project management was accepted despite the substantial demand for project management skills. However, in 2006, the need for a unifying international approach was recognized by the International Organization for Standard (ISO). The work of over hundreds experts in project management from around the globe resulted in ''ISO 21500: 2012 -Guidance on project management''. This norm defines universal project management terminologies, as well as the principles and processes it involves. It provides a basic guide against which any organization can compare its current project management practices and determine areas in need of improvement. But how to practically apply it to a project? A specific example of project failure prior to introducing ISO 21500 will be provided to analyze which project management processes were disregarded. More particularly, the merger of the German automaker Daimler-Benz with the American Chrysler Corporation will be examined with the perspective of subject group.

= ISO 21500 : 2012, A focus on processes <ref> ISO 21500:2012 ''Guidance on project management'' </ref> <ref> Anton Zandhuis, Rommert Stellingwerf. ''ISO 215000, Guidance on Project managenent, A Pocket Guide''. Van Haren Publishing. 2013 </ref>=

What is a project? A definition is provided by the ISO 21500: “A unique set of processes consisting of coordinated and controlled activities with start and end dates, performed to achieve project objectives.” The concept of processes seems to be at the crux of project management issues. The definition of how to manage a project stresses this point: “Project management is performed through processes”.

Specifically, the norm splits the method of managing a project into 39 elementary processes. Depending on the perspective, the latter are grouped into five process groups (Initiating, Planning, Controlling and Closing) or into ten subject groups (Integration, Stakeholder, Scope, Resource, Time, Cost, Risk, Quality, Procurement and Communication). The classification of these processes is provided in the following table.

{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 1 : Project management cross-referenced to process and subject groups (ISO 21500 : 2012)'''
|-
! rowspan="2" style="background: #ffedd3;" | SUBJECT GROUPS
! colspan="5" style="background: #ffedd3;" | PROCESS GROUPS
|-
|style="background: #fff4d3;" align=center | '''Initiating'''
|style="background: #fff4d3;" align=center| '''Planning'''
|style="background: #fff4d3;" align=center| '''Implementing'''
|style="background: #fff4d3;" align=center | '''Controlling'''
|style="background: #fff4d3;" align=center | '''Closing'''
|-
|style="background: #fff4d3;" |'''Integration'''
|
4.3.2 Develop project chart
|
4.3.3. Develop project plans
|
4.3.4 Direct project work
|
4.3.5 Control project work

4.3.6 Control changes
|
4.3.7 Close project or phase

4.3.8 Collect lessons learned
|-
|style="background: #fff4d3;" |'''Stakeholder'''
|
4.3.9 Identify stakeholders
|

|
4.3.10 Manage stakeholders
|

|

|-
|style="background: #fff4d3;" |'''Scope'''
|

|
4.3.11 Define scope

4.3.12 Create work breakdown structure

4.3.13 Define activities
|

|
4.3.14 Control scope
|

|-
|style="background: #fff4d3;" |'''Resource'''
|
4.3.15 Establish project team
|
4.3.16 Estimate resources

4.3.17 Define project organization
|
4.3.18 Develop project team
|
4.3.19 Control resources

4.3.20 Manage project team
|

|-
|style="background: #fff4d3;" |'''Time'''
|

|
4.3.21 Sequence activities

4.3.22 Estimate activity durations

4.3.23 Develop schedule
|

|
4.3.24 Control schedule
|

|-
|style="background: #fff4d3;" |'''Cost'''
|

|
4.3.25 Estimate costs

4.3.26 Develop budget
|

|
4.3.27 Control costs
|

|-
|style="background: #fff4d3;" |'''Risk'''
|

|
4.3.28 Identify risks

4.3.29 Asses risks
|
4.3.30 Treat risks
|
4.3.31 Control risks
|
|-
|style="background: #fff4d3;" |'''Quality'''
|

|
4.3.32 Plan quality
|
4.3.33 Perform quality assurance
|
4.3.34 Perform quality control
|

|-
|style="background: #fff4d3;" |'''Procurement'''
|

|
4.3.35 Plan procurements
|
4.3.36 Select suppliers
|
4.3.37 Administer procurements
|

|-
|style="background: #fff4d3;" |'''Communication'''
|

|
4.3.38 Plan communications
|
4.3.39 Distribute information
|
4.3.40 Manage communications
|

|}

The perspective of subject groups will be adopted to consider the management of DaimlerChrysler project. A subject is a theme in which processes are classified according to its related activities.

But before that, the project of DaimlerChrysler merger is regarded.

=DaimlerChrysler merger project <ref> Julia Hollmann, Aletéia de Moura Carpes, Thiago Antonio Beuron. ''The DaimlerChrylser Merger- A cultural mismatch ?'' Faculty Sponsor : Universität Paderborn- Germany, Department of International Business Studies. Universidade Federal de Santa Maria- Brazil, Department of Administration. 2010 </ref> =
==The genesis of the project==
In the late 90´s, the automotive industry had to face multiples challenges due to the excess manufacturing capacity, the growth of ecological awareness, and the retail revolution that empowered buyers. To strengthen their position during this crisis, the automakers Daimler-Benz and Chrysler Corporation decided to merge. This project aimed to combine each other´s product designs, manufacturing resources and distribution systems.
The following table shows the complementary of the two companies, which wanted to unit their knowledge and their market in order to gain a competitive advantage.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 2 : The complementary of the two companies '''
|
! style="background: #ffedd3;" |'''Daimler-Benz AG'''
! style="background: #ffedd3;" |'''Chrysler Corporation'''
|-
! style="background: #ffedd3;" |'''Head office location'''
|
Germany
|
United States
|-
! style="background: #ffedd3;" |'''Geographical reach'''
|
European market
|
U.S. American market
|-
! style="background: #ffedd3;" |'''Product ranges'''
|
Uncompromising quality products
|
Car models that meet the American demand for adventurousness
|}


Both synergies and economies of scale were likely to proliferate.

How the project was set up is explained in the following paragraph. However, its detailed description falls outside the scope of this article.

==The execution of the project==
On May 7th, 1998 the signing of the combination agreement between Daimler-Benz and Chrysler was publicly announced. Daimler-Benz CEO Jürgen Schrempp described the union as "a merger of equals, a merger of growth, and a merger of unprecedented strength".
The equal status of the two organizations was reflected in the newly established entity name, DaimlerChrysler, as well as in the combination of the two former boards of management to form the one of DaimlerChrysler. Furthermore, it was agreed that Schrempp and Eaton, former CEO of the Chrysler Corporation, would jointly led the entity as co-chairmen and co-CEOs. It was also decided that Eaton would stay up to three years.
The two following tables provide more data about DaimlerChrysler right after the merger and the expected results of this project.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 3 : Characteristics of DaimlerChrysler right after the merger'''
|-
! style="background: #ffedd3;" |'''Number of employees '''
|442,000 employees
½ in Germany

1/3 in North America

1/6 spread across 200 countries around the world
|-
! style="background: #ffedd3;" |'''Daimler-Benz AG Market capitalization'''
|$ 92 billion
|}



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 4 : Expected results'''
! style="background: #ffedd3;" |Annual revenues of the combined company
|$ 132 billion
|-
! style="background: #ffedd3;" |Increase in sales
|13%
|-
! style="background: #ffedd3;" |Cost savings brought within 2 or 3 years
|$ 3,5 billion a year
|}


So far, this fusion appears to be very beneficial for all parties involved. However the wish for synergy effects never came true and the project drove Chrysler into chaos. In May 2007, the merger of Chrysler and Daimler-Benz was dissolved. Can this failure be ascribed to mismanagement?

The purpose of this article is now to point out which processes, related to the different subject groups definied in ISO 21500:2012 were disregarded and may have led to the project failure.

=The mismanagement of some subject groups <ref> Wanda Curlee, Robert L. Gordon . ''Complexity Theory and Project Management. ''. New York : Wiley, 2011, p. 129-133 </ref> =

Four subject groups will successively be considered : Integration, Time, Communication and Stakeholders. A mismanagement of some processes related to these four specific subject groups is namely to be seen.

==Integration <ref> Grässlin, Jürgen.''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> <ref> ''DaimlerChrysler confronts the challenges of global integration'', Human Resource Management International Digest, Vol 12 Iss :2 P.5-8</ref> ==

The Integration subject group includes the processes required to identify, define, combine, unify, coordinate, control and close the various activities and processes related to the project (ISO 21500:2012 - 4.2.3.2).

Within this merger, the unification and combination of all operations within the established entity needed to be achieved. To meet this target, a newly corporate culture had to be defined to align working styles. The latter namely radically differ due to major cultural differences, as shown in the following table.



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 5 : Comparison between the German and the American working styles'''
|-
|
! style="background: #ffedd3;" | '''Germany'''
! style="background: #ffedd3;"|'''United States'''
|-
! style="background: #ffedd3;" align="left" |'''Employee working style'''
| Work in a team-oriented environment
| Work individually
|-
! style="background: #ffedd3;" align="left" |'''Writing report'''
| Lengthy reports
| Little paper
|-
! style="background: #ffedd3;" align="left" |'''Decision-making process'''
|
Methodical, based on very detailed plans
|
Using creativity, based on trial-and-error method
|-
! style="background: #ffedd3;" align="left" |'''Meeting'''
|
Extended discussions
|
Short meeting
|-
! style="background: #ffedd3;" align="left" |'''Organizational structure'''
|
Pronounced hierarchy based on top-down-management
|
Flat organizational hierarchy stimulating empowerment of the employees
|-
! style="background: #ffedd3;" align="left" |'''Risk appetite'''
|
Risk adverse culture
|
Risk takers
|}


Due to the fact that this merger was a so-called `merger of equals´, the integration of the two cultures was to combine them to generate a new shared corporate one. It was namely vital that both organizations learn from each other to generate synergy effects. Managers have here a central role to play to define and coordinate the development of this new culture.

Eaton affirmed that it was at the top of the agenda and Thomas Stallkamp, Chrysler President during the negotiation phase, was charged with overseeing this integration process. Some effort went into harmonizing the two corporate cultures. Many seminars and workshops were organized to sensitizing the employees for working with new colleagues with diverging working methods. Furthermore, German was taught to many American managers.

However, given the large gap between the two organizations, it would appear that managers should have undertaken more activities and CEOs should have allocated more resources to bridge the chasm of cultural differences.

In fact, no strong and cohesive organizational culture was created, as illustrated in daily misunderstandings. For instance, the attention Daimler-Benz leaders paid to writing a leaflet sent to employee annoyed Chrysler executives. At the end of 1999, the resignation of Thomas Stallkamp, a 19-year veteran of Chrysler who was highly regarded, might be seen as a failure of the merger integration process after all the effort. Stallkamp is quoted as saying: <nowiki>“</nowiki>The majority of my career has been spent implementing supply chain management. I would like to continue to explore those areas at a less hectic pace<nowiki>”</nowiki>. Were both parties truly willing to cooperate wholeheartedly and to enter compromises to succeed in the numerous integration processes? A negative answer is the root cause of an unachieved integration.

==Time<ref> Sue Cartwright, Cary L. Cooper. ''Mergers and Acquisitions: The Human Factor Paperback'' . January 1, 1992 </ref>==

The Time subject group is all about managing the timely completion of the project. Feasible deadlines taking all known constraints into account need to be set. Processes covered by the latter subject group are the development of schedule for project activities estimating each activity duration, the progress monitoring and the schedule control.

One failure in managing time in DaimlerChrysler merger was that too little time was devoted to each activity. Let´s take a concrete example: Daimler-Benz and Chrysler began formal negotiations on January 12, 1998 and only five months later, the merger was announced worldwide. Susan Cartwright – past President of the British Academy Management – asserts that the period of time from the germ of the merger idea till an agreement is reached is estimated to last around two years. Speeding up the pre-merger preparation, the precise objectives of the fusion and the way to achieve them could not have been defined accurately.
Furthermore, the merger was completed on November 12, 1998. Time needed by employees to adapt to the new circumstances was not taken into account in the deadlines. One more mismanagement which is added to the others.

==Communication==
In the standard ISO 21500:2012, three key processes are defined to ensure appropriate exchange of project information: Plan communications, Distribute information and Manage communications. But within DaimlerChrysler project none of them were totally met. In order to appreciate the scale of the problem, it should be point out that even managers and CEOs experienced serious difficulties in discussing solutions and achieving a consensus. According to a Daimler-Benz executive, <nowiki>"</nowiki>Eaton went weeks without speaking with Jürgen [Schrempp]. He preferred to maintain lower-level contact. Jürgen, meanwhile, left Chrysler alone.<nowiki>"</nowiki> <ref> [http://mba.tuck.dartmouth.edu/pdf/2002-1-0071.pdf] Professor Sydney Finkelstein. ''The DaimlerChrysler Merger.''Tuck School of Business at Dartmouth. 2002 </ref> One would have expected that both CEOs would have shared their different views in order to discover common goal and operate as an effective team at the top. Given the seeming clash of culture described in the first paragraph, it was crucial to start the discussion to create healthy relationship and release the company´s potential. The clearer the communication, the better issues are addressed. But with such a lack of communication among leaders, no far-reaching communication plan could be implemented among all stakeholders involved, not to mention the distribution of the information. Both internal and external communications were chaotic. It is likely that the standard ISO 21500 would have made managers more aware of the processes related to communication which requires to be efficiently tackled.

==Stakeholders==
The stakeholder subject group is concerned with identifying and managing all parties involved. To classify them, both their expectations and influence on the project need to be analyzed. The table 6 provides a power-interest matrix, which is crucial to draw up appropriate management strategies for effectively engaging with them. The external stakeholders are written in italics, the others are internal.

{| border="1" cellpadding="3" cellspacing="0" style="margin:auto;"
|+ '''Table 6 : Power and interest matrix'''
|-
! rowspan="2" style="background: #ffedd3;" | Level of interest
! colspan="5" style="background: #ffedd3;" | Level of power
|-
|style="background: #fff4d3;" align=center | ''' Low '''
|style="background: #fff4d3;" align=center| ''' High '''
|-
|style="background: #fff4d3;" align=center |'''High'''
|
[[Employee]]

Trade Union

''[[Clients]]''

''Suppliers''

''Government''

''Society''
|
Directors

Managers

''[[Stockholders]]''
|-
|style="background: #fff4d3;" align=center |'''Low'''
|
''Competitors''
|

|-
|}

To analyze the management of all of these stakeholders one by one would be tedious. However it is relevant to focus on several categories according to the table 6. Special focus will be laid on the stakeholders written in red. Therefore, both high power/high interest and low power/high interest stakeholders will be looked at. Two of them are internal, whereas the other is internal.

It will be shown that all of them were significantly affected by the DaimlerChrysler project due to mismanagement.

===Employees===
Employees, low-power and high-interest stakeholders, must be kept informed and managers should ensure that no major issues are arising.
However, this was not the case in the DaimlerChrysler merger: employees felt overlooked, disregarded and left out of the merger process. But to what extent CEOs and managers were responsible in this climate of distrust and dislike?

First, soon after the merger, it became obvious that Daimler was taking over the whole company´s management. Chrysler President Stallkamp retirement at the end of 1999 was followed by the one of James P. Holdem, top-level executive of the Chrysler Group. They were replaced by two German managers: Dieter Zetsche and Wolfgang Bernhard. Being lowered to divisional status, it is understandable that American´s morale suffered from this German hegemony. Employee felt eclipsed and were disgusted. They also were worried that DaimlerChrysler would dismiss some of them. But the problems were not confined to be here. Indeed, Jürgen Schrempp attitude only made the situation worse. In autumn 2000, DaimlerChrysler CEO acknowledged in the German financial daily Handelsblatt that <nowiki>“</nowiki>The Merger of Equals statement was necessary in order to earn the support of Chrysler's workers and the American public, but it was never reality<nowiki>"</nowiki>. Many Americans regarded this statement as a betrayal, since Schrempp intended to deceive them from the outset. It appears clear that it is due to the board of directors´ failure in acting responsibly towards the workers that deep-seated distrust ran deep.

Furthermore, such a mismanagement of the employees can lead to far-reaching consequences on the project success itself. Indeed, it could have been that some workers simply did not work as efficiently because they supposed the board of directors did not care about the Chrysler entity – so why should they? Decreased performance would have resulted in it.

It is to notice that even though the standard ''ISO 21500: 2012'' did not exist at that time, the fact that employee influence was of importance to succeed such a process was already known. MaryAnn Keller, founder and managing partner of MaryAnn Keller & Associates LLC, namely stated in June 1998 that <nowiki>“</nowiki>The success of any combination depends on the ability of the new organization to win over the hearts and minds of employees.<nowiki>”</nowiki> <ref> [http://murphylibrary.uwlax.edu/digital/jur/2002/carpiaux.pdf] Nicole Carpiaux. ''DaimlerChrysler : Wunderkind or Problem Child ?'' Faculty Sponsor : Leticia Peña, Department of Management. </ref> The managers of DaimlerChrysler should then be aware that is really a management issue to embrace workers instead to neglect them in order to obtain the best they can offer.

===Clients===
And what about the customers, low-power and high interest stakeholders?

Once again, one could argue that managers failed to define as well as to meet their needs.
One example is given for illustration. At the time, the DaimlerChrysler A-Class was 1.25 to 2 times more expensive than similar vehicles sold by Volkswagen, Renault or Fiat. This higher price was not deterrent since clients were aware that Daimler-Benz primarily asset was quality and safety. However, in 1999, the A-class failed an emergency maneuver test conducted by a Swedish television station. <ref> Bill Vlasic, Bradley A. Stertz. ''Taken for a Ride: How Daimler-Benz Drove off with Chrysler''. Harper Paperbacks,
2001, p. 300.
</ref> Consequently, client´s satisfaction suddenly drop off the map. The DaimlerChrysler vehicle was considered as an overpriced car which did not achieve engineering excellence compared to the highly competitive European compact market. The crux of the problem may be that the German entity have tried to implant the American low development costs into its entities, disregarding the high expectations of the clients. This paragraph appears to prove that trying to generate synergy savings the managers failed in responding the customer´s needs.

===Stockholders===
Last but not least, the management of both high power and high interest stakeholders needs to be considered. Take the stockholders.

An overwhelming majority of them favored the project of merger in 1998. Approvals ratings reached 99.9% at Daimler-Benz and 97.5% at Chrysler. It may be inferred that, at the outset of the project, managers successfully took into account the processes required to satisfy the shareholders. It did not take long, however, for some of them to express their disappointment. This was the case for Kirk Kerkorian, the third largest proprietor of DailerChrysler stock and largest Chrysler shareholder before the merger. In November 2000, the latter filed a $9 billion lawsuit against DaimlerChrysler for falsifying the terms of the fusion as a “merger of equals”. He was upset with the German hegemony and stated he had voted to turn its shares for stock in DaimlerChrysler without having considered the American entity would be reduced to a mere division. Two months later, he cut his take in the merged company by a third. Even though the managers were not directly involved in this discontent, the lack of acting responsibly of the Board of the director is obvious.

To conclude, the completion of the processes related to each of these three stakeholders lacked efficiency. The managers failed in implementing the required activities to satisfy them and this will become a major hindrance to the project completion.

=Conclusion=
Many factors may affect the failure of the DaimlerChrysler project, but most of them may have been due to its mismanagement. Such a union was notoriously risky, especially due to the opposite companies it combined. To deliver the intent benefits, particular care should then have been taken by managers to tackle all the project management processes.

The use of the standard ''ISO 21500 : 2012'' was made to group the processes in term of Subject Group. It appears clear that there were some omissions, particularly regarding Integration, Time, Communication and Stakeholders. This standard has proven to be useful to analyze a project management, especially in case of cross-boarders project. It is a shame that such a unifying international approach was only established in 2012.

= References =

<references />

[[Category:Project Management]]
[[Category:Human Behaviour]]
[[Category:Complexity]]

Analyzing the failure of the DaimlerChrysler merger from a project management perspective

2014-12-01T20:11:34Z

Lyngby: /* Employees */

'''Abstract'''

In the late 90´s, German Daimler-Benz AG and American Chrysler Corporation announced their intention to combine their strengths within a so-called `merger of equals´ <ref> Grässlin, Jürgen. ''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> . Becoming the fifth largest automaker in the world, both companies hoped to overcome together the automotive industry crisis. However, nothing worked out as planned, so much so that in 2007 Daimler-Benz sold all its shares of the Chrysler division.

Could the use of a norm have guaranteed the success of the DaimlerChrysler merger ? This question will be answered with regard to the ISO 21500:2012 guideline for project management.

According to the latter, a definition of project management and the processes it involves will be provided.Then, an analysis of the origin of DaimlerChrysler project will be carried out. It will also be shown to what extent this fusion was mismanaged with regard to the subject groups defined in the ISO 21500:2012. Last but not least the benefits of using this standard to successfully conduct a complex project will be discussed.

=Introduction=
In the early 21st century, no comprehensive standard on project management was accepted despite the substantial demand for project management skills. However, in 2006, the need for a unifying international approach was recognized by the International Organization for Standard (ISO). The work of over hundreds experts in project management from around the globe resulted in ''ISO 21500: 2012 -Guidance on project management''. This norm defines universal project management terminologies, as well as the principles and processes it involves. It provides a basic guide against which any organization can compare its current project management practices and determine areas in need of improvement. But how to practically apply it to a project? A specific example of project failure prior to introducing ISO 21500 will be provided to analyze which project management processes were disregarded. More particularly, the merger of the German automaker Daimler-Benz with the American Chrysler Corporation will be examined with the perspective of subject group.

= ISO 21500 : 2012, A focus on processes <ref> ISO 21500:2012 ''Guidance on project management'' </ref> <ref> Anton Zandhuis, Rommert Stellingwerf. ''ISO 215000, Guidance on Project managenent, A Pocket Guide''. Van Haren Publishing. 2013 </ref>=

What is a project? A definition is provided by the ISO 21500: “A unique set of processes consisting of coordinated and controlled activities with start and end dates, performed to achieve project objectives.” The concept of processes seems to be at the crux of project management issues. The definition of how to manage a project stresses this point: “Project management is performed through processes”.

Specifically, the norm splits the method of managing a project into 39 elementary processes. Depending on the perspective, the latter are grouped into five process groups (Initiating, Planning, Controlling and Closing) or into ten subject groups (Integration, Stakeholder, Scope, Resource, Time, Cost, Risk, Quality, Procurement and Communication). The classification of these processes is provided in the following table.

{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 1 : Project management cross-referenced to process and subject groups (ISO 21500 : 2012)'''
|-
! rowspan="2" style="background: #ffedd3;" | SUBJECT GROUPS
! colspan="5" style="background: #ffedd3;" | PROCESS GROUPS
|-
|style="background: #fff4d3;" align=center | '''Initiating'''
|style="background: #fff4d3;" align=center| '''Planning'''
|style="background: #fff4d3;" align=center| '''Implementing'''
|style="background: #fff4d3;" align=center | '''Controlling'''
|style="background: #fff4d3;" align=center | '''Closing'''
|-
|style="background: #fff4d3;" |'''Integration'''
|
4.3.2 Develop project chart
|
4.3.3. Develop project plans
|
4.3.4 Direct project work
|
4.3.5 Control project work

4.3.6 Control changes
|
4.3.7 Close project or phase

4.3.8 Collect lessons learned
|-
|style="background: #fff4d3;" |'''Stakeholder'''
|
4.3.9 Identify stakeholders
|

|
4.3.10 Manage stakeholders
|

|

|-
|style="background: #fff4d3;" |'''Scope'''
|

|
4.3.11 Define scope

4.3.12 Create work breakdown structure

4.3.13 Define activities
|

|
4.3.14 Control scope
|

|-
|style="background: #fff4d3;" |'''Resource'''
|
4.3.15 Establish project team
|
4.3.16 Estimate resources

4.3.17 Define project organization
|
4.3.18 Develop project team
|
4.3.19 Control resources

4.3.20 Manage project team
|

|-
|style="background: #fff4d3;" |'''Time'''
|

|
4.3.21 Sequence activities

4.3.22 Estimate activity durations

4.3.23 Develop schedule
|

|
4.3.24 Control schedule
|

|-
|style="background: #fff4d3;" |'''Cost'''
|

|
4.3.25 Estimate costs

4.3.26 Develop budget
|

|
4.3.27 Control costs
|

|-
|style="background: #fff4d3;" |'''Risk'''
|

|
4.3.28 Identify risks

4.3.29 Asses risks
|
4.3.30 Treat risks
|
4.3.31 Control risks
|
|-
|style="background: #fff4d3;" |'''Quality'''
|

|
4.3.32 Plan quality
|
4.3.33 Perform quality assurance
|
4.3.34 Perform quality control
|

|-
|style="background: #fff4d3;" |'''Procurement'''
|

|
4.3.35 Plan procurements
|
4.3.36 Select suppliers
|
4.3.37 Administer procurements
|

|-
|style="background: #fff4d3;" |'''Communication'''
|

|
4.3.38 Plan communications
|
4.3.39 Distribute information
|
4.3.40 Manage communications
|

|}

The perspective of subject groups will be adopted to consider the management of DaimlerChrysler project. A subject is a theme in which processes are classified according to its related activities.

But before that, the project of DaimlerChrysler merger is regarded.

=DaimlerChrysler merger project <ref> Julia Hollmann, Aletéia de Moura Carpes, Thiago Antonio Beuron. ''The DaimlerChrylser Merger- A cultural mismatch ?'' Faculty Sponsor : Universität Paderborn- Germany, Department of International Business Studies. Universidade Federal de Santa Maria- Brazil, Department of Administration. 2010 </ref> =
==The genesis of the project==
In the late 90´s, the automotive industry had to face multiples challenges due to the excess manufacturing capacity, the growth of ecological awareness, and the retail revolution that empowered buyers. To strengthen their position during this crisis, the automakers Daimler-Benz and Chrysler Corporation decided to merge. This project aimed to combine each other´s product designs, manufacturing resources and distribution systems.
The following table shows the complementary of the two companies, which wanted to unit their knowledge and their market in order to gain a competitive advantage.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 2 : The complementary of the two companies '''
|
! style="background: #ffedd3;" |'''Daimler-Benz AG'''
! style="background: #ffedd3;" |'''Chrysler Corporation'''
|-
! style="background: #ffedd3;" |'''Head office location'''
|
Germany
|
United States
|-
! style="background: #ffedd3;" |'''Geographical reach'''
|
European market
|
U.S. American market
|-
! style="background: #ffedd3;" |'''Product ranges'''
|
Uncompromising quality products
|
Car models that meet the American demand for adventurousness
|}


Both synergies and economies of scale were likely to proliferate.

How the project was set up is explained in the following paragraph. However, its detailed description falls outside the scope of this article.

==The execution of the project==
On May 7th, 1998 the signing of the combination agreement between Daimler-Benz and Chrysler was publicly announced. Daimler-Benz CEO Jürgen Schrempp described the union as "a merger of equals, a merger of growth, and a merger of unprecedented strength".
The equal status of the two organizations was reflected in the newly established entity name, DaimlerChrysler, as well as in the combination of the two former boards of management to form the one of DaimlerChrysler. Furthermore, it was agreed that Schrempp and Eaton, former CEO of the Chrysler Corporation, would jointly led the entity as co-chairmen and co-CEOs. It was also decided that Eaton would stay up to three years.
The two following tables provide more data about DaimlerChrysler right after the merger and the expected results of this project.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 3 : Characteristics of DaimlerChrysler right after the merger'''
|-
! style="background: #ffedd3;" |'''Number of employees '''
|442,000 employees
½ in Germany

1/3 in North America

1/6 spread across 200 countries around the world
|-
! style="background: #ffedd3;" |'''Daimler-Benz AG Market capitalization'''
|$ 92 billion
|}



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 4 : Expected results'''
! style="background: #ffedd3;" |Annual revenues of the combined company
|$ 132 billion
|-
! style="background: #ffedd3;" |Increase in sales
|13%
|-
! style="background: #ffedd3;" |Cost savings brought within 2 or 3 years
|$ 3,5 billion a year
|}


So far, this fusion appears to be very beneficial for all parties involved. However the wish for synergy effects never came true and the project drove Chrysler into chaos. In May 2007, the merger of Chrysler and Daimler-Benz was dissolved. Can this failure be ascribed to mismanagement?

The purpose of this article is now to point out which processes, related to the different subject groups definied in ISO 21500:2012 were disregarded and may have led to the project failure.

=The mismanagement of some subject groups <ref> Wanda Curlee, Robert L. Gordon . ''Complexity Theory and Project Management. ''. New York : Wiley, 2011, p. 129-133 </ref> =

Four subject groups will successively be considered : Integration, Time, Communication and Stakeholders. A mismanagement of some processes related to these four specific subject groups is namely to be seen.

==Integration <ref> Grässlin, Jürgen.''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> <ref> ''DaimlerChrysler confronts the challenges of global integration'', Human Resource Management International Digest, Vol 12 Iss :2 P.5-8</ref> ==

The Integration subject group includes the processes required to identify, define, combine, unify, coordinate, control and close the various activities and processes related to the project (ISO 21500:2012 - 4.2.3.2).

Within this merger, the unification and combination of all operations within the established entity needed to be achieved. To meet this target, a newly corporate culture had to be defined to align working styles. The latter namely radically differ due to major cultural differences, as shown in the following table.



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 5 : Comparison between the German and the American working styles'''
|-
|
! style="background: #ffedd3;" | '''Germany'''
! style="background: #ffedd3;"|'''United States'''
|-
! style="background: #ffedd3;" align="left" |'''Employee working style'''
| Work in a team-oriented environment
| Work individually
|-
! style="background: #ffedd3;" align="left" |'''Writing report'''
| Lengthy reports
| Little paper
|-
! style="background: #ffedd3;" align="left" |'''Decision-making process'''
|
Methodical, based on very detailed plans
|
Using creativity, based on trial-and-error method
|-
! style="background: #ffedd3;" align="left" |'''Meeting'''
|
Extended discussions
|
Short meeting
|-
! style="background: #ffedd3;" align="left" |'''Organizational structure'''
|
Pronounced hierarchy based on top-down-management
|
Flat organizational hierarchy stimulating empowerment of the employees
|-
! style="background: #ffedd3;" align="left" |'''Risk appetite'''
|
Risk adverse culture
|
Risk takers
|}


Due to the fact that this merger was a so-called `merger of equals´, the integration of the two cultures was to combine them to generate a new shared corporate one. It was namely vital that both organizations learn from each other to generate synergy effects. Managers have here a central role to play to define and coordinate the development of this new culture.

Eaton affirmed that it was at the top of the agenda and Thomas Stallkamp, Chrysler President during the negotiation phase, was charged with overseeing this integration process. Some effort went into harmonizing the two corporate cultures. Many seminars and workshops were organized to sensitizing the employees for working with new colleagues with diverging working methods. Furthermore, German was taught to many American managers.

However, given the large gap between the two organizations, it would appear that managers should have undertaken more activities and CEOs should have allocated more resources to bridge the chasm of cultural differences.

In fact, no strong and cohesive organizational culture was created, as illustrated in daily misunderstandings. For instance, the attention Daimler-Benz leaders paid to writing a leaflet sent to employee annoyed Chrysler executives. At the end of 1999, the resignation of Thomas Stallkamp, a 19-year veteran of Chrysler who was highly regarded, might be seen as a failure of the merger integration process after all the effort. Stallkamp is quoted as saying: <nowiki>“</nowiki>The majority of my career has been spent implementing supply chain management. I would like to continue to explore those areas at a less hectic pace<nowiki>”</nowiki>. Were both parties truly willing to cooperate wholeheartedly and to enter compromises to succeed in the numerous integration processes? A negative answer is the root cause of an unachieved integration.

==Time<ref> Sue Cartwright, Cary L. Cooper. ''Mergers and Acquisitions: The Human Factor Paperback'' . January 1, 1992 </ref>==

The Time subject group is all about managing the timely completion of the project. Feasible deadlines taking all known constraints into account need to be set. Processes covered by the latter subject group are the development of schedule for project activities estimating each activity duration, the progress monitoring and the schedule control.

One failure in managing time in DaimlerChrysler merger was that too little time was devoted to each activity. Let´s take a concrete example: Daimler-Benz and Chrysler began formal negotiations on January 12, 1998 and only five months later, the merger was announced worldwide. Susan Cartwright – past President of the British Academy Management – asserts that the period of time from the germ of the merger idea till an agreement is reached is estimated to last around two years. Speeding up the pre-merger preparation, the precise objectives of the fusion and the way to achieve them could not have been defined accurately.
Furthermore, the merger was completed on November 12, 1998. Time needed by employees to adapt to the new circumstances was not taken into account in the deadlines. One more mismanagement which is added to the others.

==Communication==
In the standard ISO 21500:2012, three key processes are defined to ensure appropriate exchange of project information: Plan communications, Distribute information and Manage communications. But within DaimlerChrysler project none of them were totally met. In order to appreciate the scale of the problem, it should be point out that even managers and CEOs experienced serious difficulties in discussing solutions and achieving a consensus. According to a Daimler-Benz executive, <nowiki>"</nowiki>Eaton went weeks without speaking with Jürgen [Schrempp]. He preferred to maintain lower-level contact. Jürgen, meanwhile, left Chrysler alone.<nowiki>"</nowiki> <ref> [http://mba.tuck.dartmouth.edu/pdf/2002-1-0071.pdf] Professor Sydney Finkelstein. ''The DaimlerChrysler Merger.''Tuck School of Business at Dartmouth. 2002 </ref> One would have expected that both CEOs would have shared their different views in order to discover common goal and operate as an effective team at the top. Given the seeming clash of culture described in the first paragraph, it was crucial to start the discussion to create healthy relationship and release the company´s potential. The clearer the communication, the better issues are addressed. But with such a lack of communication among leaders, no far-reaching communication plan could be implemented among all stakeholders involved, not to mention the distribution of the information. Both internal and external communications were chaotic. It is likely that the standard ISO 21500 would have made managers more aware of the processes related to communication which requires to be efficiently tackled.

==Stakeholders==
The stakeholder subject group is concerned with identifying and managing all parties involved. To classify them, both their expectations and influence on the project need to be analyzed. The table 6 provides a power-interest matrix, which is crucial to draw up appropriate management strategies for effectively engaging with them. The external stakeholders are written in italics, the others are internal.

{| border="1" cellpadding="3" cellspacing="0" style="margin:auto;"
|+ '''Table 6 : Power and interest matrix'''
|-
! rowspan="2" style="background: #ffedd3;" | Level of interest
! colspan="5" style="background: #ffedd3;" | Level of power
|-
|style="background: #fff4d3;" align=center | ''' Low '''
|style="background: #fff4d3;" align=center| ''' High '''
|-
|style="background: #fff4d3;" align=center |'''High'''
|
[[Employee]]

Trade Union

''[[Clients]]''

''Suppliers''

''Government''

''Society''
|
Directors

Managers

''[[Stockholders]]''
|-
|style="background: #fff4d3;" align=center |'''Low'''
|
''Competitors''
|

|-
|}

To analyze the management of all of these stakeholders one by one would be tedious. However it is relevant to focus on several categories according to the table 6. Special focus will be laid on the stakeholders written in red. Therefore, both high power/high interest and low power/high interest stakeholders will be looked at. Two of them are internal, whereas the other is internal.

It will be shown that all of them were significantly affected by the DaimlerChrysler project due to mismanagement.

===Employees===
Employees, low-power and high-interest stakeholders, must be kept informed and managers should ensure that no major issues are arising.
However, this was not the case in the DaimlerChrysler merger: employees felt overlooked, disregarded and left out of the merger process. But to what extent CEOs and managers were responsible in this climate of distrust and dislike?

First, soon after the merger, it became obvious that Daimler was taking over the whole company´s management. Chrysler President Stallkamp retirement at the end of 1999 was followed by the one of James P. Holdem, top-level executive of the Chrysler Group. They were replaced by two German managers: Dieter Zetsche and Wolfgang Bernhard. Being lowered to divisional status, it is understandable that American´s morale suffered from this German hegemony. Employee felt eclipsed and were disgusted. They also were worried that DaimlerChrysler would dismiss some of them. But the problems were not confined to be here. Indeed, Jürgen Schrempp attitude only made the situation worse. In autumn 2000, DaimlerChrysler CEO acknowledged in the German financial daily Handelsblatt that <nowiki>“</nowiki>The Merger of Equals statement was necessary in order to earn the support of Chrysler's workers and the American public, but it was never reality<nowiki>"</nowiki>. Many Americans regarded this statement as a betrayal, since Schrempp intended to deceive them from the outset. It appears clear that it is due to the board of directors´ failure in acting responsibly towards the workers that deep-seated distrust ran deep.

Furthermore, such a mismanagement of the employees can lead to far-reaching consequences on the project success itself. Indeed, it could have been that some workers simply did not work as efficiently because they supposed the board of directors did not care about the Chrysler entity – so why should they? Decreased performance would have resulted in it.

It is to notice that even though the standard ''ISO 21500: 2012'' did not exist at that time, the fact that employee influence was of importance to succeed such a process was already known. MaryAnn Keller, founder and managing partner of MaryAnn Keller & Associates LLC, namely stated in June 1998 that <nowiki>“</nowiki>The success of any combination depends on the ability of the new organization to win over the hearts and minds of employees.<nowiki>”</nowiki> <ref> [http://murphylibrary.uwlax.edu/digital/jur/2002/carpiaux.pdf] Nicole Carpiaux. ''DaimlerChrysler : Wunderkind or Problem Child ?'' Faculty Sponsor : Leticia Peña, Department of Management. </ref> The managers of DaimlerChrysler should then be aware that is really a management issue to embrace workers instead to neglect them in order to obtain the best they can offer.

===Clients===
And what about the consumers, low-power and high interest stakeholders?

Once again, one could argue that managers failed to define as well as to meet their needs.
One example is given for illustration. At the time, the DaimlerChrysler A-Class was 1.25 to 2 times more expensive than similar vehicles sold by Volkswagen, Renault or Fiat. This higher price was not deterrent since clients were aware that Daimler-Benz primarily asset was quality and safety. However, in 1999, the A-class failed an emergency maneuver test conducted by a Swedish television station. <ref> Bill Vlasic, Bradley A. Stertz. ''Taken for a Ride: How Daimler-Benz Drove off with Chrysler''. Harper Paperbacks,
2001, p. 300.
</ref> Consequently, client´s satisfaction suddenly drop off the map. The DaimlerChrysler vehicle was considered as an overpriced car which did not achieve engineering excellence compared to the highly competitive European compact market. The crux of the problem may be that the German entity have tried to implant the American low development costs into its entities, disregarding the high expectations of the clients. This paragraph appears to prove that trying to generate synergy savings the managers failed in responding the customer´s needs.

===Stockholders===
Last but not least, the management of both high power and high interest stakeholders needs to be considered. Take the stockholders.

An overwhelming majority of them favored the project of merger in 1998. Approvals ratings reached 99.9% at Daimler-Benz and 97.5% at Chrysler. It may be inferred that, at the outset of the project, managers successfully took into account the processes required to satisfy the shareholders. It did not take long, however, for some of them to express their disappointment. This was the case for Kirk Kerkorian, the third largest proprietor of DailerChrysler stock and largest Chrysler shareholder before the merger. In November 2000, the latter filed a $9 billion lawsuit against DaimlerChrysler for falsifying the terms of the fusion as a “merger of equals”. He was upset with the German hegemony and stated he had voted to turn its shares for stock in DaimlerChrysler without having considered the American entity would be reduced to a mere division. Two months later, he cut his take in the merged company by a third. Even though the managers were not directly involved in this discontent, the lack of acting responsibly of the Board of the director is obvious.

To conclude, the completion of the processes related to each of these three stakeholders lacked efficiency. The managers failed in implementing the required activities to satisfy them and this will become a major hindrance to the project completion.

=Conclusion=
Many factors may affect the failure of the DaimlerChrysler project, but most of them may have been due to its mismanagement. Such a union was notoriously risky, especially due to the opposite companies it combined. To deliver the intent benefits, particular care should then have been taken by managers to tackle all the project management processes.

The use of the standard ''ISO 21500 : 2012'' was made to group the processes in term of Subject Group. It appears clear that there were some omissions, particularly regarding Integration, Time, Communication and Stakeholders. This standard has proven to be useful to analyze a project management, especially in case of cross-boarders project. It is a shame that such a unifying international approach was only established in 2012.

= References =

<references />

[[Category:Project Management]]
[[Category:Human Behaviour]]
[[Category:Complexity]]

Analyzing the failure of the DaimlerChrysler merger from a project management perspective

2014-12-01T20:09:10Z

Lyngby: /* Employees */

'''Abstract'''

In the late 90´s, German Daimler-Benz AG and American Chrysler Corporation announced their intention to combine their strengths within a so-called `merger of equals´ <ref> Grässlin, Jürgen. ''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> . Becoming the fifth largest automaker in the world, both companies hoped to overcome together the automotive industry crisis. However, nothing worked out as planned, so much so that in 2007 Daimler-Benz sold all its shares of the Chrysler division.

Could the use of a norm have guaranteed the success of the DaimlerChrysler merger ? This question will be answered with regard to the ISO 21500:2012 guideline for project management.

According to the latter, a definition of project management and the processes it involves will be provided.Then, an analysis of the origin of DaimlerChrysler project will be carried out. It will also be shown to what extent this fusion was mismanaged with regard to the subject groups defined in the ISO 21500:2012. Last but not least the benefits of using this standard to successfully conduct a complex project will be discussed.

=Introduction=
In the early 21st century, no comprehensive standard on project management was accepted despite the substantial demand for project management skills. However, in 2006, the need for a unifying international approach was recognized by the International Organization for Standard (ISO). The work of over hundreds experts in project management from around the globe resulted in ''ISO 21500: 2012 -Guidance on project management''. This norm defines universal project management terminologies, as well as the principles and processes it involves. It provides a basic guide against which any organization can compare its current project management practices and determine areas in need of improvement. But how to practically apply it to a project? A specific example of project failure prior to introducing ISO 21500 will be provided to analyze which project management processes were disregarded. More particularly, the merger of the German automaker Daimler-Benz with the American Chrysler Corporation will be examined with the perspective of subject group.

= ISO 21500 : 2012, A focus on processes <ref> ISO 21500:2012 ''Guidance on project management'' </ref> <ref> Anton Zandhuis, Rommert Stellingwerf. ''ISO 215000, Guidance on Project managenent, A Pocket Guide''. Van Haren Publishing. 2013 </ref>=

What is a project? A definition is provided by the ISO 21500: “A unique set of processes consisting of coordinated and controlled activities with start and end dates, performed to achieve project objectives.” The concept of processes seems to be at the crux of project management issues. The definition of how to manage a project stresses this point: “Project management is performed through processes”.

Specifically, the norm splits the method of managing a project into 39 elementary processes. Depending on the perspective, the latter are grouped into five process groups (Initiating, Planning, Controlling and Closing) or into ten subject groups (Integration, Stakeholder, Scope, Resource, Time, Cost, Risk, Quality, Procurement and Communication). The classification of these processes is provided in the following table.

{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 1 : Project management cross-referenced to process and subject groups (ISO 21500 : 2012)'''
|-
! rowspan="2" style="background: #ffedd3;" | SUBJECT GROUPS
! colspan="5" style="background: #ffedd3;" | PROCESS GROUPS
|-
|style="background: #fff4d3;" align=center | '''Initiating'''
|style="background: #fff4d3;" align=center| '''Planning'''
|style="background: #fff4d3;" align=center| '''Implementing'''
|style="background: #fff4d3;" align=center | '''Controlling'''
|style="background: #fff4d3;" align=center | '''Closing'''
|-
|style="background: #fff4d3;" |'''Integration'''
|
4.3.2 Develop project chart
|
4.3.3. Develop project plans
|
4.3.4 Direct project work
|
4.3.5 Control project work

4.3.6 Control changes
|
4.3.7 Close project or phase

4.3.8 Collect lessons learned
|-
|style="background: #fff4d3;" |'''Stakeholder'''
|
4.3.9 Identify stakeholders
|

|
4.3.10 Manage stakeholders
|

|

|-
|style="background: #fff4d3;" |'''Scope'''
|

|
4.3.11 Define scope

4.3.12 Create work breakdown structure

4.3.13 Define activities
|

|
4.3.14 Control scope
|

|-
|style="background: #fff4d3;" |'''Resource'''
|
4.3.15 Establish project team
|
4.3.16 Estimate resources

4.3.17 Define project organization
|
4.3.18 Develop project team
|
4.3.19 Control resources

4.3.20 Manage project team
|

|-
|style="background: #fff4d3;" |'''Time'''
|

|
4.3.21 Sequence activities

4.3.22 Estimate activity durations

4.3.23 Develop schedule
|

|
4.3.24 Control schedule
|

|-
|style="background: #fff4d3;" |'''Cost'''
|

|
4.3.25 Estimate costs

4.3.26 Develop budget
|

|
4.3.27 Control costs
|

|-
|style="background: #fff4d3;" |'''Risk'''
|

|
4.3.28 Identify risks

4.3.29 Asses risks
|
4.3.30 Treat risks
|
4.3.31 Control risks
|
|-
|style="background: #fff4d3;" |'''Quality'''
|

|
4.3.32 Plan quality
|
4.3.33 Perform quality assurance
|
4.3.34 Perform quality control
|

|-
|style="background: #fff4d3;" |'''Procurement'''
|

|
4.3.35 Plan procurements
|
4.3.36 Select suppliers
|
4.3.37 Administer procurements
|

|-
|style="background: #fff4d3;" |'''Communication'''
|

|
4.3.38 Plan communications
|
4.3.39 Distribute information
|
4.3.40 Manage communications
|

|}

The perspective of subject groups will be adopted to consider the management of DaimlerChrysler project. A subject is a theme in which processes are classified according to its related activities.

But before that, the project of DaimlerChrysler merger is regarded.

=DaimlerChrysler merger project <ref> Julia Hollmann, Aletéia de Moura Carpes, Thiago Antonio Beuron. ''The DaimlerChrylser Merger- A cultural mismatch ?'' Faculty Sponsor : Universität Paderborn- Germany, Department of International Business Studies. Universidade Federal de Santa Maria- Brazil, Department of Administration. 2010 </ref> =
==The genesis of the project==
In the late 90´s, the automotive industry had to face multiples challenges due to the excess manufacturing capacity, the growth of ecological awareness, and the retail revolution that empowered buyers. To strengthen their position during this crisis, the automakers Daimler-Benz and Chrysler Corporation decided to merge. This project aimed to combine each other´s product designs, manufacturing resources and distribution systems.
The following table shows the complementary of the two companies, which wanted to unit their knowledge and their market in order to gain a competitive advantage.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 2 : The complementary of the two companies '''
|
! style="background: #ffedd3;" |'''Daimler-Benz AG'''
! style="background: #ffedd3;" |'''Chrysler Corporation'''
|-
! style="background: #ffedd3;" |'''Head office location'''
|
Germany
|
United States
|-
! style="background: #ffedd3;" |'''Geographical reach'''
|
European market
|
U.S. American market
|-
! style="background: #ffedd3;" |'''Product ranges'''
|
Uncompromising quality products
|
Car models that meet the American demand for adventurousness
|}


Both synergies and economies of scale were likely to proliferate.

How the project was set up is explained in the following paragraph. However, its detailed description falls outside the scope of this article.

==The execution of the project==
On May 7th, 1998 the signing of the combination agreement between Daimler-Benz and Chrysler was publicly announced. Daimler-Benz CEO Jürgen Schrempp described the union as "a merger of equals, a merger of growth, and a merger of unprecedented strength".
The equal status of the two organizations was reflected in the newly established entity name, DaimlerChrysler, as well as in the combination of the two former boards of management to form the one of DaimlerChrysler. Furthermore, it was agreed that Schrempp and Eaton, former CEO of the Chrysler Corporation, would jointly led the entity as co-chairmen and co-CEOs. It was also decided that Eaton would stay up to three years.
The two following tables provide more data about DaimlerChrysler right after the merger and the expected results of this project.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 3 : Characteristics of DaimlerChrysler right after the merger'''
|-
! style="background: #ffedd3;" |'''Number of employees '''
|442,000 employees
½ in Germany

1/3 in North America

1/6 spread across 200 countries around the world
|-
! style="background: #ffedd3;" |'''Daimler-Benz AG Market capitalization'''
|$ 92 billion
|}



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 4 : Expected results'''
! style="background: #ffedd3;" |Annual revenues of the combined company
|$ 132 billion
|-
! style="background: #ffedd3;" |Increase in sales
|13%
|-
! style="background: #ffedd3;" |Cost savings brought within 2 or 3 years
|$ 3,5 billion a year
|}


So far, this fusion appears to be very beneficial for all parties involved. However the wish for synergy effects never came true and the project drove Chrysler into chaos. In May 2007, the merger of Chrysler and Daimler-Benz was dissolved. Can this failure be ascribed to mismanagement?

The purpose of this article is now to point out which processes, related to the different subject groups definied in ISO 21500:2012 were disregarded and may have led to the project failure.

=The mismanagement of some subject groups <ref> Wanda Curlee, Robert L. Gordon . ''Complexity Theory and Project Management. ''. New York : Wiley, 2011, p. 129-133 </ref> =

Four subject groups will successively be considered : Integration, Time, Communication and Stakeholders. A mismanagement of some processes related to these four specific subject groups is namely to be seen.

==Integration <ref> Grässlin, Jürgen.''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> <ref> ''DaimlerChrysler confronts the challenges of global integration'', Human Resource Management International Digest, Vol 12 Iss :2 P.5-8</ref> ==

The Integration subject group includes the processes required to identify, define, combine, unify, coordinate, control and close the various activities and processes related to the project (ISO 21500:2012 - 4.2.3.2).

Within this merger, the unification and combination of all operations within the established entity needed to be achieved. To meet this target, a newly corporate culture had to be defined to align working styles. The latter namely radically differ due to major cultural differences, as shown in the following table.



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 5 : Comparison between the German and the American working styles'''
|-
|
! style="background: #ffedd3;" | '''Germany'''
! style="background: #ffedd3;"|'''United States'''
|-
! style="background: #ffedd3;" align="left" |'''Employee working style'''
| Work in a team-oriented environment
| Work individually
|-
! style="background: #ffedd3;" align="left" |'''Writing report'''
| Lengthy reports
| Little paper
|-
! style="background: #ffedd3;" align="left" |'''Decision-making process'''
|
Methodical, based on very detailed plans
|
Using creativity, based on trial-and-error method
|-
! style="background: #ffedd3;" align="left" |'''Meeting'''
|
Extended discussions
|
Short meeting
|-
! style="background: #ffedd3;" align="left" |'''Organizational structure'''
|
Pronounced hierarchy based on top-down-management
|
Flat organizational hierarchy stimulating empowerment of the employees
|-
! style="background: #ffedd3;" align="left" |'''Risk appetite'''
|
Risk adverse culture
|
Risk takers
|}


Due to the fact that this merger was a so-called `merger of equals´, the integration of the two cultures was to combine them to generate a new shared corporate one. It was namely vital that both organizations learn from each other to generate synergy effects. Managers have here a central role to play to define and coordinate the development of this new culture.

Eaton affirmed that it was at the top of the agenda and Thomas Stallkamp, Chrysler President during the negotiation phase, was charged with overseeing this integration process. Some effort went into harmonizing the two corporate cultures. Many seminars and workshops were organized to sensitizing the employees for working with new colleagues with diverging working methods. Furthermore, German was taught to many American managers.

However, given the large gap between the two organizations, it would appear that managers should have undertaken more activities and CEOs should have allocated more resources to bridge the chasm of cultural differences.

In fact, no strong and cohesive organizational culture was created, as illustrated in daily misunderstandings. For instance, the attention Daimler-Benz leaders paid to writing a leaflet sent to employee annoyed Chrysler executives. At the end of 1999, the resignation of Thomas Stallkamp, a 19-year veteran of Chrysler who was highly regarded, might be seen as a failure of the merger integration process after all the effort. Stallkamp is quoted as saying: <nowiki>“</nowiki>The majority of my career has been spent implementing supply chain management. I would like to continue to explore those areas at a less hectic pace<nowiki>”</nowiki>. Were both parties truly willing to cooperate wholeheartedly and to enter compromises to succeed in the numerous integration processes? A negative answer is the root cause of an unachieved integration.

==Time<ref> Sue Cartwright, Cary L. Cooper. ''Mergers and Acquisitions: The Human Factor Paperback'' . January 1, 1992 </ref>==

The Time subject group is all about managing the timely completion of the project. Feasible deadlines taking all known constraints into account need to be set. Processes covered by the latter subject group are the development of schedule for project activities estimating each activity duration, the progress monitoring and the schedule control.

One failure in managing time in DaimlerChrysler merger was that too little time was devoted to each activity. Let´s take a concrete example: Daimler-Benz and Chrysler began formal negotiations on January 12, 1998 and only five months later, the merger was announced worldwide. Susan Cartwright – past President of the British Academy Management – asserts that the period of time from the germ of the merger idea till an agreement is reached is estimated to last around two years. Speeding up the pre-merger preparation, the precise objectives of the fusion and the way to achieve them could not have been defined accurately.
Furthermore, the merger was completed on November 12, 1998. Time needed by employees to adapt to the new circumstances was not taken into account in the deadlines. One more mismanagement which is added to the others.

==Communication==
In the standard ISO 21500:2012, three key processes are defined to ensure appropriate exchange of project information: Plan communications, Distribute information and Manage communications. But within DaimlerChrysler project none of them were totally met. In order to appreciate the scale of the problem, it should be point out that even managers and CEOs experienced serious difficulties in discussing solutions and achieving a consensus. According to a Daimler-Benz executive, <nowiki>"</nowiki>Eaton went weeks without speaking with Jürgen [Schrempp]. He preferred to maintain lower-level contact. Jürgen, meanwhile, left Chrysler alone.<nowiki>"</nowiki> <ref> [http://mba.tuck.dartmouth.edu/pdf/2002-1-0071.pdf] Professor Sydney Finkelstein. ''The DaimlerChrysler Merger.''Tuck School of Business at Dartmouth. 2002 </ref> One would have expected that both CEOs would have shared their different views in order to discover common goal and operate as an effective team at the top. Given the seeming clash of culture described in the first paragraph, it was crucial to start the discussion to create healthy relationship and release the company´s potential. The clearer the communication, the better issues are addressed. But with such a lack of communication among leaders, no far-reaching communication plan could be implemented among all stakeholders involved, not to mention the distribution of the information. Both internal and external communications were chaotic. It is likely that the standard ISO 21500 would have made managers more aware of the processes related to communication which requires to be efficiently tackled.

==Stakeholders==
The stakeholder subject group is concerned with identifying and managing all parties involved. To classify them, both their expectations and influence on the project need to be analyzed. The table 6 provides a power-interest matrix, which is crucial to draw up appropriate management strategies for effectively engaging with them. The external stakeholders are written in italics, the others are internal.

{| border="1" cellpadding="3" cellspacing="0" style="margin:auto;"
|+ '''Table 6 : Power and interest matrix'''
|-
! rowspan="2" style="background: #ffedd3;" | Level of interest
! colspan="5" style="background: #ffedd3;" | Level of power
|-
|style="background: #fff4d3;" align=center | ''' Low '''
|style="background: #fff4d3;" align=center| ''' High '''
|-
|style="background: #fff4d3;" align=center |'''High'''
|
[[Employee]]

Trade Union

''[[Clients]]''

''Suppliers''

''Government''

''Society''
|
Directors

Managers

''[[Stockholders]]''
|-
|style="background: #fff4d3;" align=center |'''Low'''
|
''Competitors''
|

|-
|}

To analyze the management of all of these stakeholders one by one would be tedious. However it is relevant to focus on several categories according to the table 6. Special focus will be laid on the stakeholders written in red. Therefore, both high power/high interest and low power/high interest stakeholders will be looked at. Two of them are internal, whereas the other is internal.

It will be shown that all of them were significantly affected by the DaimlerChrysler project due to mismanagement.

===Employees===
Employees, low-power and high-interest stakeholders, must be kept informed and managers should ensure that no major issues are arising.
However, this was not the case in the DaimlerChrysler merger: employees felt overlooked, disregarded and left out of the merger process. But to what extent CEOs and managers were responsible in this climate of distrust and dislike?

First, soon after the merger, it became obvious that Daimler was taking over the whole company´s management. Chrysler President Stallkamp retirement at the end of 1999 was followed by the one of James P. Holdem, top-level executive of the Chrysler Group. They were replaced by two German managers: Dieter Zetsche and Wolfgang Bernhard. Being lowered to divisional status, it is understandable that American´s morale suffered from this German hegemony. Employee felt eclipsed and were disgusted. They also were worried that DaimlerChrysler would dismiss some of them. But the problems were not confined to be here. Indeed, Jürgen Schrempp attitude only made the situation worse. In autumn 2000, DaimlerChrysler CEO acknowledged in the German financial daily Handelsblatt that <nowiki>“</nowiki>The Merger of Equals statement was necessary in order to earn the support of Chrysler's workers and the American public, but it was never reality<nowiki>"</nowiki>. Many Americans regarded this statement as a betrayal, since Schrempp intended to deceive them from the outset. It appears clear that it is due to the board of directors´ failure in acting responsibly towards the workers that deep-seated distrust ran deep.

Furthermore, such a mismanagement of the employees can lead to far-reaching consequences on the project success itself. Indeed, it could have been that some workers simply did not work as efficiently because they supposed the board of directors did not care about the Chrysler entity – so why should they? Decreased performance would have resulted in it.

It is to notice that even though the standard ''ISO 21500: 2012'' did not exist at that time, the fact that employee influence to succeed such a process was of importance was already known. MaryAnn Keller, founder and managing partner of MaryAnn Keller & Associates LLC, namely stated in June 1998 that <nowiki>“</nowiki>The success of any combination depends on the ability of the new organization to win over the hearts and minds of employees.<nowiki>”</nowiki> <ref> [http://murphylibrary.uwlax.edu/digital/jur/2002/carpiaux.pdf] Nicole Carpiaux. ''DaimlerChrysler : Wunderkind or Problem Child ?'' Faculty Sponsor : Leticia Peña, Department of Management. </ref> The managers of DaimlerChrysler should then be aware that is really a management issue to embrace workers instead to neglect them in order to obtain the best they can offer.

===Clients===
And what about the consumers, low-power and high interest stakeholders?

Once again, one could argue that managers failed to define as well as to meet their needs.
One example is given for illustration. At the time, the DaimlerChrysler A-Class was 1.25 to 2 times more expensive than similar vehicles sold by Volkswagen, Renault or Fiat. This higher price was not deterrent since clients were aware that Daimler-Benz primarily asset was quality and safety. However, in 1999, the A-class failed an emergency maneuver test conducted by a Swedish television station. <ref> Bill Vlasic, Bradley A. Stertz. ''Taken for a Ride: How Daimler-Benz Drove off with Chrysler''. Harper Paperbacks,
2001, p. 300.
</ref> Consequently, client´s satisfaction suddenly drop off the map. The DaimlerChrysler vehicle was considered as an overpriced car which did not achieve engineering excellence compared to the highly competitive European compact market. The crux of the problem may be that the German entity have tried to implant the American low development costs into its entities, disregarding the high expectations of the clients. This paragraph appears to prove that trying to generate synergy savings the managers failed in responding the customer´s needs.

===Stockholders===
Last but not least, the management of both high power and high interest stakeholders needs to be considered. Take the stockholders.

An overwhelming majority of them favored the project of merger in 1998. Approvals ratings reached 99.9% at Daimler-Benz and 97.5% at Chrysler. It may be inferred that, at the outset of the project, managers successfully took into account the processes required to satisfy the shareholders. It did not take long, however, for some of them to express their disappointment. This was the case for Kirk Kerkorian, the third largest proprietor of DailerChrysler stock and largest Chrysler shareholder before the merger. In November 2000, the latter filed a $9 billion lawsuit against DaimlerChrysler for falsifying the terms of the fusion as a “merger of equals”. He was upset with the German hegemony and stated he had voted to turn its shares for stock in DaimlerChrysler without having considered the American entity would be reduced to a mere division. Two months later, he cut his take in the merged company by a third. Even though the managers were not directly involved in this discontent, the lack of acting responsibly of the Board of the director is obvious.

To conclude, the completion of the processes related to each of these three stakeholders lacked efficiency. The managers failed in implementing the required activities to satisfy them and this will become a major hindrance to the project completion.

=Conclusion=
Many factors may affect the failure of the DaimlerChrysler project, but most of them may have been due to its mismanagement. Such a union was notoriously risky, especially due to the opposite companies it combined. To deliver the intent benefits, particular care should then have been taken by managers to tackle all the project management processes.

The use of the standard ''ISO 21500 : 2012'' was made to group the processes in term of Subject Group. It appears clear that there were some omissions, particularly regarding Integration, Time, Communication and Stakeholders. This standard has proven to be useful to analyze a project management, especially in case of cross-boarders project. It is a shame that such a unifying international approach was only established in 2012.

= References =

<references />

[[Category:Project Management]]
[[Category:Human Behaviour]]
[[Category:Complexity]]

Analyzing the failure of the DaimlerChrysler merger from a project management perspective

2014-12-01T20:06:39Z

Lyngby: /* Employees */

'''Abstract'''

In the late 90´s, German Daimler-Benz AG and American Chrysler Corporation announced their intention to combine their strengths within a so-called `merger of equals´ <ref> Grässlin, Jürgen. ''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> . Becoming the fifth largest automaker in the world, both companies hoped to overcome together the automotive industry crisis. However, nothing worked out as planned, so much so that in 2007 Daimler-Benz sold all its shares of the Chrysler division.

Could the use of a norm have guaranteed the success of the DaimlerChrysler merger ? This question will be answered with regard to the ISO 21500:2012 guideline for project management.

According to the latter, a definition of project management and the processes it involves will be provided.Then, an analysis of the origin of DaimlerChrysler project will be carried out. It will also be shown to what extent this fusion was mismanaged with regard to the subject groups defined in the ISO 21500:2012. Last but not least the benefits of using this standard to successfully conduct a complex project will be discussed.

=Introduction=
In the early 21st century, no comprehensive standard on project management was accepted despite the substantial demand for project management skills. However, in 2006, the need for a unifying international approach was recognized by the International Organization for Standard (ISO). The work of over hundreds experts in project management from around the globe resulted in ''ISO 21500: 2012 -Guidance on project management''. This norm defines universal project management terminologies, as well as the principles and processes it involves. It provides a basic guide against which any organization can compare its current project management practices and determine areas in need of improvement. But how to practically apply it to a project? A specific example of project failure prior to introducing ISO 21500 will be provided to analyze which project management processes were disregarded. More particularly, the merger of the German automaker Daimler-Benz with the American Chrysler Corporation will be examined with the perspective of subject group.

= ISO 21500 : 2012, A focus on processes <ref> ISO 21500:2012 ''Guidance on project management'' </ref> <ref> Anton Zandhuis, Rommert Stellingwerf. ''ISO 215000, Guidance on Project managenent, A Pocket Guide''. Van Haren Publishing. 2013 </ref>=

What is a project? A definition is provided by the ISO 21500: “A unique set of processes consisting of coordinated and controlled activities with start and end dates, performed to achieve project objectives.” The concept of processes seems to be at the crux of project management issues. The definition of how to manage a project stresses this point: “Project management is performed through processes”.

Specifically, the norm splits the method of managing a project into 39 elementary processes. Depending on the perspective, the latter are grouped into five process groups (Initiating, Planning, Controlling and Closing) or into ten subject groups (Integration, Stakeholder, Scope, Resource, Time, Cost, Risk, Quality, Procurement and Communication). The classification of these processes is provided in the following table.

{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 1 : Project management cross-referenced to process and subject groups (ISO 21500 : 2012)'''
|-
! rowspan="2" style="background: #ffedd3;" | SUBJECT GROUPS
! colspan="5" style="background: #ffedd3;" | PROCESS GROUPS
|-
|style="background: #fff4d3;" align=center | '''Initiating'''
|style="background: #fff4d3;" align=center| '''Planning'''
|style="background: #fff4d3;" align=center| '''Implementing'''
|style="background: #fff4d3;" align=center | '''Controlling'''
|style="background: #fff4d3;" align=center | '''Closing'''
|-
|style="background: #fff4d3;" |'''Integration'''
|
4.3.2 Develop project chart
|
4.3.3. Develop project plans
|
4.3.4 Direct project work
|
4.3.5 Control project work

4.3.6 Control changes
|
4.3.7 Close project or phase

4.3.8 Collect lessons learned
|-
|style="background: #fff4d3;" |'''Stakeholder'''
|
4.3.9 Identify stakeholders
|

|
4.3.10 Manage stakeholders
|

|

|-
|style="background: #fff4d3;" |'''Scope'''
|

|
4.3.11 Define scope

4.3.12 Create work breakdown structure

4.3.13 Define activities
|

|
4.3.14 Control scope
|

|-
|style="background: #fff4d3;" |'''Resource'''
|
4.3.15 Establish project team
|
4.3.16 Estimate resources

4.3.17 Define project organization
|
4.3.18 Develop project team
|
4.3.19 Control resources

4.3.20 Manage project team
|

|-
|style="background: #fff4d3;" |'''Time'''
|

|
4.3.21 Sequence activities

4.3.22 Estimate activity durations

4.3.23 Develop schedule
|

|
4.3.24 Control schedule
|

|-
|style="background: #fff4d3;" |'''Cost'''
|

|
4.3.25 Estimate costs

4.3.26 Develop budget
|

|
4.3.27 Control costs
|

|-
|style="background: #fff4d3;" |'''Risk'''
|

|
4.3.28 Identify risks

4.3.29 Asses risks
|
4.3.30 Treat risks
|
4.3.31 Control risks
|
|-
|style="background: #fff4d3;" |'''Quality'''
|

|
4.3.32 Plan quality
|
4.3.33 Perform quality assurance
|
4.3.34 Perform quality control
|

|-
|style="background: #fff4d3;" |'''Procurement'''
|

|
4.3.35 Plan procurements
|
4.3.36 Select suppliers
|
4.3.37 Administer procurements
|

|-
|style="background: #fff4d3;" |'''Communication'''
|

|
4.3.38 Plan communications
|
4.3.39 Distribute information
|
4.3.40 Manage communications
|

|}

The perspective of subject groups will be adopted to consider the management of DaimlerChrysler project. A subject is a theme in which processes are classified according to its related activities.

But before that, the project of DaimlerChrysler merger is regarded.

=DaimlerChrysler merger project <ref> Julia Hollmann, Aletéia de Moura Carpes, Thiago Antonio Beuron. ''The DaimlerChrylser Merger- A cultural mismatch ?'' Faculty Sponsor : Universität Paderborn- Germany, Department of International Business Studies. Universidade Federal de Santa Maria- Brazil, Department of Administration. 2010 </ref> =
==The genesis of the project==
In the late 90´s, the automotive industry had to face multiples challenges due to the excess manufacturing capacity, the growth of ecological awareness, and the retail revolution that empowered buyers. To strengthen their position during this crisis, the automakers Daimler-Benz and Chrysler Corporation decided to merge. This project aimed to combine each other´s product designs, manufacturing resources and distribution systems.
The following table shows the complementary of the two companies, which wanted to unit their knowledge and their market in order to gain a competitive advantage.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 2 : The complementary of the two companies '''
|
! style="background: #ffedd3;" |'''Daimler-Benz AG'''
! style="background: #ffedd3;" |'''Chrysler Corporation'''
|-
! style="background: #ffedd3;" |'''Head office location'''
|
Germany
|
United States
|-
! style="background: #ffedd3;" |'''Geographical reach'''
|
European market
|
U.S. American market
|-
! style="background: #ffedd3;" |'''Product ranges'''
|
Uncompromising quality products
|
Car models that meet the American demand for adventurousness
|}


Both synergies and economies of scale were likely to proliferate.

How the project was set up is explained in the following paragraph. However, its detailed description falls outside the scope of this article.

==The execution of the project==
On May 7th, 1998 the signing of the combination agreement between Daimler-Benz and Chrysler was publicly announced. Daimler-Benz CEO Jürgen Schrempp described the union as "a merger of equals, a merger of growth, and a merger of unprecedented strength".
The equal status of the two organizations was reflected in the newly established entity name, DaimlerChrysler, as well as in the combination of the two former boards of management to form the one of DaimlerChrysler. Furthermore, it was agreed that Schrempp and Eaton, former CEO of the Chrysler Corporation, would jointly led the entity as co-chairmen and co-CEOs. It was also decided that Eaton would stay up to three years.
The two following tables provide more data about DaimlerChrysler right after the merger and the expected results of this project.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 3 : Characteristics of DaimlerChrysler right after the merger'''
|-
! style="background: #ffedd3;" |'''Number of employees '''
|442,000 employees
½ in Germany

1/3 in North America

1/6 spread across 200 countries around the world
|-
! style="background: #ffedd3;" |'''Daimler-Benz AG Market capitalization'''
|$ 92 billion
|}



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 4 : Expected results'''
! style="background: #ffedd3;" |Annual revenues of the combined company
|$ 132 billion
|-
! style="background: #ffedd3;" |Increase in sales
|13%
|-
! style="background: #ffedd3;" |Cost savings brought within 2 or 3 years
|$ 3,5 billion a year
|}


So far, this fusion appears to be very beneficial for all parties involved. However the wish for synergy effects never came true and the project drove Chrysler into chaos. In May 2007, the merger of Chrysler and Daimler-Benz was dissolved. Can this failure be ascribed to mismanagement?

The purpose of this article is now to point out which processes, related to the different subject groups definied in ISO 21500:2012 were disregarded and may have led to the project failure.

=The mismanagement of some subject groups <ref> Wanda Curlee, Robert L. Gordon . ''Complexity Theory and Project Management. ''. New York : Wiley, 2011, p. 129-133 </ref> =

Four subject groups will successively be considered : Integration, Time, Communication and Stakeholders. A mismanagement of some processes related to these four specific subject groups is namely to be seen.

==Integration <ref> Grässlin, Jürgen.''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> <ref> ''DaimlerChrysler confronts the challenges of global integration'', Human Resource Management International Digest, Vol 12 Iss :2 P.5-8</ref> ==

The Integration subject group includes the processes required to identify, define, combine, unify, coordinate, control and close the various activities and processes related to the project (ISO 21500:2012 - 4.2.3.2).

Within this merger, the unification and combination of all operations within the established entity needed to be achieved. To meet this target, a newly corporate culture had to be defined to align working styles. The latter namely radically differ due to major cultural differences, as shown in the following table.



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 5 : Comparison between the German and the American working styles'''
|-
|
! style="background: #ffedd3;" | '''Germany'''
! style="background: #ffedd3;"|'''United States'''
|-
! style="background: #ffedd3;" align="left" |'''Employee working style'''
| Work in a team-oriented environment
| Work individually
|-
! style="background: #ffedd3;" align="left" |'''Writing report'''
| Lengthy reports
| Little paper
|-
! style="background: #ffedd3;" align="left" |'''Decision-making process'''
|
Methodical, based on very detailed plans
|
Using creativity, based on trial-and-error method
|-
! style="background: #ffedd3;" align="left" |'''Meeting'''
|
Extended discussions
|
Short meeting
|-
! style="background: #ffedd3;" align="left" |'''Organizational structure'''
|
Pronounced hierarchy based on top-down-management
|
Flat organizational hierarchy stimulating empowerment of the employees
|-
! style="background: #ffedd3;" align="left" |'''Risk appetite'''
|
Risk adverse culture
|
Risk takers
|}


Due to the fact that this merger was a so-called `merger of equals´, the integration of the two cultures was to combine them to generate a new shared corporate one. It was namely vital that both organizations learn from each other to generate synergy effects. Managers have here a central role to play to define and coordinate the development of this new culture.

Eaton affirmed that it was at the top of the agenda and Thomas Stallkamp, Chrysler President during the negotiation phase, was charged with overseeing this integration process. Some effort went into harmonizing the two corporate cultures. Many seminars and workshops were organized to sensitizing the employees for working with new colleagues with diverging working methods. Furthermore, German was taught to many American managers.

However, given the large gap between the two organizations, it would appear that managers should have undertaken more activities and CEOs should have allocated more resources to bridge the chasm of cultural differences.

In fact, no strong and cohesive organizational culture was created, as illustrated in daily misunderstandings. For instance, the attention Daimler-Benz leaders paid to writing a leaflet sent to employee annoyed Chrysler executives. At the end of 1999, the resignation of Thomas Stallkamp, a 19-year veteran of Chrysler who was highly regarded, might be seen as a failure of the merger integration process after all the effort. Stallkamp is quoted as saying: <nowiki>“</nowiki>The majority of my career has been spent implementing supply chain management. I would like to continue to explore those areas at a less hectic pace<nowiki>”</nowiki>. Were both parties truly willing to cooperate wholeheartedly and to enter compromises to succeed in the numerous integration processes? A negative answer is the root cause of an unachieved integration.

==Time<ref> Sue Cartwright, Cary L. Cooper. ''Mergers and Acquisitions: The Human Factor Paperback'' . January 1, 1992 </ref>==

The Time subject group is all about managing the timely completion of the project. Feasible deadlines taking all known constraints into account need to be set. Processes covered by the latter subject group are the development of schedule for project activities estimating each activity duration, the progress monitoring and the schedule control.

One failure in managing time in DaimlerChrysler merger was that too little time was devoted to each activity. Let´s take a concrete example: Daimler-Benz and Chrysler began formal negotiations on January 12, 1998 and only five months later, the merger was announced worldwide. Susan Cartwright – past President of the British Academy Management – asserts that the period of time from the germ of the merger idea till an agreement is reached is estimated to last around two years. Speeding up the pre-merger preparation, the precise objectives of the fusion and the way to achieve them could not have been defined accurately.
Furthermore, the merger was completed on November 12, 1998. Time needed by employees to adapt to the new circumstances was not taken into account in the deadlines. One more mismanagement which is added to the others.

==Communication==
In the standard ISO 21500:2012, three key processes are defined to ensure appropriate exchange of project information: Plan communications, Distribute information and Manage communications. But within DaimlerChrysler project none of them were totally met. In order to appreciate the scale of the problem, it should be point out that even managers and CEOs experienced serious difficulties in discussing solutions and achieving a consensus. According to a Daimler-Benz executive, <nowiki>"</nowiki>Eaton went weeks without speaking with Jürgen [Schrempp]. He preferred to maintain lower-level contact. Jürgen, meanwhile, left Chrysler alone.<nowiki>"</nowiki> <ref> [http://mba.tuck.dartmouth.edu/pdf/2002-1-0071.pdf] Professor Sydney Finkelstein. ''The DaimlerChrysler Merger.''Tuck School of Business at Dartmouth. 2002 </ref> One would have expected that both CEOs would have shared their different views in order to discover common goal and operate as an effective team at the top. Given the seeming clash of culture described in the first paragraph, it was crucial to start the discussion to create healthy relationship and release the company´s potential. The clearer the communication, the better issues are addressed. But with such a lack of communication among leaders, no far-reaching communication plan could be implemented among all stakeholders involved, not to mention the distribution of the information. Both internal and external communications were chaotic. It is likely that the standard ISO 21500 would have made managers more aware of the processes related to communication which requires to be efficiently tackled.

==Stakeholders==
The stakeholder subject group is concerned with identifying and managing all parties involved. To classify them, both their expectations and influence on the project need to be analyzed. The table 6 provides a power-interest matrix, which is crucial to draw up appropriate management strategies for effectively engaging with them. The external stakeholders are written in italics, the others are internal.

{| border="1" cellpadding="3" cellspacing="0" style="margin:auto;"
|+ '''Table 6 : Power and interest matrix'''
|-
! rowspan="2" style="background: #ffedd3;" | Level of interest
! colspan="5" style="background: #ffedd3;" | Level of power
|-
|style="background: #fff4d3;" align=center | ''' Low '''
|style="background: #fff4d3;" align=center| ''' High '''
|-
|style="background: #fff4d3;" align=center |'''High'''
|
[[Employee]]

Trade Union

''[[Clients]]''

''Suppliers''

''Government''

''Society''
|
Directors

Managers

''[[Stockholders]]''
|-
|style="background: #fff4d3;" align=center |'''Low'''
|
''Competitors''
|

|-
|}

To analyze the management of all of these stakeholders one by one would be tedious. However it is relevant to focus on several categories according to the table 6. Special focus will be laid on the stakeholders written in red. Therefore, both high power/high interest and low power/high interest stakeholders will be looked at. Two of them are internal, whereas the other is internal.

It will be shown that all of them were significantly affected by the DaimlerChrysler project due to mismanagement.

===Employees===
Employees, low-power and high-interest stakeholders, must be kept informed and managers should ensure that no major issues are arising.
However, this was not the case in the DaimlerChrysler merger: employees felt overlooked, disregarded and left out of the merger process. But to what extent CEOs and managers were responsible in this climate of distrust and dislike?

First, soon after the merger, it became obvious that Daimler was taking over the whole company´s management. Chrysler President Stallkamp retirement at the end of 1999 was followed by the one of James P. Holdem, top-level executive of the Chrysler Group. They were replaced by two German managers: Dieter Zetsche and Wolfgang Bernhard. Being lowered to divisional status, it is understandable that American´s morale suffered from this German hegemony. Employee felt eclipsed and were disgusted. They also were worried that DaimlerChrysler would dismiss some of them. But the problems were not confined to be here. Indeed, Jürgen Schrempp attitude only made the situation worse. In autumn 2000, DaimlerChrysler CEO acknowledged in the German financial daily Handelsblatt that <nowiki>“</nowiki>The Merger of Equals statement was necessary in order to earn the support of Chrysler's workers and the American public, but it was never reality<nowiki>"</nowiki>. Many Americans regarded this statement as a betrayal, since Schrempp intended to deceive them from the outset. It appears clear that it is due to the board of directors´ failure in acting responsibly towards the workers that deep-seated distrust ran deep.

Furthermore, such a mismanagement of the employees can lead to far-reaching consequences on the project success itself. Indeed, it could be that some workers simply do not work as efficiently because they suppose the Board of Directors doesn’t care about the Chrysler entity – so why should they? Decreased performance would result in it.

It is to notice that even though the standard ''ISO 21500: 2012'' did not exist at that time, the fact that employee influence to succeed such a process was of importance was already known. MaryAnn Keller, founder and managing partner of MaryAnn Keller & Associates LLC, namely stated in June 1998 that <nowiki>“</nowiki>The success of any combination depends on the ability of the new organization to win over the hearts and minds of employees.<nowiki>”</nowiki> <ref> [http://murphylibrary.uwlax.edu/digital/jur/2002/carpiaux.pdf] Nicole Carpiaux. ''DaimlerChrysler : Wunderkind or Problem Child ?'' Faculty Sponsor : Leticia Peña, Department of Management. </ref> The managers of DaimlerChrysler should then be aware that is really a management issue to embrace workers instead to neglect them in order to obtain the best they can offer.

===Clients===
And what about the consumers, low-power and high interest stakeholders?

Once again, one could argue that managers failed to define as well as to meet their needs.
One example is given for illustration. At the time, the DaimlerChrysler A-Class was 1.25 to 2 times more expensive than similar vehicles sold by Volkswagen, Renault or Fiat. This higher price was not deterrent since clients were aware that Daimler-Benz primarily asset was quality and safety. However, in 1999, the A-class failed an emergency maneuver test conducted by a Swedish television station. <ref> Bill Vlasic, Bradley A. Stertz. ''Taken for a Ride: How Daimler-Benz Drove off with Chrysler''. Harper Paperbacks,
2001, p. 300.
</ref> Consequently, client´s satisfaction suddenly drop off the map. The DaimlerChrysler vehicle was considered as an overpriced car which did not achieve engineering excellence compared to the highly competitive European compact market. The crux of the problem may be that the German entity have tried to implant the American low development costs into its entities, disregarding the high expectations of the clients. This paragraph appears to prove that trying to generate synergy savings the managers failed in responding the customer´s needs.

===Stockholders===
Last but not least, the management of both high power and high interest stakeholders needs to be considered. Take the stockholders.

An overwhelming majority of them favored the project of merger in 1998. Approvals ratings reached 99.9% at Daimler-Benz and 97.5% at Chrysler. It may be inferred that, at the outset of the project, managers successfully took into account the processes required to satisfy the shareholders. It did not take long, however, for some of them to express their disappointment. This was the case for Kirk Kerkorian, the third largest proprietor of DailerChrysler stock and largest Chrysler shareholder before the merger. In November 2000, the latter filed a $9 billion lawsuit against DaimlerChrysler for falsifying the terms of the fusion as a “merger of equals”. He was upset with the German hegemony and stated he had voted to turn its shares for stock in DaimlerChrysler without having considered the American entity would be reduced to a mere division. Two months later, he cut his take in the merged company by a third. Even though the managers were not directly involved in this discontent, the lack of acting responsibly of the Board of the director is obvious.

To conclude, the completion of the processes related to each of these three stakeholders lacked efficiency. The managers failed in implementing the required activities to satisfy them and this will become a major hindrance to the project completion.

=Conclusion=
Many factors may affect the failure of the DaimlerChrysler project, but most of them may have been due to its mismanagement. Such a union was notoriously risky, especially due to the opposite companies it combined. To deliver the intent benefits, particular care should then have been taken by managers to tackle all the project management processes.

The use of the standard ''ISO 21500 : 2012'' was made to group the processes in term of Subject Group. It appears clear that there were some omissions, particularly regarding Integration, Time, Communication and Stakeholders. This standard has proven to be useful to analyze a project management, especially in case of cross-boarders project. It is a shame that such a unifying international approach was only established in 2012.

= References =

<references />

[[Category:Project Management]]
[[Category:Human Behaviour]]
[[Category:Complexity]]

Analyzing the failure of the DaimlerChrysler merger from a project management perspective

2014-12-01T20:05:18Z

Lyngby: /* Employees */

'''Abstract'''

In the late 90´s, German Daimler-Benz AG and American Chrysler Corporation announced their intention to combine their strengths within a so-called `merger of equals´ <ref> Grässlin, Jürgen. ''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> . Becoming the fifth largest automaker in the world, both companies hoped to overcome together the automotive industry crisis. However, nothing worked out as planned, so much so that in 2007 Daimler-Benz sold all its shares of the Chrysler division.

Could the use of a norm have guaranteed the success of the DaimlerChrysler merger ? This question will be answered with regard to the ISO 21500:2012 guideline for project management.

According to the latter, a definition of project management and the processes it involves will be provided.Then, an analysis of the origin of DaimlerChrysler project will be carried out. It will also be shown to what extent this fusion was mismanaged with regard to the subject groups defined in the ISO 21500:2012. Last but not least the benefits of using this standard to successfully conduct a complex project will be discussed.

=Introduction=
In the early 21st century, no comprehensive standard on project management was accepted despite the substantial demand for project management skills. However, in 2006, the need for a unifying international approach was recognized by the International Organization for Standard (ISO). The work of over hundreds experts in project management from around the globe resulted in ''ISO 21500: 2012 -Guidance on project management''. This norm defines universal project management terminologies, as well as the principles and processes it involves. It provides a basic guide against which any organization can compare its current project management practices and determine areas in need of improvement. But how to practically apply it to a project? A specific example of project failure prior to introducing ISO 21500 will be provided to analyze which project management processes were disregarded. More particularly, the merger of the German automaker Daimler-Benz with the American Chrysler Corporation will be examined with the perspective of subject group.

= ISO 21500 : 2012, A focus on processes <ref> ISO 21500:2012 ''Guidance on project management'' </ref> <ref> Anton Zandhuis, Rommert Stellingwerf. ''ISO 215000, Guidance on Project managenent, A Pocket Guide''. Van Haren Publishing. 2013 </ref>=

What is a project? A definition is provided by the ISO 21500: “A unique set of processes consisting of coordinated and controlled activities with start and end dates, performed to achieve project objectives.” The concept of processes seems to be at the crux of project management issues. The definition of how to manage a project stresses this point: “Project management is performed through processes”.

Specifically, the norm splits the method of managing a project into 39 elementary processes. Depending on the perspective, the latter are grouped into five process groups (Initiating, Planning, Controlling and Closing) or into ten subject groups (Integration, Stakeholder, Scope, Resource, Time, Cost, Risk, Quality, Procurement and Communication). The classification of these processes is provided in the following table.

{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 1 : Project management cross-referenced to process and subject groups (ISO 21500 : 2012)'''
|-
! rowspan="2" style="background: #ffedd3;" | SUBJECT GROUPS
! colspan="5" style="background: #ffedd3;" | PROCESS GROUPS
|-
|style="background: #fff4d3;" align=center | '''Initiating'''
|style="background: #fff4d3;" align=center| '''Planning'''
|style="background: #fff4d3;" align=center| '''Implementing'''
|style="background: #fff4d3;" align=center | '''Controlling'''
|style="background: #fff4d3;" align=center | '''Closing'''
|-
|style="background: #fff4d3;" |'''Integration'''
|
4.3.2 Develop project chart
|
4.3.3. Develop project plans
|
4.3.4 Direct project work
|
4.3.5 Control project work

4.3.6 Control changes
|
4.3.7 Close project or phase

4.3.8 Collect lessons learned
|-
|style="background: #fff4d3;" |'''Stakeholder'''
|
4.3.9 Identify stakeholders
|

|
4.3.10 Manage stakeholders
|

|

|-
|style="background: #fff4d3;" |'''Scope'''
|

|
4.3.11 Define scope

4.3.12 Create work breakdown structure

4.3.13 Define activities
|

|
4.3.14 Control scope
|

|-
|style="background: #fff4d3;" |'''Resource'''
|
4.3.15 Establish project team
|
4.3.16 Estimate resources

4.3.17 Define project organization
|
4.3.18 Develop project team
|
4.3.19 Control resources

4.3.20 Manage project team
|

|-
|style="background: #fff4d3;" |'''Time'''
|

|
4.3.21 Sequence activities

4.3.22 Estimate activity durations

4.3.23 Develop schedule
|

|
4.3.24 Control schedule
|

|-
|style="background: #fff4d3;" |'''Cost'''
|

|
4.3.25 Estimate costs

4.3.26 Develop budget
|

|
4.3.27 Control costs
|

|-
|style="background: #fff4d3;" |'''Risk'''
|

|
4.3.28 Identify risks

4.3.29 Asses risks
|
4.3.30 Treat risks
|
4.3.31 Control risks
|
|-
|style="background: #fff4d3;" |'''Quality'''
|

|
4.3.32 Plan quality
|
4.3.33 Perform quality assurance
|
4.3.34 Perform quality control
|

|-
|style="background: #fff4d3;" |'''Procurement'''
|

|
4.3.35 Plan procurements
|
4.3.36 Select suppliers
|
4.3.37 Administer procurements
|

|-
|style="background: #fff4d3;" |'''Communication'''
|

|
4.3.38 Plan communications
|
4.3.39 Distribute information
|
4.3.40 Manage communications
|

|}

The perspective of subject groups will be adopted to consider the management of DaimlerChrysler project. A subject is a theme in which processes are classified according to its related activities.

But before that, the project of DaimlerChrysler merger is regarded.

=DaimlerChrysler merger project <ref> Julia Hollmann, Aletéia de Moura Carpes, Thiago Antonio Beuron. ''The DaimlerChrylser Merger- A cultural mismatch ?'' Faculty Sponsor : Universität Paderborn- Germany, Department of International Business Studies. Universidade Federal de Santa Maria- Brazil, Department of Administration. 2010 </ref> =
==The genesis of the project==
In the late 90´s, the automotive industry had to face multiples challenges due to the excess manufacturing capacity, the growth of ecological awareness, and the retail revolution that empowered buyers. To strengthen their position during this crisis, the automakers Daimler-Benz and Chrysler Corporation decided to merge. This project aimed to combine each other´s product designs, manufacturing resources and distribution systems.
The following table shows the complementary of the two companies, which wanted to unit their knowledge and their market in order to gain a competitive advantage.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 2 : The complementary of the two companies '''
|
! style="background: #ffedd3;" |'''Daimler-Benz AG'''
! style="background: #ffedd3;" |'''Chrysler Corporation'''
|-
! style="background: #ffedd3;" |'''Head office location'''
|
Germany
|
United States
|-
! style="background: #ffedd3;" |'''Geographical reach'''
|
European market
|
U.S. American market
|-
! style="background: #ffedd3;" |'''Product ranges'''
|
Uncompromising quality products
|
Car models that meet the American demand for adventurousness
|}


Both synergies and economies of scale were likely to proliferate.

How the project was set up is explained in the following paragraph. However, its detailed description falls outside the scope of this article.

==The execution of the project==
On May 7th, 1998 the signing of the combination agreement between Daimler-Benz and Chrysler was publicly announced. Daimler-Benz CEO Jürgen Schrempp described the union as "a merger of equals, a merger of growth, and a merger of unprecedented strength".
The equal status of the two organizations was reflected in the newly established entity name, DaimlerChrysler, as well as in the combination of the two former boards of management to form the one of DaimlerChrysler. Furthermore, it was agreed that Schrempp and Eaton, former CEO of the Chrysler Corporation, would jointly led the entity as co-chairmen and co-CEOs. It was also decided that Eaton would stay up to three years.
The two following tables provide more data about DaimlerChrysler right after the merger and the expected results of this project.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 3 : Characteristics of DaimlerChrysler right after the merger'''
|-
! style="background: #ffedd3;" |'''Number of employees '''
|442,000 employees
½ in Germany

1/3 in North America

1/6 spread across 200 countries around the world
|-
! style="background: #ffedd3;" |'''Daimler-Benz AG Market capitalization'''
|$ 92 billion
|}



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 4 : Expected results'''
! style="background: #ffedd3;" |Annual revenues of the combined company
|$ 132 billion
|-
! style="background: #ffedd3;" |Increase in sales
|13%
|-
! style="background: #ffedd3;" |Cost savings brought within 2 or 3 years
|$ 3,5 billion a year
|}


So far, this fusion appears to be very beneficial for all parties involved. However the wish for synergy effects never came true and the project drove Chrysler into chaos. In May 2007, the merger of Chrysler and Daimler-Benz was dissolved. Can this failure be ascribed to mismanagement?

The purpose of this article is now to point out which processes, related to the different subject groups definied in ISO 21500:2012 were disregarded and may have led to the project failure.

=The mismanagement of some subject groups <ref> Wanda Curlee, Robert L. Gordon . ''Complexity Theory and Project Management. ''. New York : Wiley, 2011, p. 129-133 </ref> =

Four subject groups will successively be considered : Integration, Time, Communication and Stakeholders. A mismanagement of some processes related to these four specific subject groups is namely to be seen.

==Integration <ref> Grässlin, Jürgen.''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> <ref> ''DaimlerChrysler confronts the challenges of global integration'', Human Resource Management International Digest, Vol 12 Iss :2 P.5-8</ref> ==

The Integration subject group includes the processes required to identify, define, combine, unify, coordinate, control and close the various activities and processes related to the project (ISO 21500:2012 - 4.2.3.2).

Within this merger, the unification and combination of all operations within the established entity needed to be achieved. To meet this target, a newly corporate culture had to be defined to align working styles. The latter namely radically differ due to major cultural differences, as shown in the following table.



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 5 : Comparison between the German and the American working styles'''
|-
|
! style="background: #ffedd3;" | '''Germany'''
! style="background: #ffedd3;"|'''United States'''
|-
! style="background: #ffedd3;" align="left" |'''Employee working style'''
| Work in a team-oriented environment
| Work individually
|-
! style="background: #ffedd3;" align="left" |'''Writing report'''
| Lengthy reports
| Little paper
|-
! style="background: #ffedd3;" align="left" |'''Decision-making process'''
|
Methodical, based on very detailed plans
|
Using creativity, based on trial-and-error method
|-
! style="background: #ffedd3;" align="left" |'''Meeting'''
|
Extended discussions
|
Short meeting
|-
! style="background: #ffedd3;" align="left" |'''Organizational structure'''
|
Pronounced hierarchy based on top-down-management
|
Flat organizational hierarchy stimulating empowerment of the employees
|-
! style="background: #ffedd3;" align="left" |'''Risk appetite'''
|
Risk adverse culture
|
Risk takers
|}


Due to the fact that this merger was a so-called `merger of equals´, the integration of the two cultures was to combine them to generate a new shared corporate one. It was namely vital that both organizations learn from each other to generate synergy effects. Managers have here a central role to play to define and coordinate the development of this new culture.

Eaton affirmed that it was at the top of the agenda and Thomas Stallkamp, Chrysler President during the negotiation phase, was charged with overseeing this integration process. Some effort went into harmonizing the two corporate cultures. Many seminars and workshops were organized to sensitizing the employees for working with new colleagues with diverging working methods. Furthermore, German was taught to many American managers.

However, given the large gap between the two organizations, it would appear that managers should have undertaken more activities and CEOs should have allocated more resources to bridge the chasm of cultural differences.

In fact, no strong and cohesive organizational culture was created, as illustrated in daily misunderstandings. For instance, the attention Daimler-Benz leaders paid to writing a leaflet sent to employee annoyed Chrysler executives. At the end of 1999, the resignation of Thomas Stallkamp, a 19-year veteran of Chrysler who was highly regarded, might be seen as a failure of the merger integration process after all the effort. Stallkamp is quoted as saying: <nowiki>“</nowiki>The majority of my career has been spent implementing supply chain management. I would like to continue to explore those areas at a less hectic pace<nowiki>”</nowiki>. Were both parties truly willing to cooperate wholeheartedly and to enter compromises to succeed in the numerous integration processes? A negative answer is the root cause of an unachieved integration.

==Time<ref> Sue Cartwright, Cary L. Cooper. ''Mergers and Acquisitions: The Human Factor Paperback'' . January 1, 1992 </ref>==

The Time subject group is all about managing the timely completion of the project. Feasible deadlines taking all known constraints into account need to be set. Processes covered by the latter subject group are the development of schedule for project activities estimating each activity duration, the progress monitoring and the schedule control.

One failure in managing time in DaimlerChrysler merger was that too little time was devoted to each activity. Let´s take a concrete example: Daimler-Benz and Chrysler began formal negotiations on January 12, 1998 and only five months later, the merger was announced worldwide. Susan Cartwright – past President of the British Academy Management – asserts that the period of time from the germ of the merger idea till an agreement is reached is estimated to last around two years. Speeding up the pre-merger preparation, the precise objectives of the fusion and the way to achieve them could not have been defined accurately.
Furthermore, the merger was completed on November 12, 1998. Time needed by employees to adapt to the new circumstances was not taken into account in the deadlines. One more mismanagement which is added to the others.

==Communication==
In the standard ISO 21500:2012, three key processes are defined to ensure appropriate exchange of project information: Plan communications, Distribute information and Manage communications. But within DaimlerChrysler project none of them were totally met. In order to appreciate the scale of the problem, it should be point out that even managers and CEOs experienced serious difficulties in discussing solutions and achieving a consensus. According to a Daimler-Benz executive, <nowiki>"</nowiki>Eaton went weeks without speaking with Jürgen [Schrempp]. He preferred to maintain lower-level contact. Jürgen, meanwhile, left Chrysler alone.<nowiki>"</nowiki> <ref> [http://mba.tuck.dartmouth.edu/pdf/2002-1-0071.pdf] Professor Sydney Finkelstein. ''The DaimlerChrysler Merger.''Tuck School of Business at Dartmouth. 2002 </ref> One would have expected that both CEOs would have shared their different views in order to discover common goal and operate as an effective team at the top. Given the seeming clash of culture described in the first paragraph, it was crucial to start the discussion to create healthy relationship and release the company´s potential. The clearer the communication, the better issues are addressed. But with such a lack of communication among leaders, no far-reaching communication plan could be implemented among all stakeholders involved, not to mention the distribution of the information. Both internal and external communications were chaotic. It is likely that the standard ISO 21500 would have made managers more aware of the processes related to communication which requires to be efficiently tackled.

==Stakeholders==
The stakeholder subject group is concerned with identifying and managing all parties involved. To classify them, both their expectations and influence on the project need to be analyzed. The table 6 provides a power-interest matrix, which is crucial to draw up appropriate management strategies for effectively engaging with them. The external stakeholders are written in italics, the others are internal.

{| border="1" cellpadding="3" cellspacing="0" style="margin:auto;"
|+ '''Table 6 : Power and interest matrix'''
|-
! rowspan="2" style="background: #ffedd3;" | Level of interest
! colspan="5" style="background: #ffedd3;" | Level of power
|-
|style="background: #fff4d3;" align=center | ''' Low '''
|style="background: #fff4d3;" align=center| ''' High '''
|-
|style="background: #fff4d3;" align=center |'''High'''
|
[[Employee]]

Trade Union

''[[Clients]]''

''Suppliers''

''Government''

''Society''
|
Directors

Managers

''[[Stockholders]]''
|-
|style="background: #fff4d3;" align=center |'''Low'''
|
''Competitors''
|

|-
|}

To analyze the management of all of these stakeholders one by one would be tedious. However it is relevant to focus on several categories according to the table 6. Special focus will be laid on the stakeholders written in red. Therefore, both high power/high interest and low power/high interest stakeholders will be looked at. Two of them are internal, whereas the other is internal.

It will be shown that all of them were significantly affected by the DaimlerChrysler project due to mismanagement.

===Employees===
Employees, low-power and high-interest stakeholders, must be kept informed and managers should ensure that no major issues are arising.
However, this was not the case in the DaimlerChrysler merger: employees felt overlooked, disregarded and left out of the merger process. But to what extent CEOs and managers were responsible in this climate of distrust and dislike?

First, soon after the merger, it became obvious that Daimler was taking over the whole company´s management. Chrysler President Stallkamp retirement at the end of 1999 was followed by the one of James P. Holdem, top-level executive of the Chrysler Group. They were replaced by two German managers: Dieter Zetsche and Wolfgang Bernhard. Being lowered to divisional status, it is understandable that American´s morale suffered from this German hegemony. Employee felt eclipsed and were disgusted. They also were worried that DaimlerChrysler would dismiss some of them. But the problems were not confined to be here. Indeed, Jürgen Schrempp attitude only made the situation worse. In autumn 2000, DaimlerChrysler CEO acknowledged in the German financial daily Handelsblatt that <nowiki>“</nowiki>The Merger of Equals statement was necessary in order to earn the support of Chrysler's workers and the American public, but it was never reality<nowiki>"</nowiki>. Many Americans regarded this statement as a betrayal, since Schrempp intended to deceive them from the outset. It appears clear that it is due to the board of directors´ failure in acting responsibly towards the workers that deep-seated distrust ran deep.

But this mismanagement of the project stakeholders can lead to far-reaching consequences on the project success itself. Indeed, it could be that some employees simply do not work as efficiently because they suppose the Board of Directors doesn’t care about the Chrysler entity – so why should they? Decreased performance would result in it.

It is to notice that even though the standard ''ISO 21500: 2012'' did not exist at that time, the fact that employee influence to succeed such a process was of importance was already known. MaryAnn Keller, founder and managing partner of MaryAnn Keller & Associates LLC, namely stated in June 1998 that <nowiki>“</nowiki>The success of any combination depends on the ability of the new organization to win over the hearts and minds of employees.<nowiki>”</nowiki> <ref> [http://murphylibrary.uwlax.edu/digital/jur/2002/carpiaux.pdf] Nicole Carpiaux. ''DaimlerChrysler : Wunderkind or Problem Child ?'' Faculty Sponsor : Leticia Peña, Department of Management. </ref> The managers of DaimlerChrysler should then be aware that is really a management issue to embrace workers instead to neglect them in order to obtain the best they can offer.

===Clients===
And what about the consumers, low-power and high interest stakeholders?

Once again, one could argue that managers failed to define as well as to meet their needs.
One example is given for illustration. At the time, the DaimlerChrysler A-Class was 1.25 to 2 times more expensive than similar vehicles sold by Volkswagen, Renault or Fiat. This higher price was not deterrent since clients were aware that Daimler-Benz primarily asset was quality and safety. However, in 1999, the A-class failed an emergency maneuver test conducted by a Swedish television station. <ref> Bill Vlasic, Bradley A. Stertz. ''Taken for a Ride: How Daimler-Benz Drove off with Chrysler''. Harper Paperbacks,
2001, p. 300.
</ref> Consequently, client´s satisfaction suddenly drop off the map. The DaimlerChrysler vehicle was considered as an overpriced car which did not achieve engineering excellence compared to the highly competitive European compact market. The crux of the problem may be that the German entity have tried to implant the American low development costs into its entities, disregarding the high expectations of the clients. This paragraph appears to prove that trying to generate synergy savings the managers failed in responding the customer´s needs.

===Stockholders===
Last but not least, the management of both high power and high interest stakeholders needs to be considered. Take the stockholders.

An overwhelming majority of them favored the project of merger in 1998. Approvals ratings reached 99.9% at Daimler-Benz and 97.5% at Chrysler. It may be inferred that, at the outset of the project, managers successfully took into account the processes required to satisfy the shareholders. It did not take long, however, for some of them to express their disappointment. This was the case for Kirk Kerkorian, the third largest proprietor of DailerChrysler stock and largest Chrysler shareholder before the merger. In November 2000, the latter filed a $9 billion lawsuit against DaimlerChrysler for falsifying the terms of the fusion as a “merger of equals”. He was upset with the German hegemony and stated he had voted to turn its shares for stock in DaimlerChrysler without having considered the American entity would be reduced to a mere division. Two months later, he cut his take in the merged company by a third. Even though the managers were not directly involved in this discontent, the lack of acting responsibly of the Board of the director is obvious.

To conclude, the completion of the processes related to each of these three stakeholders lacked efficiency. The managers failed in implementing the required activities to satisfy them and this will become a major hindrance to the project completion.

=Conclusion=
Many factors may affect the failure of the DaimlerChrysler project, but most of them may have been due to its mismanagement. Such a union was notoriously risky, especially due to the opposite companies it combined. To deliver the intent benefits, particular care should then have been taken by managers to tackle all the project management processes.

The use of the standard ''ISO 21500 : 2012'' was made to group the processes in term of Subject Group. It appears clear that there were some omissions, particularly regarding Integration, Time, Communication and Stakeholders. This standard has proven to be useful to analyze a project management, especially in case of cross-boarders project. It is a shame that such a unifying international approach was only established in 2012.

= References =

<references />

[[Category:Project Management]]
[[Category:Human Behaviour]]
[[Category:Complexity]]

Analyzing the failure of the DaimlerChrysler merger from a project management perspective

2014-12-01T20:00:07Z

Lyngby: /* Stakeholders */

'''Abstract'''

In the late 90´s, German Daimler-Benz AG and American Chrysler Corporation announced their intention to combine their strengths within a so-called `merger of equals´ <ref> Grässlin, Jürgen. ''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> . Becoming the fifth largest automaker in the world, both companies hoped to overcome together the automotive industry crisis. However, nothing worked out as planned, so much so that in 2007 Daimler-Benz sold all its shares of the Chrysler division.

Could the use of a norm have guaranteed the success of the DaimlerChrysler merger ? This question will be answered with regard to the ISO 21500:2012 guideline for project management.

According to the latter, a definition of project management and the processes it involves will be provided.Then, an analysis of the origin of DaimlerChrysler project will be carried out. It will also be shown to what extent this fusion was mismanaged with regard to the subject groups defined in the ISO 21500:2012. Last but not least the benefits of using this standard to successfully conduct a complex project will be discussed.

=Introduction=
In the early 21st century, no comprehensive standard on project management was accepted despite the substantial demand for project management skills. However, in 2006, the need for a unifying international approach was recognized by the International Organization for Standard (ISO). The work of over hundreds experts in project management from around the globe resulted in ''ISO 21500: 2012 -Guidance on project management''. This norm defines universal project management terminologies, as well as the principles and processes it involves. It provides a basic guide against which any organization can compare its current project management practices and determine areas in need of improvement. But how to practically apply it to a project? A specific example of project failure prior to introducing ISO 21500 will be provided to analyze which project management processes were disregarded. More particularly, the merger of the German automaker Daimler-Benz with the American Chrysler Corporation will be examined with the perspective of subject group.

= ISO 21500 : 2012, A focus on processes <ref> ISO 21500:2012 ''Guidance on project management'' </ref> <ref> Anton Zandhuis, Rommert Stellingwerf. ''ISO 215000, Guidance on Project managenent, A Pocket Guide''. Van Haren Publishing. 2013 </ref>=

What is a project? A definition is provided by the ISO 21500: “A unique set of processes consisting of coordinated and controlled activities with start and end dates, performed to achieve project objectives.” The concept of processes seems to be at the crux of project management issues. The definition of how to manage a project stresses this point: “Project management is performed through processes”.

Specifically, the norm splits the method of managing a project into 39 elementary processes. Depending on the perspective, the latter are grouped into five process groups (Initiating, Planning, Controlling and Closing) or into ten subject groups (Integration, Stakeholder, Scope, Resource, Time, Cost, Risk, Quality, Procurement and Communication). The classification of these processes is provided in the following table.

{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 1 : Project management cross-referenced to process and subject groups (ISO 21500 : 2012)'''
|-
! rowspan="2" style="background: #ffedd3;" | SUBJECT GROUPS
! colspan="5" style="background: #ffedd3;" | PROCESS GROUPS
|-
|style="background: #fff4d3;" align=center | '''Initiating'''
|style="background: #fff4d3;" align=center| '''Planning'''
|style="background: #fff4d3;" align=center| '''Implementing'''
|style="background: #fff4d3;" align=center | '''Controlling'''
|style="background: #fff4d3;" align=center | '''Closing'''
|-
|style="background: #fff4d3;" |'''Integration'''
|
4.3.2 Develop project chart
|
4.3.3. Develop project plans
|
4.3.4 Direct project work
|
4.3.5 Control project work

4.3.6 Control changes
|
4.3.7 Close project or phase

4.3.8 Collect lessons learned
|-
|style="background: #fff4d3;" |'''Stakeholder'''
|
4.3.9 Identify stakeholders
|

|
4.3.10 Manage stakeholders
|

|

|-
|style="background: #fff4d3;" |'''Scope'''
|

|
4.3.11 Define scope

4.3.12 Create work breakdown structure

4.3.13 Define activities
|

|
4.3.14 Control scope
|

|-
|style="background: #fff4d3;" |'''Resource'''
|
4.3.15 Establish project team
|
4.3.16 Estimate resources

4.3.17 Define project organization
|
4.3.18 Develop project team
|
4.3.19 Control resources

4.3.20 Manage project team
|

|-
|style="background: #fff4d3;" |'''Time'''
|

|
4.3.21 Sequence activities

4.3.22 Estimate activity durations

4.3.23 Develop schedule
|

|
4.3.24 Control schedule
|

|-
|style="background: #fff4d3;" |'''Cost'''
|

|
4.3.25 Estimate costs

4.3.26 Develop budget
|

|
4.3.27 Control costs
|

|-
|style="background: #fff4d3;" |'''Risk'''
|

|
4.3.28 Identify risks

4.3.29 Asses risks
|
4.3.30 Treat risks
|
4.3.31 Control risks
|
|-
|style="background: #fff4d3;" |'''Quality'''
|

|
4.3.32 Plan quality
|
4.3.33 Perform quality assurance
|
4.3.34 Perform quality control
|

|-
|style="background: #fff4d3;" |'''Procurement'''
|

|
4.3.35 Plan procurements
|
4.3.36 Select suppliers
|
4.3.37 Administer procurements
|

|-
|style="background: #fff4d3;" |'''Communication'''
|

|
4.3.38 Plan communications
|
4.3.39 Distribute information
|
4.3.40 Manage communications
|

|}

The perspective of subject groups will be adopted to consider the management of DaimlerChrysler project. A subject is a theme in which processes are classified according to its related activities.

But before that, the project of DaimlerChrysler merger is regarded.

=DaimlerChrysler merger project <ref> Julia Hollmann, Aletéia de Moura Carpes, Thiago Antonio Beuron. ''The DaimlerChrylser Merger- A cultural mismatch ?'' Faculty Sponsor : Universität Paderborn- Germany, Department of International Business Studies. Universidade Federal de Santa Maria- Brazil, Department of Administration. 2010 </ref> =
==The genesis of the project==
In the late 90´s, the automotive industry had to face multiples challenges due to the excess manufacturing capacity, the growth of ecological awareness, and the retail revolution that empowered buyers. To strengthen their position during this crisis, the automakers Daimler-Benz and Chrysler Corporation decided to merge. This project aimed to combine each other´s product designs, manufacturing resources and distribution systems.
The following table shows the complementary of the two companies, which wanted to unit their knowledge and their market in order to gain a competitive advantage.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 2 : The complementary of the two companies '''
|
! style="background: #ffedd3;" |'''Daimler-Benz AG'''
! style="background: #ffedd3;" |'''Chrysler Corporation'''
|-
! style="background: #ffedd3;" |'''Head office location'''
|
Germany
|
United States
|-
! style="background: #ffedd3;" |'''Geographical reach'''
|
European market
|
U.S. American market
|-
! style="background: #ffedd3;" |'''Product ranges'''
|
Uncompromising quality products
|
Car models that meet the American demand for adventurousness
|}


Both synergies and economies of scale were likely to proliferate.

How the project was set up is explained in the following paragraph. However, its detailed description falls outside the scope of this article.

==The execution of the project==
On May 7th, 1998 the signing of the combination agreement between Daimler-Benz and Chrysler was publicly announced. Daimler-Benz CEO Jürgen Schrempp described the union as "a merger of equals, a merger of growth, and a merger of unprecedented strength".
The equal status of the two organizations was reflected in the newly established entity name, DaimlerChrysler, as well as in the combination of the two former boards of management to form the one of DaimlerChrysler. Furthermore, it was agreed that Schrempp and Eaton, former CEO of the Chrysler Corporation, would jointly led the entity as co-chairmen and co-CEOs. It was also decided that Eaton would stay up to three years.
The two following tables provide more data about DaimlerChrysler right after the merger and the expected results of this project.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 3 : Characteristics of DaimlerChrysler right after the merger'''
|-
! style="background: #ffedd3;" |'''Number of employees '''
|442,000 employees
½ in Germany

1/3 in North America

1/6 spread across 200 countries around the world
|-
! style="background: #ffedd3;" |'''Daimler-Benz AG Market capitalization'''
|$ 92 billion
|}



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 4 : Expected results'''
! style="background: #ffedd3;" |Annual revenues of the combined company
|$ 132 billion
|-
! style="background: #ffedd3;" |Increase in sales
|13%
|-
! style="background: #ffedd3;" |Cost savings brought within 2 or 3 years
|$ 3,5 billion a year
|}


So far, this fusion appears to be very beneficial for all parties involved. However the wish for synergy effects never came true and the project drove Chrysler into chaos. In May 2007, the merger of Chrysler and Daimler-Benz was dissolved. Can this failure be ascribed to mismanagement?

The purpose of this article is now to point out which processes, related to the different subject groups definied in ISO 21500:2012 were disregarded and may have led to the project failure.

=The mismanagement of some subject groups <ref> Wanda Curlee, Robert L. Gordon . ''Complexity Theory and Project Management. ''. New York : Wiley, 2011, p. 129-133 </ref> =

Four subject groups will successively be considered : Integration, Time, Communication and Stakeholders. A mismanagement of some processes related to these four specific subject groups is namely to be seen.

==Integration <ref> Grässlin, Jürgen.''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> <ref> ''DaimlerChrysler confronts the challenges of global integration'', Human Resource Management International Digest, Vol 12 Iss :2 P.5-8</ref> ==

The Integration subject group includes the processes required to identify, define, combine, unify, coordinate, control and close the various activities and processes related to the project (ISO 21500:2012 - 4.2.3.2).

Within this merger, the unification and combination of all operations within the established entity needed to be achieved. To meet this target, a newly corporate culture had to be defined to align working styles. The latter namely radically differ due to major cultural differences, as shown in the following table.



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 5 : Comparison between the German and the American working styles'''
|-
|
! style="background: #ffedd3;" | '''Germany'''
! style="background: #ffedd3;"|'''United States'''
|-
! style="background: #ffedd3;" align="left" |'''Employee working style'''
| Work in a team-oriented environment
| Work individually
|-
! style="background: #ffedd3;" align="left" |'''Writing report'''
| Lengthy reports
| Little paper
|-
! style="background: #ffedd3;" align="left" |'''Decision-making process'''
|
Methodical, based on very detailed plans
|
Using creativity, based on trial-and-error method
|-
! style="background: #ffedd3;" align="left" |'''Meeting'''
|
Extended discussions
|
Short meeting
|-
! style="background: #ffedd3;" align="left" |'''Organizational structure'''
|
Pronounced hierarchy based on top-down-management
|
Flat organizational hierarchy stimulating empowerment of the employees
|-
! style="background: #ffedd3;" align="left" |'''Risk appetite'''
|
Risk adverse culture
|
Risk takers
|}


Due to the fact that this merger was a so-called `merger of equals´, the integration of the two cultures was to combine them to generate a new shared corporate one. It was namely vital that both organizations learn from each other to generate synergy effects. Managers have here a central role to play to define and coordinate the development of this new culture.

Eaton affirmed that it was at the top of the agenda and Thomas Stallkamp, Chrysler President during the negotiation phase, was charged with overseeing this integration process. Some effort went into harmonizing the two corporate cultures. Many seminars and workshops were organized to sensitizing the employees for working with new colleagues with diverging working methods. Furthermore, German was taught to many American managers.

However, given the large gap between the two organizations, it would appear that managers should have undertaken more activities and CEOs should have allocated more resources to bridge the chasm of cultural differences.

In fact, no strong and cohesive organizational culture was created, as illustrated in daily misunderstandings. For instance, the attention Daimler-Benz leaders paid to writing a leaflet sent to employee annoyed Chrysler executives. At the end of 1999, the resignation of Thomas Stallkamp, a 19-year veteran of Chrysler who was highly regarded, might be seen as a failure of the merger integration process after all the effort. Stallkamp is quoted as saying: <nowiki>“</nowiki>The majority of my career has been spent implementing supply chain management. I would like to continue to explore those areas at a less hectic pace<nowiki>”</nowiki>. Were both parties truly willing to cooperate wholeheartedly and to enter compromises to succeed in the numerous integration processes? A negative answer is the root cause of an unachieved integration.

==Time<ref> Sue Cartwright, Cary L. Cooper. ''Mergers and Acquisitions: The Human Factor Paperback'' . January 1, 1992 </ref>==

The Time subject group is all about managing the timely completion of the project. Feasible deadlines taking all known constraints into account need to be set. Processes covered by the latter subject group are the development of schedule for project activities estimating each activity duration, the progress monitoring and the schedule control.

One failure in managing time in DaimlerChrysler merger was that too little time was devoted to each activity. Let´s take a concrete example: Daimler-Benz and Chrysler began formal negotiations on January 12, 1998 and only five months later, the merger was announced worldwide. Susan Cartwright – past President of the British Academy Management – asserts that the period of time from the germ of the merger idea till an agreement is reached is estimated to last around two years. Speeding up the pre-merger preparation, the precise objectives of the fusion and the way to achieve them could not have been defined accurately.
Furthermore, the merger was completed on November 12, 1998. Time needed by employees to adapt to the new circumstances was not taken into account in the deadlines. One more mismanagement which is added to the others.

==Communication==
In the standard ISO 21500:2012, three key processes are defined to ensure appropriate exchange of project information: Plan communications, Distribute information and Manage communications. But within DaimlerChrysler project none of them were totally met. In order to appreciate the scale of the problem, it should be point out that even managers and CEOs experienced serious difficulties in discussing solutions and achieving a consensus. According to a Daimler-Benz executive, <nowiki>"</nowiki>Eaton went weeks without speaking with Jürgen [Schrempp]. He preferred to maintain lower-level contact. Jürgen, meanwhile, left Chrysler alone.<nowiki>"</nowiki> <ref> [http://mba.tuck.dartmouth.edu/pdf/2002-1-0071.pdf] Professor Sydney Finkelstein. ''The DaimlerChrysler Merger.''Tuck School of Business at Dartmouth. 2002 </ref> One would have expected that both CEOs would have shared their different views in order to discover common goal and operate as an effective team at the top. Given the seeming clash of culture described in the first paragraph, it was crucial to start the discussion to create healthy relationship and release the company´s potential. The clearer the communication, the better issues are addressed. But with such a lack of communication among leaders, no far-reaching communication plan could be implemented among all stakeholders involved, not to mention the distribution of the information. Both internal and external communications were chaotic. It is likely that the standard ISO 21500 would have made managers more aware of the processes related to communication which requires to be efficiently tackled.

==Stakeholders==
The stakeholder subject group is concerned with identifying and managing all parties involved. To classify them, both their expectations and influence on the project need to be analyzed. The table 6 provides a power-interest matrix, which is crucial to draw up appropriate management strategies for effectively engaging with them. The external stakeholders are written in italics, the others are internal.

{| border="1" cellpadding="3" cellspacing="0" style="margin:auto;"
|+ '''Table 6 : Power and interest matrix'''
|-
! rowspan="2" style="background: #ffedd3;" | Level of interest
! colspan="5" style="background: #ffedd3;" | Level of power
|-
|style="background: #fff4d3;" align=center | ''' Low '''
|style="background: #fff4d3;" align=center| ''' High '''
|-
|style="background: #fff4d3;" align=center |'''High'''
|
[[Employee]]

Trade Union

''[[Clients]]''

''Suppliers''

''Government''

''Society''
|
Directors

Managers

''[[Stockholders]]''
|-
|style="background: #fff4d3;" align=center |'''Low'''
|
''Competitors''
|

|-
|}

To analyze the management of all of these stakeholders one by one would be tedious. However it is relevant to focus on several categories according to the table 6. Special focus will be laid on the stakeholders written in red. Therefore, both high power/high interest and low power/high interest stakeholders will be looked at. Two of them are internal, whereas the other is internal.

It will be shown that all of them were significantly affected by the DaimlerChrysler project due to mismanagement.

===Employees===
Employees, low-power and high-interest stakeholders, must be kept informed and managers should ensure that no major issues are arising.
However, this was not the case in the DaimlerChrysler merger: employees felt overlooked, disregarded and left out of the merger process. But to what extent CEOs and managers were responsible in this climate of distrust and dislike?

First, soon after the merger, it became obvious that Daimler was taking over the whole company´s management. Chrysler President Stallkamp retirement at the end of 1999 was followed by the one of James P. Holdem, top-level executive of the Chrysler Group. They were replaced by two German managers: Dieter Zetsche and Wolfgang Bernhard. Being lowered to divisional status, it is understandable that American´s morale suffer from this German hegemony. Employee felt eclipsed and were disgusted. They also were worried that DaimlerChrysler would dismiss some of them. But the problems are not confined to be here. Indeed, Jürgen Schrempp attitude only made the situation worse. In autumn 2000, DaimlerChrysler CEO acknowledged in the German financial daily Handelsblatt that <nowiki>“</nowiki>The Merger of Equals statement was necessary in order to earn the support of Chrysler's workers and the American public, but it was never reality<nowiki>"</nowiki>. Many American regarded this statement as a betrayal, since he intended to deceive them from the outset. It appears clear that it is due to board of directors failure in acting responsibly towards these stakeholders that deep-seated distrust ran deep.

But this mismanagement of the project stakeholders can lead to far-reaching consequences on the project success itself. Indeed, it could be that some employees simply do not work as efficiently because they suppose the Board of Directors doesn’t care about the Chrysler entity – so why should they? Decreased performance would result in it.

It is to notice that even though the standard ''ISO 21500: 2012'' did not exist at that time, the fact that employee influence to succeed such a process was of importance was already known. MaryAnn Keller, founder and managing partner of MaryAnn Keller & Associates LLC, namely stated in June 1998 that <nowiki>“</nowiki>The success of any combination depends on the ability of the new organization to win over the hearts and minds of employees.<nowiki>”</nowiki> <ref> [http://murphylibrary.uwlax.edu/digital/jur/2002/carpiaux.pdf] Nicole Carpiaux. ''DaimlerChrysler : Wunderkind or Problem Child ?'' Faculty Sponsor : Leticia Peña, Department of Management. </ref> The managers of DaimlerChrysler should then be aware that is really a management issue to embrace workers instead to neglect them in order to obtain the best they can offer.

===Clients===
And what about the consumers, low-power and high interest stakeholders?

Once again, one could argue that managers failed to define as well as to meet their needs.
One example is given for illustration. At the time, the DaimlerChrysler A-Class was 1.25 to 2 times more expensive than similar vehicles sold by Volkswagen, Renault or Fiat. This higher price was not deterrent since clients were aware that Daimler-Benz primarily asset was quality and safety. However, in 1999, the A-class failed an emergency maneuver test conducted by a Swedish television station. <ref> Bill Vlasic, Bradley A. Stertz. ''Taken for a Ride: How Daimler-Benz Drove off with Chrysler''. Harper Paperbacks,
2001, p. 300.
</ref> Consequently, client´s satisfaction suddenly drop off the map. The DaimlerChrysler vehicle was considered as an overpriced car which did not achieve engineering excellence compared to the highly competitive European compact market. The crux of the problem may be that the German entity have tried to implant the American low development costs into its entities, disregarding the high expectations of the clients. This paragraph appears to prove that trying to generate synergy savings the managers failed in responding the customer´s needs.

===Stockholders===
Last but not least, the management of both high power and high interest stakeholders needs to be considered. Take the stockholders.

An overwhelming majority of them favored the project of merger in 1998. Approvals ratings reached 99.9% at Daimler-Benz and 97.5% at Chrysler. It may be inferred that, at the outset of the project, managers successfully took into account the processes required to satisfy the shareholders. It did not take long, however, for some of them to express their disappointment. This was the case for Kirk Kerkorian, the third largest proprietor of DailerChrysler stock and largest Chrysler shareholder before the merger. In November 2000, the latter filed a $9 billion lawsuit against DaimlerChrysler for falsifying the terms of the fusion as a “merger of equals”. He was upset with the German hegemony and stated he had voted to turn its shares for stock in DaimlerChrysler without having considered the American entity would be reduced to a mere division. Two months later, he cut his take in the merged company by a third. Even though the managers were not directly involved in this discontent, the lack of acting responsibly of the Board of the director is obvious.

To conclude, the completion of the processes related to each of these three stakeholders lacked efficiency. The managers failed in implementing the required activities to satisfy them and this will become a major hindrance to the project completion.

=Conclusion=
Many factors may affect the failure of the DaimlerChrysler project, but most of them may have been due to its mismanagement. Such a union was notoriously risky, especially due to the opposite companies it combined. To deliver the intent benefits, particular care should then have been taken by managers to tackle all the project management processes.

The use of the standard ''ISO 21500 : 2012'' was made to group the processes in term of Subject Group. It appears clear that there were some omissions, particularly regarding Integration, Time, Communication and Stakeholders. This standard has proven to be useful to analyze a project management, especially in case of cross-boarders project. It is a shame that such a unifying international approach was only established in 2012.

= References =

<references />

[[Category:Project Management]]
[[Category:Human Behaviour]]
[[Category:Complexity]]

Analyzing the failure of the DaimlerChrysler merger from a project management perspective

2014-12-01T19:59:10Z

Lyngby: /* Stakeholders */

'''Abstract'''

In the late 90´s, German Daimler-Benz AG and American Chrysler Corporation announced their intention to combine their strengths within a so-called `merger of equals´ <ref> Grässlin, Jürgen. ''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> . Becoming the fifth largest automaker in the world, both companies hoped to overcome together the automotive industry crisis. However, nothing worked out as planned, so much so that in 2007 Daimler-Benz sold all its shares of the Chrysler division.

Could the use of a norm have guaranteed the success of the DaimlerChrysler merger ? This question will be answered with regard to the ISO 21500:2012 guideline for project management.

According to the latter, a definition of project management and the processes it involves will be provided.Then, an analysis of the origin of DaimlerChrysler project will be carried out. It will also be shown to what extent this fusion was mismanaged with regard to the subject groups defined in the ISO 21500:2012. Last but not least the benefits of using this standard to successfully conduct a complex project will be discussed.

=Introduction=
In the early 21st century, no comprehensive standard on project management was accepted despite the substantial demand for project management skills. However, in 2006, the need for a unifying international approach was recognized by the International Organization for Standard (ISO). The work of over hundreds experts in project management from around the globe resulted in ''ISO 21500: 2012 -Guidance on project management''. This norm defines universal project management terminologies, as well as the principles and processes it involves. It provides a basic guide against which any organization can compare its current project management practices and determine areas in need of improvement. But how to practically apply it to a project? A specific example of project failure prior to introducing ISO 21500 will be provided to analyze which project management processes were disregarded. More particularly, the merger of the German automaker Daimler-Benz with the American Chrysler Corporation will be examined with the perspective of subject group.

= ISO 21500 : 2012, A focus on processes <ref> ISO 21500:2012 ''Guidance on project management'' </ref> <ref> Anton Zandhuis, Rommert Stellingwerf. ''ISO 215000, Guidance on Project managenent, A Pocket Guide''. Van Haren Publishing. 2013 </ref>=

What is a project? A definition is provided by the ISO 21500: “A unique set of processes consisting of coordinated and controlled activities with start and end dates, performed to achieve project objectives.” The concept of processes seems to be at the crux of project management issues. The definition of how to manage a project stresses this point: “Project management is performed through processes”.

Specifically, the norm splits the method of managing a project into 39 elementary processes. Depending on the perspective, the latter are grouped into five process groups (Initiating, Planning, Controlling and Closing) or into ten subject groups (Integration, Stakeholder, Scope, Resource, Time, Cost, Risk, Quality, Procurement and Communication). The classification of these processes is provided in the following table.

{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 1 : Project management cross-referenced to process and subject groups (ISO 21500 : 2012)'''
|-
! rowspan="2" style="background: #ffedd3;" | SUBJECT GROUPS
! colspan="5" style="background: #ffedd3;" | PROCESS GROUPS
|-
|style="background: #fff4d3;" align=center | '''Initiating'''
|style="background: #fff4d3;" align=center| '''Planning'''
|style="background: #fff4d3;" align=center| '''Implementing'''
|style="background: #fff4d3;" align=center | '''Controlling'''
|style="background: #fff4d3;" align=center | '''Closing'''
|-
|style="background: #fff4d3;" |'''Integration'''
|
4.3.2 Develop project chart
|
4.3.3. Develop project plans
|
4.3.4 Direct project work
|
4.3.5 Control project work

4.3.6 Control changes
|
4.3.7 Close project or phase

4.3.8 Collect lessons learned
|-
|style="background: #fff4d3;" |'''Stakeholder'''
|
4.3.9 Identify stakeholders
|

|
4.3.10 Manage stakeholders
|

|

|-
|style="background: #fff4d3;" |'''Scope'''
|

|
4.3.11 Define scope

4.3.12 Create work breakdown structure

4.3.13 Define activities
|

|
4.3.14 Control scope
|

|-
|style="background: #fff4d3;" |'''Resource'''
|
4.3.15 Establish project team
|
4.3.16 Estimate resources

4.3.17 Define project organization
|
4.3.18 Develop project team
|
4.3.19 Control resources

4.3.20 Manage project team
|

|-
|style="background: #fff4d3;" |'''Time'''
|

|
4.3.21 Sequence activities

4.3.22 Estimate activity durations

4.3.23 Develop schedule
|

|
4.3.24 Control schedule
|

|-
|style="background: #fff4d3;" |'''Cost'''
|

|
4.3.25 Estimate costs

4.3.26 Develop budget
|

|
4.3.27 Control costs
|

|-
|style="background: #fff4d3;" |'''Risk'''
|

|
4.3.28 Identify risks

4.3.29 Asses risks
|
4.3.30 Treat risks
|
4.3.31 Control risks
|
|-
|style="background: #fff4d3;" |'''Quality'''
|

|
4.3.32 Plan quality
|
4.3.33 Perform quality assurance
|
4.3.34 Perform quality control
|

|-
|style="background: #fff4d3;" |'''Procurement'''
|

|
4.3.35 Plan procurements
|
4.3.36 Select suppliers
|
4.3.37 Administer procurements
|

|-
|style="background: #fff4d3;" |'''Communication'''
|

|
4.3.38 Plan communications
|
4.3.39 Distribute information
|
4.3.40 Manage communications
|

|}

The perspective of subject groups will be adopted to consider the management of DaimlerChrysler project. A subject is a theme in which processes are classified according to its related activities.

But before that, the project of DaimlerChrysler merger is regarded.

=DaimlerChrysler merger project <ref> Julia Hollmann, Aletéia de Moura Carpes, Thiago Antonio Beuron. ''The DaimlerChrylser Merger- A cultural mismatch ?'' Faculty Sponsor : Universität Paderborn- Germany, Department of International Business Studies. Universidade Federal de Santa Maria- Brazil, Department of Administration. 2010 </ref> =
==The genesis of the project==
In the late 90´s, the automotive industry had to face multiples challenges due to the excess manufacturing capacity, the growth of ecological awareness, and the retail revolution that empowered buyers. To strengthen their position during this crisis, the automakers Daimler-Benz and Chrysler Corporation decided to merge. This project aimed to combine each other´s product designs, manufacturing resources and distribution systems.
The following table shows the complementary of the two companies, which wanted to unit their knowledge and their market in order to gain a competitive advantage.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 2 : The complementary of the two companies '''
|
! style="background: #ffedd3;" |'''Daimler-Benz AG'''
! style="background: #ffedd3;" |'''Chrysler Corporation'''
|-
! style="background: #ffedd3;" |'''Head office location'''
|
Germany
|
United States
|-
! style="background: #ffedd3;" |'''Geographical reach'''
|
European market
|
U.S. American market
|-
! style="background: #ffedd3;" |'''Product ranges'''
|
Uncompromising quality products
|
Car models that meet the American demand for adventurousness
|}


Both synergies and economies of scale were likely to proliferate.

How the project was set up is explained in the following paragraph. However, its detailed description falls outside the scope of this article.

==The execution of the project==
On May 7th, 1998 the signing of the combination agreement between Daimler-Benz and Chrysler was publicly announced. Daimler-Benz CEO Jürgen Schrempp described the union as "a merger of equals, a merger of growth, and a merger of unprecedented strength".
The equal status of the two organizations was reflected in the newly established entity name, DaimlerChrysler, as well as in the combination of the two former boards of management to form the one of DaimlerChrysler. Furthermore, it was agreed that Schrempp and Eaton, former CEO of the Chrysler Corporation, would jointly led the entity as co-chairmen and co-CEOs. It was also decided that Eaton would stay up to three years.
The two following tables provide more data about DaimlerChrysler right after the merger and the expected results of this project.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 3 : Characteristics of DaimlerChrysler right after the merger'''
|-
! style="background: #ffedd3;" |'''Number of employees '''
|442,000 employees
½ in Germany

1/3 in North America

1/6 spread across 200 countries around the world
|-
! style="background: #ffedd3;" |'''Daimler-Benz AG Market capitalization'''
|$ 92 billion
|}



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 4 : Expected results'''
! style="background: #ffedd3;" |Annual revenues of the combined company
|$ 132 billion
|-
! style="background: #ffedd3;" |Increase in sales
|13%
|-
! style="background: #ffedd3;" |Cost savings brought within 2 or 3 years
|$ 3,5 billion a year
|}


So far, this fusion appears to be very beneficial for all parties involved. However the wish for synergy effects never came true and the project drove Chrysler into chaos. In May 2007, the merger of Chrysler and Daimler-Benz was dissolved. Can this failure be ascribed to mismanagement?

The purpose of this article is now to point out which processes, related to the different subject groups definied in ISO 21500:2012 were disregarded and may have led to the project failure.

=The mismanagement of some subject groups <ref> Wanda Curlee, Robert L. Gordon . ''Complexity Theory and Project Management. ''. New York : Wiley, 2011, p. 129-133 </ref> =

Four subject groups will successively be considered : Integration, Time, Communication and Stakeholders. A mismanagement of some processes related to these four specific subject groups is namely to be seen.

==Integration <ref> Grässlin, Jürgen.''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> <ref> ''DaimlerChrysler confronts the challenges of global integration'', Human Resource Management International Digest, Vol 12 Iss :2 P.5-8</ref> ==

The Integration subject group includes the processes required to identify, define, combine, unify, coordinate, control and close the various activities and processes related to the project (ISO 21500:2012 - 4.2.3.2).

Within this merger, the unification and combination of all operations within the established entity needed to be achieved. To meet this target, a newly corporate culture had to be defined to align working styles. The latter namely radically differ due to major cultural differences, as shown in the following table.



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 5 : Comparison between the German and the American working styles'''
|-
|
! style="background: #ffedd3;" | '''Germany'''
! style="background: #ffedd3;"|'''United States'''
|-
! style="background: #ffedd3;" align="left" |'''Employee working style'''
| Work in a team-oriented environment
| Work individually
|-
! style="background: #ffedd3;" align="left" |'''Writing report'''
| Lengthy reports
| Little paper
|-
! style="background: #ffedd3;" align="left" |'''Decision-making process'''
|
Methodical, based on very detailed plans
|
Using creativity, based on trial-and-error method
|-
! style="background: #ffedd3;" align="left" |'''Meeting'''
|
Extended discussions
|
Short meeting
|-
! style="background: #ffedd3;" align="left" |'''Organizational structure'''
|
Pronounced hierarchy based on top-down-management
|
Flat organizational hierarchy stimulating empowerment of the employees
|-
! style="background: #ffedd3;" align="left" |'''Risk appetite'''
|
Risk adverse culture
|
Risk takers
|}


Due to the fact that this merger was a so-called `merger of equals´, the integration of the two cultures was to combine them to generate a new shared corporate one. It was namely vital that both organizations learn from each other to generate synergy effects. Managers have here a central role to play to define and coordinate the development of this new culture.

Eaton affirmed that it was at the top of the agenda and Thomas Stallkamp, Chrysler President during the negotiation phase, was charged with overseeing this integration process. Some effort went into harmonizing the two corporate cultures. Many seminars and workshops were organized to sensitizing the employees for working with new colleagues with diverging working methods. Furthermore, German was taught to many American managers.

However, given the large gap between the two organizations, it would appear that managers should have undertaken more activities and CEOs should have allocated more resources to bridge the chasm of cultural differences.

In fact, no strong and cohesive organizational culture was created, as illustrated in daily misunderstandings. For instance, the attention Daimler-Benz leaders paid to writing a leaflet sent to employee annoyed Chrysler executives. At the end of 1999, the resignation of Thomas Stallkamp, a 19-year veteran of Chrysler who was highly regarded, might be seen as a failure of the merger integration process after all the effort. Stallkamp is quoted as saying: <nowiki>“</nowiki>The majority of my career has been spent implementing supply chain management. I would like to continue to explore those areas at a less hectic pace<nowiki>”</nowiki>. Were both parties truly willing to cooperate wholeheartedly and to enter compromises to succeed in the numerous integration processes? A negative answer is the root cause of an unachieved integration.

==Time<ref> Sue Cartwright, Cary L. Cooper. ''Mergers and Acquisitions: The Human Factor Paperback'' . January 1, 1992 </ref>==

The Time subject group is all about managing the timely completion of the project. Feasible deadlines taking all known constraints into account need to be set. Processes covered by the latter subject group are the development of schedule for project activities estimating each activity duration, the progress monitoring and the schedule control.

One failure in managing time in DaimlerChrysler merger was that too little time was devoted to each activity. Let´s take a concrete example: Daimler-Benz and Chrysler began formal negotiations on January 12, 1998 and only five months later, the merger was announced worldwide. Susan Cartwright – past President of the British Academy Management – asserts that the period of time from the germ of the merger idea till an agreement is reached is estimated to last around two years. Speeding up the pre-merger preparation, the precise objectives of the fusion and the way to achieve them could not have been defined accurately.
Furthermore, the merger was completed on November 12, 1998. Time needed by employees to adapt to the new circumstances was not taken into account in the deadlines. One more mismanagement which is added to the others.

==Communication==
In the standard ISO 21500:2012, three key processes are defined to ensure appropriate exchange of project information: Plan communications, Distribute information and Manage communications. But within DaimlerChrysler project none of them were totally met. In order to appreciate the scale of the problem, it should be point out that even managers and CEOs experienced serious difficulties in discussing solutions and achieving a consensus. According to a Daimler-Benz executive, <nowiki>"</nowiki>Eaton went weeks without speaking with Jürgen [Schrempp]. He preferred to maintain lower-level contact. Jürgen, meanwhile, left Chrysler alone.<nowiki>"</nowiki> <ref> [http://mba.tuck.dartmouth.edu/pdf/2002-1-0071.pdf] Professor Sydney Finkelstein. ''The DaimlerChrysler Merger.''Tuck School of Business at Dartmouth. 2002 </ref> One would have expected that both CEOs would have shared their different views in order to discover common goal and operate as an effective team at the top. Given the seeming clash of culture described in the first paragraph, it was crucial to start the discussion to create healthy relationship and release the company´s potential. The clearer the communication, the better issues are addressed. But with such a lack of communication among leaders, no far-reaching communication plan could be implemented among all stakeholders involved, not to mention the distribution of the information. Both internal and external communications were chaotic. It is likely that the standard ISO 21500 would have made managers more aware of the processes related to communication which requires to be efficiently tackled.

==Stakeholders==
The stakeholder subject group is concerned with identifying and managing all parties involved. To classify them, both their expectations and influence on the project need to be analyzed. The table 6 provides a power-interest matrix, which is crucial to draw up appropriate management strategies for effectively engaging with them. The external stakeholders are written in italics, the others are internal.

{| border="1" cellpadding="3" cellspacing="0" style="margin:auto;"
|+ '''Table 6 : Power and interest matrix'''
|-
! rowspan="2" style="background: #ffedd3;" | Level of interest
! colspan="5" style="background: #ffedd3;" | Level of power
|-
|style="background: #fff4d3;" align=center | ''' Low '''
|style="background: #fff4d3;" align=center| ''' High '''
|-
|style="background: #fff4d3;" align=center |'''High'''
|
[[Employee]]

Trade Union

''[[Clients]]''

''Suppliers''

''Government''

''Society''
|
Directors

Managers

''[[Stockholders]]''
|-
|style="background: #fff4d3;" align=center |'''Low'''
|
''Competitors''
|

|-
|}

To analyze the management of all of these stakeholders one by one would be tedious. However it is relevant to focus on several categories according to the table 6. Special focus will be laid on the stakeholders written in red. Therefore, both high power/high interest and low power/high interest stakeholders will be looked at. Two of them are internal, whereas the other is internal.
All of them were significantly affected by the DaimlerChrysler project due to mismanagement.

===Employees===
Employees, low-power and high-interest stakeholders, must be kept informed and managers should ensure that no major issues are arising.
However, this was not the case in the DaimlerChrysler merger: employees felt overlooked, disregarded and left out of the merger process. But to what extent CEOs and managers were responsible in this climate of distrust and dislike?

First, soon after the merger, it became obvious that Daimler was taking over the whole company´s management. Chrysler President Stallkamp retirement at the end of 1999 was followed by the one of James P. Holdem, top-level executive of the Chrysler Group. They were replaced by two German managers: Dieter Zetsche and Wolfgang Bernhard. Being lowered to divisional status, it is understandable that American´s morale suffer from this German hegemony. Employee felt eclipsed and were disgusted. They also were worried that DaimlerChrysler would dismiss some of them. But the problems are not confined to be here. Indeed, Jürgen Schrempp attitude only made the situation worse. In autumn 2000, DaimlerChrysler CEO acknowledged in the German financial daily Handelsblatt that <nowiki>“</nowiki>The Merger of Equals statement was necessary in order to earn the support of Chrysler's workers and the American public, but it was never reality<nowiki>"</nowiki>. Many American regarded this statement as a betrayal, since he intended to deceive them from the outset. It appears clear that it is due to board of directors failure in acting responsibly towards these stakeholders that deep-seated distrust ran deep.

But this mismanagement of the project stakeholders can lead to far-reaching consequences on the project success itself. Indeed, it could be that some employees simply do not work as efficiently because they suppose the Board of Directors doesn’t care about the Chrysler entity – so why should they? Decreased performance would result in it.

It is to notice that even though the standard ''ISO 21500: 2012'' did not exist at that time, the fact that employee influence to succeed such a process was of importance was already known. MaryAnn Keller, founder and managing partner of MaryAnn Keller & Associates LLC, namely stated in June 1998 that <nowiki>“</nowiki>The success of any combination depends on the ability of the new organization to win over the hearts and minds of employees.<nowiki>”</nowiki> <ref> [http://murphylibrary.uwlax.edu/digital/jur/2002/carpiaux.pdf] Nicole Carpiaux. ''DaimlerChrysler : Wunderkind or Problem Child ?'' Faculty Sponsor : Leticia Peña, Department of Management. </ref> The managers of DaimlerChrysler should then be aware that is really a management issue to embrace workers instead to neglect them in order to obtain the best they can offer.

===Clients===
And what about the consumers, low-power and high interest stakeholders?

Once again, one could argue that managers failed to define as well as to meet their needs.
One example is given for illustration. At the time, the DaimlerChrysler A-Class was 1.25 to 2 times more expensive than similar vehicles sold by Volkswagen, Renault or Fiat. This higher price was not deterrent since clients were aware that Daimler-Benz primarily asset was quality and safety. However, in 1999, the A-class failed an emergency maneuver test conducted by a Swedish television station. <ref> Bill Vlasic, Bradley A. Stertz. ''Taken for a Ride: How Daimler-Benz Drove off with Chrysler''. Harper Paperbacks,
2001, p. 300.
</ref> Consequently, client´s satisfaction suddenly drop off the map. The DaimlerChrysler vehicle was considered as an overpriced car which did not achieve engineering excellence compared to the highly competitive European compact market. The crux of the problem may be that the German entity have tried to implant the American low development costs into its entities, disregarding the high expectations of the clients. This paragraph appears to prove that trying to generate synergy savings the managers failed in responding the customer´s needs.

===Stockholders===
Last but not least, the management of both high power and high interest stakeholders needs to be considered. Take the stockholders.

An overwhelming majority of them favored the project of merger in 1998. Approvals ratings reached 99.9% at Daimler-Benz and 97.5% at Chrysler. It may be inferred that, at the outset of the project, managers successfully took into account the processes required to satisfy the shareholders. It did not take long, however, for some of them to express their disappointment. This was the case for Kirk Kerkorian, the third largest proprietor of DailerChrysler stock and largest Chrysler shareholder before the merger. In November 2000, the latter filed a $9 billion lawsuit against DaimlerChrysler for falsifying the terms of the fusion as a “merger of equals”. He was upset with the German hegemony and stated he had voted to turn its shares for stock in DaimlerChrysler without having considered the American entity would be reduced to a mere division. Two months later, he cut his take in the merged company by a third. Even though the managers were not directly involved in this discontent, the lack of acting responsibly of the Board of the director is obvious.

To conclude, the completion of the processes related to each of these three stakeholders lacked efficiency. The managers failed in implementing the required activities to satisfy them and this will become a major hindrance to the project completion.

=Conclusion=
Many factors may affect the failure of the DaimlerChrysler project, but most of them may have been due to its mismanagement. Such a union was notoriously risky, especially due to the opposite companies it combined. To deliver the intent benefits, particular care should then have been taken by managers to tackle all the project management processes.

The use of the standard ''ISO 21500 : 2012'' was made to group the processes in term of Subject Group. It appears clear that there were some omissions, particularly regarding Integration, Time, Communication and Stakeholders. This standard has proven to be useful to analyze a project management, especially in case of cross-boarders project. It is a shame that such a unifying international approach was only established in 2012.

= References =

<references />

[[Category:Project Management]]
[[Category:Human Behaviour]]
[[Category:Complexity]]

Analyzing the failure of the DaimlerChrysler merger from a project management perspective

2014-12-01T19:58:16Z

Lyngby: /* Stakeholders */

'''Abstract'''

In the late 90´s, German Daimler-Benz AG and American Chrysler Corporation announced their intention to combine their strengths within a so-called `merger of equals´ <ref> Grässlin, Jürgen. ''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> . Becoming the fifth largest automaker in the world, both companies hoped to overcome together the automotive industry crisis. However, nothing worked out as planned, so much so that in 2007 Daimler-Benz sold all its shares of the Chrysler division.

Could the use of a norm have guaranteed the success of the DaimlerChrysler merger ? This question will be answered with regard to the ISO 21500:2012 guideline for project management.

According to the latter, a definition of project management and the processes it involves will be provided.Then, an analysis of the origin of DaimlerChrysler project will be carried out. It will also be shown to what extent this fusion was mismanaged with regard to the subject groups defined in the ISO 21500:2012. Last but not least the benefits of using this standard to successfully conduct a complex project will be discussed.

=Introduction=
In the early 21st century, no comprehensive standard on project management was accepted despite the substantial demand for project management skills. However, in 2006, the need for a unifying international approach was recognized by the International Organization for Standard (ISO). The work of over hundreds experts in project management from around the globe resulted in ''ISO 21500: 2012 -Guidance on project management''. This norm defines universal project management terminologies, as well as the principles and processes it involves. It provides a basic guide against which any organization can compare its current project management practices and determine areas in need of improvement. But how to practically apply it to a project? A specific example of project failure prior to introducing ISO 21500 will be provided to analyze which project management processes were disregarded. More particularly, the merger of the German automaker Daimler-Benz with the American Chrysler Corporation will be examined with the perspective of subject group.

= ISO 21500 : 2012, A focus on processes <ref> ISO 21500:2012 ''Guidance on project management'' </ref> <ref> Anton Zandhuis, Rommert Stellingwerf. ''ISO 215000, Guidance on Project managenent, A Pocket Guide''. Van Haren Publishing. 2013 </ref>=

What is a project? A definition is provided by the ISO 21500: “A unique set of processes consisting of coordinated and controlled activities with start and end dates, performed to achieve project objectives.” The concept of processes seems to be at the crux of project management issues. The definition of how to manage a project stresses this point: “Project management is performed through processes”.

Specifically, the norm splits the method of managing a project into 39 elementary processes. Depending on the perspective, the latter are grouped into five process groups (Initiating, Planning, Controlling and Closing) or into ten subject groups (Integration, Stakeholder, Scope, Resource, Time, Cost, Risk, Quality, Procurement and Communication). The classification of these processes is provided in the following table.

{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 1 : Project management cross-referenced to process and subject groups (ISO 21500 : 2012)'''
|-
! rowspan="2" style="background: #ffedd3;" | SUBJECT GROUPS
! colspan="5" style="background: #ffedd3;" | PROCESS GROUPS
|-
|style="background: #fff4d3;" align=center | '''Initiating'''
|style="background: #fff4d3;" align=center| '''Planning'''
|style="background: #fff4d3;" align=center| '''Implementing'''
|style="background: #fff4d3;" align=center | '''Controlling'''
|style="background: #fff4d3;" align=center | '''Closing'''
|-
|style="background: #fff4d3;" |'''Integration'''
|
4.3.2 Develop project chart
|
4.3.3. Develop project plans
|
4.3.4 Direct project work
|
4.3.5 Control project work

4.3.6 Control changes
|
4.3.7 Close project or phase

4.3.8 Collect lessons learned
|-
|style="background: #fff4d3;" |'''Stakeholder'''
|
4.3.9 Identify stakeholders
|

|
4.3.10 Manage stakeholders
|

|

|-
|style="background: #fff4d3;" |'''Scope'''
|

|
4.3.11 Define scope

4.3.12 Create work breakdown structure

4.3.13 Define activities
|

|
4.3.14 Control scope
|

|-
|style="background: #fff4d3;" |'''Resource'''
|
4.3.15 Establish project team
|
4.3.16 Estimate resources

4.3.17 Define project organization
|
4.3.18 Develop project team
|
4.3.19 Control resources

4.3.20 Manage project team
|

|-
|style="background: #fff4d3;" |'''Time'''
|

|
4.3.21 Sequence activities

4.3.22 Estimate activity durations

4.3.23 Develop schedule
|

|
4.3.24 Control schedule
|

|-
|style="background: #fff4d3;" |'''Cost'''
|

|
4.3.25 Estimate costs

4.3.26 Develop budget
|

|
4.3.27 Control costs
|

|-
|style="background: #fff4d3;" |'''Risk'''
|

|
4.3.28 Identify risks

4.3.29 Asses risks
|
4.3.30 Treat risks
|
4.3.31 Control risks
|
|-
|style="background: #fff4d3;" |'''Quality'''
|

|
4.3.32 Plan quality
|
4.3.33 Perform quality assurance
|
4.3.34 Perform quality control
|

|-
|style="background: #fff4d3;" |'''Procurement'''
|

|
4.3.35 Plan procurements
|
4.3.36 Select suppliers
|
4.3.37 Administer procurements
|

|-
|style="background: #fff4d3;" |'''Communication'''
|

|
4.3.38 Plan communications
|
4.3.39 Distribute information
|
4.3.40 Manage communications
|

|}

The perspective of subject groups will be adopted to consider the management of DaimlerChrysler project. A subject is a theme in which processes are classified according to its related activities.

But before that, the project of DaimlerChrysler merger is regarded.

=DaimlerChrysler merger project <ref> Julia Hollmann, Aletéia de Moura Carpes, Thiago Antonio Beuron. ''The DaimlerChrylser Merger- A cultural mismatch ?'' Faculty Sponsor : Universität Paderborn- Germany, Department of International Business Studies. Universidade Federal de Santa Maria- Brazil, Department of Administration. 2010 </ref> =
==The genesis of the project==
In the late 90´s, the automotive industry had to face multiples challenges due to the excess manufacturing capacity, the growth of ecological awareness, and the retail revolution that empowered buyers. To strengthen their position during this crisis, the automakers Daimler-Benz and Chrysler Corporation decided to merge. This project aimed to combine each other´s product designs, manufacturing resources and distribution systems.
The following table shows the complementary of the two companies, which wanted to unit their knowledge and their market in order to gain a competitive advantage.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 2 : The complementary of the two companies '''
|
! style="background: #ffedd3;" |'''Daimler-Benz AG'''
! style="background: #ffedd3;" |'''Chrysler Corporation'''
|-
! style="background: #ffedd3;" |'''Head office location'''
|
Germany
|
United States
|-
! style="background: #ffedd3;" |'''Geographical reach'''
|
European market
|
U.S. American market
|-
! style="background: #ffedd3;" |'''Product ranges'''
|
Uncompromising quality products
|
Car models that meet the American demand for adventurousness
|}


Both synergies and economies of scale were likely to proliferate.

How the project was set up is explained in the following paragraph. However, its detailed description falls outside the scope of this article.

==The execution of the project==
On May 7th, 1998 the signing of the combination agreement between Daimler-Benz and Chrysler was publicly announced. Daimler-Benz CEO Jürgen Schrempp described the union as "a merger of equals, a merger of growth, and a merger of unprecedented strength".
The equal status of the two organizations was reflected in the newly established entity name, DaimlerChrysler, as well as in the combination of the two former boards of management to form the one of DaimlerChrysler. Furthermore, it was agreed that Schrempp and Eaton, former CEO of the Chrysler Corporation, would jointly led the entity as co-chairmen and co-CEOs. It was also decided that Eaton would stay up to three years.
The two following tables provide more data about DaimlerChrysler right after the merger and the expected results of this project.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 3 : Characteristics of DaimlerChrysler right after the merger'''
|-
! style="background: #ffedd3;" |'''Number of employees '''
|442,000 employees
½ in Germany

1/3 in North America

1/6 spread across 200 countries around the world
|-
! style="background: #ffedd3;" |'''Daimler-Benz AG Market capitalization'''
|$ 92 billion
|}



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 4 : Expected results'''
! style="background: #ffedd3;" |Annual revenues of the combined company
|$ 132 billion
|-
! style="background: #ffedd3;" |Increase in sales
|13%
|-
! style="background: #ffedd3;" |Cost savings brought within 2 or 3 years
|$ 3,5 billion a year
|}


So far, this fusion appears to be very beneficial for all parties involved. However the wish for synergy effects never came true and the project drove Chrysler into chaos. In May 2007, the merger of Chrysler and Daimler-Benz was dissolved. Can this failure be ascribed to mismanagement?

The purpose of this article is now to point out which processes, related to the different subject groups definied in ISO 21500:2012 were disregarded and may have led to the project failure.

=The mismanagement of some subject groups <ref> Wanda Curlee, Robert L. Gordon . ''Complexity Theory and Project Management. ''. New York : Wiley, 2011, p. 129-133 </ref> =

Four subject groups will successively be considered : Integration, Time, Communication and Stakeholders. A mismanagement of some processes related to these four specific subject groups is namely to be seen.

==Integration <ref> Grässlin, Jürgen.''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> <ref> ''DaimlerChrysler confronts the challenges of global integration'', Human Resource Management International Digest, Vol 12 Iss :2 P.5-8</ref> ==

The Integration subject group includes the processes required to identify, define, combine, unify, coordinate, control and close the various activities and processes related to the project (ISO 21500:2012 - 4.2.3.2).

Within this merger, the unification and combination of all operations within the established entity needed to be achieved. To meet this target, a newly corporate culture had to be defined to align working styles. The latter namely radically differ due to major cultural differences, as shown in the following table.



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 5 : Comparison between the German and the American working styles'''
|-
|
! style="background: #ffedd3;" | '''Germany'''
! style="background: #ffedd3;"|'''United States'''
|-
! style="background: #ffedd3;" align="left" |'''Employee working style'''
| Work in a team-oriented environment
| Work individually
|-
! style="background: #ffedd3;" align="left" |'''Writing report'''
| Lengthy reports
| Little paper
|-
! style="background: #ffedd3;" align="left" |'''Decision-making process'''
|
Methodical, based on very detailed plans
|
Using creativity, based on trial-and-error method
|-
! style="background: #ffedd3;" align="left" |'''Meeting'''
|
Extended discussions
|
Short meeting
|-
! style="background: #ffedd3;" align="left" |'''Organizational structure'''
|
Pronounced hierarchy based on top-down-management
|
Flat organizational hierarchy stimulating empowerment of the employees
|-
! style="background: #ffedd3;" align="left" |'''Risk appetite'''
|
Risk adverse culture
|
Risk takers
|}


Due to the fact that this merger was a so-called `merger of equals´, the integration of the two cultures was to combine them to generate a new shared corporate one. It was namely vital that both organizations learn from each other to generate synergy effects. Managers have here a central role to play to define and coordinate the development of this new culture.

Eaton affirmed that it was at the top of the agenda and Thomas Stallkamp, Chrysler President during the negotiation phase, was charged with overseeing this integration process. Some effort went into harmonizing the two corporate cultures. Many seminars and workshops were organized to sensitizing the employees for working with new colleagues with diverging working methods. Furthermore, German was taught to many American managers.

However, given the large gap between the two organizations, it would appear that managers should have undertaken more activities and CEOs should have allocated more resources to bridge the chasm of cultural differences.

In fact, no strong and cohesive organizational culture was created, as illustrated in daily misunderstandings. For instance, the attention Daimler-Benz leaders paid to writing a leaflet sent to employee annoyed Chrysler executives. At the end of 1999, the resignation of Thomas Stallkamp, a 19-year veteran of Chrysler who was highly regarded, might be seen as a failure of the merger integration process after all the effort. Stallkamp is quoted as saying: <nowiki>“</nowiki>The majority of my career has been spent implementing supply chain management. I would like to continue to explore those areas at a less hectic pace<nowiki>”</nowiki>. Were both parties truly willing to cooperate wholeheartedly and to enter compromises to succeed in the numerous integration processes? A negative answer is the root cause of an unachieved integration.

==Time<ref> Sue Cartwright, Cary L. Cooper. ''Mergers and Acquisitions: The Human Factor Paperback'' . January 1, 1992 </ref>==

The Time subject group is all about managing the timely completion of the project. Feasible deadlines taking all known constraints into account need to be set. Processes covered by the latter subject group are the development of schedule for project activities estimating each activity duration, the progress monitoring and the schedule control.

One failure in managing time in DaimlerChrysler merger was that too little time was devoted to each activity. Let´s take a concrete example: Daimler-Benz and Chrysler began formal negotiations on January 12, 1998 and only five months later, the merger was announced worldwide. Susan Cartwright – past President of the British Academy Management – asserts that the period of time from the germ of the merger idea till an agreement is reached is estimated to last around two years. Speeding up the pre-merger preparation, the precise objectives of the fusion and the way to achieve them could not have been defined accurately.
Furthermore, the merger was completed on November 12, 1998. Time needed by employees to adapt to the new circumstances was not taken into account in the deadlines. One more mismanagement which is added to the others.

==Communication==
In the standard ISO 21500:2012, three key processes are defined to ensure appropriate exchange of project information: Plan communications, Distribute information and Manage communications. But within DaimlerChrysler project none of them were totally met. In order to appreciate the scale of the problem, it should be point out that even managers and CEOs experienced serious difficulties in discussing solutions and achieving a consensus. According to a Daimler-Benz executive, <nowiki>"</nowiki>Eaton went weeks without speaking with Jürgen [Schrempp]. He preferred to maintain lower-level contact. Jürgen, meanwhile, left Chrysler alone.<nowiki>"</nowiki> <ref> [http://mba.tuck.dartmouth.edu/pdf/2002-1-0071.pdf] Professor Sydney Finkelstein. ''The DaimlerChrysler Merger.''Tuck School of Business at Dartmouth. 2002 </ref> One would have expected that both CEOs would have shared their different views in order to discover common goal and operate as an effective team at the top. Given the seeming clash of culture described in the first paragraph, it was crucial to start the discussion to create healthy relationship and release the company´s potential. The clearer the communication, the better issues are addressed. But with such a lack of communication among leaders, no far-reaching communication plan could be implemented among all stakeholders involved, not to mention the distribution of the information. Both internal and external communications were chaotic. It is likely that the standard ISO 21500 would have made managers more aware of the processes related to communication which requires to be efficiently tackled.

==Stakeholders==
The stakeholder subject group is concerned with identifying and managing all parties involved. To classify them, both their expectations and influence on the project need to be analyzed. The table 6 provides a power-interest matrix, which is crucial to draw up appropriate management strategies for effectively engaging with them. The external stakeholders are written in italics, the others are internal.

{| border="1" cellpadding="3" cellspacing="0" style="margin:auto;"
|+ '''Table 6 : Power and interest matrix'''
|-
! rowspan="2" style="background: #ffedd3;" | Level of interest
! colspan="5" style="background: #ffedd3;" | Level of power
|-
|style="background: #fff4d3;" align=center | ''' Low '''
|style="background: #fff4d3;" align=center| ''' High '''
|-
|style="background: #fff4d3;" align=center |'''High'''
|
[[Employee]]

Trade Union

''[[Clients]]''

''Suppliers''

''Government''

''Society''
|
Directors

Managers

''[[Stockholders]]''
|-
|style="background: #fff4d3;" align=center |'''Low'''
|
''Competitors''
|

|-
|}

To analyze the management of all of these stakeholders one by one would be tedious. However it is relevant to focus on several categories according to the table 6. Special focus will be laid on the stakeholders written in red. Therefore, both high power/high interest and low power/high interest stakeholders will be looked at. Furthermore, two of them are internal, whereas the other is internal.
All of them were significantly affected by the DaimlerChrysler project due to mismanagement.

===Employees===
Employees, low-power and high-interest stakeholders, must be kept informed and managers should ensure that no major issues are arising.
However, this was not the case in the DaimlerChrysler merger: employees felt overlooked, disregarded and left out of the merger process. But to what extent CEOs and managers were responsible in this climate of distrust and dislike?

First, soon after the merger, it became obvious that Daimler was taking over the whole company´s management. Chrysler President Stallkamp retirement at the end of 1999 was followed by the one of James P. Holdem, top-level executive of the Chrysler Group. They were replaced by two German managers: Dieter Zetsche and Wolfgang Bernhard. Being lowered to divisional status, it is understandable that American´s morale suffer from this German hegemony. Employee felt eclipsed and were disgusted. They also were worried that DaimlerChrysler would dismiss some of them. But the problems are not confined to be here. Indeed, Jürgen Schrempp attitude only made the situation worse. In autumn 2000, DaimlerChrysler CEO acknowledged in the German financial daily Handelsblatt that <nowiki>“</nowiki>The Merger of Equals statement was necessary in order to earn the support of Chrysler's workers and the American public, but it was never reality<nowiki>"</nowiki>. Many American regarded this statement as a betrayal, since he intended to deceive them from the outset. It appears clear that it is due to board of directors failure in acting responsibly towards these stakeholders that deep-seated distrust ran deep.

But this mismanagement of the project stakeholders can lead to far-reaching consequences on the project success itself. Indeed, it could be that some employees simply do not work as efficiently because they suppose the Board of Directors doesn’t care about the Chrysler entity – so why should they? Decreased performance would result in it.

It is to notice that even though the standard ''ISO 21500: 2012'' did not exist at that time, the fact that employee influence to succeed such a process was of importance was already known. MaryAnn Keller, founder and managing partner of MaryAnn Keller & Associates LLC, namely stated in June 1998 that <nowiki>“</nowiki>The success of any combination depends on the ability of the new organization to win over the hearts and minds of employees.<nowiki>”</nowiki> <ref> [http://murphylibrary.uwlax.edu/digital/jur/2002/carpiaux.pdf] Nicole Carpiaux. ''DaimlerChrysler : Wunderkind or Problem Child ?'' Faculty Sponsor : Leticia Peña, Department of Management. </ref> The managers of DaimlerChrysler should then be aware that is really a management issue to embrace workers instead to neglect them in order to obtain the best they can offer.

===Clients===
And what about the consumers, low-power and high interest stakeholders?

Once again, one could argue that managers failed to define as well as to meet their needs.
One example is given for illustration. At the time, the DaimlerChrysler A-Class was 1.25 to 2 times more expensive than similar vehicles sold by Volkswagen, Renault or Fiat. This higher price was not deterrent since clients were aware that Daimler-Benz primarily asset was quality and safety. However, in 1999, the A-class failed an emergency maneuver test conducted by a Swedish television station. <ref> Bill Vlasic, Bradley A. Stertz. ''Taken for a Ride: How Daimler-Benz Drove off with Chrysler''. Harper Paperbacks,
2001, p. 300.
</ref> Consequently, client´s satisfaction suddenly drop off the map. The DaimlerChrysler vehicle was considered as an overpriced car which did not achieve engineering excellence compared to the highly competitive European compact market. The crux of the problem may be that the German entity have tried to implant the American low development costs into its entities, disregarding the high expectations of the clients. This paragraph appears to prove that trying to generate synergy savings the managers failed in responding the customer´s needs.

===Stockholders===
Last but not least, the management of both high power and high interest stakeholders needs to be considered. Take the stockholders.

An overwhelming majority of them favored the project of merger in 1998. Approvals ratings reached 99.9% at Daimler-Benz and 97.5% at Chrysler. It may be inferred that, at the outset of the project, managers successfully took into account the processes required to satisfy the shareholders. It did not take long, however, for some of them to express their disappointment. This was the case for Kirk Kerkorian, the third largest proprietor of DailerChrysler stock and largest Chrysler shareholder before the merger. In November 2000, the latter filed a $9 billion lawsuit against DaimlerChrysler for falsifying the terms of the fusion as a “merger of equals”. He was upset with the German hegemony and stated he had voted to turn its shares for stock in DaimlerChrysler without having considered the American entity would be reduced to a mere division. Two months later, he cut his take in the merged company by a third. Even though the managers were not directly involved in this discontent, the lack of acting responsibly of the Board of the director is obvious.

To conclude, the completion of the processes related to each of these three stakeholders lacked efficiency. The managers failed in implementing the required activities to satisfy them and this will become a major hindrance to the project completion.

=Conclusion=
Many factors may affect the failure of the DaimlerChrysler project, but most of them may have been due to its mismanagement. Such a union was notoriously risky, especially due to the opposite companies it combined. To deliver the intent benefits, particular care should then have been taken by managers to tackle all the project management processes.

The use of the standard ''ISO 21500 : 2012'' was made to group the processes in term of Subject Group. It appears clear that there were some omissions, particularly regarding Integration, Time, Communication and Stakeholders. This standard has proven to be useful to analyze a project management, especially in case of cross-boarders project. It is a shame that such a unifying international approach was only established in 2012.

= References =

<references />

[[Category:Project Management]]
[[Category:Human Behaviour]]
[[Category:Complexity]]

Analyzing the failure of the DaimlerChrysler merger from a project management perspective

2014-12-01T19:57:38Z

Lyngby: /* Stakeholders */

'''Abstract'''

In the late 90´s, German Daimler-Benz AG and American Chrysler Corporation announced their intention to combine their strengths within a so-called `merger of equals´ <ref> Grässlin, Jürgen. ''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> . Becoming the fifth largest automaker in the world, both companies hoped to overcome together the automotive industry crisis. However, nothing worked out as planned, so much so that in 2007 Daimler-Benz sold all its shares of the Chrysler division.

Could the use of a norm have guaranteed the success of the DaimlerChrysler merger ? This question will be answered with regard to the ISO 21500:2012 guideline for project management.

According to the latter, a definition of project management and the processes it involves will be provided.Then, an analysis of the origin of DaimlerChrysler project will be carried out. It will also be shown to what extent this fusion was mismanaged with regard to the subject groups defined in the ISO 21500:2012. Last but not least the benefits of using this standard to successfully conduct a complex project will be discussed.

=Introduction=
In the early 21st century, no comprehensive standard on project management was accepted despite the substantial demand for project management skills. However, in 2006, the need for a unifying international approach was recognized by the International Organization for Standard (ISO). The work of over hundreds experts in project management from around the globe resulted in ''ISO 21500: 2012 -Guidance on project management''. This norm defines universal project management terminologies, as well as the principles and processes it involves. It provides a basic guide against which any organization can compare its current project management practices and determine areas in need of improvement. But how to practically apply it to a project? A specific example of project failure prior to introducing ISO 21500 will be provided to analyze which project management processes were disregarded. More particularly, the merger of the German automaker Daimler-Benz with the American Chrysler Corporation will be examined with the perspective of subject group.

= ISO 21500 : 2012, A focus on processes <ref> ISO 21500:2012 ''Guidance on project management'' </ref> <ref> Anton Zandhuis, Rommert Stellingwerf. ''ISO 215000, Guidance on Project managenent, A Pocket Guide''. Van Haren Publishing. 2013 </ref>=

What is a project? A definition is provided by the ISO 21500: “A unique set of processes consisting of coordinated and controlled activities with start and end dates, performed to achieve project objectives.” The concept of processes seems to be at the crux of project management issues. The definition of how to manage a project stresses this point: “Project management is performed through processes”.

Specifically, the norm splits the method of managing a project into 39 elementary processes. Depending on the perspective, the latter are grouped into five process groups (Initiating, Planning, Controlling and Closing) or into ten subject groups (Integration, Stakeholder, Scope, Resource, Time, Cost, Risk, Quality, Procurement and Communication). The classification of these processes is provided in the following table.

{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 1 : Project management cross-referenced to process and subject groups (ISO 21500 : 2012)'''
|-
! rowspan="2" style="background: #ffedd3;" | SUBJECT GROUPS
! colspan="5" style="background: #ffedd3;" | PROCESS GROUPS
|-
|style="background: #fff4d3;" align=center | '''Initiating'''
|style="background: #fff4d3;" align=center| '''Planning'''
|style="background: #fff4d3;" align=center| '''Implementing'''
|style="background: #fff4d3;" align=center | '''Controlling'''
|style="background: #fff4d3;" align=center | '''Closing'''
|-
|style="background: #fff4d3;" |'''Integration'''
|
4.3.2 Develop project chart
|
4.3.3. Develop project plans
|
4.3.4 Direct project work
|
4.3.5 Control project work

4.3.6 Control changes
|
4.3.7 Close project or phase

4.3.8 Collect lessons learned
|-
|style="background: #fff4d3;" |'''Stakeholder'''
|
4.3.9 Identify stakeholders
|

|
4.3.10 Manage stakeholders
|

|

|-
|style="background: #fff4d3;" |'''Scope'''
|

|
4.3.11 Define scope

4.3.12 Create work breakdown structure

4.3.13 Define activities
|

|
4.3.14 Control scope
|

|-
|style="background: #fff4d3;" |'''Resource'''
|
4.3.15 Establish project team
|
4.3.16 Estimate resources

4.3.17 Define project organization
|
4.3.18 Develop project team
|
4.3.19 Control resources

4.3.20 Manage project team
|

|-
|style="background: #fff4d3;" |'''Time'''
|

|
4.3.21 Sequence activities

4.3.22 Estimate activity durations

4.3.23 Develop schedule
|

|
4.3.24 Control schedule
|

|-
|style="background: #fff4d3;" |'''Cost'''
|

|
4.3.25 Estimate costs

4.3.26 Develop budget
|

|
4.3.27 Control costs
|

|-
|style="background: #fff4d3;" |'''Risk'''
|

|
4.3.28 Identify risks

4.3.29 Asses risks
|
4.3.30 Treat risks
|
4.3.31 Control risks
|
|-
|style="background: #fff4d3;" |'''Quality'''
|

|
4.3.32 Plan quality
|
4.3.33 Perform quality assurance
|
4.3.34 Perform quality control
|

|-
|style="background: #fff4d3;" |'''Procurement'''
|

|
4.3.35 Plan procurements
|
4.3.36 Select suppliers
|
4.3.37 Administer procurements
|

|-
|style="background: #fff4d3;" |'''Communication'''
|

|
4.3.38 Plan communications
|
4.3.39 Distribute information
|
4.3.40 Manage communications
|

|}

The perspective of subject groups will be adopted to consider the management of DaimlerChrysler project. A subject is a theme in which processes are classified according to its related activities.

But before that, the project of DaimlerChrysler merger is regarded.

=DaimlerChrysler merger project <ref> Julia Hollmann, Aletéia de Moura Carpes, Thiago Antonio Beuron. ''The DaimlerChrylser Merger- A cultural mismatch ?'' Faculty Sponsor : Universität Paderborn- Germany, Department of International Business Studies. Universidade Federal de Santa Maria- Brazil, Department of Administration. 2010 </ref> =
==The genesis of the project==
In the late 90´s, the automotive industry had to face multiples challenges due to the excess manufacturing capacity, the growth of ecological awareness, and the retail revolution that empowered buyers. To strengthen their position during this crisis, the automakers Daimler-Benz and Chrysler Corporation decided to merge. This project aimed to combine each other´s product designs, manufacturing resources and distribution systems.
The following table shows the complementary of the two companies, which wanted to unit their knowledge and their market in order to gain a competitive advantage.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 2 : The complementary of the two companies '''
|
! style="background: #ffedd3;" |'''Daimler-Benz AG'''
! style="background: #ffedd3;" |'''Chrysler Corporation'''
|-
! style="background: #ffedd3;" |'''Head office location'''
|
Germany
|
United States
|-
! style="background: #ffedd3;" |'''Geographical reach'''
|
European market
|
U.S. American market
|-
! style="background: #ffedd3;" |'''Product ranges'''
|
Uncompromising quality products
|
Car models that meet the American demand for adventurousness
|}


Both synergies and economies of scale were likely to proliferate.

How the project was set up is explained in the following paragraph. However, its detailed description falls outside the scope of this article.

==The execution of the project==
On May 7th, 1998 the signing of the combination agreement between Daimler-Benz and Chrysler was publicly announced. Daimler-Benz CEO Jürgen Schrempp described the union as "a merger of equals, a merger of growth, and a merger of unprecedented strength".
The equal status of the two organizations was reflected in the newly established entity name, DaimlerChrysler, as well as in the combination of the two former boards of management to form the one of DaimlerChrysler. Furthermore, it was agreed that Schrempp and Eaton, former CEO of the Chrysler Corporation, would jointly led the entity as co-chairmen and co-CEOs. It was also decided that Eaton would stay up to three years.
The two following tables provide more data about DaimlerChrysler right after the merger and the expected results of this project.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 3 : Characteristics of DaimlerChrysler right after the merger'''
|-
! style="background: #ffedd3;" |'''Number of employees '''
|442,000 employees
½ in Germany

1/3 in North America

1/6 spread across 200 countries around the world
|-
! style="background: #ffedd3;" |'''Daimler-Benz AG Market capitalization'''
|$ 92 billion
|}



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 4 : Expected results'''
! style="background: #ffedd3;" |Annual revenues of the combined company
|$ 132 billion
|-
! style="background: #ffedd3;" |Increase in sales
|13%
|-
! style="background: #ffedd3;" |Cost savings brought within 2 or 3 years
|$ 3,5 billion a year
|}


So far, this fusion appears to be very beneficial for all parties involved. However the wish for synergy effects never came true and the project drove Chrysler into chaos. In May 2007, the merger of Chrysler and Daimler-Benz was dissolved. Can this failure be ascribed to mismanagement?

The purpose of this article is now to point out which processes, related to the different subject groups definied in ISO 21500:2012 were disregarded and may have led to the project failure.

=The mismanagement of some subject groups <ref> Wanda Curlee, Robert L. Gordon . ''Complexity Theory and Project Management. ''. New York : Wiley, 2011, p. 129-133 </ref> =

Four subject groups will successively be considered : Integration, Time, Communication and Stakeholders. A mismanagement of some processes related to these four specific subject groups is namely to be seen.

==Integration <ref> Grässlin, Jürgen.''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> <ref> ''DaimlerChrysler confronts the challenges of global integration'', Human Resource Management International Digest, Vol 12 Iss :2 P.5-8</ref> ==

The Integration subject group includes the processes required to identify, define, combine, unify, coordinate, control and close the various activities and processes related to the project (ISO 21500:2012 - 4.2.3.2).

Within this merger, the unification and combination of all operations within the established entity needed to be achieved. To meet this target, a newly corporate culture had to be defined to align working styles. The latter namely radically differ due to major cultural differences, as shown in the following table.



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 5 : Comparison between the German and the American working styles'''
|-
|
! style="background: #ffedd3;" | '''Germany'''
! style="background: #ffedd3;"|'''United States'''
|-
! style="background: #ffedd3;" align="left" |'''Employee working style'''
| Work in a team-oriented environment
| Work individually
|-
! style="background: #ffedd3;" align="left" |'''Writing report'''
| Lengthy reports
| Little paper
|-
! style="background: #ffedd3;" align="left" |'''Decision-making process'''
|
Methodical, based on very detailed plans
|
Using creativity, based on trial-and-error method
|-
! style="background: #ffedd3;" align="left" |'''Meeting'''
|
Extended discussions
|
Short meeting
|-
! style="background: #ffedd3;" align="left" |'''Organizational structure'''
|
Pronounced hierarchy based on top-down-management
|
Flat organizational hierarchy stimulating empowerment of the employees
|-
! style="background: #ffedd3;" align="left" |'''Risk appetite'''
|
Risk adverse culture
|
Risk takers
|}


Due to the fact that this merger was a so-called `merger of equals´, the integration of the two cultures was to combine them to generate a new shared corporate one. It was namely vital that both organizations learn from each other to generate synergy effects. Managers have here a central role to play to define and coordinate the development of this new culture.

Eaton affirmed that it was at the top of the agenda and Thomas Stallkamp, Chrysler President during the negotiation phase, was charged with overseeing this integration process. Some effort went into harmonizing the two corporate cultures. Many seminars and workshops were organized to sensitizing the employees for working with new colleagues with diverging working methods. Furthermore, German was taught to many American managers.

However, given the large gap between the two organizations, it would appear that managers should have undertaken more activities and CEOs should have allocated more resources to bridge the chasm of cultural differences.

In fact, no strong and cohesive organizational culture was created, as illustrated in daily misunderstandings. For instance, the attention Daimler-Benz leaders paid to writing a leaflet sent to employee annoyed Chrysler executives. At the end of 1999, the resignation of Thomas Stallkamp, a 19-year veteran of Chrysler who was highly regarded, might be seen as a failure of the merger integration process after all the effort. Stallkamp is quoted as saying: <nowiki>“</nowiki>The majority of my career has been spent implementing supply chain management. I would like to continue to explore those areas at a less hectic pace<nowiki>”</nowiki>. Were both parties truly willing to cooperate wholeheartedly and to enter compromises to succeed in the numerous integration processes? A negative answer is the root cause of an unachieved integration.

==Time<ref> Sue Cartwright, Cary L. Cooper. ''Mergers and Acquisitions: The Human Factor Paperback'' . January 1, 1992 </ref>==

The Time subject group is all about managing the timely completion of the project. Feasible deadlines taking all known constraints into account need to be set. Processes covered by the latter subject group are the development of schedule for project activities estimating each activity duration, the progress monitoring and the schedule control.

One failure in managing time in DaimlerChrysler merger was that too little time was devoted to each activity. Let´s take a concrete example: Daimler-Benz and Chrysler began formal negotiations on January 12, 1998 and only five months later, the merger was announced worldwide. Susan Cartwright – past President of the British Academy Management – asserts that the period of time from the germ of the merger idea till an agreement is reached is estimated to last around two years. Speeding up the pre-merger preparation, the precise objectives of the fusion and the way to achieve them could not have been defined accurately.
Furthermore, the merger was completed on November 12, 1998. Time needed by employees to adapt to the new circumstances was not taken into account in the deadlines. One more mismanagement which is added to the others.

==Communication==
In the standard ISO 21500:2012, three key processes are defined to ensure appropriate exchange of project information: Plan communications, Distribute information and Manage communications. But within DaimlerChrysler project none of them were totally met. In order to appreciate the scale of the problem, it should be point out that even managers and CEOs experienced serious difficulties in discussing solutions and achieving a consensus. According to a Daimler-Benz executive, <nowiki>"</nowiki>Eaton went weeks without speaking with Jürgen [Schrempp]. He preferred to maintain lower-level contact. Jürgen, meanwhile, left Chrysler alone.<nowiki>"</nowiki> <ref> [http://mba.tuck.dartmouth.edu/pdf/2002-1-0071.pdf] Professor Sydney Finkelstein. ''The DaimlerChrysler Merger.''Tuck School of Business at Dartmouth. 2002 </ref> One would have expected that both CEOs would have shared their different views in order to discover common goal and operate as an effective team at the top. Given the seeming clash of culture described in the first paragraph, it was crucial to start the discussion to create healthy relationship and release the company´s potential. The clearer the communication, the better issues are addressed. But with such a lack of communication among leaders, no far-reaching communication plan could be implemented among all stakeholders involved, not to mention the distribution of the information. Both internal and external communications were chaotic. It is likely that the standard ISO 21500 would have made managers more aware of the processes related to communication which requires to be efficiently tackled.

==Stakeholders==
The stakeholder subject group is concerned with identifying and managing all parties involved. To classify them, both their expectations and influence on the project need to be analyzed. The table 6 provides a power-interest matrix, which is crucial to draw up appropriate management strategies for effectively engaging with them. The external stakeholders are written in italics, the others are internal.

{| border="1" cellpadding="3" cellspacing="0" style="margin:auto;"
|+ '''Table 6 : Power and interest matrix'''
|-
! rowspan="2" style="background: #ffedd3;" | Level of interest
! colspan="5" style="background: #ffedd3;" | Level of power
|-
|style="background: #fff4d3;" align=center | ''' Low '''
|style="background: #fff4d3;" align=center| ''' High '''
|-
|style="background: #fff4d3;" align=center |'''High'''
|
[[Employee]]

Trade Union

''[[Clients]]''

''Suppliers''

''Government''

''Society''
|
Directors

Managers

''[[Stockholders]]''
|-
|style="background: #fff4d3;" align=center |'''Low'''
|
''Competitors''
|

|-
|}

To analyze the management of all of these stakeholders one by one would be tedious. However it is relevant to focus on several categories according to the table 6. Special focus will be laid on the stakeholders written in red in the table above. Therefore, both high power/high interest and low power/high interest stakeholders will be looked at. Furthermore, two of them are internal, whereas the other is internal.
All of them were significantly affected by the DaimlerChrysler project due to mismanagement.

===Employees===
Employees, low-power and high-interest stakeholders, must be kept informed and managers should ensure that no major issues are arising.
However, this was not the case in the DaimlerChrysler merger: employees felt overlooked, disregarded and left out of the merger process. But to what extent CEOs and managers were responsible in this climate of distrust and dislike?

First, soon after the merger, it became obvious that Daimler was taking over the whole company´s management. Chrysler President Stallkamp retirement at the end of 1999 was followed by the one of James P. Holdem, top-level executive of the Chrysler Group. They were replaced by two German managers: Dieter Zetsche and Wolfgang Bernhard. Being lowered to divisional status, it is understandable that American´s morale suffer from this German hegemony. Employee felt eclipsed and were disgusted. They also were worried that DaimlerChrysler would dismiss some of them. But the problems are not confined to be here. Indeed, Jürgen Schrempp attitude only made the situation worse. In autumn 2000, DaimlerChrysler CEO acknowledged in the German financial daily Handelsblatt that <nowiki>“</nowiki>The Merger of Equals statement was necessary in order to earn the support of Chrysler's workers and the American public, but it was never reality<nowiki>"</nowiki>. Many American regarded this statement as a betrayal, since he intended to deceive them from the outset. It appears clear that it is due to board of directors failure in acting responsibly towards these stakeholders that deep-seated distrust ran deep.

But this mismanagement of the project stakeholders can lead to far-reaching consequences on the project success itself. Indeed, it could be that some employees simply do not work as efficiently because they suppose the Board of Directors doesn’t care about the Chrysler entity – so why should they? Decreased performance would result in it.

It is to notice that even though the standard ''ISO 21500: 2012'' did not exist at that time, the fact that employee influence to succeed such a process was of importance was already known. MaryAnn Keller, founder and managing partner of MaryAnn Keller & Associates LLC, namely stated in June 1998 that <nowiki>“</nowiki>The success of any combination depends on the ability of the new organization to win over the hearts and minds of employees.<nowiki>”</nowiki> <ref> [http://murphylibrary.uwlax.edu/digital/jur/2002/carpiaux.pdf] Nicole Carpiaux. ''DaimlerChrysler : Wunderkind or Problem Child ?'' Faculty Sponsor : Leticia Peña, Department of Management. </ref> The managers of DaimlerChrysler should then be aware that is really a management issue to embrace workers instead to neglect them in order to obtain the best they can offer.

===Clients===
And what about the consumers, low-power and high interest stakeholders?

Once again, one could argue that managers failed to define as well as to meet their needs.
One example is given for illustration. At the time, the DaimlerChrysler A-Class was 1.25 to 2 times more expensive than similar vehicles sold by Volkswagen, Renault or Fiat. This higher price was not deterrent since clients were aware that Daimler-Benz primarily asset was quality and safety. However, in 1999, the A-class failed an emergency maneuver test conducted by a Swedish television station. <ref> Bill Vlasic, Bradley A. Stertz. ''Taken for a Ride: How Daimler-Benz Drove off with Chrysler''. Harper Paperbacks,
2001, p. 300.
</ref> Consequently, client´s satisfaction suddenly drop off the map. The DaimlerChrysler vehicle was considered as an overpriced car which did not achieve engineering excellence compared to the highly competitive European compact market. The crux of the problem may be that the German entity have tried to implant the American low development costs into its entities, disregarding the high expectations of the clients. This paragraph appears to prove that trying to generate synergy savings the managers failed in responding the customer´s needs.

===Stockholders===
Last but not least, the management of both high power and high interest stakeholders needs to be considered. Take the stockholders.

An overwhelming majority of them favored the project of merger in 1998. Approvals ratings reached 99.9% at Daimler-Benz and 97.5% at Chrysler. It may be inferred that, at the outset of the project, managers successfully took into account the processes required to satisfy the shareholders. It did not take long, however, for some of them to express their disappointment. This was the case for Kirk Kerkorian, the third largest proprietor of DailerChrysler stock and largest Chrysler shareholder before the merger. In November 2000, the latter filed a $9 billion lawsuit against DaimlerChrysler for falsifying the terms of the fusion as a “merger of equals”. He was upset with the German hegemony and stated he had voted to turn its shares for stock in DaimlerChrysler without having considered the American entity would be reduced to a mere division. Two months later, he cut his take in the merged company by a third. Even though the managers were not directly involved in this discontent, the lack of acting responsibly of the Board of the director is obvious.

To conclude, the completion of the processes related to each of these three stakeholders lacked efficiency. The managers failed in implementing the required activities to satisfy them and this will become a major hindrance to the project completion.

=Conclusion=
Many factors may affect the failure of the DaimlerChrysler project, but most of them may have been due to its mismanagement. Such a union was notoriously risky, especially due to the opposite companies it combined. To deliver the intent benefits, particular care should then have been taken by managers to tackle all the project management processes.

The use of the standard ''ISO 21500 : 2012'' was made to group the processes in term of Subject Group. It appears clear that there were some omissions, particularly regarding Integration, Time, Communication and Stakeholders. This standard has proven to be useful to analyze a project management, especially in case of cross-boarders project. It is a shame that such a unifying international approach was only established in 2012.

= References =

<references />

[[Category:Project Management]]
[[Category:Human Behaviour]]
[[Category:Complexity]]

Analyzing the failure of the DaimlerChrysler merger from a project management perspective

2014-12-01T19:56:26Z

Lyngby: /* Stakeholders */

'''Abstract'''

In the late 90´s, German Daimler-Benz AG and American Chrysler Corporation announced their intention to combine their strengths within a so-called `merger of equals´ <ref> Grässlin, Jürgen. ''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> . Becoming the fifth largest automaker in the world, both companies hoped to overcome together the automotive industry crisis. However, nothing worked out as planned, so much so that in 2007 Daimler-Benz sold all its shares of the Chrysler division.

Could the use of a norm have guaranteed the success of the DaimlerChrysler merger ? This question will be answered with regard to the ISO 21500:2012 guideline for project management.

According to the latter, a definition of project management and the processes it involves will be provided.Then, an analysis of the origin of DaimlerChrysler project will be carried out. It will also be shown to what extent this fusion was mismanaged with regard to the subject groups defined in the ISO 21500:2012. Last but not least the benefits of using this standard to successfully conduct a complex project will be discussed.

=Introduction=
In the early 21st century, no comprehensive standard on project management was accepted despite the substantial demand for project management skills. However, in 2006, the need for a unifying international approach was recognized by the International Organization for Standard (ISO). The work of over hundreds experts in project management from around the globe resulted in ''ISO 21500: 2012 -Guidance on project management''. This norm defines universal project management terminologies, as well as the principles and processes it involves. It provides a basic guide against which any organization can compare its current project management practices and determine areas in need of improvement. But how to practically apply it to a project? A specific example of project failure prior to introducing ISO 21500 will be provided to analyze which project management processes were disregarded. More particularly, the merger of the German automaker Daimler-Benz with the American Chrysler Corporation will be examined with the perspective of subject group.

= ISO 21500 : 2012, A focus on processes <ref> ISO 21500:2012 ''Guidance on project management'' </ref> <ref> Anton Zandhuis, Rommert Stellingwerf. ''ISO 215000, Guidance on Project managenent, A Pocket Guide''. Van Haren Publishing. 2013 </ref>=

What is a project? A definition is provided by the ISO 21500: “A unique set of processes consisting of coordinated and controlled activities with start and end dates, performed to achieve project objectives.” The concept of processes seems to be at the crux of project management issues. The definition of how to manage a project stresses this point: “Project management is performed through processes”.

Specifically, the norm splits the method of managing a project into 39 elementary processes. Depending on the perspective, the latter are grouped into five process groups (Initiating, Planning, Controlling and Closing) or into ten subject groups (Integration, Stakeholder, Scope, Resource, Time, Cost, Risk, Quality, Procurement and Communication). The classification of these processes is provided in the following table.

{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 1 : Project management cross-referenced to process and subject groups (ISO 21500 : 2012)'''
|-
! rowspan="2" style="background: #ffedd3;" | SUBJECT GROUPS
! colspan="5" style="background: #ffedd3;" | PROCESS GROUPS
|-
|style="background: #fff4d3;" align=center | '''Initiating'''
|style="background: #fff4d3;" align=center| '''Planning'''
|style="background: #fff4d3;" align=center| '''Implementing'''
|style="background: #fff4d3;" align=center | '''Controlling'''
|style="background: #fff4d3;" align=center | '''Closing'''
|-
|style="background: #fff4d3;" |'''Integration'''
|
4.3.2 Develop project chart
|
4.3.3. Develop project plans
|
4.3.4 Direct project work
|
4.3.5 Control project work

4.3.6 Control changes
|
4.3.7 Close project or phase

4.3.8 Collect lessons learned
|-
|style="background: #fff4d3;" |'''Stakeholder'''
|
4.3.9 Identify stakeholders
|

|
4.3.10 Manage stakeholders
|

|

|-
|style="background: #fff4d3;" |'''Scope'''
|

|
4.3.11 Define scope

4.3.12 Create work breakdown structure

4.3.13 Define activities
|

|
4.3.14 Control scope
|

|-
|style="background: #fff4d3;" |'''Resource'''
|
4.3.15 Establish project team
|
4.3.16 Estimate resources

4.3.17 Define project organization
|
4.3.18 Develop project team
|
4.3.19 Control resources

4.3.20 Manage project team
|

|-
|style="background: #fff4d3;" |'''Time'''
|

|
4.3.21 Sequence activities

4.3.22 Estimate activity durations

4.3.23 Develop schedule
|

|
4.3.24 Control schedule
|

|-
|style="background: #fff4d3;" |'''Cost'''
|

|
4.3.25 Estimate costs

4.3.26 Develop budget
|

|
4.3.27 Control costs
|

|-
|style="background: #fff4d3;" |'''Risk'''
|

|
4.3.28 Identify risks

4.3.29 Asses risks
|
4.3.30 Treat risks
|
4.3.31 Control risks
|
|-
|style="background: #fff4d3;" |'''Quality'''
|

|
4.3.32 Plan quality
|
4.3.33 Perform quality assurance
|
4.3.34 Perform quality control
|

|-
|style="background: #fff4d3;" |'''Procurement'''
|

|
4.3.35 Plan procurements
|
4.3.36 Select suppliers
|
4.3.37 Administer procurements
|

|-
|style="background: #fff4d3;" |'''Communication'''
|

|
4.3.38 Plan communications
|
4.3.39 Distribute information
|
4.3.40 Manage communications
|

|}

The perspective of subject groups will be adopted to consider the management of DaimlerChrysler project. A subject is a theme in which processes are classified according to its related activities.

But before that, the project of DaimlerChrysler merger is regarded.

=DaimlerChrysler merger project <ref> Julia Hollmann, Aletéia de Moura Carpes, Thiago Antonio Beuron. ''The DaimlerChrylser Merger- A cultural mismatch ?'' Faculty Sponsor : Universität Paderborn- Germany, Department of International Business Studies. Universidade Federal de Santa Maria- Brazil, Department of Administration. 2010 </ref> =
==The genesis of the project==
In the late 90´s, the automotive industry had to face multiples challenges due to the excess manufacturing capacity, the growth of ecological awareness, and the retail revolution that empowered buyers. To strengthen their position during this crisis, the automakers Daimler-Benz and Chrysler Corporation decided to merge. This project aimed to combine each other´s product designs, manufacturing resources and distribution systems.
The following table shows the complementary of the two companies, which wanted to unit their knowledge and their market in order to gain a competitive advantage.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 2 : The complementary of the two companies '''
|
! style="background: #ffedd3;" |'''Daimler-Benz AG'''
! style="background: #ffedd3;" |'''Chrysler Corporation'''
|-
! style="background: #ffedd3;" |'''Head office location'''
|
Germany
|
United States
|-
! style="background: #ffedd3;" |'''Geographical reach'''
|
European market
|
U.S. American market
|-
! style="background: #ffedd3;" |'''Product ranges'''
|
Uncompromising quality products
|
Car models that meet the American demand for adventurousness
|}


Both synergies and economies of scale were likely to proliferate.

How the project was set up is explained in the following paragraph. However, its detailed description falls outside the scope of this article.

==The execution of the project==
On May 7th, 1998 the signing of the combination agreement between Daimler-Benz and Chrysler was publicly announced. Daimler-Benz CEO Jürgen Schrempp described the union as "a merger of equals, a merger of growth, and a merger of unprecedented strength".
The equal status of the two organizations was reflected in the newly established entity name, DaimlerChrysler, as well as in the combination of the two former boards of management to form the one of DaimlerChrysler. Furthermore, it was agreed that Schrempp and Eaton, former CEO of the Chrysler Corporation, would jointly led the entity as co-chairmen and co-CEOs. It was also decided that Eaton would stay up to three years.
The two following tables provide more data about DaimlerChrysler right after the merger and the expected results of this project.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 3 : Characteristics of DaimlerChrysler right after the merger'''
|-
! style="background: #ffedd3;" |'''Number of employees '''
|442,000 employees
½ in Germany

1/3 in North America

1/6 spread across 200 countries around the world
|-
! style="background: #ffedd3;" |'''Daimler-Benz AG Market capitalization'''
|$ 92 billion
|}



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 4 : Expected results'''
! style="background: #ffedd3;" |Annual revenues of the combined company
|$ 132 billion
|-
! style="background: #ffedd3;" |Increase in sales
|13%
|-
! style="background: #ffedd3;" |Cost savings brought within 2 or 3 years
|$ 3,5 billion a year
|}


So far, this fusion appears to be very beneficial for all parties involved. However the wish for synergy effects never came true and the project drove Chrysler into chaos. In May 2007, the merger of Chrysler and Daimler-Benz was dissolved. Can this failure be ascribed to mismanagement?

The purpose of this article is now to point out which processes, related to the different subject groups definied in ISO 21500:2012 were disregarded and may have led to the project failure.

=The mismanagement of some subject groups <ref> Wanda Curlee, Robert L. Gordon . ''Complexity Theory and Project Management. ''. New York : Wiley, 2011, p. 129-133 </ref> =

Four subject groups will successively be considered : Integration, Time, Communication and Stakeholders. A mismanagement of some processes related to these four specific subject groups is namely to be seen.

==Integration <ref> Grässlin, Jürgen.''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> <ref> ''DaimlerChrysler confronts the challenges of global integration'', Human Resource Management International Digest, Vol 12 Iss :2 P.5-8</ref> ==

The Integration subject group includes the processes required to identify, define, combine, unify, coordinate, control and close the various activities and processes related to the project (ISO 21500:2012 - 4.2.3.2).

Within this merger, the unification and combination of all operations within the established entity needed to be achieved. To meet this target, a newly corporate culture had to be defined to align working styles. The latter namely radically differ due to major cultural differences, as shown in the following table.



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 5 : Comparison between the German and the American working styles'''
|-
|
! style="background: #ffedd3;" | '''Germany'''
! style="background: #ffedd3;"|'''United States'''
|-
! style="background: #ffedd3;" align="left" |'''Employee working style'''
| Work in a team-oriented environment
| Work individually
|-
! style="background: #ffedd3;" align="left" |'''Writing report'''
| Lengthy reports
| Little paper
|-
! style="background: #ffedd3;" align="left" |'''Decision-making process'''
|
Methodical, based on very detailed plans
|
Using creativity, based on trial-and-error method
|-
! style="background: #ffedd3;" align="left" |'''Meeting'''
|
Extended discussions
|
Short meeting
|-
! style="background: #ffedd3;" align="left" |'''Organizational structure'''
|
Pronounced hierarchy based on top-down-management
|
Flat organizational hierarchy stimulating empowerment of the employees
|-
! style="background: #ffedd3;" align="left" |'''Risk appetite'''
|
Risk adverse culture
|
Risk takers
|}


Due to the fact that this merger was a so-called `merger of equals´, the integration of the two cultures was to combine them to generate a new shared corporate one. It was namely vital that both organizations learn from each other to generate synergy effects. Managers have here a central role to play to define and coordinate the development of this new culture.

Eaton affirmed that it was at the top of the agenda and Thomas Stallkamp, Chrysler President during the negotiation phase, was charged with overseeing this integration process. Some effort went into harmonizing the two corporate cultures. Many seminars and workshops were organized to sensitizing the employees for working with new colleagues with diverging working methods. Furthermore, German was taught to many American managers.

However, given the large gap between the two organizations, it would appear that managers should have undertaken more activities and CEOs should have allocated more resources to bridge the chasm of cultural differences.

In fact, no strong and cohesive organizational culture was created, as illustrated in daily misunderstandings. For instance, the attention Daimler-Benz leaders paid to writing a leaflet sent to employee annoyed Chrysler executives. At the end of 1999, the resignation of Thomas Stallkamp, a 19-year veteran of Chrysler who was highly regarded, might be seen as a failure of the merger integration process after all the effort. Stallkamp is quoted as saying: <nowiki>“</nowiki>The majority of my career has been spent implementing supply chain management. I would like to continue to explore those areas at a less hectic pace<nowiki>”</nowiki>. Were both parties truly willing to cooperate wholeheartedly and to enter compromises to succeed in the numerous integration processes? A negative answer is the root cause of an unachieved integration.

==Time<ref> Sue Cartwright, Cary L. Cooper. ''Mergers and Acquisitions: The Human Factor Paperback'' . January 1, 1992 </ref>==

The Time subject group is all about managing the timely completion of the project. Feasible deadlines taking all known constraints into account need to be set. Processes covered by the latter subject group are the development of schedule for project activities estimating each activity duration, the progress monitoring and the schedule control.

One failure in managing time in DaimlerChrysler merger was that too little time was devoted to each activity. Let´s take a concrete example: Daimler-Benz and Chrysler began formal negotiations on January 12, 1998 and only five months later, the merger was announced worldwide. Susan Cartwright – past President of the British Academy Management – asserts that the period of time from the germ of the merger idea till an agreement is reached is estimated to last around two years. Speeding up the pre-merger preparation, the precise objectives of the fusion and the way to achieve them could not have been defined accurately.
Furthermore, the merger was completed on November 12, 1998. Time needed by employees to adapt to the new circumstances was not taken into account in the deadlines. One more mismanagement which is added to the others.

==Communication==
In the standard ISO 21500:2012, three key processes are defined to ensure appropriate exchange of project information: Plan communications, Distribute information and Manage communications. But within DaimlerChrysler project none of them were totally met. In order to appreciate the scale of the problem, it should be point out that even managers and CEOs experienced serious difficulties in discussing solutions and achieving a consensus. According to a Daimler-Benz executive, <nowiki>"</nowiki>Eaton went weeks without speaking with Jürgen [Schrempp]. He preferred to maintain lower-level contact. Jürgen, meanwhile, left Chrysler alone.<nowiki>"</nowiki> <ref> [http://mba.tuck.dartmouth.edu/pdf/2002-1-0071.pdf] Professor Sydney Finkelstein. ''The DaimlerChrysler Merger.''Tuck School of Business at Dartmouth. 2002 </ref> One would have expected that both CEOs would have shared their different views in order to discover common goal and operate as an effective team at the top. Given the seeming clash of culture described in the first paragraph, it was crucial to start the discussion to create healthy relationship and release the company´s potential. The clearer the communication, the better issues are addressed. But with such a lack of communication among leaders, no far-reaching communication plan could be implemented among all stakeholders involved, not to mention the distribution of the information. Both internal and external communications were chaotic. It is likely that the standard ISO 21500 would have made managers more aware of the processes related to communication which requires to be efficiently tackled.

==Stakeholders==
The stakeholder subject group is concerned with identifying and managing all parties involved. To classify them, both their expectations and influence on the project need to be analyzed. The table 6 provides a power-interest matrix, which is crucial to draw up appropriate management strategies for effectively engaging with them. The external stakeholders are written in italics, the others are internal.

{| border="1" cellpadding="3" cellspacing="0" style="margin:auto;"
|+ '''Table 6 : Power and interest matrix'''
|-
! rowspan="2" style="background: #ffedd3;" | Level of interest
! colspan="5" style="background: #ffedd3;" | Level of power
|-
|style="background: #fff4d3;" align=center | ''' Low '''
|style="background: #fff4d3;" align=center| ''' High '''
|-
|style="background: #fff4d3;" align=center |'''High'''
|
[[Employee]]

Trade Union

''[[Clients]]''

''Suppliers''

''Government''

''Society''
|
Directors

Managers

''[[Stockholders]]''
|-
|style="background: #fff4d3;" align=center |'''Low'''
|
''Competitors''
|

|-
|}

To analyze the management of all the stakeholders one by one would be tedious. However it is relevant to focus on several categories according to the table 6. Special focus will be laid on the stakeholders written in red in the table above. Therefore, both high power/high interest and low power/high interest stakeholders will be looked at. Furthermore, two of them are internal, whereas the other is internal.
All of them were significantly affected by the DaimlerChrysler project due to mismanagement.

===Employees===
Employees, low-power and high-interest stakeholders, must be kept informed and managers should ensure that no major issues are arising.
However, this was not the case in the DaimlerChrysler merger: employees felt overlooked, disregarded and left out of the merger process. But to what extent CEOs and managers were responsible in this climate of distrust and dislike?

First, soon after the merger, it became obvious that Daimler was taking over the whole company´s management. Chrysler President Stallkamp retirement at the end of 1999 was followed by the one of James P. Holdem, top-level executive of the Chrysler Group. They were replaced by two German managers: Dieter Zetsche and Wolfgang Bernhard. Being lowered to divisional status, it is understandable that American´s morale suffer from this German hegemony. Employee felt eclipsed and were disgusted. They also were worried that DaimlerChrysler would dismiss some of them. But the problems are not confined to be here. Indeed, Jürgen Schrempp attitude only made the situation worse. In autumn 2000, DaimlerChrysler CEO acknowledged in the German financial daily Handelsblatt that <nowiki>“</nowiki>The Merger of Equals statement was necessary in order to earn the support of Chrysler's workers and the American public, but it was never reality<nowiki>"</nowiki>. Many American regarded this statement as a betrayal, since he intended to deceive them from the outset. It appears clear that it is due to board of directors failure in acting responsibly towards these stakeholders that deep-seated distrust ran deep.

But this mismanagement of the project stakeholders can lead to far-reaching consequences on the project success itself. Indeed, it could be that some employees simply do not work as efficiently because they suppose the Board of Directors doesn’t care about the Chrysler entity – so why should they? Decreased performance would result in it.

It is to notice that even though the standard ''ISO 21500: 2012'' did not exist at that time, the fact that employee influence to succeed such a process was of importance was already known. MaryAnn Keller, founder and managing partner of MaryAnn Keller & Associates LLC, namely stated in June 1998 that <nowiki>“</nowiki>The success of any combination depends on the ability of the new organization to win over the hearts and minds of employees.<nowiki>”</nowiki> <ref> [http://murphylibrary.uwlax.edu/digital/jur/2002/carpiaux.pdf] Nicole Carpiaux. ''DaimlerChrysler : Wunderkind or Problem Child ?'' Faculty Sponsor : Leticia Peña, Department of Management. </ref> The managers of DaimlerChrysler should then be aware that is really a management issue to embrace workers instead to neglect them in order to obtain the best they can offer.

===Clients===
And what about the consumers, low-power and high interest stakeholders?

Once again, one could argue that managers failed to define as well as to meet their needs.
One example is given for illustration. At the time, the DaimlerChrysler A-Class was 1.25 to 2 times more expensive than similar vehicles sold by Volkswagen, Renault or Fiat. This higher price was not deterrent since clients were aware that Daimler-Benz primarily asset was quality and safety. However, in 1999, the A-class failed an emergency maneuver test conducted by a Swedish television station. <ref> Bill Vlasic, Bradley A. Stertz. ''Taken for a Ride: How Daimler-Benz Drove off with Chrysler''. Harper Paperbacks,
2001, p. 300.
</ref> Consequently, client´s satisfaction suddenly drop off the map. The DaimlerChrysler vehicle was considered as an overpriced car which did not achieve engineering excellence compared to the highly competitive European compact market. The crux of the problem may be that the German entity have tried to implant the American low development costs into its entities, disregarding the high expectations of the clients. This paragraph appears to prove that trying to generate synergy savings the managers failed in responding the customer´s needs.

===Stockholders===
Last but not least, the management of both high power and high interest stakeholders needs to be considered. Take the stockholders.

An overwhelming majority of them favored the project of merger in 1998. Approvals ratings reached 99.9% at Daimler-Benz and 97.5% at Chrysler. It may be inferred that, at the outset of the project, managers successfully took into account the processes required to satisfy the shareholders. It did not take long, however, for some of them to express their disappointment. This was the case for Kirk Kerkorian, the third largest proprietor of DailerChrysler stock and largest Chrysler shareholder before the merger. In November 2000, the latter filed a $9 billion lawsuit against DaimlerChrysler for falsifying the terms of the fusion as a “merger of equals”. He was upset with the German hegemony and stated he had voted to turn its shares for stock in DaimlerChrysler without having considered the American entity would be reduced to a mere division. Two months later, he cut his take in the merged company by a third. Even though the managers were not directly involved in this discontent, the lack of acting responsibly of the Board of the director is obvious.

To conclude, the completion of the processes related to each of these three stakeholders lacked efficiency. The managers failed in implementing the required activities to satisfy them and this will become a major hindrance to the project completion.

=Conclusion=
Many factors may affect the failure of the DaimlerChrysler project, but most of them may have been due to its mismanagement. Such a union was notoriously risky, especially due to the opposite companies it combined. To deliver the intent benefits, particular care should then have been taken by managers to tackle all the project management processes.

The use of the standard ''ISO 21500 : 2012'' was made to group the processes in term of Subject Group. It appears clear that there were some omissions, particularly regarding Integration, Time, Communication and Stakeholders. This standard has proven to be useful to analyze a project management, especially in case of cross-boarders project. It is a shame that such a unifying international approach was only established in 2012.

= References =

<references />

[[Category:Project Management]]
[[Category:Human Behaviour]]
[[Category:Complexity]]

Analyzing the failure of the DaimlerChrysler merger from a project management perspective

2014-12-01T19:55:11Z

Lyngby: /* Integration Grässlin, Jürgen.Jürgen Schrempp and the Making of an Auto Dynasty. New York: McGraw-Hill, 2000, p. 155 DaimlerChrysler confronts the challenges of global integration, Human Resource Management International Digest, Vol 12 Is...

'''Abstract'''

In the late 90´s, German Daimler-Benz AG and American Chrysler Corporation announced their intention to combine their strengths within a so-called `merger of equals´ <ref> Grässlin, Jürgen. ''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> . Becoming the fifth largest automaker in the world, both companies hoped to overcome together the automotive industry crisis. However, nothing worked out as planned, so much so that in 2007 Daimler-Benz sold all its shares of the Chrysler division.

Could the use of a norm have guaranteed the success of the DaimlerChrysler merger ? This question will be answered with regard to the ISO 21500:2012 guideline for project management.

According to the latter, a definition of project management and the processes it involves will be provided.Then, an analysis of the origin of DaimlerChrysler project will be carried out. It will also be shown to what extent this fusion was mismanaged with regard to the subject groups defined in the ISO 21500:2012. Last but not least the benefits of using this standard to successfully conduct a complex project will be discussed.

=Introduction=
In the early 21st century, no comprehensive standard on project management was accepted despite the substantial demand for project management skills. However, in 2006, the need for a unifying international approach was recognized by the International Organization for Standard (ISO). The work of over hundreds experts in project management from around the globe resulted in ''ISO 21500: 2012 -Guidance on project management''. This norm defines universal project management terminologies, as well as the principles and processes it involves. It provides a basic guide against which any organization can compare its current project management practices and determine areas in need of improvement. But how to practically apply it to a project? A specific example of project failure prior to introducing ISO 21500 will be provided to analyze which project management processes were disregarded. More particularly, the merger of the German automaker Daimler-Benz with the American Chrysler Corporation will be examined with the perspective of subject group.

= ISO 21500 : 2012, A focus on processes <ref> ISO 21500:2012 ''Guidance on project management'' </ref> <ref> Anton Zandhuis, Rommert Stellingwerf. ''ISO 215000, Guidance on Project managenent, A Pocket Guide''. Van Haren Publishing. 2013 </ref>=

What is a project? A definition is provided by the ISO 21500: “A unique set of processes consisting of coordinated and controlled activities with start and end dates, performed to achieve project objectives.” The concept of processes seems to be at the crux of project management issues. The definition of how to manage a project stresses this point: “Project management is performed through processes”.

Specifically, the norm splits the method of managing a project into 39 elementary processes. Depending on the perspective, the latter are grouped into five process groups (Initiating, Planning, Controlling and Closing) or into ten subject groups (Integration, Stakeholder, Scope, Resource, Time, Cost, Risk, Quality, Procurement and Communication). The classification of these processes is provided in the following table.

{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 1 : Project management cross-referenced to process and subject groups (ISO 21500 : 2012)'''
|-
! rowspan="2" style="background: #ffedd3;" | SUBJECT GROUPS
! colspan="5" style="background: #ffedd3;" | PROCESS GROUPS
|-
|style="background: #fff4d3;" align=center | '''Initiating'''
|style="background: #fff4d3;" align=center| '''Planning'''
|style="background: #fff4d3;" align=center| '''Implementing'''
|style="background: #fff4d3;" align=center | '''Controlling'''
|style="background: #fff4d3;" align=center | '''Closing'''
|-
|style="background: #fff4d3;" |'''Integration'''
|
4.3.2 Develop project chart
|
4.3.3. Develop project plans
|
4.3.4 Direct project work
|
4.3.5 Control project work

4.3.6 Control changes
|
4.3.7 Close project or phase

4.3.8 Collect lessons learned
|-
|style="background: #fff4d3;" |'''Stakeholder'''
|
4.3.9 Identify stakeholders
|

|
4.3.10 Manage stakeholders
|

|

|-
|style="background: #fff4d3;" |'''Scope'''
|

|
4.3.11 Define scope

4.3.12 Create work breakdown structure

4.3.13 Define activities
|

|
4.3.14 Control scope
|

|-
|style="background: #fff4d3;" |'''Resource'''
|
4.3.15 Establish project team
|
4.3.16 Estimate resources

4.3.17 Define project organization
|
4.3.18 Develop project team
|
4.3.19 Control resources

4.3.20 Manage project team
|

|-
|style="background: #fff4d3;" |'''Time'''
|

|
4.3.21 Sequence activities

4.3.22 Estimate activity durations

4.3.23 Develop schedule
|

|
4.3.24 Control schedule
|

|-
|style="background: #fff4d3;" |'''Cost'''
|

|
4.3.25 Estimate costs

4.3.26 Develop budget
|

|
4.3.27 Control costs
|

|-
|style="background: #fff4d3;" |'''Risk'''
|

|
4.3.28 Identify risks

4.3.29 Asses risks
|
4.3.30 Treat risks
|
4.3.31 Control risks
|
|-
|style="background: #fff4d3;" |'''Quality'''
|

|
4.3.32 Plan quality
|
4.3.33 Perform quality assurance
|
4.3.34 Perform quality control
|

|-
|style="background: #fff4d3;" |'''Procurement'''
|

|
4.3.35 Plan procurements
|
4.3.36 Select suppliers
|
4.3.37 Administer procurements
|

|-
|style="background: #fff4d3;" |'''Communication'''
|

|
4.3.38 Plan communications
|
4.3.39 Distribute information
|
4.3.40 Manage communications
|

|}

The perspective of subject groups will be adopted to consider the management of DaimlerChrysler project. A subject is a theme in which processes are classified according to its related activities.

But before that, the project of DaimlerChrysler merger is regarded.

=DaimlerChrysler merger project <ref> Julia Hollmann, Aletéia de Moura Carpes, Thiago Antonio Beuron. ''The DaimlerChrylser Merger- A cultural mismatch ?'' Faculty Sponsor : Universität Paderborn- Germany, Department of International Business Studies. Universidade Federal de Santa Maria- Brazil, Department of Administration. 2010 </ref> =
==The genesis of the project==
In the late 90´s, the automotive industry had to face multiples challenges due to the excess manufacturing capacity, the growth of ecological awareness, and the retail revolution that empowered buyers. To strengthen their position during this crisis, the automakers Daimler-Benz and Chrysler Corporation decided to merge. This project aimed to combine each other´s product designs, manufacturing resources and distribution systems.
The following table shows the complementary of the two companies, which wanted to unit their knowledge and their market in order to gain a competitive advantage.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 2 : The complementary of the two companies '''
|
! style="background: #ffedd3;" |'''Daimler-Benz AG'''
! style="background: #ffedd3;" |'''Chrysler Corporation'''
|-
! style="background: #ffedd3;" |'''Head office location'''
|
Germany
|
United States
|-
! style="background: #ffedd3;" |'''Geographical reach'''
|
European market
|
U.S. American market
|-
! style="background: #ffedd3;" |'''Product ranges'''
|
Uncompromising quality products
|
Car models that meet the American demand for adventurousness
|}


Both synergies and economies of scale were likely to proliferate.

How the project was set up is explained in the following paragraph. However, its detailed description falls outside the scope of this article.

==The execution of the project==
On May 7th, 1998 the signing of the combination agreement between Daimler-Benz and Chrysler was publicly announced. Daimler-Benz CEO Jürgen Schrempp described the union as "a merger of equals, a merger of growth, and a merger of unprecedented strength".
The equal status of the two organizations was reflected in the newly established entity name, DaimlerChrysler, as well as in the combination of the two former boards of management to form the one of DaimlerChrysler. Furthermore, it was agreed that Schrempp and Eaton, former CEO of the Chrysler Corporation, would jointly led the entity as co-chairmen and co-CEOs. It was also decided that Eaton would stay up to three years.
The two following tables provide more data about DaimlerChrysler right after the merger and the expected results of this project.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 3 : Characteristics of DaimlerChrysler right after the merger'''
|-
! style="background: #ffedd3;" |'''Number of employees '''
|442,000 employees
½ in Germany

1/3 in North America

1/6 spread across 200 countries around the world
|-
! style="background: #ffedd3;" |'''Daimler-Benz AG Market capitalization'''
|$ 92 billion
|}



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 4 : Expected results'''
! style="background: #ffedd3;" |Annual revenues of the combined company
|$ 132 billion
|-
! style="background: #ffedd3;" |Increase in sales
|13%
|-
! style="background: #ffedd3;" |Cost savings brought within 2 or 3 years
|$ 3,5 billion a year
|}


So far, this fusion appears to be very beneficial for all parties involved. However the wish for synergy effects never came true and the project drove Chrysler into chaos. In May 2007, the merger of Chrysler and Daimler-Benz was dissolved. Can this failure be ascribed to mismanagement?

The purpose of this article is now to point out which processes, related to the different subject groups definied in ISO 21500:2012 were disregarded and may have led to the project failure.

=The mismanagement of some subject groups <ref> Wanda Curlee, Robert L. Gordon . ''Complexity Theory and Project Management. ''. New York : Wiley, 2011, p. 129-133 </ref> =

Four subject groups will successively be considered : Integration, Time, Communication and Stakeholders. A mismanagement of some processes related to these four specific subject groups is namely to be seen.

==Integration <ref> Grässlin, Jürgen.''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> <ref> ''DaimlerChrysler confronts the challenges of global integration'', Human Resource Management International Digest, Vol 12 Iss :2 P.5-8</ref> ==

The Integration subject group includes the processes required to identify, define, combine, unify, coordinate, control and close the various activities and processes related to the project (ISO 21500:2012 - 4.2.3.2).

Within this merger, the unification and combination of all operations within the established entity needed to be achieved. To meet this target, a newly corporate culture had to be defined to align working styles. The latter namely radically differ due to major cultural differences, as shown in the following table.



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 5 : Comparison between the German and the American working styles'''
|-
|
! style="background: #ffedd3;" | '''Germany'''
! style="background: #ffedd3;"|'''United States'''
|-
! style="background: #ffedd3;" align="left" |'''Employee working style'''
| Work in a team-oriented environment
| Work individually
|-
! style="background: #ffedd3;" align="left" |'''Writing report'''
| Lengthy reports
| Little paper
|-
! style="background: #ffedd3;" align="left" |'''Decision-making process'''
|
Methodical, based on very detailed plans
|
Using creativity, based on trial-and-error method
|-
! style="background: #ffedd3;" align="left" |'''Meeting'''
|
Extended discussions
|
Short meeting
|-
! style="background: #ffedd3;" align="left" |'''Organizational structure'''
|
Pronounced hierarchy based on top-down-management
|
Flat organizational hierarchy stimulating empowerment of the employees
|-
! style="background: #ffedd3;" align="left" |'''Risk appetite'''
|
Risk adverse culture
|
Risk takers
|}


Due to the fact that this merger was a so-called `merger of equals´, the integration of the two cultures was to combine them to generate a new shared corporate one. It was namely vital that both organizations learn from each other to generate synergy effects. Managers have here a central role to play to define and coordinate the development of this new culture.

Eaton affirmed that it was at the top of the agenda and Thomas Stallkamp, Chrysler President during the negotiation phase, was charged with overseeing this integration process. Some effort went into harmonizing the two corporate cultures. Many seminars and workshops were organized to sensitizing the employees for working with new colleagues with diverging working methods. Furthermore, German was taught to many American managers.

However, given the large gap between the two organizations, it would appear that managers should have undertaken more activities and CEOs should have allocated more resources to bridge the chasm of cultural differences.

In fact, no strong and cohesive organizational culture was created, as illustrated in daily misunderstandings. For instance, the attention Daimler-Benz leaders paid to writing a leaflet sent to employee annoyed Chrysler executives. At the end of 1999, the resignation of Thomas Stallkamp, a 19-year veteran of Chrysler who was highly regarded, might be seen as a failure of the merger integration process after all the effort. Stallkamp is quoted as saying: <nowiki>“</nowiki>The majority of my career has been spent implementing supply chain management. I would like to continue to explore those areas at a less hectic pace<nowiki>”</nowiki>. Were both parties truly willing to cooperate wholeheartedly and to enter compromises to succeed in the numerous integration processes? A negative answer is the root cause of an unachieved integration.

==Time<ref> Sue Cartwright, Cary L. Cooper. ''Mergers and Acquisitions: The Human Factor Paperback'' . January 1, 1992 </ref>==

The Time subject group is all about managing the timely completion of the project. Feasible deadlines taking all known constraints into account need to be set. Processes covered by the latter subject group are the development of schedule for project activities estimating each activity duration, the progress monitoring and the schedule control.

One failure in managing time in DaimlerChrysler merger was that too little time was devoted to each activity. Let´s take a concrete example: Daimler-Benz and Chrysler began formal negotiations on January 12, 1998 and only five months later, the merger was announced worldwide. Susan Cartwright – past President of the British Academy Management – asserts that the period of time from the germ of the merger idea till an agreement is reached is estimated to last around two years. Speeding up the pre-merger preparation, the precise objectives of the fusion and the way to achieve them could not have been defined accurately.
Furthermore, the merger was completed on November 12, 1998. Time needed by employees to adapt to the new circumstances was not taken into account in the deadlines. One more mismanagement which is added to the others.

==Communication==
In the standard ISO 21500:2012, three key processes are defined to ensure appropriate exchange of project information: Plan communications, Distribute information and Manage communications. But within DaimlerChrysler project none of them were totally met. In order to appreciate the scale of the problem, it should be point out that even managers and CEOs experienced serious difficulties in discussing solutions and achieving a consensus. According to a Daimler-Benz executive, <nowiki>"</nowiki>Eaton went weeks without speaking with Jürgen [Schrempp]. He preferred to maintain lower-level contact. Jürgen, meanwhile, left Chrysler alone.<nowiki>"</nowiki> <ref> [http://mba.tuck.dartmouth.edu/pdf/2002-1-0071.pdf] Professor Sydney Finkelstein. ''The DaimlerChrysler Merger.''Tuck School of Business at Dartmouth. 2002 </ref> One would have expected that both CEOs would have shared their different views in order to discover common goal and operate as an effective team at the top. Given the seeming clash of culture described in the first paragraph, it was crucial to start the discussion to create healthy relationship and release the company´s potential. The clearer the communication, the better issues are addressed. But with such a lack of communication among leaders, no far-reaching communication plan could be implemented among all stakeholders involved, not to mention the distribution of the information. Both internal and external communications were chaotic. It is likely that the standard ISO 21500 would have made managers more aware of the processes related to communication which requires to be efficiently tackled.

==Stakeholders==
The stakeholder subject group is concerned with identifying and managing all parties involved. To classify them, both their expectations and influence on the project need to be analyzed. The table 6 provides a power-interest matrix, which is crucial to draw up appropriate management strategies for effectively engaging with them. The external stakeholders are written in italics, the others are internal.

{| border="1" cellpadding="3" cellspacing="0" style="margin:auto;"
|+ '''Table 6 : Power and interest matrix'''
|-
! rowspan="2" style="background: #ffedd3;" | Level of interest
! colspan="5" style="background: #ffedd3;" | Level of power
|-
|style="background: #fff4d3;" align=center | ''' Low '''
|style="background: #fff4d3;" align=center| ''' High '''
|-
|style="background: #fff4d3;" align=center |'''High'''
|
[[Employee]]

Trade Union

''[[Clients]]''

''Suppliers''

''Government''

''Society''
|
Directors

Managers

''[[Stockholders]]''
|-
|style="background: #fff4d3;" align=center |'''Low'''
|
''Competitors''
|

|-
|}

To analyze the management of all of these stakeholders one by one would be tedious. However it is relevant to focus on several categories according to the table 6. Special focus will be laid on the stakeholders written in red in the table above. Therefore, both high power/high interest and low power/high interest stakeholders will be looked at. Furthermore, two of them are internal, whereas the other is internal.
All of them were significantly affected by the DaimlerChrysler project due to mismanagement.

===Employees===
Employees, low-power and high-interest stakeholders, must be kept informed and managers should ensure that no major issues are arising.
However, this was not the case in the DaimlerChrysler merger: employees felt overlooked, disregarded and left out of the merger process. But to what extent CEOs and managers were responsible in this climate of distrust and dislike?

First, soon after the merger, it became obvious that Daimler was taking over the whole company´s management. Chrysler President Stallkamp retirement at the end of 1999 was followed by the one of James P. Holdem, top-level executive of the Chrysler Group. They were replaced by two German managers: Dieter Zetsche and Wolfgang Bernhard. Being lowered to divisional status, it is understandable that American´s morale suffer from this German hegemony. Employee felt eclipsed and were disgusted. They also were worried that DaimlerChrysler would dismiss some of them. But the problems are not confined to be here. Indeed, Jürgen Schrempp attitude only made the situation worse. In autumn 2000, DaimlerChrysler CEO acknowledged in the German financial daily Handelsblatt that <nowiki>“</nowiki>The Merger of Equals statement was necessary in order to earn the support of Chrysler's workers and the American public, but it was never reality<nowiki>"</nowiki>. Many American regarded this statement as a betrayal, since he intended to deceive them from the outset. It appears clear that it is due to board of directors failure in acting responsibly towards these stakeholders that deep-seated distrust ran deep.

But this mismanagement of the project stakeholders can lead to far-reaching consequences on the project success itself. Indeed, it could be that some employees simply do not work as efficiently because they suppose the Board of Directors doesn’t care about the Chrysler entity – so why should they? Decreased performance would result in it.

It is to notice that even though the standard ''ISO 21500: 2012'' did not exist at that time, the fact that employee influence to succeed such a process was of importance was already known. MaryAnn Keller, founder and managing partner of MaryAnn Keller & Associates LLC, namely stated in June 1998 that <nowiki>“</nowiki>The success of any combination depends on the ability of the new organization to win over the hearts and minds of employees.<nowiki>”</nowiki> <ref> [http://murphylibrary.uwlax.edu/digital/jur/2002/carpiaux.pdf] Nicole Carpiaux. ''DaimlerChrysler : Wunderkind or Problem Child ?'' Faculty Sponsor : Leticia Peña, Department of Management. </ref> The managers of DaimlerChrysler should then be aware that is really a management issue to embrace workers instead to neglect them in order to obtain the best they can offer.

===Clients===
And what about the consumers, low-power and high interest stakeholders?

Once again, one could argue that managers failed to define as well as to meet their needs.
One example is given for illustration. At the time, the DaimlerChrysler A-Class was 1.25 to 2 times more expensive than similar vehicles sold by Volkswagen, Renault or Fiat. This higher price was not deterrent since clients were aware that Daimler-Benz primarily asset was quality and safety. However, in 1999, the A-class failed an emergency maneuver test conducted by a Swedish television station. <ref> Bill Vlasic, Bradley A. Stertz. ''Taken for a Ride: How Daimler-Benz Drove off with Chrysler''. Harper Paperbacks,
2001, p. 300.
</ref> Consequently, client´s satisfaction suddenly drop off the map. The DaimlerChrysler vehicle was considered as an overpriced car which did not achieve engineering excellence compared to the highly competitive European compact market. The crux of the problem may be that the German entity have tried to implant the American low development costs into its entities, disregarding the high expectations of the clients. This paragraph appears to prove that trying to generate synergy savings the managers failed in responding the customer´s needs.

===Stockholders===
Last but not least, the management of both high power and high interest stakeholders needs to be considered. Take the stockholders.

An overwhelming majority of them favored the project of merger in 1998. Approvals ratings reached 99.9% at Daimler-Benz and 97.5% at Chrysler. It may be inferred that, at the outset of the project, managers successfully took into account the processes required to satisfy the shareholders. It did not take long, however, for some of them to express their disappointment. This was the case for Kirk Kerkorian, the third largest proprietor of DailerChrysler stock and largest Chrysler shareholder before the merger. In November 2000, the latter filed a $9 billion lawsuit against DaimlerChrysler for falsifying the terms of the fusion as a “merger of equals”. He was upset with the German hegemony and stated he had voted to turn its shares for stock in DaimlerChrysler without having considered the American entity would be reduced to a mere division. Two months later, he cut his take in the merged company by a third. Even though the managers were not directly involved in this discontent, the lack of acting responsibly of the Board of the director is obvious.

To conclude, the completion of the processes related to each of these three stakeholders lacked efficiency. The managers failed in implementing the required activities to satisfy them and this will become a major hindrance to the project completion.

=Conclusion=
Many factors may affect the failure of the DaimlerChrysler project, but most of them may have been due to its mismanagement. Such a union was notoriously risky, especially due to the opposite companies it combined. To deliver the intent benefits, particular care should then have been taken by managers to tackle all the project management processes.

The use of the standard ''ISO 21500 : 2012'' was made to group the processes in term of Subject Group. It appears clear that there were some omissions, particularly regarding Integration, Time, Communication and Stakeholders. This standard has proven to be useful to analyze a project management, especially in case of cross-boarders project. It is a shame that such a unifying international approach was only established in 2012.

= References =

<references />

[[Category:Project Management]]
[[Category:Human Behaviour]]
[[Category:Complexity]]

Analyzing the failure of the DaimlerChrysler merger from a project management perspective

2014-12-01T19:54:54Z

Lyngby: /* Stakeholders */

'''Abstract'''

In the late 90´s, German Daimler-Benz AG and American Chrysler Corporation announced their intention to combine their strengths within a so-called `merger of equals´ <ref> Grässlin, Jürgen. ''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> . Becoming the fifth largest automaker in the world, both companies hoped to overcome together the automotive industry crisis. However, nothing worked out as planned, so much so that in 2007 Daimler-Benz sold all its shares of the Chrysler division.

Could the use of a norm have guaranteed the success of the DaimlerChrysler merger ? This question will be answered with regard to the ISO 21500:2012 guideline for project management.

According to the latter, a definition of project management and the processes it involves will be provided.Then, an analysis of the origin of DaimlerChrysler project will be carried out. It will also be shown to what extent this fusion was mismanaged with regard to the subject groups defined in the ISO 21500:2012. Last but not least the benefits of using this standard to successfully conduct a complex project will be discussed.

=Introduction=
In the early 21st century, no comprehensive standard on project management was accepted despite the substantial demand for project management skills. However, in 2006, the need for a unifying international approach was recognized by the International Organization for Standard (ISO). The work of over hundreds experts in project management from around the globe resulted in ''ISO 21500: 2012 -Guidance on project management''. This norm defines universal project management terminologies, as well as the principles and processes it involves. It provides a basic guide against which any organization can compare its current project management practices and determine areas in need of improvement. But how to practically apply it to a project? A specific example of project failure prior to introducing ISO 21500 will be provided to analyze which project management processes were disregarded. More particularly, the merger of the German automaker Daimler-Benz with the American Chrysler Corporation will be examined with the perspective of subject group.

= ISO 21500 : 2012, A focus on processes <ref> ISO 21500:2012 ''Guidance on project management'' </ref> <ref> Anton Zandhuis, Rommert Stellingwerf. ''ISO 215000, Guidance on Project managenent, A Pocket Guide''. Van Haren Publishing. 2013 </ref>=

What is a project? A definition is provided by the ISO 21500: “A unique set of processes consisting of coordinated and controlled activities with start and end dates, performed to achieve project objectives.” The concept of processes seems to be at the crux of project management issues. The definition of how to manage a project stresses this point: “Project management is performed through processes”.

Specifically, the norm splits the method of managing a project into 39 elementary processes. Depending on the perspective, the latter are grouped into five process groups (Initiating, Planning, Controlling and Closing) or into ten subject groups (Integration, Stakeholder, Scope, Resource, Time, Cost, Risk, Quality, Procurement and Communication). The classification of these processes is provided in the following table.

{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 1 : Project management cross-referenced to process and subject groups (ISO 21500 : 2012)'''
|-
! rowspan="2" style="background: #ffedd3;" | SUBJECT GROUPS
! colspan="5" style="background: #ffedd3;" | PROCESS GROUPS
|-
|style="background: #fff4d3;" align=center | '''Initiating'''
|style="background: #fff4d3;" align=center| '''Planning'''
|style="background: #fff4d3;" align=center| '''Implementing'''
|style="background: #fff4d3;" align=center | '''Controlling'''
|style="background: #fff4d3;" align=center | '''Closing'''
|-
|style="background: #fff4d3;" |'''Integration'''
|
4.3.2 Develop project chart
|
4.3.3. Develop project plans
|
4.3.4 Direct project work
|
4.3.5 Control project work

4.3.6 Control changes
|
4.3.7 Close project or phase

4.3.8 Collect lessons learned
|-
|style="background: #fff4d3;" |'''Stakeholder'''
|
4.3.9 Identify stakeholders
|

|
4.3.10 Manage stakeholders
|

|

|-
|style="background: #fff4d3;" |'''Scope'''
|

|
4.3.11 Define scope

4.3.12 Create work breakdown structure

4.3.13 Define activities
|

|
4.3.14 Control scope
|

|-
|style="background: #fff4d3;" |'''Resource'''
|
4.3.15 Establish project team
|
4.3.16 Estimate resources

4.3.17 Define project organization
|
4.3.18 Develop project team
|
4.3.19 Control resources

4.3.20 Manage project team
|

|-
|style="background: #fff4d3;" |'''Time'''
|

|
4.3.21 Sequence activities

4.3.22 Estimate activity durations

4.3.23 Develop schedule
|

|
4.3.24 Control schedule
|

|-
|style="background: #fff4d3;" |'''Cost'''
|

|
4.3.25 Estimate costs

4.3.26 Develop budget
|

|
4.3.27 Control costs
|

|-
|style="background: #fff4d3;" |'''Risk'''
|

|
4.3.28 Identify risks

4.3.29 Asses risks
|
4.3.30 Treat risks
|
4.3.31 Control risks
|
|-
|style="background: #fff4d3;" |'''Quality'''
|

|
4.3.32 Plan quality
|
4.3.33 Perform quality assurance
|
4.3.34 Perform quality control
|

|-
|style="background: #fff4d3;" |'''Procurement'''
|

|
4.3.35 Plan procurements
|
4.3.36 Select suppliers
|
4.3.37 Administer procurements
|

|-
|style="background: #fff4d3;" |'''Communication'''
|

|
4.3.38 Plan communications
|
4.3.39 Distribute information
|
4.3.40 Manage communications
|

|}

The perspective of subject groups will be adopted to consider the management of DaimlerChrysler project. A subject is a theme in which processes are classified according to its related activities.

But before that, the project of DaimlerChrysler merger is regarded.

=DaimlerChrysler merger project <ref> Julia Hollmann, Aletéia de Moura Carpes, Thiago Antonio Beuron. ''The DaimlerChrylser Merger- A cultural mismatch ?'' Faculty Sponsor : Universität Paderborn- Germany, Department of International Business Studies. Universidade Federal de Santa Maria- Brazil, Department of Administration. 2010 </ref> =
==The genesis of the project==
In the late 90´s, the automotive industry had to face multiples challenges due to the excess manufacturing capacity, the growth of ecological awareness, and the retail revolution that empowered buyers. To strengthen their position during this crisis, the automakers Daimler-Benz and Chrysler Corporation decided to merge. This project aimed to combine each other´s product designs, manufacturing resources and distribution systems.
The following table shows the complementary of the two companies, which wanted to unit their knowledge and their market in order to gain a competitive advantage.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 2 : The complementary of the two companies '''
|
! style="background: #ffedd3;" |'''Daimler-Benz AG'''
! style="background: #ffedd3;" |'''Chrysler Corporation'''
|-
! style="background: #ffedd3;" |'''Head office location'''
|
Germany
|
United States
|-
! style="background: #ffedd3;" |'''Geographical reach'''
|
European market
|
U.S. American market
|-
! style="background: #ffedd3;" |'''Product ranges'''
|
Uncompromising quality products
|
Car models that meet the American demand for adventurousness
|}


Both synergies and economies of scale were likely to proliferate.

How the project was set up is explained in the following paragraph. However, its detailed description falls outside the scope of this article.

==The execution of the project==
On May 7th, 1998 the signing of the combination agreement between Daimler-Benz and Chrysler was publicly announced. Daimler-Benz CEO Jürgen Schrempp described the union as "a merger of equals, a merger of growth, and a merger of unprecedented strength".
The equal status of the two organizations was reflected in the newly established entity name, DaimlerChrysler, as well as in the combination of the two former boards of management to form the one of DaimlerChrysler. Furthermore, it was agreed that Schrempp and Eaton, former CEO of the Chrysler Corporation, would jointly led the entity as co-chairmen and co-CEOs. It was also decided that Eaton would stay up to three years.
The two following tables provide more data about DaimlerChrysler right after the merger and the expected results of this project.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 3 : Characteristics of DaimlerChrysler right after the merger'''
|-
! style="background: #ffedd3;" |'''Number of employees '''
|442,000 employees
½ in Germany

1/3 in North America

1/6 spread across 200 countries around the world
|-
! style="background: #ffedd3;" |'''Daimler-Benz AG Market capitalization'''
|$ 92 billion
|}



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 4 : Expected results'''
! style="background: #ffedd3;" |Annual revenues of the combined company
|$ 132 billion
|-
! style="background: #ffedd3;" |Increase in sales
|13%
|-
! style="background: #ffedd3;" |Cost savings brought within 2 or 3 years
|$ 3,5 billion a year
|}


So far, this fusion appears to be very beneficial for all parties involved. However the wish for synergy effects never came true and the project drove Chrysler into chaos. In May 2007, the merger of Chrysler and Daimler-Benz was dissolved. Can this failure be ascribed to mismanagement?

The purpose of this article is now to point out which processes, related to the different subject groups definied in ISO 21500:2012 were disregarded and may have led to the project failure.

=The mismanagement of some subject groups <ref> Wanda Curlee, Robert L. Gordon . ''Complexity Theory and Project Management. ''. New York : Wiley, 2011, p. 129-133 </ref> =

Four subject groups will successively be considered : Integration, Time, Communication and Stakeholders. A mismanagement of some processes related to these four specific subject groups is namely to be seen.

==Integration <ref> Grässlin, Jürgen.''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> <ref> ''DaimlerChrysler confronts the challenges of global integration'', Human Resource Management International Digest, Vol 12 Iss :2 P.5-8</ref> ==

The Integration subject group includes the processes required to identify, define, combine, unify, coordinate, control and close the various activities and processes related to the project (ISO 21500:2012 - 4.2.3.2).

Within this merger, the unification and combination of all operations within the established entity needed to be achieved. To meet this target, a newly corporate culture had to be defined to align working styles. The latters namely radically differ due to major cultural differences, as shown in the following table.



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 5 : Comparison between the German and the American working styles'''
|-
|
! style="background: #ffedd3;" | '''Germany'''
! style="background: #ffedd3;"|'''United States'''
|-
! style="background: #ffedd3;" align="left" |'''Employee working style'''
| Work in a team-oriented environment
| Work individually
|-
! style="background: #ffedd3;" align="left" |'''Writing report'''
| Lengthy reports
| Little paper
|-
! style="background: #ffedd3;" align="left" |'''Decision-making process'''
|
Methodical, based on very detailed plans
|
Using creativity, based on trial-and-error method
|-
! style="background: #ffedd3;" align="left" |'''Meeting'''
|
Extended discussions
|
Short meeting
|-
! style="background: #ffedd3;" align="left" |'''Organizational structure'''
|
Pronounced hierarchy based on top-down-management
|
Flat organizational hierarchy stimulating empowerment of the employees
|-
! style="background: #ffedd3;" align="left" |'''Risk appetite'''
|
Risk adverse culture
|
Risk takers
|}


Due to the fact that this merger was a so-called `merger of equals´, the integration of the two cultures was to combine them to generate a new shared corporate one. It was namely vital that both organizations learn from each other to generate synergy effects. Managers have here a central role to play to define and coordinate the development of this new culture.

Eaton affirmed that it was at the top of the agenda and Thomas Stallkamp, Chrysler President during the negotiation phase, was charged with overseeing this integration process. Some effort went into harmonizing the two corporate cultures. Many seminars and workshops were organized to sensitizing the employees for working with new colleagues with diverging working methods. Furthermore, German was taught to many American managers.

However, given the large gap between the two organizations, it would appear that managers should have undertaken more activities and CEOs should have allocated more resources to bridge the chasm of cultural differences.

In fact, no strong and cohesive organizational culture was created, as illustrated in daily misunderstandings. For instance, the attention Daimler-Benz leaders paid to writing a leaflet sent to employee annoyed Chrysler executives. At the end of 1999, the resignation of Thomas Stallkamp, a 19-year veteran of Chrysler who was highly regarded, might be seen as a failure of the merger integration process after all the effort. Stallkamp is quoted as saying: <nowiki>“</nowiki>The majority of my career has been spent implementing supply chain management. I would like to continue to explore those areas at a less hectic pace<nowiki>”</nowiki>. Were both parties truly willing to cooperate wholeheartedly and to enter compromises to succeed in the numerous integration processes? A negative answer is the root cause of an unachieved integration.

==Time<ref> Sue Cartwright, Cary L. Cooper. ''Mergers and Acquisitions: The Human Factor Paperback'' . January 1, 1992 </ref>==

The Time subject group is all about managing the timely completion of the project. Feasible deadlines taking all known constraints into account need to be set. Processes covered by the latter subject group are the development of schedule for project activities estimating each activity duration, the progress monitoring and the schedule control.

One failure in managing time in DaimlerChrysler merger was that too little time was devoted to each activity. Let´s take a concrete example: Daimler-Benz and Chrysler began formal negotiations on January 12, 1998 and only five months later, the merger was announced worldwide. Susan Cartwright – past President of the British Academy Management – asserts that the period of time from the germ of the merger idea till an agreement is reached is estimated to last around two years. Speeding up the pre-merger preparation, the precise objectives of the fusion and the way to achieve them could not have been defined accurately.
Furthermore, the merger was completed on November 12, 1998. Time needed by employees to adapt to the new circumstances was not taken into account in the deadlines. One more mismanagement which is added to the others.

==Communication==
In the standard ISO 21500:2012, three key processes are defined to ensure appropriate exchange of project information: Plan communications, Distribute information and Manage communications. But within DaimlerChrysler project none of them were totally met. In order to appreciate the scale of the problem, it should be point out that even managers and CEOs experienced serious difficulties in discussing solutions and achieving a consensus. According to a Daimler-Benz executive, <nowiki>"</nowiki>Eaton went weeks without speaking with Jürgen [Schrempp]. He preferred to maintain lower-level contact. Jürgen, meanwhile, left Chrysler alone.<nowiki>"</nowiki> <ref> [http://mba.tuck.dartmouth.edu/pdf/2002-1-0071.pdf] Professor Sydney Finkelstein. ''The DaimlerChrysler Merger.''Tuck School of Business at Dartmouth. 2002 </ref> One would have expected that both CEOs would have shared their different views in order to discover common goal and operate as an effective team at the top. Given the seeming clash of culture described in the first paragraph, it was crucial to start the discussion to create healthy relationship and release the company´s potential. The clearer the communication, the better issues are addressed. But with such a lack of communication among leaders, no far-reaching communication plan could be implemented among all stakeholders involved, not to mention the distribution of the information. Both internal and external communications were chaotic. It is likely that the standard ISO 21500 would have made managers more aware of the processes related to communication which requires to be efficiently tackled.

==Stakeholders==
The stakeholder subject group is concerned with identifying and managing all parties involved. To classify them, both their expectations and influence on the project need to be analyzed. The table 6 provides a power-interest matrix, which is crucial to draw up appropriate management strategies for effectively engaging with them. The external stakeholders are written in italics, the others are internal.

{| border="1" cellpadding="3" cellspacing="0" style="margin:auto;"
|+ '''Table 6 : Power and interest matrix'''
|-
! rowspan="2" style="background: #ffedd3;" | Level of interest
! colspan="5" style="background: #ffedd3;" | Level of power
|-
|style="background: #fff4d3;" align=center | ''' Low '''
|style="background: #fff4d3;" align=center| ''' High '''
|-
|style="background: #fff4d3;" align=center |'''High'''
|
[[Employee]]

Trade Union

''[[Clients]]''

''Suppliers''

''Government''

''Society''
|
Directors

Managers

''[[Stockholders]]''
|-
|style="background: #fff4d3;" align=center |'''Low'''
|
''Competitors''
|

|-
|}

To analyze the management of all of these stakeholders one by one would be tedious. However it is relevant to focus on several categories according to the table 6. Special focus will be laid on the stakeholders written in red in the table above. Therefore, both high power/high interest and low power/high interest stakeholders will be looked at. Furthermore, two of them are internal, whereas the other is internal.
All of them were significantly affected by the DaimlerChrysler project due to mismanagement.

===Employees===
Employees, low-power and high-interest stakeholders, must be kept informed and managers should ensure that no major issues are arising.
However, this was not the case in the DaimlerChrysler merger: employees felt overlooked, disregarded and left out of the merger process. But to what extent CEOs and managers were responsible in this climate of distrust and dislike?

First, soon after the merger, it became obvious that Daimler was taking over the whole company´s management. Chrysler President Stallkamp retirement at the end of 1999 was followed by the one of James P. Holdem, top-level executive of the Chrysler Group. They were replaced by two German managers: Dieter Zetsche and Wolfgang Bernhard. Being lowered to divisional status, it is understandable that American´s morale suffer from this German hegemony. Employee felt eclipsed and were disgusted. They also were worried that DaimlerChrysler would dismiss some of them. But the problems are not confined to be here. Indeed, Jürgen Schrempp attitude only made the situation worse. In autumn 2000, DaimlerChrysler CEO acknowledged in the German financial daily Handelsblatt that <nowiki>“</nowiki>The Merger of Equals statement was necessary in order to earn the support of Chrysler's workers and the American public, but it was never reality<nowiki>"</nowiki>. Many American regarded this statement as a betrayal, since he intended to deceive them from the outset. It appears clear that it is due to board of directors failure in acting responsibly towards these stakeholders that deep-seated distrust ran deep.

But this mismanagement of the project stakeholders can lead to far-reaching consequences on the project success itself. Indeed, it could be that some employees simply do not work as efficiently because they suppose the Board of Directors doesn’t care about the Chrysler entity – so why should they? Decreased performance would result in it.

It is to notice that even though the standard ''ISO 21500: 2012'' did not exist at that time, the fact that employee influence to succeed such a process was of importance was already known. MaryAnn Keller, founder and managing partner of MaryAnn Keller & Associates LLC, namely stated in June 1998 that <nowiki>“</nowiki>The success of any combination depends on the ability of the new organization to win over the hearts and minds of employees.<nowiki>”</nowiki> <ref> [http://murphylibrary.uwlax.edu/digital/jur/2002/carpiaux.pdf] Nicole Carpiaux. ''DaimlerChrysler : Wunderkind or Problem Child ?'' Faculty Sponsor : Leticia Peña, Department of Management. </ref> The managers of DaimlerChrysler should then be aware that is really a management issue to embrace workers instead to neglect them in order to obtain the best they can offer.

===Clients===
And what about the consumers, low-power and high interest stakeholders?

Once again, one could argue that managers failed to define as well as to meet their needs.
One example is given for illustration. At the time, the DaimlerChrysler A-Class was 1.25 to 2 times more expensive than similar vehicles sold by Volkswagen, Renault or Fiat. This higher price was not deterrent since clients were aware that Daimler-Benz primarily asset was quality and safety. However, in 1999, the A-class failed an emergency maneuver test conducted by a Swedish television station. <ref> Bill Vlasic, Bradley A. Stertz. ''Taken for a Ride: How Daimler-Benz Drove off with Chrysler''. Harper Paperbacks,
2001, p. 300.
</ref> Consequently, client´s satisfaction suddenly drop off the map. The DaimlerChrysler vehicle was considered as an overpriced car which did not achieve engineering excellence compared to the highly competitive European compact market. The crux of the problem may be that the German entity have tried to implant the American low development costs into its entities, disregarding the high expectations of the clients. This paragraph appears to prove that trying to generate synergy savings the managers failed in responding the customer´s needs.

===Stockholders===
Last but not least, the management of both high power and high interest stakeholders needs to be considered. Take the stockholders.

An overwhelming majority of them favored the project of merger in 1998. Approvals ratings reached 99.9% at Daimler-Benz and 97.5% at Chrysler. It may be inferred that, at the outset of the project, managers successfully took into account the processes required to satisfy the shareholders. It did not take long, however, for some of them to express their disappointment. This was the case for Kirk Kerkorian, the third largest proprietor of DailerChrysler stock and largest Chrysler shareholder before the merger. In November 2000, the latter filed a $9 billion lawsuit against DaimlerChrysler for falsifying the terms of the fusion as a “merger of equals”. He was upset with the German hegemony and stated he had voted to turn its shares for stock in DaimlerChrysler without having considered the American entity would be reduced to a mere division. Two months later, he cut his take in the merged company by a third. Even though the managers were not directly involved in this discontent, the lack of acting responsibly of the Board of the director is obvious.

To conclude, the completion of the processes related to each of these three stakeholders lacked efficiency. The managers failed in implementing the required activities to satisfy them and this will become a major hindrance to the project completion.

=Conclusion=
Many factors may affect the failure of the DaimlerChrysler project, but most of them may have been due to its mismanagement. Such a union was notoriously risky, especially due to the opposite companies it combined. To deliver the intent benefits, particular care should then have been taken by managers to tackle all the project management processes.

The use of the standard ''ISO 21500 : 2012'' was made to group the processes in term of Subject Group. It appears clear that there were some omissions, particularly regarding Integration, Time, Communication and Stakeholders. This standard has proven to be useful to analyze a project management, especially in case of cross-boarders project. It is a shame that such a unifying international approach was only established in 2012.

= References =

<references />

[[Category:Project Management]]
[[Category:Human Behaviour]]
[[Category:Complexity]]

Analyzing the failure of the DaimlerChrysler merger from a project management perspective

2014-12-01T19:54:08Z

Lyngby: /* Stakeholders */

'''Abstract'''

In the late 90´s, German Daimler-Benz AG and American Chrysler Corporation announced their intention to combine their strengths within a so-called `merger of equals´ <ref> Grässlin, Jürgen. ''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> . Becoming the fifth largest automaker in the world, both companies hoped to overcome together the automotive industry crisis. However, nothing worked out as planned, so much so that in 2007 Daimler-Benz sold all its shares of the Chrysler division.

Could the use of a norm have guaranteed the success of the DaimlerChrysler merger ? This question will be answered with regard to the ISO 21500:2012 guideline for project management.

According to the latter, a definition of project management and the processes it involves will be provided.Then, an analysis of the origin of DaimlerChrysler project will be carried out. It will also be shown to what extent this fusion was mismanaged with regard to the subject groups defined in the ISO 21500:2012. Last but not least the benefits of using this standard to successfully conduct a complex project will be discussed.

=Introduction=
In the early 21st century, no comprehensive standard on project management was accepted despite the substantial demand for project management skills. However, in 2006, the need for a unifying international approach was recognized by the International Organization for Standard (ISO). The work of over hundreds experts in project management from around the globe resulted in ''ISO 21500: 2012 -Guidance on project management''. This norm defines universal project management terminologies, as well as the principles and processes it involves. It provides a basic guide against which any organization can compare its current project management practices and determine areas in need of improvement. But how to practically apply it to a project? A specific example of project failure prior to introducing ISO 21500 will be provided to analyze which project management processes were disregarded. More particularly, the merger of the German automaker Daimler-Benz with the American Chrysler Corporation will be examined with the perspective of subject group.

= ISO 21500 : 2012, A focus on processes <ref> ISO 21500:2012 ''Guidance on project management'' </ref> <ref> Anton Zandhuis, Rommert Stellingwerf. ''ISO 215000, Guidance on Project managenent, A Pocket Guide''. Van Haren Publishing. 2013 </ref>=

What is a project? A definition is provided by the ISO 21500: “A unique set of processes consisting of coordinated and controlled activities with start and end dates, performed to achieve project objectives.” The concept of processes seems to be at the crux of project management issues. The definition of how to manage a project stresses this point: “Project management is performed through processes”.

Specifically, the norm splits the method of managing a project into 39 elementary processes. Depending on the perspective, the latter are grouped into five process groups (Initiating, Planning, Controlling and Closing) or into ten subject groups (Integration, Stakeholder, Scope, Resource, Time, Cost, Risk, Quality, Procurement and Communication). The classification of these processes is provided in the following table.

{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 1 : Project management cross-referenced to process and subject groups (ISO 21500 : 2012)'''
|-
! rowspan="2" style="background: #ffedd3;" | SUBJECT GROUPS
! colspan="5" style="background: #ffedd3;" | PROCESS GROUPS
|-
|style="background: #fff4d3;" align=center | '''Initiating'''
|style="background: #fff4d3;" align=center| '''Planning'''
|style="background: #fff4d3;" align=center| '''Implementing'''
|style="background: #fff4d3;" align=center | '''Controlling'''
|style="background: #fff4d3;" align=center | '''Closing'''
|-
|style="background: #fff4d3;" |'''Integration'''
|
4.3.2 Develop project chart
|
4.3.3. Develop project plans
|
4.3.4 Direct project work
|
4.3.5 Control project work

4.3.6 Control changes
|
4.3.7 Close project or phase

4.3.8 Collect lessons learned
|-
|style="background: #fff4d3;" |'''Stakeholder'''
|
4.3.9 Identify stakeholders
|

|
4.3.10 Manage stakeholders
|

|

|-
|style="background: #fff4d3;" |'''Scope'''
|

|
4.3.11 Define scope

4.3.12 Create work breakdown structure

4.3.13 Define activities
|

|
4.3.14 Control scope
|

|-
|style="background: #fff4d3;" |'''Resource'''
|
4.3.15 Establish project team
|
4.3.16 Estimate resources

4.3.17 Define project organization
|
4.3.18 Develop project team
|
4.3.19 Control resources

4.3.20 Manage project team
|

|-
|style="background: #fff4d3;" |'''Time'''
|

|
4.3.21 Sequence activities

4.3.22 Estimate activity durations

4.3.23 Develop schedule
|

|
4.3.24 Control schedule
|

|-
|style="background: #fff4d3;" |'''Cost'''
|

|
4.3.25 Estimate costs

4.3.26 Develop budget
|

|
4.3.27 Control costs
|

|-
|style="background: #fff4d3;" |'''Risk'''
|

|
4.3.28 Identify risks

4.3.29 Asses risks
|
4.3.30 Treat risks
|
4.3.31 Control risks
|
|-
|style="background: #fff4d3;" |'''Quality'''
|

|
4.3.32 Plan quality
|
4.3.33 Perform quality assurance
|
4.3.34 Perform quality control
|

|-
|style="background: #fff4d3;" |'''Procurement'''
|

|
4.3.35 Plan procurements
|
4.3.36 Select suppliers
|
4.3.37 Administer procurements
|

|-
|style="background: #fff4d3;" |'''Communication'''
|

|
4.3.38 Plan communications
|
4.3.39 Distribute information
|
4.3.40 Manage communications
|

|}

The perspective of subject groups will be adopted to consider the management of DaimlerChrysler project. A subject is a theme in which processes are classified according to its related activities.

But before that, the project of DaimlerChrysler merger is regarded.

=DaimlerChrysler merger project <ref> Julia Hollmann, Aletéia de Moura Carpes, Thiago Antonio Beuron. ''The DaimlerChrylser Merger- A cultural mismatch ?'' Faculty Sponsor : Universität Paderborn- Germany, Department of International Business Studies. Universidade Federal de Santa Maria- Brazil, Department of Administration. 2010 </ref> =
==The genesis of the project==
In the late 90´s, the automotive industry had to face multiples challenges due to the excess manufacturing capacity, the growth of ecological awareness, and the retail revolution that empowered buyers. To strengthen their position during this crisis, the automakers Daimler-Benz and Chrysler Corporation decided to merge. This project aimed to combine each other´s product designs, manufacturing resources and distribution systems.
The following table shows the complementary of the two companies, which wanted to unit their knowledge and their market in order to gain a competitive advantage.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 2 : The complementary of the two companies '''
|
! style="background: #ffedd3;" |'''Daimler-Benz AG'''
! style="background: #ffedd3;" |'''Chrysler Corporation'''
|-
! style="background: #ffedd3;" |'''Head office location'''
|
Germany
|
United States
|-
! style="background: #ffedd3;" |'''Geographical reach'''
|
European market
|
U.S. American market
|-
! style="background: #ffedd3;" |'''Product ranges'''
|
Uncompromising quality products
|
Car models that meet the American demand for adventurousness
|}


Both synergies and economies of scale were likely to proliferate.

How the project was set up is explained in the following paragraph. However, its detailed description falls outside the scope of this article.

==The execution of the project==
On May 7th, 1998 the signing of the combination agreement between Daimler-Benz and Chrysler was publicly announced. Daimler-Benz CEO Jürgen Schrempp described the union as "a merger of equals, a merger of growth, and a merger of unprecedented strength".
The equal status of the two organizations was reflected in the newly established entity name, DaimlerChrysler, as well as in the combination of the two former boards of management to form the one of DaimlerChrysler. Furthermore, it was agreed that Schrempp and Eaton, former CEO of the Chrysler Corporation, would jointly led the entity as co-chairmen and co-CEOs. It was also decided that Eaton would stay up to three years.
The two following tables provide more data about DaimlerChrysler right after the merger and the expected results of this project.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 3 : Characteristics of DaimlerChrysler right after the merger'''
|-
! style="background: #ffedd3;" |'''Number of employees '''
|442,000 employees
½ in Germany

1/3 in North America

1/6 spread across 200 countries around the world
|-
! style="background: #ffedd3;" |'''Daimler-Benz AG Market capitalization'''
|$ 92 billion
|}



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 4 : Expected results'''
! style="background: #ffedd3;" |Annual revenues of the combined company
|$ 132 billion
|-
! style="background: #ffedd3;" |Increase in sales
|13%
|-
! style="background: #ffedd3;" |Cost savings brought within 2 or 3 years
|$ 3,5 billion a year
|}


So far, this fusion appears to be very beneficial for all parties involved. However the wish for synergy effects never came true and the project drove Chrysler into chaos. In May 2007, the merger of Chrysler and Daimler-Benz was dissolved. Can this failure be ascribed to mismanagement?

The purpose of this article is now to point out which processes, related to the different subject groups definied in ISO 21500:2012 were disregarded and may have led to the project failure.

=The mismanagement of some subject groups <ref> Wanda Curlee, Robert L. Gordon . ''Complexity Theory and Project Management. ''. New York : Wiley, 2011, p. 129-133 </ref> =

Four subject groups will successively be considered : Integration, Time, Communication and Stakeholders. A mismanagement of some processes related to these four specific subject groups is namely to be seen.

==Integration <ref> Grässlin, Jürgen.''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> <ref> ''DaimlerChrysler confronts the challenges of global integration'', Human Resource Management International Digest, Vol 12 Iss :2 P.5-8</ref> ==

The Integration subject group includes the processes required to identify, define, combine, unify, coordinate, control and close the various activities and processes related to the project (ISO 21500:2012 - 4.2.3.2).

Within this merger, the unification and combination of all operations within the established entity needed to be achieved. To meet this target, a newly corporate culture had to be defined to align working styles. The latters namely radically differ due to major cultural differences, as shown in the following table.



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 5 : Comparison between the German and the American working styles'''
|-
|
! style="background: #ffedd3;" | '''Germany'''
! style="background: #ffedd3;"|'''United States'''
|-
! style="background: #ffedd3;" align="left" |'''Employee working style'''
| Work in a team-oriented environment
| Work individually
|-
! style="background: #ffedd3;" align="left" |'''Writing report'''
| Lengthy reports
| Little paper
|-
! style="background: #ffedd3;" align="left" |'''Decision-making process'''
|
Methodical, based on very detailed plans
|
Using creativity, based on trial-and-error method
|-
! style="background: #ffedd3;" align="left" |'''Meeting'''
|
Extended discussions
|
Short meeting
|-
! style="background: #ffedd3;" align="left" |'''Organizational structure'''
|
Pronounced hierarchy based on top-down-management
|
Flat organizational hierarchy stimulating empowerment of the employees
|-
! style="background: #ffedd3;" align="left" |'''Risk appetite'''
|
Risk adverse culture
|
Risk takers
|}


Due to the fact that this merger was a so-called `merger of equals´, the integration of the two cultures was to combine them to generate a new shared corporate one. It was namely vital that both organizations learn from each other to generate synergy effects. Managers have here a central role to play to define and coordinate the development of this new culture.

Eaton affirmed that it was at the top of the agenda and Thomas Stallkamp, Chrysler President during the negotiation phase, was charged with overseeing this integration process. Some effort went into harmonizing the two corporate cultures. Many seminars and workshops were organized to sensitizing the employees for working with new colleagues with diverging working methods. Furthermore, German was taught to many American managers.

However, given the large gap between the two organizations, it would appear that managers should have undertaken more activities and CEOs should have allocated more resources to bridge the chasm of cultural differences.

In fact, no strong and cohesive organizational culture was created, as illustrated in daily misunderstandings. For instance, the attention Daimler-Benz leaders paid to writing a leaflet sent to employee annoyed Chrysler executives. At the end of 1999, the resignation of Thomas Stallkamp, a 19-year veteran of Chrysler who was highly regarded, might be seen as a failure of the merger integration process after all the effort. Stallkamp is quoted as saying: <nowiki>“</nowiki>The majority of my career has been spent implementing supply chain management. I would like to continue to explore those areas at a less hectic pace<nowiki>”</nowiki>. Were both parties truly willing to cooperate wholeheartedly and to enter compromises to succeed in the numerous integration processes? A negative answer is the root cause of an unachieved integration.

==Time<ref> Sue Cartwright, Cary L. Cooper. ''Mergers and Acquisitions: The Human Factor Paperback'' . January 1, 1992 </ref>==

The Time subject group is all about managing the timely completion of the project. Feasible deadlines taking all known constraints into account need to be set. Processes covered by the latter subject group are the development of schedule for project activities estimating each activity duration, the progress monitoring and the schedule control.

One failure in managing time in DaimlerChrysler merger was that too little time was devoted to each activity. Let´s take a concrete example: Daimler-Benz and Chrysler began formal negotiations on January 12, 1998 and only five months later, the merger was announced worldwide. Susan Cartwright – past President of the British Academy Management – asserts that the period of time from the germ of the merger idea till an agreement is reached is estimated to last around two years. Speeding up the pre-merger preparation, the precise objectives of the fusion and the way to achieve them could not have been defined accurately.
Furthermore, the merger was completed on November 12, 1998. Time needed by employees to adapt to the new circumstances was not taken into account in the deadlines. One more mismanagement which is added to the others.

==Communication==
In the standard ISO 21500:2012, three key processes are defined to ensure appropriate exchange of project information: Plan communications, Distribute information and Manage communications. But within DaimlerChrysler project none of them were totally met. In order to appreciate the scale of the problem, it should be point out that even managers and CEOs experienced serious difficulties in discussing solutions and achieving a consensus. According to a Daimler-Benz executive, <nowiki>"</nowiki>Eaton went weeks without speaking with Jürgen [Schrempp]. He preferred to maintain lower-level contact. Jürgen, meanwhile, left Chrysler alone.<nowiki>"</nowiki> <ref> [http://mba.tuck.dartmouth.edu/pdf/2002-1-0071.pdf] Professor Sydney Finkelstein. ''The DaimlerChrysler Merger.''Tuck School of Business at Dartmouth. 2002 </ref> One would have expected that both CEOs would have shared their different views in order to discover common goal and operate as an effective team at the top. Given the seeming clash of culture described in the first paragraph, it was crucial to start the discussion to create healthy relationship and release the company´s potential. The clearer the communication, the better issues are addressed. But with such a lack of communication among leaders, no far-reaching communication plan could be implemented among all stakeholders involved, not to mention the distribution of the information. Both internal and external communications were chaotic. It is likely that the standard ISO 21500 would have made managers more aware of the processes related to communication which requires to be efficiently tackled.

==Stakeholders==
The stakeholder subject group is concerned with identifying and managing all parties involved. To classify the latter, both their expectations and influence on the project need to be analyzed. The table 6 provides a power-interest matrix, which is crucial to draw up appropriate management strategies for effectively engaging with them. The external stakeholders are written in italics, the others are internal.

{| border="1" cellpadding="3" cellspacing="0" style="margin:auto;"
|+ '''Table 6 : Power and interest matrix'''
|-
! rowspan="2" style="background: #ffedd3;" | Level of interest
! colspan="5" style="background: #ffedd3;" | Level of power
|-
|style="background: #fff4d3;" align=center | ''' Low '''
|style="background: #fff4d3;" align=center| ''' High '''
|-
|style="background: #fff4d3;" align=center |'''High'''
|
[[Employee]]

Trade Union

''[[Clients]]''

''Suppliers''

''Government''

''Society''
|
Directors

Managers

''[[Stockholders]]''
|-
|style="background: #fff4d3;" align=center |'''Low'''
|
''Competitors''
|

|-
|}

To analyze the management of all of these stakeholders one by one would be tedious. However it is relevant to focus on several categories according to the table 6. Special focus will be laid on the stakeholders written in red in the table above. Therefore, both high power/high interest and low power/high interest stakeholders will be looked at. Furthermore, two of them are internal, whereas the other is internal.
All of them were significantly affected by the DaimlerChrysler project due to mismanagement.

===Employees===
Employees, low-power and high-interest stakeholders, must be kept informed and managers should ensure that no major issues are arising.
However, this was not the case in the DaimlerChrysler merger: employees felt overlooked, disregarded and left out of the merger process. But to what extent CEOs and managers were responsible in this climate of distrust and dislike?

First, soon after the merger, it became obvious that Daimler was taking over the whole company´s management. Chrysler President Stallkamp retirement at the end of 1999 was followed by the one of James P. Holdem, top-level executive of the Chrysler Group. They were replaced by two German managers: Dieter Zetsche and Wolfgang Bernhard. Being lowered to divisional status, it is understandable that American´s morale suffer from this German hegemony. Employee felt eclipsed and were disgusted. They also were worried that DaimlerChrysler would dismiss some of them. But the problems are not confined to be here. Indeed, Jürgen Schrempp attitude only made the situation worse. In autumn 2000, DaimlerChrysler CEO acknowledged in the German financial daily Handelsblatt that <nowiki>“</nowiki>The Merger of Equals statement was necessary in order to earn the support of Chrysler's workers and the American public, but it was never reality<nowiki>"</nowiki>. Many American regarded this statement as a betrayal, since he intended to deceive them from the outset. It appears clear that it is due to board of directors failure in acting responsibly towards these stakeholders that deep-seated distrust ran deep.

But this mismanagement of the project stakeholders can lead to far-reaching consequences on the project success itself. Indeed, it could be that some employees simply do not work as efficiently because they suppose the Board of Directors doesn’t care about the Chrysler entity – so why should they? Decreased performance would result in it.

It is to notice that even though the standard ''ISO 21500: 2012'' did not exist at that time, the fact that employee influence to succeed such a process was of importance was already known. MaryAnn Keller, founder and managing partner of MaryAnn Keller & Associates LLC, namely stated in June 1998 that <nowiki>“</nowiki>The success of any combination depends on the ability of the new organization to win over the hearts and minds of employees.<nowiki>”</nowiki> <ref> [http://murphylibrary.uwlax.edu/digital/jur/2002/carpiaux.pdf] Nicole Carpiaux. ''DaimlerChrysler : Wunderkind or Problem Child ?'' Faculty Sponsor : Leticia Peña, Department of Management. </ref> The managers of DaimlerChrysler should then be aware that is really a management issue to embrace workers instead to neglect them in order to obtain the best they can offer.

===Clients===
And what about the consumers, low-power and high interest stakeholders?

Once again, one could argue that managers failed to define as well as to meet their needs.
One example is given for illustration. At the time, the DaimlerChrysler A-Class was 1.25 to 2 times more expensive than similar vehicles sold by Volkswagen, Renault or Fiat. This higher price was not deterrent since clients were aware that Daimler-Benz primarily asset was quality and safety. However, in 1999, the A-class failed an emergency maneuver test conducted by a Swedish television station. <ref> Bill Vlasic, Bradley A. Stertz. ''Taken for a Ride: How Daimler-Benz Drove off with Chrysler''. Harper Paperbacks,
2001, p. 300.
</ref> Consequently, client´s satisfaction suddenly drop off the map. The DaimlerChrysler vehicle was considered as an overpriced car which did not achieve engineering excellence compared to the highly competitive European compact market. The crux of the problem may be that the German entity have tried to implant the American low development costs into its entities, disregarding the high expectations of the clients. This paragraph appears to prove that trying to generate synergy savings the managers failed in responding the customer´s needs.

===Stockholders===
Last but not least, the management of both high power and high interest stakeholders needs to be considered. Take the stockholders.

An overwhelming majority of them favored the project of merger in 1998. Approvals ratings reached 99.9% at Daimler-Benz and 97.5% at Chrysler. It may be inferred that, at the outset of the project, managers successfully took into account the processes required to satisfy the shareholders. It did not take long, however, for some of them to express their disappointment. This was the case for Kirk Kerkorian, the third largest proprietor of DailerChrysler stock and largest Chrysler shareholder before the merger. In November 2000, the latter filed a $9 billion lawsuit against DaimlerChrysler for falsifying the terms of the fusion as a “merger of equals”. He was upset with the German hegemony and stated he had voted to turn its shares for stock in DaimlerChrysler without having considered the American entity would be reduced to a mere division. Two months later, he cut his take in the merged company by a third. Even though the managers were not directly involved in this discontent, the lack of acting responsibly of the Board of the director is obvious.

To conclude, the completion of the processes related to each of these three stakeholders lacked efficiency. The managers failed in implementing the required activities to satisfy them and this will become a major hindrance to the project completion.

=Conclusion=
Many factors may affect the failure of the DaimlerChrysler project, but most of them may have been due to its mismanagement. Such a union was notoriously risky, especially due to the opposite companies it combined. To deliver the intent benefits, particular care should then have been taken by managers to tackle all the project management processes.

The use of the standard ''ISO 21500 : 2012'' was made to group the processes in term of Subject Group. It appears clear that there were some omissions, particularly regarding Integration, Time, Communication and Stakeholders. This standard has proven to be useful to analyze a project management, especially in case of cross-boarders project. It is a shame that such a unifying international approach was only established in 2012.

= References =

<references />

[[Category:Project Management]]
[[Category:Human Behaviour]]
[[Category:Complexity]]

Analyzing the failure of the DaimlerChrysler merger from a project management perspective

2014-12-01T19:53:09Z

Lyngby: /* Stakeholders */

'''Abstract'''

In the late 90´s, German Daimler-Benz AG and American Chrysler Corporation announced their intention to combine their strengths within a so-called `merger of equals´ <ref> Grässlin, Jürgen. ''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> . Becoming the fifth largest automaker in the world, both companies hoped to overcome together the automotive industry crisis. However, nothing worked out as planned, so much so that in 2007 Daimler-Benz sold all its shares of the Chrysler division.

Could the use of a norm have guaranteed the success of the DaimlerChrysler merger ? This question will be answered with regard to the ISO 21500:2012 guideline for project management.

According to the latter, a definition of project management and the processes it involves will be provided.Then, an analysis of the origin of DaimlerChrysler project will be carried out. It will also be shown to what extent this fusion was mismanaged with regard to the subject groups defined in the ISO 21500:2012. Last but not least the benefits of using this standard to successfully conduct a complex project will be discussed.

=Introduction=
In the early 21st century, no comprehensive standard on project management was accepted despite the substantial demand for project management skills. However, in 2006, the need for a unifying international approach was recognized by the International Organization for Standard (ISO). The work of over hundreds experts in project management from around the globe resulted in ''ISO 21500: 2012 -Guidance on project management''. This norm defines universal project management terminologies, as well as the principles and processes it involves. It provides a basic guide against which any organization can compare its current project management practices and determine areas in need of improvement. But how to practically apply it to a project? A specific example of project failure prior to introducing ISO 21500 will be provided to analyze which project management processes were disregarded. More particularly, the merger of the German automaker Daimler-Benz with the American Chrysler Corporation will be examined with the perspective of subject group.

= ISO 21500 : 2012, A focus on processes <ref> ISO 21500:2012 ''Guidance on project management'' </ref> <ref> Anton Zandhuis, Rommert Stellingwerf. ''ISO 215000, Guidance on Project managenent, A Pocket Guide''. Van Haren Publishing. 2013 </ref>=

What is a project? A definition is provided by the ISO 21500: “A unique set of processes consisting of coordinated and controlled activities with start and end dates, performed to achieve project objectives.” The concept of processes seems to be at the crux of project management issues. The definition of how to manage a project stresses this point: “Project management is performed through processes”.

Specifically, the norm splits the method of managing a project into 39 elementary processes. Depending on the perspective, the latter are grouped into five process groups (Initiating, Planning, Controlling and Closing) or into ten subject groups (Integration, Stakeholder, Scope, Resource, Time, Cost, Risk, Quality, Procurement and Communication). The classification of these processes is provided in the following table.

{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 1 : Project management cross-referenced to process and subject groups (ISO 21500 : 2012)'''
|-
! rowspan="2" style="background: #ffedd3;" | SUBJECT GROUPS
! colspan="5" style="background: #ffedd3;" | PROCESS GROUPS
|-
|style="background: #fff4d3;" align=center | '''Initiating'''
|style="background: #fff4d3;" align=center| '''Planning'''
|style="background: #fff4d3;" align=center| '''Implementing'''
|style="background: #fff4d3;" align=center | '''Controlling'''
|style="background: #fff4d3;" align=center | '''Closing'''
|-
|style="background: #fff4d3;" |'''Integration'''
|
4.3.2 Develop project chart
|
4.3.3. Develop project plans
|
4.3.4 Direct project work
|
4.3.5 Control project work

4.3.6 Control changes
|
4.3.7 Close project or phase

4.3.8 Collect lessons learned
|-
|style="background: #fff4d3;" |'''Stakeholder'''
|
4.3.9 Identify stakeholders
|

|
4.3.10 Manage stakeholders
|

|

|-
|style="background: #fff4d3;" |'''Scope'''
|

|
4.3.11 Define scope

4.3.12 Create work breakdown structure

4.3.13 Define activities
|

|
4.3.14 Control scope
|

|-
|style="background: #fff4d3;" |'''Resource'''
|
4.3.15 Establish project team
|
4.3.16 Estimate resources

4.3.17 Define project organization
|
4.3.18 Develop project team
|
4.3.19 Control resources

4.3.20 Manage project team
|

|-
|style="background: #fff4d3;" |'''Time'''
|

|
4.3.21 Sequence activities

4.3.22 Estimate activity durations

4.3.23 Develop schedule
|

|
4.3.24 Control schedule
|

|-
|style="background: #fff4d3;" |'''Cost'''
|

|
4.3.25 Estimate costs

4.3.26 Develop budget
|

|
4.3.27 Control costs
|

|-
|style="background: #fff4d3;" |'''Risk'''
|

|
4.3.28 Identify risks

4.3.29 Asses risks
|
4.3.30 Treat risks
|
4.3.31 Control risks
|
|-
|style="background: #fff4d3;" |'''Quality'''
|

|
4.3.32 Plan quality
|
4.3.33 Perform quality assurance
|
4.3.34 Perform quality control
|

|-
|style="background: #fff4d3;" |'''Procurement'''
|

|
4.3.35 Plan procurements
|
4.3.36 Select suppliers
|
4.3.37 Administer procurements
|

|-
|style="background: #fff4d3;" |'''Communication'''
|

|
4.3.38 Plan communications
|
4.3.39 Distribute information
|
4.3.40 Manage communications
|

|}

The perspective of subject groups will be adopted to consider the management of DaimlerChrysler project. A subject is a theme in which processes are classified according to its related activities.

But before that, the project of DaimlerChrysler merger is regarded.

=DaimlerChrysler merger project <ref> Julia Hollmann, Aletéia de Moura Carpes, Thiago Antonio Beuron. ''The DaimlerChrylser Merger- A cultural mismatch ?'' Faculty Sponsor : Universität Paderborn- Germany, Department of International Business Studies. Universidade Federal de Santa Maria- Brazil, Department of Administration. 2010 </ref> =
==The genesis of the project==
In the late 90´s, the automotive industry had to face multiples challenges due to the excess manufacturing capacity, the growth of ecological awareness, and the retail revolution that empowered buyers. To strengthen their position during this crisis, the automakers Daimler-Benz and Chrysler Corporation decided to merge. This project aimed to combine each other´s product designs, manufacturing resources and distribution systems.
The following table shows the complementary of the two companies, which wanted to unit their knowledge and their market in order to gain a competitive advantage.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 2 : The complementary of the two companies '''
|
! style="background: #ffedd3;" |'''Daimler-Benz AG'''
! style="background: #ffedd3;" |'''Chrysler Corporation'''
|-
! style="background: #ffedd3;" |'''Head office location'''
|
Germany
|
United States
|-
! style="background: #ffedd3;" |'''Geographical reach'''
|
European market
|
U.S. American market
|-
! style="background: #ffedd3;" |'''Product ranges'''
|
Uncompromising quality products
|
Car models that meet the American demand for adventurousness
|}


Both synergies and economies of scale were likely to proliferate.

How the project was set up is explained in the following paragraph. However, its detailed description falls outside the scope of this article.

==The execution of the project==
On May 7th, 1998 the signing of the combination agreement between Daimler-Benz and Chrysler was publicly announced. Daimler-Benz CEO Jürgen Schrempp described the union as "a merger of equals, a merger of growth, and a merger of unprecedented strength".
The equal status of the two organizations was reflected in the newly established entity name, DaimlerChrysler, as well as in the combination of the two former boards of management to form the one of DaimlerChrysler. Furthermore, it was agreed that Schrempp and Eaton, former CEO of the Chrysler Corporation, would jointly led the entity as co-chairmen and co-CEOs. It was also decided that Eaton would stay up to three years.
The two following tables provide more data about DaimlerChrysler right after the merger and the expected results of this project.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 3 : Characteristics of DaimlerChrysler right after the merger'''
|-
! style="background: #ffedd3;" |'''Number of employees '''
|442,000 employees
½ in Germany

1/3 in North America

1/6 spread across 200 countries around the world
|-
! style="background: #ffedd3;" |'''Daimler-Benz AG Market capitalization'''
|$ 92 billion
|}



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 4 : Expected results'''
! style="background: #ffedd3;" |Annual revenues of the combined company
|$ 132 billion
|-
! style="background: #ffedd3;" |Increase in sales
|13%
|-
! style="background: #ffedd3;" |Cost savings brought within 2 or 3 years
|$ 3,5 billion a year
|}


So far, this fusion appears to be very beneficial for all parties involved. However the wish for synergy effects never came true and the project drove Chrysler into chaos. In May 2007, the merger of Chrysler and Daimler-Benz was dissolved. Can this failure be ascribed to mismanagement?

The purpose of this article is now to point out which processes, related to the different subject groups definied in ISO 21500:2012 were disregarded and may have led to the project failure.

=The mismanagement of some subject groups <ref> Wanda Curlee, Robert L. Gordon . ''Complexity Theory and Project Management. ''. New York : Wiley, 2011, p. 129-133 </ref> =

Four subject groups will successively be considered : Integration, Time, Communication and Stakeholders. A mismanagement of some processes related to these four specific subject groups is namely to be seen.

==Integration <ref> Grässlin, Jürgen.''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> <ref> ''DaimlerChrysler confronts the challenges of global integration'', Human Resource Management International Digest, Vol 12 Iss :2 P.5-8</ref> ==

The Integration subject group includes the processes required to identify, define, combine, unify, coordinate, control and close the various activities and processes related to the project (ISO 21500:2012 - 4.2.3.2).

Within this merger, the unification and combination of all operations within the established entity needed to be achieved. To meet this target, a newly corporate culture had to be defined to align working styles. The latters namely radically differ due to major cultural differences, as shown in the following table.



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 5 : Comparison between the German and the American working styles'''
|-
|
! style="background: #ffedd3;" | '''Germany'''
! style="background: #ffedd3;"|'''United States'''
|-
! style="background: #ffedd3;" align="left" |'''Employee working style'''
| Work in a team-oriented environment
| Work individually
|-
! style="background: #ffedd3;" align="left" |'''Writing report'''
| Lengthy reports
| Little paper
|-
! style="background: #ffedd3;" align="left" |'''Decision-making process'''
|
Methodical, based on very detailed plans
|
Using creativity, based on trial-and-error method
|-
! style="background: #ffedd3;" align="left" |'''Meeting'''
|
Extended discussions
|
Short meeting
|-
! style="background: #ffedd3;" align="left" |'''Organizational structure'''
|
Pronounced hierarchy based on top-down-management
|
Flat organizational hierarchy stimulating empowerment of the employees
|-
! style="background: #ffedd3;" align="left" |'''Risk appetite'''
|
Risk adverse culture
|
Risk takers
|}


Due to the fact that this merger was a so-called `merger of equals´, the integration of the two cultures was to combine them to generate a new shared corporate one. It was namely vital that both organizations learn from each other to generate synergy effects. Managers have here a central role to play to define and coordinate the development of this new culture.

Eaton affirmed that it was at the top of the agenda and Thomas Stallkamp, Chrysler President during the negotiation phase, was charged with overseeing this integration process. Some effort went into harmonizing the two corporate cultures. Many seminars and workshops were organized to sensitizing the employees for working with new colleagues with diverging working methods. Furthermore, German was taught to many American managers.

However, given the large gap between the two organizations, it would appear that managers should have undertaken more activities and CEOs should have allocated more resources to bridge the chasm of cultural differences.

In fact, no strong and cohesive organizational culture was created, as illustrated in daily misunderstandings. For instance, the attention Daimler-Benz leaders paid to writing a leaflet sent to employee annoyed Chrysler executives. At the end of 1999, the resignation of Thomas Stallkamp, a 19-year veteran of Chrysler who was highly regarded, might be seen as a failure of the merger integration process after all the effort. Stallkamp is quoted as saying: <nowiki>“</nowiki>The majority of my career has been spent implementing supply chain management. I would like to continue to explore those areas at a less hectic pace<nowiki>”</nowiki>. Were both parties truly willing to cooperate wholeheartedly and to enter compromises to succeed in the numerous integration processes? A negative answer is the root cause of an unachieved integration.

==Time<ref> Sue Cartwright, Cary L. Cooper. ''Mergers and Acquisitions: The Human Factor Paperback'' . January 1, 1992 </ref>==

The Time subject group is all about managing the timely completion of the project. Feasible deadlines taking all known constraints into account need to be set. Processes covered by the latter subject group are the development of schedule for project activities estimating each activity duration, the progress monitoring and the schedule control.

One failure in managing time in DaimlerChrysler merger was that too little time was devoted to each activity. Let´s take a concrete example: Daimler-Benz and Chrysler began formal negotiations on January 12, 1998 and only five months later, the merger was announced worldwide. Susan Cartwright – past President of the British Academy Management – asserts that the period of time from the germ of the merger idea till an agreement is reached is estimated to last around two years. Speeding up the pre-merger preparation, the precise objectives of the fusion and the way to achieve them could not have been defined accurately.
Furthermore, the merger was completed on November 12, 1998. Time needed by employees to adapt to the new circumstances was not taken into account in the deadlines. One more mismanagement which is added to the others.

==Communication==
In the standard ISO 21500:2012, three key processes are defined to ensure appropriate exchange of project information: Plan communications, Distribute information and Manage communications. But within DaimlerChrysler project none of them were totally met. In order to appreciate the scale of the problem, it should be point out that even managers and CEOs experienced serious difficulties in discussing solutions and achieving a consensus. According to a Daimler-Benz executive, <nowiki>"</nowiki>Eaton went weeks without speaking with Jürgen [Schrempp]. He preferred to maintain lower-level contact. Jürgen, meanwhile, left Chrysler alone.<nowiki>"</nowiki> <ref> [http://mba.tuck.dartmouth.edu/pdf/2002-1-0071.pdf] Professor Sydney Finkelstein. ''The DaimlerChrysler Merger.''Tuck School of Business at Dartmouth. 2002 </ref> One would have expected that both CEOs would have shared their different views in order to discover common goal and operate as an effective team at the top. Given the seeming clash of culture described in the first paragraph, it was crucial to start the discussion to create healthy relationship and release the company´s potential. The clearer the communication, the better issues are addressed. But with such a lack of communication among leaders, no far-reaching communication plan could be implemented among all stakeholders involved, not to mention the distribution of the information. Both internal and external communications were chaotic. It is likely that the standard ISO 21500 would have made managers more aware of the processes related to communication which requires to be efficiently tackled.

==Stakeholders==
The stakeholder subject group is concerned with identifying and managing all parties involved. Both their expectations and influence on the project need to be analyzed to classify them. The table 6 provides a power-interest matrix, which is crucial to draw up appropriate management strategies for effectively engaging with them. The external stakeholders are written in italics, the others are internal.

{| border="1" cellpadding="3" cellspacing="0" style="margin:auto;"
|+ '''Table 6 : Power and interest matrix'''
|-
! rowspan="2" style="background: #ffedd3;" | Level of interest
! colspan="5" style="background: #ffedd3;" | Level of power
|-
|style="background: #fff4d3;" align=center | ''' Low '''
|style="background: #fff4d3;" align=center| ''' High '''
|-
|style="background: #fff4d3;" align=center |'''High'''
|
[[Employee]]

Trade Union

''[[Clients]]''

''Suppliers''

''Government''

''Society''
|
Directors

Managers

''[[Stockholders]]''
|-
|style="background: #fff4d3;" align=center |'''Low'''
|
''Competitors''
|

|-
|}

To analyze the management of all of these stakeholders one by one would be tedious. However it is relevant to focus on several categories according to the table 6. Special focus will be laid on the stakeholders written in red in the table above. Therefore, both high power/high interest and low power/high interest stakeholders will be looked at. Furthermore, two of them are internal, whereas the other is internal.
All of them were significantly affected by the DaimlerChrysler project due to mismanagement.

===Employees===
Employees, low-power and high-interest stakeholders, must be kept informed and managers should ensure that no major issues are arising.
However, this was not the case in the DaimlerChrysler merger: employees felt overlooked, disregarded and left out of the merger process. But to what extent CEOs and managers were responsible in this climate of distrust and dislike?

First, soon after the merger, it became obvious that Daimler was taking over the whole company´s management. Chrysler President Stallkamp retirement at the end of 1999 was followed by the one of James P. Holdem, top-level executive of the Chrysler Group. They were replaced by two German managers: Dieter Zetsche and Wolfgang Bernhard. Being lowered to divisional status, it is understandable that American´s morale suffer from this German hegemony. Employee felt eclipsed and were disgusted. They also were worried that DaimlerChrysler would dismiss some of them. But the problems are not confined to be here. Indeed, Jürgen Schrempp attitude only made the situation worse. In autumn 2000, DaimlerChrysler CEO acknowledged in the German financial daily Handelsblatt that <nowiki>“</nowiki>The Merger of Equals statement was necessary in order to earn the support of Chrysler's workers and the American public, but it was never reality<nowiki>"</nowiki>. Many American regarded this statement as a betrayal, since he intended to deceive them from the outset. It appears clear that it is due to board of directors failure in acting responsibly towards these stakeholders that deep-seated distrust ran deep.

But this mismanagement of the project stakeholders can lead to far-reaching consequences on the project success itself. Indeed, it could be that some employees simply do not work as efficiently because they suppose the Board of Directors doesn’t care about the Chrysler entity – so why should they? Decreased performance would result in it.

It is to notice that even though the standard ''ISO 21500: 2012'' did not exist at that time, the fact that employee influence to succeed such a process was of importance was already known. MaryAnn Keller, founder and managing partner of MaryAnn Keller & Associates LLC, namely stated in June 1998 that <nowiki>“</nowiki>The success of any combination depends on the ability of the new organization to win over the hearts and minds of employees.<nowiki>”</nowiki> <ref> [http://murphylibrary.uwlax.edu/digital/jur/2002/carpiaux.pdf] Nicole Carpiaux. ''DaimlerChrysler : Wunderkind or Problem Child ?'' Faculty Sponsor : Leticia Peña, Department of Management. </ref> The managers of DaimlerChrysler should then be aware that is really a management issue to embrace workers instead to neglect them in order to obtain the best they can offer.

===Clients===
And what about the consumers, low-power and high interest stakeholders?

Once again, one could argue that managers failed to define as well as to meet their needs.
One example is given for illustration. At the time, the DaimlerChrysler A-Class was 1.25 to 2 times more expensive than similar vehicles sold by Volkswagen, Renault or Fiat. This higher price was not deterrent since clients were aware that Daimler-Benz primarily asset was quality and safety. However, in 1999, the A-class failed an emergency maneuver test conducted by a Swedish television station. <ref> Bill Vlasic, Bradley A. Stertz. ''Taken for a Ride: How Daimler-Benz Drove off with Chrysler''. Harper Paperbacks,
2001, p. 300.
</ref> Consequently, client´s satisfaction suddenly drop off the map. The DaimlerChrysler vehicle was considered as an overpriced car which did not achieve engineering excellence compared to the highly competitive European compact market. The crux of the problem may be that the German entity have tried to implant the American low development costs into its entities, disregarding the high expectations of the clients. This paragraph appears to prove that trying to generate synergy savings the managers failed in responding the customer´s needs.

===Stockholders===
Last but not least, the management of both high power and high interest stakeholders needs to be considered. Take the stockholders.

An overwhelming majority of them favored the project of merger in 1998. Approvals ratings reached 99.9% at Daimler-Benz and 97.5% at Chrysler. It may be inferred that, at the outset of the project, managers successfully took into account the processes required to satisfy the shareholders. It did not take long, however, for some of them to express their disappointment. This was the case for Kirk Kerkorian, the third largest proprietor of DailerChrysler stock and largest Chrysler shareholder before the merger. In November 2000, the latter filed a $9 billion lawsuit against DaimlerChrysler for falsifying the terms of the fusion as a “merger of equals”. He was upset with the German hegemony and stated he had voted to turn its shares for stock in DaimlerChrysler without having considered the American entity would be reduced to a mere division. Two months later, he cut his take in the merged company by a third. Even though the managers were not directly involved in this discontent, the lack of acting responsibly of the Board of the director is obvious.

To conclude, the completion of the processes related to each of these three stakeholders lacked efficiency. The managers failed in implementing the required activities to satisfy them and this will become a major hindrance to the project completion.

=Conclusion=
Many factors may affect the failure of the DaimlerChrysler project, but most of them may have been due to its mismanagement. Such a union was notoriously risky, especially due to the opposite companies it combined. To deliver the intent benefits, particular care should then have been taken by managers to tackle all the project management processes.

The use of the standard ''ISO 21500 : 2012'' was made to group the processes in term of Subject Group. It appears clear that there were some omissions, particularly regarding Integration, Time, Communication and Stakeholders. This standard has proven to be useful to analyze a project management, especially in case of cross-boarders project. It is a shame that such a unifying international approach was only established in 2012.

= References =

<references />

[[Category:Project Management]]
[[Category:Human Behaviour]]
[[Category:Complexity]]

Analyzing the failure of the DaimlerChrysler merger from a project management perspective

2014-12-01T19:52:15Z

Lyngby: /* Communication */

'''Abstract'''

In the late 90´s, German Daimler-Benz AG and American Chrysler Corporation announced their intention to combine their strengths within a so-called `merger of equals´ <ref> Grässlin, Jürgen. ''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> . Becoming the fifth largest automaker in the world, both companies hoped to overcome together the automotive industry crisis. However, nothing worked out as planned, so much so that in 2007 Daimler-Benz sold all its shares of the Chrysler division.

Could the use of a norm have guaranteed the success of the DaimlerChrysler merger ? This question will be answered with regard to the ISO 21500:2012 guideline for project management.

According to the latter, a definition of project management and the processes it involves will be provided.Then, an analysis of the origin of DaimlerChrysler project will be carried out. It will also be shown to what extent this fusion was mismanaged with regard to the subject groups defined in the ISO 21500:2012. Last but not least the benefits of using this standard to successfully conduct a complex project will be discussed.

=Introduction=
In the early 21st century, no comprehensive standard on project management was accepted despite the substantial demand for project management skills. However, in 2006, the need for a unifying international approach was recognized by the International Organization for Standard (ISO). The work of over hundreds experts in project management from around the globe resulted in ''ISO 21500: 2012 -Guidance on project management''. This norm defines universal project management terminologies, as well as the principles and processes it involves. It provides a basic guide against which any organization can compare its current project management practices and determine areas in need of improvement. But how to practically apply it to a project? A specific example of project failure prior to introducing ISO 21500 will be provided to analyze which project management processes were disregarded. More particularly, the merger of the German automaker Daimler-Benz with the American Chrysler Corporation will be examined with the perspective of subject group.

= ISO 21500 : 2012, A focus on processes <ref> ISO 21500:2012 ''Guidance on project management'' </ref> <ref> Anton Zandhuis, Rommert Stellingwerf. ''ISO 215000, Guidance on Project managenent, A Pocket Guide''. Van Haren Publishing. 2013 </ref>=

What is a project? A definition is provided by the ISO 21500: “A unique set of processes consisting of coordinated and controlled activities with start and end dates, performed to achieve project objectives.” The concept of processes seems to be at the crux of project management issues. The definition of how to manage a project stresses this point: “Project management is performed through processes”.

Specifically, the norm splits the method of managing a project into 39 elementary processes. Depending on the perspective, the latter are grouped into five process groups (Initiating, Planning, Controlling and Closing) or into ten subject groups (Integration, Stakeholder, Scope, Resource, Time, Cost, Risk, Quality, Procurement and Communication). The classification of these processes is provided in the following table.

{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 1 : Project management cross-referenced to process and subject groups (ISO 21500 : 2012)'''
|-
! rowspan="2" style="background: #ffedd3;" | SUBJECT GROUPS
! colspan="5" style="background: #ffedd3;" | PROCESS GROUPS
|-
|style="background: #fff4d3;" align=center | '''Initiating'''
|style="background: #fff4d3;" align=center| '''Planning'''
|style="background: #fff4d3;" align=center| '''Implementing'''
|style="background: #fff4d3;" align=center | '''Controlling'''
|style="background: #fff4d3;" align=center | '''Closing'''
|-
|style="background: #fff4d3;" |'''Integration'''
|
4.3.2 Develop project chart
|
4.3.3. Develop project plans
|
4.3.4 Direct project work
|
4.3.5 Control project work

4.3.6 Control changes
|
4.3.7 Close project or phase

4.3.8 Collect lessons learned
|-
|style="background: #fff4d3;" |'''Stakeholder'''
|
4.3.9 Identify stakeholders
|

|
4.3.10 Manage stakeholders
|

|

|-
|style="background: #fff4d3;" |'''Scope'''
|

|
4.3.11 Define scope

4.3.12 Create work breakdown structure

4.3.13 Define activities
|

|
4.3.14 Control scope
|

|-
|style="background: #fff4d3;" |'''Resource'''
|
4.3.15 Establish project team
|
4.3.16 Estimate resources

4.3.17 Define project organization
|
4.3.18 Develop project team
|
4.3.19 Control resources

4.3.20 Manage project team
|

|-
|style="background: #fff4d3;" |'''Time'''
|

|
4.3.21 Sequence activities

4.3.22 Estimate activity durations

4.3.23 Develop schedule
|

|
4.3.24 Control schedule
|

|-
|style="background: #fff4d3;" |'''Cost'''
|

|
4.3.25 Estimate costs

4.3.26 Develop budget
|

|
4.3.27 Control costs
|

|-
|style="background: #fff4d3;" |'''Risk'''
|

|
4.3.28 Identify risks

4.3.29 Asses risks
|
4.3.30 Treat risks
|
4.3.31 Control risks
|
|-
|style="background: #fff4d3;" |'''Quality'''
|

|
4.3.32 Plan quality
|
4.3.33 Perform quality assurance
|
4.3.34 Perform quality control
|

|-
|style="background: #fff4d3;" |'''Procurement'''
|

|
4.3.35 Plan procurements
|
4.3.36 Select suppliers
|
4.3.37 Administer procurements
|

|-
|style="background: #fff4d3;" |'''Communication'''
|

|
4.3.38 Plan communications
|
4.3.39 Distribute information
|
4.3.40 Manage communications
|

|}

The perspective of subject groups will be adopted to consider the management of DaimlerChrysler project. A subject is a theme in which processes are classified according to its related activities.

But before that, the project of DaimlerChrysler merger is regarded.

=DaimlerChrysler merger project <ref> Julia Hollmann, Aletéia de Moura Carpes, Thiago Antonio Beuron. ''The DaimlerChrylser Merger- A cultural mismatch ?'' Faculty Sponsor : Universität Paderborn- Germany, Department of International Business Studies. Universidade Federal de Santa Maria- Brazil, Department of Administration. 2010 </ref> =
==The genesis of the project==
In the late 90´s, the automotive industry had to face multiples challenges due to the excess manufacturing capacity, the growth of ecological awareness, and the retail revolution that empowered buyers. To strengthen their position during this crisis, the automakers Daimler-Benz and Chrysler Corporation decided to merge. This project aimed to combine each other´s product designs, manufacturing resources and distribution systems.
The following table shows the complementary of the two companies, which wanted to unit their knowledge and their market in order to gain a competitive advantage.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 2 : The complementary of the two companies '''
|
! style="background: #ffedd3;" |'''Daimler-Benz AG'''
! style="background: #ffedd3;" |'''Chrysler Corporation'''
|-
! style="background: #ffedd3;" |'''Head office location'''
|
Germany
|
United States
|-
! style="background: #ffedd3;" |'''Geographical reach'''
|
European market
|
U.S. American market
|-
! style="background: #ffedd3;" |'''Product ranges'''
|
Uncompromising quality products
|
Car models that meet the American demand for adventurousness
|}


Both synergies and economies of scale were likely to proliferate.

How the project was set up is explained in the following paragraph. However, its detailed description falls outside the scope of this article.

==The execution of the project==
On May 7th, 1998 the signing of the combination agreement between Daimler-Benz and Chrysler was publicly announced. Daimler-Benz CEO Jürgen Schrempp described the union as "a merger of equals, a merger of growth, and a merger of unprecedented strength".
The equal status of the two organizations was reflected in the newly established entity name, DaimlerChrysler, as well as in the combination of the two former boards of management to form the one of DaimlerChrysler. Furthermore, it was agreed that Schrempp and Eaton, former CEO of the Chrysler Corporation, would jointly led the entity as co-chairmen and co-CEOs. It was also decided that Eaton would stay up to three years.
The two following tables provide more data about DaimlerChrysler right after the merger and the expected results of this project.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 3 : Characteristics of DaimlerChrysler right after the merger'''
|-
! style="background: #ffedd3;" |'''Number of employees '''
|442,000 employees
½ in Germany

1/3 in North America

1/6 spread across 200 countries around the world
|-
! style="background: #ffedd3;" |'''Daimler-Benz AG Market capitalization'''
|$ 92 billion
|}



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 4 : Expected results'''
! style="background: #ffedd3;" |Annual revenues of the combined company
|$ 132 billion
|-
! style="background: #ffedd3;" |Increase in sales
|13%
|-
! style="background: #ffedd3;" |Cost savings brought within 2 or 3 years
|$ 3,5 billion a year
|}


So far, this fusion appears to be very beneficial for all parties involved. However the wish for synergy effects never came true and the project drove Chrysler into chaos. In May 2007, the merger of Chrysler and Daimler-Benz was dissolved. Can this failure be ascribed to mismanagement?

The purpose of this article is now to point out which processes, related to the different subject groups definied in ISO 21500:2012 were disregarded and may have led to the project failure.

=The mismanagement of some subject groups <ref> Wanda Curlee, Robert L. Gordon . ''Complexity Theory and Project Management. ''. New York : Wiley, 2011, p. 129-133 </ref> =

Four subject groups will successively be considered : Integration, Time, Communication and Stakeholders. A mismanagement of some processes related to these four specific subject groups is namely to be seen.

==Integration <ref> Grässlin, Jürgen.''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> <ref> ''DaimlerChrysler confronts the challenges of global integration'', Human Resource Management International Digest, Vol 12 Iss :2 P.5-8</ref> ==

The Integration subject group includes the processes required to identify, define, combine, unify, coordinate, control and close the various activities and processes related to the project (ISO 21500:2012 - 4.2.3.2).

Within this merger, the unification and combination of all operations within the established entity needed to be achieved. To meet this target, a newly corporate culture had to be defined to align working styles. The latters namely radically differ due to major cultural differences, as shown in the following table.



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 5 : Comparison between the German and the American working styles'''
|-
|
! style="background: #ffedd3;" | '''Germany'''
! style="background: #ffedd3;"|'''United States'''
|-
! style="background: #ffedd3;" align="left" |'''Employee working style'''
| Work in a team-oriented environment
| Work individually
|-
! style="background: #ffedd3;" align="left" |'''Writing report'''
| Lengthy reports
| Little paper
|-
! style="background: #ffedd3;" align="left" |'''Decision-making process'''
|
Methodical, based on very detailed plans
|
Using creativity, based on trial-and-error method
|-
! style="background: #ffedd3;" align="left" |'''Meeting'''
|
Extended discussions
|
Short meeting
|-
! style="background: #ffedd3;" align="left" |'''Organizational structure'''
|
Pronounced hierarchy based on top-down-management
|
Flat organizational hierarchy stimulating empowerment of the employees
|-
! style="background: #ffedd3;" align="left" |'''Risk appetite'''
|
Risk adverse culture
|
Risk takers
|}


Due to the fact that this merger was a so-called `merger of equals´, the integration of the two cultures was to combine them to generate a new shared corporate one. It was namely vital that both organizations learn from each other to generate synergy effects. Managers have here a central role to play to define and coordinate the development of this new culture.

Eaton affirmed that it was at the top of the agenda and Thomas Stallkamp, Chrysler President during the negotiation phase, was charged with overseeing this integration process. Some effort went into harmonizing the two corporate cultures. Many seminars and workshops were organized to sensitizing the employees for working with new colleagues with diverging working methods. Furthermore, German was taught to many American managers.

However, given the large gap between the two organizations, it would appear that managers should have undertaken more activities and CEOs should have allocated more resources to bridge the chasm of cultural differences.

In fact, no strong and cohesive organizational culture was created, as illustrated in daily misunderstandings. For instance, the attention Daimler-Benz leaders paid to writing a leaflet sent to employee annoyed Chrysler executives. At the end of 1999, the resignation of Thomas Stallkamp, a 19-year veteran of Chrysler who was highly regarded, might be seen as a failure of the merger integration process after all the effort. Stallkamp is quoted as saying: <nowiki>“</nowiki>The majority of my career has been spent implementing supply chain management. I would like to continue to explore those areas at a less hectic pace<nowiki>”</nowiki>. Were both parties truly willing to cooperate wholeheartedly and to enter compromises to succeed in the numerous integration processes? A negative answer is the root cause of an unachieved integration.

==Time<ref> Sue Cartwright, Cary L. Cooper. ''Mergers and Acquisitions: The Human Factor Paperback'' . January 1, 1992 </ref>==

The Time subject group is all about managing the timely completion of the project. Feasible deadlines taking all known constraints into account need to be set. Processes covered by the latter subject group are the development of schedule for project activities estimating each activity duration, the progress monitoring and the schedule control.

One failure in managing time in DaimlerChrysler merger was that too little time was devoted to each activity. Let´s take a concrete example: Daimler-Benz and Chrysler began formal negotiations on January 12, 1998 and only five months later, the merger was announced worldwide. Susan Cartwright – past President of the British Academy Management – asserts that the period of time from the germ of the merger idea till an agreement is reached is estimated to last around two years. Speeding up the pre-merger preparation, the precise objectives of the fusion and the way to achieve them could not have been defined accurately.
Furthermore, the merger was completed on November 12, 1998. Time needed by employees to adapt to the new circumstances was not taken into account in the deadlines. One more mismanagement which is added to the others.

==Communication==
In the standard ISO 21500:2012, three key processes are defined to ensure appropriate exchange of project information: Plan communications, Distribute information and Manage communications. But within DaimlerChrysler project none of them were totally met. In order to appreciate the scale of the problem, it should be point out that even managers and CEOs experienced serious difficulties in discussing solutions and achieving a consensus. According to a Daimler-Benz executive, <nowiki>"</nowiki>Eaton went weeks without speaking with Jürgen [Schrempp]. He preferred to maintain lower-level contact. Jürgen, meanwhile, left Chrysler alone.<nowiki>"</nowiki> <ref> [http://mba.tuck.dartmouth.edu/pdf/2002-1-0071.pdf] Professor Sydney Finkelstein. ''The DaimlerChrysler Merger.''Tuck School of Business at Dartmouth. 2002 </ref> One would have expected that both CEOs would have shared their different views in order to discover common goal and operate as an effective team at the top. Given the seeming clash of culture described in the first paragraph, it was crucial to start the discussion to create healthy relationship and release the company´s potential. The clearer the communication, the better issues are addressed. But with such a lack of communication among leaders, no far-reaching communication plan could be implemented among all stakeholders involved, not to mention the distribution of the information. Both internal and external communications were chaotic. It is likely that the standard ISO 21500 would have made managers more aware of the processes related to communication which requires to be efficiently tackled.

==Stakeholders==
The stakeholder subject group is concerned with identifying and managing all stakeholders. Both their expectations and influence on the project need to be analyzed to classify them. The table 6 provides a power-interest matrix, which is crucial to draw up appropriate management strategies for effectively engaging with them. The external stakeholders are written in italics, the others are internal.

{| border="1" cellpadding="3" cellspacing="0" style="margin:auto;"
|+ '''Table 6 : Power and interest matrix'''
|-
! rowspan="2" style="background: #ffedd3;" | Level of interest
! colspan="5" style="background: #ffedd3;" | Level of power
|-
|style="background: #fff4d3;" align=center | ''' Low '''
|style="background: #fff4d3;" align=center| ''' High '''
|-
|style="background: #fff4d3;" align=center |'''High'''
|
[[Employee]]

Trade Union

''[[Clients]]''

''Suppliers''

''Government''

''Society''
|
Directors

Managers

''[[Stockholders]]''
|-
|style="background: #fff4d3;" align=center |'''Low'''
|
''Competitors''
|

|-
|}

To analyze the management of all of these stakeholders one by one would be tedious. However it is relevant to focus on several categories according to the table 6. Special focus will be laid on the stakeholders written in red in the table above. Therefore, both high power/high interest and low power/high interest stakeholders will be looked at. Furthermore, two of them are internal, whereas the other is internal.
All of them were significantly affected by the DaimlerChrysler project due to mismanagement.

===Employees===
Employees, low-power and high-interest stakeholders, must be kept informed and managers should ensure that no major issues are arising.
However, this was not the case in the DaimlerChrysler merger: employees felt overlooked, disregarded and left out of the merger process. But to what extent CEOs and managers were responsible in this climate of distrust and dislike?

First, soon after the merger, it became obvious that Daimler was taking over the whole company´s management. Chrysler President Stallkamp retirement at the end of 1999 was followed by the one of James P. Holdem, top-level executive of the Chrysler Group. They were replaced by two German managers: Dieter Zetsche and Wolfgang Bernhard. Being lowered to divisional status, it is understandable that American´s morale suffer from this German hegemony. Employee felt eclipsed and were disgusted. They also were worried that DaimlerChrysler would dismiss some of them. But the problems are not confined to be here. Indeed, Jürgen Schrempp attitude only made the situation worse. In autumn 2000, DaimlerChrysler CEO acknowledged in the German financial daily Handelsblatt that <nowiki>“</nowiki>The Merger of Equals statement was necessary in order to earn the support of Chrysler's workers and the American public, but it was never reality<nowiki>"</nowiki>. Many American regarded this statement as a betrayal, since he intended to deceive them from the outset. It appears clear that it is due to board of directors failure in acting responsibly towards these stakeholders that deep-seated distrust ran deep.

But this mismanagement of the project stakeholders can lead to far-reaching consequences on the project success itself. Indeed, it could be that some employees simply do not work as efficiently because they suppose the Board of Directors doesn’t care about the Chrysler entity – so why should they? Decreased performance would result in it.

It is to notice that even though the standard ''ISO 21500: 2012'' did not exist at that time, the fact that employee influence to succeed such a process was of importance was already known. MaryAnn Keller, founder and managing partner of MaryAnn Keller & Associates LLC, namely stated in June 1998 that <nowiki>“</nowiki>The success of any combination depends on the ability of the new organization to win over the hearts and minds of employees.<nowiki>”</nowiki> <ref> [http://murphylibrary.uwlax.edu/digital/jur/2002/carpiaux.pdf] Nicole Carpiaux. ''DaimlerChrysler : Wunderkind or Problem Child ?'' Faculty Sponsor : Leticia Peña, Department of Management. </ref> The managers of DaimlerChrysler should then be aware that is really a management issue to embrace workers instead to neglect them in order to obtain the best they can offer.

===Clients===
And what about the consumers, low-power and high interest stakeholders?

Once again, one could argue that managers failed to define as well as to meet their needs.
One example is given for illustration. At the time, the DaimlerChrysler A-Class was 1.25 to 2 times more expensive than similar vehicles sold by Volkswagen, Renault or Fiat. This higher price was not deterrent since clients were aware that Daimler-Benz primarily asset was quality and safety. However, in 1999, the A-class failed an emergency maneuver test conducted by a Swedish television station. <ref> Bill Vlasic, Bradley A. Stertz. ''Taken for a Ride: How Daimler-Benz Drove off with Chrysler''. Harper Paperbacks,
2001, p. 300.
</ref> Consequently, client´s satisfaction suddenly drop off the map. The DaimlerChrysler vehicle was considered as an overpriced car which did not achieve engineering excellence compared to the highly competitive European compact market. The crux of the problem may be that the German entity have tried to implant the American low development costs into its entities, disregarding the high expectations of the clients. This paragraph appears to prove that trying to generate synergy savings the managers failed in responding the customer´s needs.

===Stockholders===
Last but not least, the management of both high power and high interest stakeholders needs to be considered. Take the stockholders.

An overwhelming majority of them favored the project of merger in 1998. Approvals ratings reached 99.9% at Daimler-Benz and 97.5% at Chrysler. It may be inferred that, at the outset of the project, managers successfully took into account the processes required to satisfy the shareholders. It did not take long, however, for some of them to express their disappointment. This was the case for Kirk Kerkorian, the third largest proprietor of DailerChrysler stock and largest Chrysler shareholder before the merger. In November 2000, the latter filed a $9 billion lawsuit against DaimlerChrysler for falsifying the terms of the fusion as a “merger of equals”. He was upset with the German hegemony and stated he had voted to turn its shares for stock in DaimlerChrysler without having considered the American entity would be reduced to a mere division. Two months later, he cut his take in the merged company by a third. Even though the managers were not directly involved in this discontent, the lack of acting responsibly of the Board of the director is obvious.

To conclude, the completion of the processes related to each of these three stakeholders lacked efficiency. The managers failed in implementing the required activities to satisfy them and this will become a major hindrance to the project completion.

=Conclusion=
Many factors may affect the failure of the DaimlerChrysler project, but most of them may have been due to its mismanagement. Such a union was notoriously risky, especially due to the opposite companies it combined. To deliver the intent benefits, particular care should then have been taken by managers to tackle all the project management processes.

The use of the standard ''ISO 21500 : 2012'' was made to group the processes in term of Subject Group. It appears clear that there were some omissions, particularly regarding Integration, Time, Communication and Stakeholders. This standard has proven to be useful to analyze a project management, especially in case of cross-boarders project. It is a shame that such a unifying international approach was only established in 2012.

= References =

<references />

[[Category:Project Management]]
[[Category:Human Behaviour]]
[[Category:Complexity]]

Analyzing the failure of the DaimlerChrysler merger from a project management perspective

2014-12-01T19:43:58Z

Lyngby: /* The execution of the project */

'''Abstract'''

In the late 90´s, German Daimler-Benz AG and American Chrysler Corporation announced their intention to combine their strengths within a so-called `merger of equals´ <ref> Grässlin, Jürgen. ''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> . Becoming the fifth largest automaker in the world, both companies hoped to overcome together the automotive industry crisis. However, nothing worked out as planned, so much so that in 2007 Daimler-Benz sold all its shares of the Chrysler division.

Could the use of a norm have guaranteed the success of the DaimlerChrysler merger ? This question will be answered with regard to the ISO 21500:2012 guideline for project management.

According to the latter, a definition of project management and the processes it involves will be provided.Then, an analysis of the origin of DaimlerChrysler project will be carried out. It will also be shown to what extent this fusion was mismanaged with regard to the subject groups defined in the ISO 21500:2012. Last but not least the benefits of using this standard to successfully conduct a complex project will be discussed.

=Introduction=
In the early 21st century, no comprehensive standard on project management was accepted despite the substantial demand for project management skills. However, in 2006, the need for a unifying international approach was recognized by the International Organization for Standard (ISO). The work of over hundreds experts in project management from around the globe resulted in ''ISO 21500: 2012 -Guidance on project management''. This norm defines universal project management terminologies, as well as the principles and processes it involves. It provides a basic guide against which any organization can compare its current project management practices and determine areas in need of improvement. But how to practically apply it to a project? A specific example of project failure prior to introducing ISO 21500 will be provided to analyze which project management processes were disregarded. More particularly, the merger of the German automaker Daimler-Benz with the American Chrysler Corporation will be examined with the perspective of subject group.

= ISO 21500 : 2012, A focus on processes <ref> ISO 21500:2012 ''Guidance on project management'' </ref> <ref> Anton Zandhuis, Rommert Stellingwerf. ''ISO 215000, Guidance on Project managenent, A Pocket Guide''. Van Haren Publishing. 2013 </ref>=

What is a project? A definition is provided by the ISO 21500: “A unique set of processes consisting of coordinated and controlled activities with start and end dates, performed to achieve project objectives.” The concept of processes seems to be at the crux of project management issues. The definition of how to manage a project stresses this point: “Project management is performed through processes”.

Specifically, the norm splits the method of managing a project into 39 elementary processes. Depending on the perspective, the latter are grouped into five process groups (Initiating, Planning, Controlling and Closing) or into ten subject groups (Integration, Stakeholder, Scope, Resource, Time, Cost, Risk, Quality, Procurement and Communication). The classification of these processes is provided in the following table.

{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 1 : Project management cross-referenced to process and subject groups (ISO 21500 : 2012)'''
|-
! rowspan="2" style="background: #ffedd3;" | SUBJECT GROUPS
! colspan="5" style="background: #ffedd3;" | PROCESS GROUPS
|-
|style="background: #fff4d3;" align=center | '''Initiating'''
|style="background: #fff4d3;" align=center| '''Planning'''
|style="background: #fff4d3;" align=center| '''Implementing'''
|style="background: #fff4d3;" align=center | '''Controlling'''
|style="background: #fff4d3;" align=center | '''Closing'''
|-
|style="background: #fff4d3;" |'''Integration'''
|
4.3.2 Develop project chart
|
4.3.3. Develop project plans
|
4.3.4 Direct project work
|
4.3.5 Control project work

4.3.6 Control changes
|
4.3.7 Close project or phase

4.3.8 Collect lessons learned
|-
|style="background: #fff4d3;" |'''Stakeholder'''
|
4.3.9 Identify stakeholders
|

|
4.3.10 Manage stakeholders
|

|

|-
|style="background: #fff4d3;" |'''Scope'''
|

|
4.3.11 Define scope

4.3.12 Create work breakdown structure

4.3.13 Define activities
|

|
4.3.14 Control scope
|

|-
|style="background: #fff4d3;" |'''Resource'''
|
4.3.15 Establish project team
|
4.3.16 Estimate resources

4.3.17 Define project organization
|
4.3.18 Develop project team
|
4.3.19 Control resources

4.3.20 Manage project team
|

|-
|style="background: #fff4d3;" |'''Time'''
|

|
4.3.21 Sequence activities

4.3.22 Estimate activity durations

4.3.23 Develop schedule
|

|
4.3.24 Control schedule
|

|-
|style="background: #fff4d3;" |'''Cost'''
|

|
4.3.25 Estimate costs

4.3.26 Develop budget
|

|
4.3.27 Control costs
|

|-
|style="background: #fff4d3;" |'''Risk'''
|

|
4.3.28 Identify risks

4.3.29 Asses risks
|
4.3.30 Treat risks
|
4.3.31 Control risks
|
|-
|style="background: #fff4d3;" |'''Quality'''
|

|
4.3.32 Plan quality
|
4.3.33 Perform quality assurance
|
4.3.34 Perform quality control
|

|-
|style="background: #fff4d3;" |'''Procurement'''
|

|
4.3.35 Plan procurements
|
4.3.36 Select suppliers
|
4.3.37 Administer procurements
|

|-
|style="background: #fff4d3;" |'''Communication'''
|

|
4.3.38 Plan communications
|
4.3.39 Distribute information
|
4.3.40 Manage communications
|

|}

The perspective of subject groups will be adopted to consider the management of DaimlerChrysler project. A subject is a theme in which processes are classified according to its related activities.

But before that, the project of DaimlerChrysler merger is regarded.

=DaimlerChrysler merger project <ref> Julia Hollmann, Aletéia de Moura Carpes, Thiago Antonio Beuron. ''The DaimlerChrylser Merger- A cultural mismatch ?'' Faculty Sponsor : Universität Paderborn- Germany, Department of International Business Studies. Universidade Federal de Santa Maria- Brazil, Department of Administration. 2010 </ref> =
==The genesis of the project==
In the late 90´s, the automotive industry had to face multiples challenges due to the excess manufacturing capacity, the growth of ecological awareness, and the retail revolution that empowered buyers. To strengthen their position during this crisis, the automakers Daimler-Benz and Chrysler Corporation decided to merge. This project aimed to combine each other´s product designs, manufacturing resources and distribution systems.
The following table shows the complementary of the two companies, which wanted to unit their knowledge and their market in order to gain a competitive advantage.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 2 : The complementary of the two companies '''
|
! style="background: #ffedd3;" |'''Daimler-Benz AG'''
! style="background: #ffedd3;" |'''Chrysler Corporation'''
|-
! style="background: #ffedd3;" |'''Head office location'''
|
Germany
|
United States
|-
! style="background: #ffedd3;" |'''Geographical reach'''
|
European market
|
U.S. American market
|-
! style="background: #ffedd3;" |'''Product ranges'''
|
Uncompromising quality products
|
Car models that meet the American demand for adventurousness
|}


Both synergies and economies of scale were likely to proliferate.

How the project was set up is explained in the following paragraph. However, its detailed description falls outside the scope of this article.

==The execution of the project==
On May 7th, 1998 the signing of the combination agreement between Daimler-Benz and Chrysler was publicly announced. Daimler-Benz CEO Jürgen Schrempp described the union as "a merger of equals, a merger of growth, and a merger of unprecedented strength".
The equal status of the two organizations was reflected in the newly established entity name, DaimlerChrysler, as well as in the combination of the two former boards of management to form the one of DaimlerChrysler. Furthermore, it was agreed that Schrempp and Eaton, former CEO of the Chrysler Corporation, would jointly led the entity as co-chairmen and co-CEOs. It was also decided that Eaton would stay up to three years.
The two following tables provide more data about DaimlerChrysler right after the merger and the expected results of this project.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 3 : Characteristics of DaimlerChrysler right after the merger'''
|-
! style="background: #ffedd3;" |'''Number of employees '''
|442,000 employees
½ in Germany

1/3 in North America

1/6 spread across 200 countries around the world
|-
! style="background: #ffedd3;" |'''Daimler-Benz AG Market capitalization'''
|$ 92 billion
|}



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 4 : Expected results'''
! style="background: #ffedd3;" |Annual revenues of the combined company
|$ 132 billion
|-
! style="background: #ffedd3;" |Increase in sales
|13%
|-
! style="background: #ffedd3;" |Cost savings brought within 2 or 3 years
|$ 3,5 billion a year
|}


So far, this fusion appears to be very beneficial for all parties involved. However the wish for synergy effects never came true and the project drove Chrysler into chaos. In May 2007, the merger of Chrysler and Daimler-Benz was dissolved. Can this failure be ascribed to mismanagement?

The purpose of this article is now to point out which processes, related to the different subject groups definied in ISO 21500:2012 were disregarded and may have led to the project failure.

=The mismanagement of some subject groups <ref> Wanda Curlee, Robert L. Gordon . ''Complexity Theory and Project Management. ''. New York : Wiley, 2011, p. 129-133 </ref> =

Four subject groups will successively be considered : Integration, Time, Communication and Stakeholders. A mismanagement of some processes related to these four specific subject groups is namely to be seen.

==Integration <ref> Grässlin, Jürgen.''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> <ref> ''DaimlerChrysler confronts the challenges of global integration'', Human Resource Management International Digest, Vol 12 Iss :2 P.5-8</ref> ==

The Integration subject group includes the processes required to identify, define, combine, unify, coordinate, control and close the various activities and processes related to the project (ISO 21500:2012 - 4.2.3.2).

Within this merger, the unification and combination of all operations within the established entity needed to be achieved. To meet this target, a newly corporate culture had to be defined to align working styles. The latters namely radically differ due to major cultural differences, as shown in the following table.



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 5 : Comparison between the German and the American working styles'''
|-
|
! style="background: #ffedd3;" | '''Germany'''
! style="background: #ffedd3;"|'''United States'''
|-
! style="background: #ffedd3;" align="left" |'''Employee working style'''
| Work in a team-oriented environment
| Work individually
|-
! style="background: #ffedd3;" align="left" |'''Writing report'''
| Lengthy reports
| Little paper
|-
! style="background: #ffedd3;" align="left" |'''Decision-making process'''
|
Methodical, based on very detailed plans
|
Using creativity, based on trial-and-error method
|-
! style="background: #ffedd3;" align="left" |'''Meeting'''
|
Extended discussions
|
Short meeting
|-
! style="background: #ffedd3;" align="left" |'''Organizational structure'''
|
Pronounced hierarchy based on top-down-management
|
Flat organizational hierarchy stimulating empowerment of the employees
|-
! style="background: #ffedd3;" align="left" |'''Risk appetite'''
|
Risk adverse culture
|
Risk takers
|}


Due to the fact that this merger was a so-called `merger of equals´, the integration of the two cultures was to combine them to generate a new shared corporate one. It was namely vital that both organizations learn from each other to generate synergy effects. Managers have here a central role to play to define and coordinate the development of this new culture.

Eaton affirmed that it was at the top of the agenda and Thomas Stallkamp, Chrysler President during the negotiation phase, was charged with overseeing this integration process. Some effort went into harmonizing the two corporate cultures. Many seminars and workshops were organized to sensitizing the employees for working with new colleagues with diverging working methods. Furthermore, German was taught to many American managers.

However, given the large gap between the two organizations, it would appear that managers should have undertaken more activities and CEOs should have allocated more resources to bridge the chasm of cultural differences.

In fact, no strong and cohesive organizational culture was created, as illustrated in daily misunderstandings. For instance, the attention Daimler-Benz leaders paid to writing a leaflet sent to employee annoyed Chrysler executives. At the end of 1999, the resignation of Thomas Stallkamp, a 19-year veteran of Chrysler who was highly regarded, might be seen as a failure of the merger integration process after all the effort. Stallkamp is quoted as saying: <nowiki>“</nowiki>The majority of my career has been spent implementing supply chain management. I would like to continue to explore those areas at a less hectic pace<nowiki>”</nowiki>. Were both parties truly willing to cooperate wholeheartedly and to enter compromises to succeed in the numerous integration processes? A negative answer is the root cause of an unachieved integration.

==Time<ref> Sue Cartwright, Cary L. Cooper. ''Mergers and Acquisitions: The Human Factor Paperback'' . January 1, 1992 </ref>==

The Time subject group is all about managing the timely completion of the project. Feasible deadlines taking all known constraints into account need to be set. Processes covered by the latter subject group are the development of schedule for project activities estimating each activity duration, the progress monitoring and the schedule control.

One failure in managing time in DaimlerChrysler merger was that too little time was devoted to each activity. Let´s take a concrete example: Daimler-Benz and Chrysler began formal negotiations on January 12, 1998 and only five months later, the merger was announced worldwide. Susan Cartwright – past President of the British Academy Management – asserts that the period of time from the germ of the merger idea till an agreement is reached is estimated to last around two years. Speeding up the pre-merger preparation, the precise objectives of the fusion and the way to achieve them could not have been defined accurately.
Furthermore, the merger was completed on November 12, 1998. Time needed by employees to adapt to the new circumstances was not taken into account in the deadlines. One more mismanagement which is added to the others.

==Communication==
In the standard ISO 21500:2012, three key processes are defined to ensure appropriate exchange of project information: Plan communications, Distribute information and Manage communications. But within DaimlerChrysler project none of them were totally met. In order to appreciate the scale of the problem, it should be pointed out that even managers and CEOs experienced serious difficulties in discussing solutions and achieving a consensus. According to a Daimler-Benz executive, <nowiki>"</nowiki>Eaton went weeks without speaking with Jürgen [Schrempp]. He preferred to maintain lower-level contact. Jürgen, meanwhile, left Chrysler alone.<nowiki>"</nowiki> <ref> [http://mba.tuck.dartmouth.edu/pdf/2002-1-0071.pdf] Professor Sydney Finkelstein. ''The DaimlerChrysler Merger.''Tuck School of Business at Dartmouth. 2002 </ref> One would have expected that both CEOs would have share their different view in order to discover common goal and operate as an effective team at the top. Given the seeming clash of culture described in the first paragraph, it was crucial to start the discussion to create healthy relationship and release the company´s potential. The clearer the communication, the better issues are addressed. But with a lack of communication among leaders, no far-reaching communication plan could be implemented among all stakeholders involved, not to mention the distribution of the information. Both internal and external communications were chaotic. It is likely that the standard ISO 21500 would have make managers more aware of the processes related to communication required to be efficiently tackled.

==Stakeholders==
The stakeholder subject group is concerned with identifying and managing all stakeholders. Both their expectations and influence on the project need to be analyzed to classify them. The table 6 provides a power-interest matrix, which is crucial to draw up appropriate management strategies for effectively engaging with them. The external stakeholders are written in italics, the others are internal.

{| border="1" cellpadding="3" cellspacing="0" style="margin:auto;"
|+ '''Table 6 : Power and interest matrix'''
|-
! rowspan="2" style="background: #ffedd3;" | Level of interest
! colspan="5" style="background: #ffedd3;" | Level of power
|-
|style="background: #fff4d3;" align=center | ''' Low '''
|style="background: #fff4d3;" align=center| ''' High '''
|-
|style="background: #fff4d3;" align=center |'''High'''
|
[[Employee]]

Trade Union

''[[Clients]]''

''Suppliers''

''Government''

''Society''
|
Directors

Managers

''[[Stockholders]]''
|-
|style="background: #fff4d3;" align=center |'''Low'''
|
''Competitors''
|

|-
|}

To analyze the management of all of these stakeholders one by one would be tedious. However it is relevant to focus on several categories according to the table 6. Special focus will be laid on the stakeholders written in red in the table above. Therefore, both high power/high interest and low power/high interest stakeholders will be looked at. Furthermore, two of them are internal, whereas the other is internal.
All of them were significantly affected by the DaimlerChrysler project due to mismanagement.

===Employees===
Employees, low-power and high-interest stakeholders, must be kept informed and managers should ensure that no major issues are arising.
However, this was not the case in the DaimlerChrysler merger: employees felt overlooked, disregarded and left out of the merger process. But to what extent CEOs and managers were responsible in this climate of distrust and dislike?

First, soon after the merger, it became obvious that Daimler was taking over the whole company´s management. Chrysler President Stallkamp retirement at the end of 1999 was followed by the one of James P. Holdem, top-level executive of the Chrysler Group. They were replaced by two German managers: Dieter Zetsche and Wolfgang Bernhard. Being lowered to divisional status, it is understandable that American´s morale suffer from this German hegemony. Employee felt eclipsed and were disgusted. They also were worried that DaimlerChrysler would dismiss some of them. But the problems are not confined to be here. Indeed, Jürgen Schrempp attitude only made the situation worse. In autumn 2000, DaimlerChrysler CEO acknowledged in the German financial daily Handelsblatt that <nowiki>“</nowiki>The Merger of Equals statement was necessary in order to earn the support of Chrysler's workers and the American public, but it was never reality<nowiki>"</nowiki>. Many American regarded this statement as a betrayal, since he intended to deceive them from the outset. It appears clear that it is due to board of directors failure in acting responsibly towards these stakeholders that deep-seated distrust ran deep.

But this mismanagement of the project stakeholders can lead to far-reaching consequences on the project success itself. Indeed, it could be that some employees simply do not work as efficiently because they suppose the Board of Directors doesn’t care about the Chrysler entity – so why should they? Decreased performance would result in it.

It is to notice that even though the standard ''ISO 21500: 2012'' did not exist at that time, the fact that employee influence to succeed such a process was of importance was already known. MaryAnn Keller, founder and managing partner of MaryAnn Keller & Associates LLC, namely stated in June 1998 that <nowiki>“</nowiki>The success of any combination depends on the ability of the new organization to win over the hearts and minds of employees.<nowiki>”</nowiki> <ref> [http://murphylibrary.uwlax.edu/digital/jur/2002/carpiaux.pdf] Nicole Carpiaux. ''DaimlerChrysler : Wunderkind or Problem Child ?'' Faculty Sponsor : Leticia Peña, Department of Management. </ref> The managers of DaimlerChrysler should then be aware that is really a management issue to embrace workers instead to neglect them in order to obtain the best they can offer.

===Clients===
And what about the consumers, low-power and high interest stakeholders?

Once again, one could argue that managers failed to define as well as to meet their needs.
One example is given for illustration. At the time, the DaimlerChrysler A-Class was 1.25 to 2 times more expensive than similar vehicles sold by Volkswagen, Renault or Fiat. This higher price was not deterrent since clients were aware that Daimler-Benz primarily asset was quality and safety. However, in 1999, the A-class failed an emergency maneuver test conducted by a Swedish television station. <ref> Bill Vlasic, Bradley A. Stertz. ''Taken for a Ride: How Daimler-Benz Drove off with Chrysler''. Harper Paperbacks,
2001, p. 300.
</ref> Consequently, client´s satisfaction suddenly drop off the map. The DaimlerChrysler vehicle was considered as an overpriced car which did not achieve engineering excellence compared to the highly competitive European compact market. The crux of the problem may be that the German entity have tried to implant the American low development costs into its entities, disregarding the high expectations of the clients. This paragraph appears to prove that trying to generate synergy savings the managers failed in responding the customer´s needs.

===Stockholders===
Last but not least, the management of both high power and high interest stakeholders needs to be considered. Take the stockholders.

An overwhelming majority of them favored the project of merger in 1998. Approvals ratings reached 99.9% at Daimler-Benz and 97.5% at Chrysler. It may be inferred that, at the outset of the project, managers successfully took into account the processes required to satisfy the shareholders. It did not take long, however, for some of them to express their disappointment. This was the case for Kirk Kerkorian, the third largest proprietor of DailerChrysler stock and largest Chrysler shareholder before the merger. In November 2000, the latter filed a $9 billion lawsuit against DaimlerChrysler for falsifying the terms of the fusion as a “merger of equals”. He was upset with the German hegemony and stated he had voted to turn its shares for stock in DaimlerChrysler without having considered the American entity would be reduced to a mere division. Two months later, he cut his take in the merged company by a third. Even though the managers were not directly involved in this discontent, the lack of acting responsibly of the Board of the director is obvious.

To conclude, the completion of the processes related to each of these three stakeholders lacked efficiency. The managers failed in implementing the required activities to satisfy them and this will become a major hindrance to the project completion.

=Conclusion=
Many factors may affect the failure of the DaimlerChrysler project, but most of them may have been due to its mismanagement. Such a union was notoriously risky, especially due to the opposite companies it combined. To deliver the intent benefits, particular care should then have been taken by managers to tackle all the project management processes.

The use of the standard ''ISO 21500 : 2012'' was made to group the processes in term of Subject Group. It appears clear that there were some omissions, particularly regarding Integration, Time, Communication and Stakeholders. This standard has proven to be useful to analyze a project management, especially in case of cross-boarders project. It is a shame that such a unifying international approach was only established in 2012.

= References =

<references />

[[Category:Project Management]]
[[Category:Human Behaviour]]
[[Category:Complexity]]

Analyzing the failure of the DaimlerChrysler merger from a project management perspective

2014-12-01T19:43:45Z

Lyngby: /* The execution of the project */

'''Abstract'''

In the late 90´s, German Daimler-Benz AG and American Chrysler Corporation announced their intention to combine their strengths within a so-called `merger of equals´ <ref> Grässlin, Jürgen. ''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> . Becoming the fifth largest automaker in the world, both companies hoped to overcome together the automotive industry crisis. However, nothing worked out as planned, so much so that in 2007 Daimler-Benz sold all its shares of the Chrysler division.

Could the use of a norm have guaranteed the success of the DaimlerChrysler merger ? This question will be answered with regard to the ISO 21500:2012 guideline for project management.

According to the latter, a definition of project management and the processes it involves will be provided.Then, an analysis of the origin of DaimlerChrysler project will be carried out. It will also be shown to what extent this fusion was mismanaged with regard to the subject groups defined in the ISO 21500:2012. Last but not least the benefits of using this standard to successfully conduct a complex project will be discussed.

=Introduction=
In the early 21st century, no comprehensive standard on project management was accepted despite the substantial demand for project management skills. However, in 2006, the need for a unifying international approach was recognized by the International Organization for Standard (ISO). The work of over hundreds experts in project management from around the globe resulted in ''ISO 21500: 2012 -Guidance on project management''. This norm defines universal project management terminologies, as well as the principles and processes it involves. It provides a basic guide against which any organization can compare its current project management practices and determine areas in need of improvement. But how to practically apply it to a project? A specific example of project failure prior to introducing ISO 21500 will be provided to analyze which project management processes were disregarded. More particularly, the merger of the German automaker Daimler-Benz with the American Chrysler Corporation will be examined with the perspective of subject group.

= ISO 21500 : 2012, A focus on processes <ref> ISO 21500:2012 ''Guidance on project management'' </ref> <ref> Anton Zandhuis, Rommert Stellingwerf. ''ISO 215000, Guidance on Project managenent, A Pocket Guide''. Van Haren Publishing. 2013 </ref>=

What is a project? A definition is provided by the ISO 21500: “A unique set of processes consisting of coordinated and controlled activities with start and end dates, performed to achieve project objectives.” The concept of processes seems to be at the crux of project management issues. The definition of how to manage a project stresses this point: “Project management is performed through processes”.

Specifically, the norm splits the method of managing a project into 39 elementary processes. Depending on the perspective, the latter are grouped into five process groups (Initiating, Planning, Controlling and Closing) or into ten subject groups (Integration, Stakeholder, Scope, Resource, Time, Cost, Risk, Quality, Procurement and Communication). The classification of these processes is provided in the following table.

{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 1 : Project management cross-referenced to process and subject groups (ISO 21500 : 2012)'''
|-
! rowspan="2" style="background: #ffedd3;" | SUBJECT GROUPS
! colspan="5" style="background: #ffedd3;" | PROCESS GROUPS
|-
|style="background: #fff4d3;" align=center | '''Initiating'''
|style="background: #fff4d3;" align=center| '''Planning'''
|style="background: #fff4d3;" align=center| '''Implementing'''
|style="background: #fff4d3;" align=center | '''Controlling'''
|style="background: #fff4d3;" align=center | '''Closing'''
|-
|style="background: #fff4d3;" |'''Integration'''
|
4.3.2 Develop project chart
|
4.3.3. Develop project plans
|
4.3.4 Direct project work
|
4.3.5 Control project work

4.3.6 Control changes
|
4.3.7 Close project or phase

4.3.8 Collect lessons learned
|-
|style="background: #fff4d3;" |'''Stakeholder'''
|
4.3.9 Identify stakeholders
|

|
4.3.10 Manage stakeholders
|

|

|-
|style="background: #fff4d3;" |'''Scope'''
|

|
4.3.11 Define scope

4.3.12 Create work breakdown structure

4.3.13 Define activities
|

|
4.3.14 Control scope
|

|-
|style="background: #fff4d3;" |'''Resource'''
|
4.3.15 Establish project team
|
4.3.16 Estimate resources

4.3.17 Define project organization
|
4.3.18 Develop project team
|
4.3.19 Control resources

4.3.20 Manage project team
|

|-
|style="background: #fff4d3;" |'''Time'''
|

|
4.3.21 Sequence activities

4.3.22 Estimate activity durations

4.3.23 Develop schedule
|

|
4.3.24 Control schedule
|

|-
|style="background: #fff4d3;" |'''Cost'''
|

|
4.3.25 Estimate costs

4.3.26 Develop budget
|

|
4.3.27 Control costs
|

|-
|style="background: #fff4d3;" |'''Risk'''
|

|
4.3.28 Identify risks

4.3.29 Asses risks
|
4.3.30 Treat risks
|
4.3.31 Control risks
|
|-
|style="background: #fff4d3;" |'''Quality'''
|

|
4.3.32 Plan quality
|
4.3.33 Perform quality assurance
|
4.3.34 Perform quality control
|

|-
|style="background: #fff4d3;" |'''Procurement'''
|

|
4.3.35 Plan procurements
|
4.3.36 Select suppliers
|
4.3.37 Administer procurements
|

|-
|style="background: #fff4d3;" |'''Communication'''
|

|
4.3.38 Plan communications
|
4.3.39 Distribute information
|
4.3.40 Manage communications
|

|}

The perspective of subject groups will be adopted to consider the management of DaimlerChrysler project. A subject is a theme in which processes are classified according to its related activities.

But before that, the project of DaimlerChrysler merger is regarded.

=DaimlerChrysler merger project <ref> Julia Hollmann, Aletéia de Moura Carpes, Thiago Antonio Beuron. ''The DaimlerChrylser Merger- A cultural mismatch ?'' Faculty Sponsor : Universität Paderborn- Germany, Department of International Business Studies. Universidade Federal de Santa Maria- Brazil, Department of Administration. 2010 </ref> =
==The genesis of the project==
In the late 90´s, the automotive industry had to face multiples challenges due to the excess manufacturing capacity, the growth of ecological awareness, and the retail revolution that empowered buyers. To strengthen their position during this crisis, the automakers Daimler-Benz and Chrysler Corporation decided to merge. This project aimed to combine each other´s product designs, manufacturing resources and distribution systems.
The following table shows the complementary of the two companies, which wanted to unit their knowledge and their market in order to gain a competitive advantage.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 2 : The complementary of the two companies '''
|
! style="background: #ffedd3;" |'''Daimler-Benz AG'''
! style="background: #ffedd3;" |'''Chrysler Corporation'''
|-
! style="background: #ffedd3;" |'''Head office location'''
|
Germany
|
United States
|-
! style="background: #ffedd3;" |'''Geographical reach'''
|
European market
|
U.S. American market
|-
! style="background: #ffedd3;" |'''Product ranges'''
|
Uncompromising quality products
|
Car models that meet the American demand for adventurousness
|}


Both synergies and economies of scale were likely to proliferate.

How the project was set up is explained in the following paragraph. However, its detailed description falls outside the scope of this article.

==The execution of the project==
On May 7th, 1998, the signing of the combination agreement between Daimler-Benz and Chrysler was publicly announced. Daimler-Benz CEO Jürgen Schrempp described the union as "a merger of equals, a merger of growth, and a merger of unprecedented strength".
The equal status of the two organizations was reflected in the newly established entity name, DaimlerChrysler, as well as in the combination of the two former boards of management to form the one of DaimlerChrysler. Furthermore, it was agreed that Schrempp and Eaton, former CEO of the Chrysler Corporation, would jointly led the entity as co-chairmen and co-CEOs. It was also decided that Eaton would stay up to three years.
The two following tables provide more data about DaimlerChrysler right after the merger and the expected results of this project.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 3 : Characteristics of DaimlerChrysler right after the merger'''
|-
! style="background: #ffedd3;" |'''Number of employees '''
|442,000 employees
½ in Germany

1/3 in North America

1/6 spread across 200 countries around the world
|-
! style="background: #ffedd3;" |'''Daimler-Benz AG Market capitalization'''
|$ 92 billion
|}



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 4 : Expected results'''
! style="background: #ffedd3;" |Annual revenues of the combined company
|$ 132 billion
|-
! style="background: #ffedd3;" |Increase in sales
|13%
|-
! style="background: #ffedd3;" |Cost savings brought within 2 or 3 years
|$ 3,5 billion a year
|}


So far, this fusion appears to be very beneficial for all parties involved. However the wish for synergy effects never came true and the project drove Chrysler into chaos. In May 2007, the merger of Chrysler and Daimler-Benz was dissolved. Can this failure be ascribed to mismanagement?

The purpose of this article is now to point out which processes, related to the different subject groups definied in ISO 21500:2012 were disregarded and may have led to the project failure.

=The mismanagement of some subject groups <ref> Wanda Curlee, Robert L. Gordon . ''Complexity Theory and Project Management. ''. New York : Wiley, 2011, p. 129-133 </ref> =

Four subject groups will successively be considered : Integration, Time, Communication and Stakeholders. A mismanagement of some processes related to these four specific subject groups is namely to be seen.

==Integration <ref> Grässlin, Jürgen.''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> <ref> ''DaimlerChrysler confronts the challenges of global integration'', Human Resource Management International Digest, Vol 12 Iss :2 P.5-8</ref> ==

The Integration subject group includes the processes required to identify, define, combine, unify, coordinate, control and close the various activities and processes related to the project (ISO 21500:2012 - 4.2.3.2).

Within this merger, the unification and combination of all operations within the established entity needed to be achieved. To meet this target, a newly corporate culture had to be defined to align working styles. The latters namely radically differ due to major cultural differences, as shown in the following table.



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 5 : Comparison between the German and the American working styles'''
|-
|
! style="background: #ffedd3;" | '''Germany'''
! style="background: #ffedd3;"|'''United States'''
|-
! style="background: #ffedd3;" align="left" |'''Employee working style'''
| Work in a team-oriented environment
| Work individually
|-
! style="background: #ffedd3;" align="left" |'''Writing report'''
| Lengthy reports
| Little paper
|-
! style="background: #ffedd3;" align="left" |'''Decision-making process'''
|
Methodical, based on very detailed plans
|
Using creativity, based on trial-and-error method
|-
! style="background: #ffedd3;" align="left" |'''Meeting'''
|
Extended discussions
|
Short meeting
|-
! style="background: #ffedd3;" align="left" |'''Organizational structure'''
|
Pronounced hierarchy based on top-down-management
|
Flat organizational hierarchy stimulating empowerment of the employees
|-
! style="background: #ffedd3;" align="left" |'''Risk appetite'''
|
Risk adverse culture
|
Risk takers
|}


Due to the fact that this merger was a so-called `merger of equals´, the integration of the two cultures was to combine them to generate a new shared corporate one. It was namely vital that both organizations learn from each other to generate synergy effects. Managers have here a central role to play to define and coordinate the development of this new culture.

Eaton affirmed that it was at the top of the agenda and Thomas Stallkamp, Chrysler President during the negotiation phase, was charged with overseeing this integration process. Some effort went into harmonizing the two corporate cultures. Many seminars and workshops were organized to sensitizing the employees for working with new colleagues with diverging working methods. Furthermore, German was taught to many American managers.

However, given the large gap between the two organizations, it would appear that managers should have undertaken more activities and CEOs should have allocated more resources to bridge the chasm of cultural differences.

In fact, no strong and cohesive organizational culture was created, as illustrated in daily misunderstandings. For instance, the attention Daimler-Benz leaders paid to writing a leaflet sent to employee annoyed Chrysler executives. At the end of 1999, the resignation of Thomas Stallkamp, a 19-year veteran of Chrysler who was highly regarded, might be seen as a failure of the merger integration process after all the effort. Stallkamp is quoted as saying: <nowiki>“</nowiki>The majority of my career has been spent implementing supply chain management. I would like to continue to explore those areas at a less hectic pace<nowiki>”</nowiki>. Were both parties truly willing to cooperate wholeheartedly and to enter compromises to succeed in the numerous integration processes? A negative answer is the root cause of an unachieved integration.

==Time<ref> Sue Cartwright, Cary L. Cooper. ''Mergers and Acquisitions: The Human Factor Paperback'' . January 1, 1992 </ref>==

The Time subject group is all about managing the timely completion of the project. Feasible deadlines taking all known constraints into account need to be set. Processes covered by the latter subject group are the development of schedule for project activities estimating each activity duration, the progress monitoring and the schedule control.

One failure in managing time in DaimlerChrysler merger was that too little time was devoted to each activity. Let´s take a concrete example: Daimler-Benz and Chrysler began formal negotiations on January 12, 1998 and only five months later, the merger was announced worldwide. Susan Cartwright – past President of the British Academy Management – asserts that the period of time from the germ of the merger idea till an agreement is reached is estimated to last around two years. Speeding up the pre-merger preparation, the precise objectives of the fusion and the way to achieve them could not have been defined accurately.
Furthermore, the merger was completed on November 12, 1998. Time needed by employees to adapt to the new circumstances was not taken into account in the deadlines. One more mismanagement which is added to the others.

==Communication==
In the standard ISO 21500:2012, three key processes are defined to ensure appropriate exchange of project information: Plan communications, Distribute information and Manage communications. But within DaimlerChrysler project none of them were totally met. In order to appreciate the scale of the problem, it should be pointed out that even managers and CEOs experienced serious difficulties in discussing solutions and achieving a consensus. According to a Daimler-Benz executive, <nowiki>"</nowiki>Eaton went weeks without speaking with Jürgen [Schrempp]. He preferred to maintain lower-level contact. Jürgen, meanwhile, left Chrysler alone.<nowiki>"</nowiki> <ref> [http://mba.tuck.dartmouth.edu/pdf/2002-1-0071.pdf] Professor Sydney Finkelstein. ''The DaimlerChrysler Merger.''Tuck School of Business at Dartmouth. 2002 </ref> One would have expected that both CEOs would have share their different view in order to discover common goal and operate as an effective team at the top. Given the seeming clash of culture described in the first paragraph, it was crucial to start the discussion to create healthy relationship and release the company´s potential. The clearer the communication, the better issues are addressed. But with a lack of communication among leaders, no far-reaching communication plan could be implemented among all stakeholders involved, not to mention the distribution of the information. Both internal and external communications were chaotic. It is likely that the standard ISO 21500 would have make managers more aware of the processes related to communication required to be efficiently tackled.

==Stakeholders==
The stakeholder subject group is concerned with identifying and managing all stakeholders. Both their expectations and influence on the project need to be analyzed to classify them. The table 6 provides a power-interest matrix, which is crucial to draw up appropriate management strategies for effectively engaging with them. The external stakeholders are written in italics, the others are internal.

{| border="1" cellpadding="3" cellspacing="0" style="margin:auto;"
|+ '''Table 6 : Power and interest matrix'''
|-
! rowspan="2" style="background: #ffedd3;" | Level of interest
! colspan="5" style="background: #ffedd3;" | Level of power
|-
|style="background: #fff4d3;" align=center | ''' Low '''
|style="background: #fff4d3;" align=center| ''' High '''
|-
|style="background: #fff4d3;" align=center |'''High'''
|
[[Employee]]

Trade Union

''[[Clients]]''

''Suppliers''

''Government''

''Society''
|
Directors

Managers

''[[Stockholders]]''
|-
|style="background: #fff4d3;" align=center |'''Low'''
|
''Competitors''
|

|-
|}

To analyze the management of all of these stakeholders one by one would be tedious. However it is relevant to focus on several categories according to the table 6. Special focus will be laid on the stakeholders written in red in the table above. Therefore, both high power/high interest and low power/high interest stakeholders will be looked at. Furthermore, two of them are internal, whereas the other is internal.
All of them were significantly affected by the DaimlerChrysler project due to mismanagement.

===Employees===
Employees, low-power and high-interest stakeholders, must be kept informed and managers should ensure that no major issues are arising.
However, this was not the case in the DaimlerChrysler merger: employees felt overlooked, disregarded and left out of the merger process. But to what extent CEOs and managers were responsible in this climate of distrust and dislike?

First, soon after the merger, it became obvious that Daimler was taking over the whole company´s management. Chrysler President Stallkamp retirement at the end of 1999 was followed by the one of James P. Holdem, top-level executive of the Chrysler Group. They were replaced by two German managers: Dieter Zetsche and Wolfgang Bernhard. Being lowered to divisional status, it is understandable that American´s morale suffer from this German hegemony. Employee felt eclipsed and were disgusted. They also were worried that DaimlerChrysler would dismiss some of them. But the problems are not confined to be here. Indeed, Jürgen Schrempp attitude only made the situation worse. In autumn 2000, DaimlerChrysler CEO acknowledged in the German financial daily Handelsblatt that <nowiki>“</nowiki>The Merger of Equals statement was necessary in order to earn the support of Chrysler's workers and the American public, but it was never reality<nowiki>"</nowiki>. Many American regarded this statement as a betrayal, since he intended to deceive them from the outset. It appears clear that it is due to board of directors failure in acting responsibly towards these stakeholders that deep-seated distrust ran deep.

But this mismanagement of the project stakeholders can lead to far-reaching consequences on the project success itself. Indeed, it could be that some employees simply do not work as efficiently because they suppose the Board of Directors doesn’t care about the Chrysler entity – so why should they? Decreased performance would result in it.

It is to notice that even though the standard ''ISO 21500: 2012'' did not exist at that time, the fact that employee influence to succeed such a process was of importance was already known. MaryAnn Keller, founder and managing partner of MaryAnn Keller & Associates LLC, namely stated in June 1998 that <nowiki>“</nowiki>The success of any combination depends on the ability of the new organization to win over the hearts and minds of employees.<nowiki>”</nowiki> <ref> [http://murphylibrary.uwlax.edu/digital/jur/2002/carpiaux.pdf] Nicole Carpiaux. ''DaimlerChrysler : Wunderkind or Problem Child ?'' Faculty Sponsor : Leticia Peña, Department of Management. </ref> The managers of DaimlerChrysler should then be aware that is really a management issue to embrace workers instead to neglect them in order to obtain the best they can offer.

===Clients===
And what about the consumers, low-power and high interest stakeholders?

Once again, one could argue that managers failed to define as well as to meet their needs.
One example is given for illustration. At the time, the DaimlerChrysler A-Class was 1.25 to 2 times more expensive than similar vehicles sold by Volkswagen, Renault or Fiat. This higher price was not deterrent since clients were aware that Daimler-Benz primarily asset was quality and safety. However, in 1999, the A-class failed an emergency maneuver test conducted by a Swedish television station. <ref> Bill Vlasic, Bradley A. Stertz. ''Taken for a Ride: How Daimler-Benz Drove off with Chrysler''. Harper Paperbacks,
2001, p. 300.
</ref> Consequently, client´s satisfaction suddenly drop off the map. The DaimlerChrysler vehicle was considered as an overpriced car which did not achieve engineering excellence compared to the highly competitive European compact market. The crux of the problem may be that the German entity have tried to implant the American low development costs into its entities, disregarding the high expectations of the clients. This paragraph appears to prove that trying to generate synergy savings the managers failed in responding the customer´s needs.

===Stockholders===
Last but not least, the management of both high power and high interest stakeholders needs to be considered. Take the stockholders.

An overwhelming majority of them favored the project of merger in 1998. Approvals ratings reached 99.9% at Daimler-Benz and 97.5% at Chrysler. It may be inferred that, at the outset of the project, managers successfully took into account the processes required to satisfy the shareholders. It did not take long, however, for some of them to express their disappointment. This was the case for Kirk Kerkorian, the third largest proprietor of DailerChrysler stock and largest Chrysler shareholder before the merger. In November 2000, the latter filed a $9 billion lawsuit against DaimlerChrysler for falsifying the terms of the fusion as a “merger of equals”. He was upset with the German hegemony and stated he had voted to turn its shares for stock in DaimlerChrysler without having considered the American entity would be reduced to a mere division. Two months later, he cut his take in the merged company by a third. Even though the managers were not directly involved in this discontent, the lack of acting responsibly of the Board of the director is obvious.

To conclude, the completion of the processes related to each of these three stakeholders lacked efficiency. The managers failed in implementing the required activities to satisfy them and this will become a major hindrance to the project completion.

=Conclusion=
Many factors may affect the failure of the DaimlerChrysler project, but most of them may have been due to its mismanagement. Such a union was notoriously risky, especially due to the opposite companies it combined. To deliver the intent benefits, particular care should then have been taken by managers to tackle all the project management processes.

The use of the standard ''ISO 21500 : 2012'' was made to group the processes in term of Subject Group. It appears clear that there were some omissions, particularly regarding Integration, Time, Communication and Stakeholders. This standard has proven to be useful to analyze a project management, especially in case of cross-boarders project. It is a shame that such a unifying international approach was only established in 2012.

= References =

<references />

[[Category:Project Management]]
[[Category:Human Behaviour]]
[[Category:Complexity]]

Analyzing the failure of the DaimlerChrysler merger from a project management perspective

2014-12-01T19:42:55Z

Lyngby: /* Time Sue Cartwright, Cary L. Cooper. Mergers and Acquisitions: The Human Factor Paperback . January 1, 1992 */

'''Abstract'''

In the late 90´s, German Daimler-Benz AG and American Chrysler Corporation announced their intention to combine their strengths within a so-called `merger of equals´ <ref> Grässlin, Jürgen. ''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> . Becoming the fifth largest automaker in the world, both companies hoped to overcome together the automotive industry crisis. However, nothing worked out as planned, so much so that in 2007 Daimler-Benz sold all its shares of the Chrysler division.

Could the use of a norm have guaranteed the success of the DaimlerChrysler merger ? This question will be answered with regard to the ISO 21500:2012 guideline for project management.

According to the latter, a definition of project management and the processes it involves will be provided.Then, an analysis of the origin of DaimlerChrysler project will be carried out. It will also be shown to what extent this fusion was mismanaged with regard to the subject groups defined in the ISO 21500:2012. Last but not least the benefits of using this standard to successfully conduct a complex project will be discussed.

=Introduction=
In the early 21st century, no comprehensive standard on project management was accepted despite the substantial demand for project management skills. However, in 2006, the need for a unifying international approach was recognized by the International Organization for Standard (ISO). The work of over hundreds experts in project management from around the globe resulted in ''ISO 21500: 2012 -Guidance on project management''. This norm defines universal project management terminologies, as well as the principles and processes it involves. It provides a basic guide against which any organization can compare its current project management practices and determine areas in need of improvement. But how to practically apply it to a project? A specific example of project failure prior to introducing ISO 21500 will be provided to analyze which project management processes were disregarded. More particularly, the merger of the German automaker Daimler-Benz with the American Chrysler Corporation will be examined with the perspective of subject group.

= ISO 21500 : 2012, A focus on processes <ref> ISO 21500:2012 ''Guidance on project management'' </ref> <ref> Anton Zandhuis, Rommert Stellingwerf. ''ISO 215000, Guidance on Project managenent, A Pocket Guide''. Van Haren Publishing. 2013 </ref>=

What is a project? A definition is provided by the ISO 21500: “A unique set of processes consisting of coordinated and controlled activities with start and end dates, performed to achieve project objectives.” The concept of processes seems to be at the crux of project management issues. The definition of how to manage a project stresses this point: “Project management is performed through processes”.

Specifically, the norm splits the method of managing a project into 39 elementary processes. Depending on the perspective, the latter are grouped into five process groups (Initiating, Planning, Controlling and Closing) or into ten subject groups (Integration, Stakeholder, Scope, Resource, Time, Cost, Risk, Quality, Procurement and Communication). The classification of these processes is provided in the following table.

{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 1 : Project management cross-referenced to process and subject groups (ISO 21500 : 2012)'''
|-
! rowspan="2" style="background: #ffedd3;" | SUBJECT GROUPS
! colspan="5" style="background: #ffedd3;" | PROCESS GROUPS
|-
|style="background: #fff4d3;" align=center | '''Initiating'''
|style="background: #fff4d3;" align=center| '''Planning'''
|style="background: #fff4d3;" align=center| '''Implementing'''
|style="background: #fff4d3;" align=center | '''Controlling'''
|style="background: #fff4d3;" align=center | '''Closing'''
|-
|style="background: #fff4d3;" |'''Integration'''
|
4.3.2 Develop project chart
|
4.3.3. Develop project plans
|
4.3.4 Direct project work
|
4.3.5 Control project work

4.3.6 Control changes
|
4.3.7 Close project or phase

4.3.8 Collect lessons learned
|-
|style="background: #fff4d3;" |'''Stakeholder'''
|
4.3.9 Identify stakeholders
|

|
4.3.10 Manage stakeholders
|

|

|-
|style="background: #fff4d3;" |'''Scope'''
|

|
4.3.11 Define scope

4.3.12 Create work breakdown structure

4.3.13 Define activities
|

|
4.3.14 Control scope
|

|-
|style="background: #fff4d3;" |'''Resource'''
|
4.3.15 Establish project team
|
4.3.16 Estimate resources

4.3.17 Define project organization
|
4.3.18 Develop project team
|
4.3.19 Control resources

4.3.20 Manage project team
|

|-
|style="background: #fff4d3;" |'''Time'''
|

|
4.3.21 Sequence activities

4.3.22 Estimate activity durations

4.3.23 Develop schedule
|

|
4.3.24 Control schedule
|

|-
|style="background: #fff4d3;" |'''Cost'''
|

|
4.3.25 Estimate costs

4.3.26 Develop budget
|

|
4.3.27 Control costs
|

|-
|style="background: #fff4d3;" |'''Risk'''
|

|
4.3.28 Identify risks

4.3.29 Asses risks
|
4.3.30 Treat risks
|
4.3.31 Control risks
|
|-
|style="background: #fff4d3;" |'''Quality'''
|

|
4.3.32 Plan quality
|
4.3.33 Perform quality assurance
|
4.3.34 Perform quality control
|

|-
|style="background: #fff4d3;" |'''Procurement'''
|

|
4.3.35 Plan procurements
|
4.3.36 Select suppliers
|
4.3.37 Administer procurements
|

|-
|style="background: #fff4d3;" |'''Communication'''
|

|
4.3.38 Plan communications
|
4.3.39 Distribute information
|
4.3.40 Manage communications
|

|}

The perspective of subject groups will be adopted to consider the management of DaimlerChrysler project. A subject is a theme in which processes are classified according to its related activities.

But before that, the project of DaimlerChrysler merger is regarded.

=DaimlerChrysler merger project <ref> Julia Hollmann, Aletéia de Moura Carpes, Thiago Antonio Beuron. ''The DaimlerChrylser Merger- A cultural mismatch ?'' Faculty Sponsor : Universität Paderborn- Germany, Department of International Business Studies. Universidade Federal de Santa Maria- Brazil, Department of Administration. 2010 </ref> =
==The genesis of the project==
In the late 90´s, the automotive industry had to face multiples challenges due to the excess manufacturing capacity, the growth of ecological awareness, and the retail revolution that empowered buyers. To strengthen their position during this crisis, the automakers Daimler-Benz and Chrysler Corporation decided to merge. This project aimed to combine each other´s product designs, manufacturing resources and distribution systems.
The following table shows the complementary of the two companies, which wanted to unit their knowledge and their market in order to gain a competitive advantage.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 2 : The complementary of the two companies '''
|
! style="background: #ffedd3;" |'''Daimler-Benz AG'''
! style="background: #ffedd3;" |'''Chrysler Corporation'''
|-
! style="background: #ffedd3;" |'''Head office location'''
|
Germany
|
United States
|-
! style="background: #ffedd3;" |'''Geographical reach'''
|
European market
|
U.S. American market
|-
! style="background: #ffedd3;" |'''Product ranges'''
|
Uncompromising quality products
|
Car models that meet the American demand for adventurousness
|}


Both synergies and economies of scale were likely to proliferate.

How the project was set up is explained in the following paragraph. However, its detailed description falls outside the scope of this article.

==The execution of the project==
On May 7th 1998, the signing of the combination agreement between Daimler-Benz and Chrysler was publicly announced. Daimler-Benz CEO Jürgen Schrempp described the union as "a merger of equals, a merger of growth, and a merger of unprecedented strength".
The equal status of the two organizations was reflected in the newly established entity name, DaimlerChrysler, as well as in the combination of the two former boards of management to form the one of DaimlerChrysler. Furthermore, it was agreed that Schrempp and Eaton, former CEO of the Chrysler Corporation, would jointly led the entity as co-chairmen and co-CEOs. It was also decided that Eaton would stay up to three years.
The two following tables provide more data about DaimlerChrysler right after the merger and the expected results of this project.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 3 : Characteristics of DaimlerChrysler right after the merger'''
|-
! style="background: #ffedd3;" |'''Number of employees '''
|442,000 employees
½ in Germany

1/3 in North America

1/6 spread across 200 countries around the world
|-
! style="background: #ffedd3;" |'''Daimler-Benz AG Market capitalization'''
|$ 92 billion
|}



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 4 : Expected results'''
! style="background: #ffedd3;" |Annual revenues of the combined company
|$ 132 billion
|-
! style="background: #ffedd3;" |Increase in sales
|13%
|-
! style="background: #ffedd3;" |Cost savings brought within 2 or 3 years
|$ 3,5 billion a year
|}


So far, this fusion appears to be very beneficial for all parties involved. However the wish for synergy effects never came true and the project drove Chrysler into chaos. In May 2007, the merger of Chrysler and Daimler-Benz was dissolved. Can this failure be ascribed to mismanagement?

The purpose of this article is now to point out which processes, related to the different subject groups definied in ISO 21500:2012 were disregarded and may have led to the project failure.

=The mismanagement of some subject groups <ref> Wanda Curlee, Robert L. Gordon . ''Complexity Theory and Project Management. ''. New York : Wiley, 2011, p. 129-133 </ref> =

Four subject groups will successively be considered : Integration, Time, Communication and Stakeholders. A mismanagement of some processes related to these four specific subject groups is namely to be seen.

==Integration <ref> Grässlin, Jürgen.''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> <ref> ''DaimlerChrysler confronts the challenges of global integration'', Human Resource Management International Digest, Vol 12 Iss :2 P.5-8</ref> ==

The Integration subject group includes the processes required to identify, define, combine, unify, coordinate, control and close the various activities and processes related to the project (ISO 21500:2012 - 4.2.3.2).

Within this merger, the unification and combination of all operations within the established entity needed to be achieved. To meet this target, a newly corporate culture had to be defined to align working styles. The latters namely radically differ due to major cultural differences, as shown in the following table.



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 5 : Comparison between the German and the American working styles'''
|-
|
! style="background: #ffedd3;" | '''Germany'''
! style="background: #ffedd3;"|'''United States'''
|-
! style="background: #ffedd3;" align="left" |'''Employee working style'''
| Work in a team-oriented environment
| Work individually
|-
! style="background: #ffedd3;" align="left" |'''Writing report'''
| Lengthy reports
| Little paper
|-
! style="background: #ffedd3;" align="left" |'''Decision-making process'''
|
Methodical, based on very detailed plans
|
Using creativity, based on trial-and-error method
|-
! style="background: #ffedd3;" align="left" |'''Meeting'''
|
Extended discussions
|
Short meeting
|-
! style="background: #ffedd3;" align="left" |'''Organizational structure'''
|
Pronounced hierarchy based on top-down-management
|
Flat organizational hierarchy stimulating empowerment of the employees
|-
! style="background: #ffedd3;" align="left" |'''Risk appetite'''
|
Risk adverse culture
|
Risk takers
|}


Due to the fact that this merger was a so-called `merger of equals´, the integration of the two cultures was to combine them to generate a new shared corporate one. It was namely vital that both organizations learn from each other to generate synergy effects. Managers have here a central role to play to define and coordinate the development of this new culture.

Eaton affirmed that it was at the top of the agenda and Thomas Stallkamp, Chrysler President during the negotiation phase, was charged with overseeing this integration process. Some effort went into harmonizing the two corporate cultures. Many seminars and workshops were organized to sensitizing the employees for working with new colleagues with diverging working methods. Furthermore, German was taught to many American managers.

However, given the large gap between the two organizations, it would appear that managers should have undertaken more activities and CEOs should have allocated more resources to bridge the chasm of cultural differences.

In fact, no strong and cohesive organizational culture was created, as illustrated in daily misunderstandings. For instance, the attention Daimler-Benz leaders paid to writing a leaflet sent to employee annoyed Chrysler executives. At the end of 1999, the resignation of Thomas Stallkamp, a 19-year veteran of Chrysler who was highly regarded, might be seen as a failure of the merger integration process after all the effort. Stallkamp is quoted as saying: <nowiki>“</nowiki>The majority of my career has been spent implementing supply chain management. I would like to continue to explore those areas at a less hectic pace<nowiki>”</nowiki>. Were both parties truly willing to cooperate wholeheartedly and to enter compromises to succeed in the numerous integration processes? A negative answer is the root cause of an unachieved integration.

==Time<ref> Sue Cartwright, Cary L. Cooper. ''Mergers and Acquisitions: The Human Factor Paperback'' . January 1, 1992 </ref>==

The Time subject group is all about managing the timely completion of the project. Feasible deadlines taking all known constraints into account need to be set. Processes covered by the latter subject group are the development of schedule for project activities estimating each activity duration, the progress monitoring and the schedule control.

One failure in managing time in DaimlerChrysler merger was that too little time was devoted to each activity. Let´s take a concrete example: Daimler-Benz and Chrysler began formal negotiations on January 12, 1998 and only five months later, the merger was announced worldwide. Susan Cartwright – past President of the British Academy Management – asserts that the period of time from the germ of the merger idea till an agreement is reached is estimated to last around two years. Speeding up the pre-merger preparation, the precise objectives of the fusion and the way to achieve them could not have been defined accurately.
Furthermore, the merger was completed on November 12, 1998. Time needed by employees to adapt to the new circumstances was not taken into account in the deadlines. One more mismanagement which is added to the others.

==Communication==
In the standard ISO 21500:2012, three key processes are defined to ensure appropriate exchange of project information: Plan communications, Distribute information and Manage communications. But within DaimlerChrysler project none of them were totally met. In order to appreciate the scale of the problem, it should be pointed out that even managers and CEOs experienced serious difficulties in discussing solutions and achieving a consensus. According to a Daimler-Benz executive, <nowiki>"</nowiki>Eaton went weeks without speaking with Jürgen [Schrempp]. He preferred to maintain lower-level contact. Jürgen, meanwhile, left Chrysler alone.<nowiki>"</nowiki> <ref> [http://mba.tuck.dartmouth.edu/pdf/2002-1-0071.pdf] Professor Sydney Finkelstein. ''The DaimlerChrysler Merger.''Tuck School of Business at Dartmouth. 2002 </ref> One would have expected that both CEOs would have share their different view in order to discover common goal and operate as an effective team at the top. Given the seeming clash of culture described in the first paragraph, it was crucial to start the discussion to create healthy relationship and release the company´s potential. The clearer the communication, the better issues are addressed. But with a lack of communication among leaders, no far-reaching communication plan could be implemented among all stakeholders involved, not to mention the distribution of the information. Both internal and external communications were chaotic. It is likely that the standard ISO 21500 would have make managers more aware of the processes related to communication required to be efficiently tackled.

==Stakeholders==
The stakeholder subject group is concerned with identifying and managing all stakeholders. Both their expectations and influence on the project need to be analyzed to classify them. The table 6 provides a power-interest matrix, which is crucial to draw up appropriate management strategies for effectively engaging with them. The external stakeholders are written in italics, the others are internal.

{| border="1" cellpadding="3" cellspacing="0" style="margin:auto;"
|+ '''Table 6 : Power and interest matrix'''
|-
! rowspan="2" style="background: #ffedd3;" | Level of interest
! colspan="5" style="background: #ffedd3;" | Level of power
|-
|style="background: #fff4d3;" align=center | ''' Low '''
|style="background: #fff4d3;" align=center| ''' High '''
|-
|style="background: #fff4d3;" align=center |'''High'''
|
[[Employee]]

Trade Union

''[[Clients]]''

''Suppliers''

''Government''

''Society''
|
Directors

Managers

''[[Stockholders]]''
|-
|style="background: #fff4d3;" align=center |'''Low'''
|
''Competitors''
|

|-
|}

To analyze the management of all of these stakeholders one by one would be tedious. However it is relevant to focus on several categories according to the table 6. Special focus will be laid on the stakeholders written in red in the table above. Therefore, both high power/high interest and low power/high interest stakeholders will be looked at. Furthermore, two of them are internal, whereas the other is internal.
All of them were significantly affected by the DaimlerChrysler project due to mismanagement.

===Employees===
Employees, low-power and high-interest stakeholders, must be kept informed and managers should ensure that no major issues are arising.
However, this was not the case in the DaimlerChrysler merger: employees felt overlooked, disregarded and left out of the merger process. But to what extent CEOs and managers were responsible in this climate of distrust and dislike?

First, soon after the merger, it became obvious that Daimler was taking over the whole company´s management. Chrysler President Stallkamp retirement at the end of 1999 was followed by the one of James P. Holdem, top-level executive of the Chrysler Group. They were replaced by two German managers: Dieter Zetsche and Wolfgang Bernhard. Being lowered to divisional status, it is understandable that American´s morale suffer from this German hegemony. Employee felt eclipsed and were disgusted. They also were worried that DaimlerChrysler would dismiss some of them. But the problems are not confined to be here. Indeed, Jürgen Schrempp attitude only made the situation worse. In autumn 2000, DaimlerChrysler CEO acknowledged in the German financial daily Handelsblatt that <nowiki>“</nowiki>The Merger of Equals statement was necessary in order to earn the support of Chrysler's workers and the American public, but it was never reality<nowiki>"</nowiki>. Many American regarded this statement as a betrayal, since he intended to deceive them from the outset. It appears clear that it is due to board of directors failure in acting responsibly towards these stakeholders that deep-seated distrust ran deep.

But this mismanagement of the project stakeholders can lead to far-reaching consequences on the project success itself. Indeed, it could be that some employees simply do not work as efficiently because they suppose the Board of Directors doesn’t care about the Chrysler entity – so why should they? Decreased performance would result in it.

It is to notice that even though the standard ''ISO 21500: 2012'' did not exist at that time, the fact that employee influence to succeed such a process was of importance was already known. MaryAnn Keller, founder and managing partner of MaryAnn Keller & Associates LLC, namely stated in June 1998 that <nowiki>“</nowiki>The success of any combination depends on the ability of the new organization to win over the hearts and minds of employees.<nowiki>”</nowiki> <ref> [http://murphylibrary.uwlax.edu/digital/jur/2002/carpiaux.pdf] Nicole Carpiaux. ''DaimlerChrysler : Wunderkind or Problem Child ?'' Faculty Sponsor : Leticia Peña, Department of Management. </ref> The managers of DaimlerChrysler should then be aware that is really a management issue to embrace workers instead to neglect them in order to obtain the best they can offer.

===Clients===
And what about the consumers, low-power and high interest stakeholders?

Once again, one could argue that managers failed to define as well as to meet their needs.
One example is given for illustration. At the time, the DaimlerChrysler A-Class was 1.25 to 2 times more expensive than similar vehicles sold by Volkswagen, Renault or Fiat. This higher price was not deterrent since clients were aware that Daimler-Benz primarily asset was quality and safety. However, in 1999, the A-class failed an emergency maneuver test conducted by a Swedish television station. <ref> Bill Vlasic, Bradley A. Stertz. ''Taken for a Ride: How Daimler-Benz Drove off with Chrysler''. Harper Paperbacks,
2001, p. 300.
</ref> Consequently, client´s satisfaction suddenly drop off the map. The DaimlerChrysler vehicle was considered as an overpriced car which did not achieve engineering excellence compared to the highly competitive European compact market. The crux of the problem may be that the German entity have tried to implant the American low development costs into its entities, disregarding the high expectations of the clients. This paragraph appears to prove that trying to generate synergy savings the managers failed in responding the customer´s needs.

===Stockholders===
Last but not least, the management of both high power and high interest stakeholders needs to be considered. Take the stockholders.

An overwhelming majority of them favored the project of merger in 1998. Approvals ratings reached 99.9% at Daimler-Benz and 97.5% at Chrysler. It may be inferred that, at the outset of the project, managers successfully took into account the processes required to satisfy the shareholders. It did not take long, however, for some of them to express their disappointment. This was the case for Kirk Kerkorian, the third largest proprietor of DailerChrysler stock and largest Chrysler shareholder before the merger. In November 2000, the latter filed a $9 billion lawsuit against DaimlerChrysler for falsifying the terms of the fusion as a “merger of equals”. He was upset with the German hegemony and stated he had voted to turn its shares for stock in DaimlerChrysler without having considered the American entity would be reduced to a mere division. Two months later, he cut his take in the merged company by a third. Even though the managers were not directly involved in this discontent, the lack of acting responsibly of the Board of the director is obvious.

To conclude, the completion of the processes related to each of these three stakeholders lacked efficiency. The managers failed in implementing the required activities to satisfy them and this will become a major hindrance to the project completion.

=Conclusion=
Many factors may affect the failure of the DaimlerChrysler project, but most of them may have been due to its mismanagement. Such a union was notoriously risky, especially due to the opposite companies it combined. To deliver the intent benefits, particular care should then have been taken by managers to tackle all the project management processes.

The use of the standard ''ISO 21500 : 2012'' was made to group the processes in term of Subject Group. It appears clear that there were some omissions, particularly regarding Integration, Time, Communication and Stakeholders. This standard has proven to be useful to analyze a project management, especially in case of cross-boarders project. It is a shame that such a unifying international approach was only established in 2012.

= References =

<references />

[[Category:Project Management]]
[[Category:Human Behaviour]]
[[Category:Complexity]]

Analyzing the failure of the DaimlerChrysler merger from a project management perspective

2014-12-01T19:41:39Z

Lyngby: /* Time Sue Cartwright, Cary L. Cooper. Mergers and Acquisitions: The Human Factor Paperback . January 1, 1992 */

'''Abstract'''

In the late 90´s, German Daimler-Benz AG and American Chrysler Corporation announced their intention to combine their strengths within a so-called `merger of equals´ <ref> Grässlin, Jürgen. ''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> . Becoming the fifth largest automaker in the world, both companies hoped to overcome together the automotive industry crisis. However, nothing worked out as planned, so much so that in 2007 Daimler-Benz sold all its shares of the Chrysler division.

Could the use of a norm have guaranteed the success of the DaimlerChrysler merger ? This question will be answered with regard to the ISO 21500:2012 guideline for project management.

According to the latter, a definition of project management and the processes it involves will be provided.Then, an analysis of the origin of DaimlerChrysler project will be carried out. It will also be shown to what extent this fusion was mismanaged with regard to the subject groups defined in the ISO 21500:2012. Last but not least the benefits of using this standard to successfully conduct a complex project will be discussed.

=Introduction=
In the early 21st century, no comprehensive standard on project management was accepted despite the substantial demand for project management skills. However, in 2006, the need for a unifying international approach was recognized by the International Organization for Standard (ISO). The work of over hundreds experts in project management from around the globe resulted in ''ISO 21500: 2012 -Guidance on project management''. This norm defines universal project management terminologies, as well as the principles and processes it involves. It provides a basic guide against which any organization can compare its current project management practices and determine areas in need of improvement. But how to practically apply it to a project? A specific example of project failure prior to introducing ISO 21500 will be provided to analyze which project management processes were disregarded. More particularly, the merger of the German automaker Daimler-Benz with the American Chrysler Corporation will be examined with the perspective of subject group.

= ISO 21500 : 2012, A focus on processes <ref> ISO 21500:2012 ''Guidance on project management'' </ref> <ref> Anton Zandhuis, Rommert Stellingwerf. ''ISO 215000, Guidance on Project managenent, A Pocket Guide''. Van Haren Publishing. 2013 </ref>=

What is a project? A definition is provided by the ISO 21500: “A unique set of processes consisting of coordinated and controlled activities with start and end dates, performed to achieve project objectives.” The concept of processes seems to be at the crux of project management issues. The definition of how to manage a project stresses this point: “Project management is performed through processes”.

Specifically, the norm splits the method of managing a project into 39 elementary processes. Depending on the perspective, the latter are grouped into five process groups (Initiating, Planning, Controlling and Closing) or into ten subject groups (Integration, Stakeholder, Scope, Resource, Time, Cost, Risk, Quality, Procurement and Communication). The classification of these processes is provided in the following table.

{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 1 : Project management cross-referenced to process and subject groups (ISO 21500 : 2012)'''
|-
! rowspan="2" style="background: #ffedd3;" | SUBJECT GROUPS
! colspan="5" style="background: #ffedd3;" | PROCESS GROUPS
|-
|style="background: #fff4d3;" align=center | '''Initiating'''
|style="background: #fff4d3;" align=center| '''Planning'''
|style="background: #fff4d3;" align=center| '''Implementing'''
|style="background: #fff4d3;" align=center | '''Controlling'''
|style="background: #fff4d3;" align=center | '''Closing'''
|-
|style="background: #fff4d3;" |'''Integration'''
|
4.3.2 Develop project chart
|
4.3.3. Develop project plans
|
4.3.4 Direct project work
|
4.3.5 Control project work

4.3.6 Control changes
|
4.3.7 Close project or phase

4.3.8 Collect lessons learned
|-
|style="background: #fff4d3;" |'''Stakeholder'''
|
4.3.9 Identify stakeholders
|

|
4.3.10 Manage stakeholders
|

|

|-
|style="background: #fff4d3;" |'''Scope'''
|

|
4.3.11 Define scope

4.3.12 Create work breakdown structure

4.3.13 Define activities
|

|
4.3.14 Control scope
|

|-
|style="background: #fff4d3;" |'''Resource'''
|
4.3.15 Establish project team
|
4.3.16 Estimate resources

4.3.17 Define project organization
|
4.3.18 Develop project team
|
4.3.19 Control resources

4.3.20 Manage project team
|

|-
|style="background: #fff4d3;" |'''Time'''
|

|
4.3.21 Sequence activities

4.3.22 Estimate activity durations

4.3.23 Develop schedule
|

|
4.3.24 Control schedule
|

|-
|style="background: #fff4d3;" |'''Cost'''
|

|
4.3.25 Estimate costs

4.3.26 Develop budget
|

|
4.3.27 Control costs
|

|-
|style="background: #fff4d3;" |'''Risk'''
|

|
4.3.28 Identify risks

4.3.29 Asses risks
|
4.3.30 Treat risks
|
4.3.31 Control risks
|
|-
|style="background: #fff4d3;" |'''Quality'''
|

|
4.3.32 Plan quality
|
4.3.33 Perform quality assurance
|
4.3.34 Perform quality control
|

|-
|style="background: #fff4d3;" |'''Procurement'''
|

|
4.3.35 Plan procurements
|
4.3.36 Select suppliers
|
4.3.37 Administer procurements
|

|-
|style="background: #fff4d3;" |'''Communication'''
|

|
4.3.38 Plan communications
|
4.3.39 Distribute information
|
4.3.40 Manage communications
|

|}

The perspective of subject groups will be adopted to consider the management of DaimlerChrysler project. A subject is a theme in which processes are classified according to its related activities.

But before that, the project of DaimlerChrysler merger is regarded.

=DaimlerChrysler merger project <ref> Julia Hollmann, Aletéia de Moura Carpes, Thiago Antonio Beuron. ''The DaimlerChrylser Merger- A cultural mismatch ?'' Faculty Sponsor : Universität Paderborn- Germany, Department of International Business Studies. Universidade Federal de Santa Maria- Brazil, Department of Administration. 2010 </ref> =
==The genesis of the project==
In the late 90´s, the automotive industry had to face multiples challenges due to the excess manufacturing capacity, the growth of ecological awareness, and the retail revolution that empowered buyers. To strengthen their position during this crisis, the automakers Daimler-Benz and Chrysler Corporation decided to merge. This project aimed to combine each other´s product designs, manufacturing resources and distribution systems.
The following table shows the complementary of the two companies, which wanted to unit their knowledge and their market in order to gain a competitive advantage.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 2 : The complementary of the two companies '''
|
! style="background: #ffedd3;" |'''Daimler-Benz AG'''
! style="background: #ffedd3;" |'''Chrysler Corporation'''
|-
! style="background: #ffedd3;" |'''Head office location'''
|
Germany
|
United States
|-
! style="background: #ffedd3;" |'''Geographical reach'''
|
European market
|
U.S. American market
|-
! style="background: #ffedd3;" |'''Product ranges'''
|
Uncompromising quality products
|
Car models that meet the American demand for adventurousness
|}


Both synergies and economies of scale were likely to proliferate.

How the project was set up is explained in the following paragraph. However, its detailed description falls outside the scope of this article.

==The execution of the project==
On May 7th 1998, the signing of the combination agreement between Daimler-Benz and Chrysler was publicly announced. Daimler-Benz CEO Jürgen Schrempp described the union as "a merger of equals, a merger of growth, and a merger of unprecedented strength".
The equal status of the two organizations was reflected in the newly established entity name, DaimlerChrysler, as well as in the combination of the two former boards of management to form the one of DaimlerChrysler. Furthermore, it was agreed that Schrempp and Eaton, former CEO of the Chrysler Corporation, would jointly led the entity as co-chairmen and co-CEOs. It was also decided that Eaton would stay up to three years.
The two following tables provide more data about DaimlerChrysler right after the merger and the expected results of this project.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 3 : Characteristics of DaimlerChrysler right after the merger'''
|-
! style="background: #ffedd3;" |'''Number of employees '''
|442,000 employees
½ in Germany

1/3 in North America

1/6 spread across 200 countries around the world
|-
! style="background: #ffedd3;" |'''Daimler-Benz AG Market capitalization'''
|$ 92 billion
|}



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 4 : Expected results'''
! style="background: #ffedd3;" |Annual revenues of the combined company
|$ 132 billion
|-
! style="background: #ffedd3;" |Increase in sales
|13%
|-
! style="background: #ffedd3;" |Cost savings brought within 2 or 3 years
|$ 3,5 billion a year
|}


So far, this fusion appears to be very beneficial for all parties involved. However the wish for synergy effects never came true and the project drove Chrysler into chaos. In May 2007, the merger of Chrysler and Daimler-Benz was dissolved. Can this failure be ascribed to mismanagement?

The purpose of this article is now to point out which processes, related to the different subject groups definied in ISO 21500:2012 were disregarded and may have led to the project failure.

=The mismanagement of some subject groups <ref> Wanda Curlee, Robert L. Gordon . ''Complexity Theory and Project Management. ''. New York : Wiley, 2011, p. 129-133 </ref> =

Four subject groups will successively be considered : Integration, Time, Communication and Stakeholders. A mismanagement of some processes related to these four specific subject groups is namely to be seen.

==Integration <ref> Grässlin, Jürgen.''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> <ref> ''DaimlerChrysler confronts the challenges of global integration'', Human Resource Management International Digest, Vol 12 Iss :2 P.5-8</ref> ==

The Integration subject group includes the processes required to identify, define, combine, unify, coordinate, control and close the various activities and processes related to the project (ISO 21500:2012 - 4.2.3.2).

Within this merger, the unification and combination of all operations within the established entity needed to be achieved. To meet this target, a newly corporate culture had to be defined to align working styles. The latters namely radically differ due to major cultural differences, as shown in the following table.



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 5 : Comparison between the German and the American working styles'''
|-
|
! style="background: #ffedd3;" | '''Germany'''
! style="background: #ffedd3;"|'''United States'''
|-
! style="background: #ffedd3;" align="left" |'''Employee working style'''
| Work in a team-oriented environment
| Work individually
|-
! style="background: #ffedd3;" align="left" |'''Writing report'''
| Lengthy reports
| Little paper
|-
! style="background: #ffedd3;" align="left" |'''Decision-making process'''
|
Methodical, based on very detailed plans
|
Using creativity, based on trial-and-error method
|-
! style="background: #ffedd3;" align="left" |'''Meeting'''
|
Extended discussions
|
Short meeting
|-
! style="background: #ffedd3;" align="left" |'''Organizational structure'''
|
Pronounced hierarchy based on top-down-management
|
Flat organizational hierarchy stimulating empowerment of the employees
|-
! style="background: #ffedd3;" align="left" |'''Risk appetite'''
|
Risk adverse culture
|
Risk takers
|}


Due to the fact that this merger was a so-called `merger of equals´, the integration of the two cultures was to combine them to generate a new shared corporate one. It was namely vital that both organizations learn from each other to generate synergy effects. Managers have here a central role to play to define and coordinate the development of this new culture.

Eaton affirmed that it was at the top of the agenda and Thomas Stallkamp, Chrysler President during the negotiation phase, was charged with overseeing this integration process. Some effort went into harmonizing the two corporate cultures. Many seminars and workshops were organized to sensitizing the employees for working with new colleagues with diverging working methods. Furthermore, German was taught to many American managers.

However, given the large gap between the two organizations, it would appear that managers should have undertaken more activities and CEOs should have allocated more resources to bridge the chasm of cultural differences.

In fact, no strong and cohesive organizational culture was created, as illustrated in daily misunderstandings. For instance, the attention Daimler-Benz leaders paid to writing a leaflet sent to employee annoyed Chrysler executives. At the end of 1999, the resignation of Thomas Stallkamp, a 19-year veteran of Chrysler who was highly regarded, might be seen as a failure of the merger integration process after all the effort. Stallkamp is quoted as saying: <nowiki>“</nowiki>The majority of my career has been spent implementing supply chain management. I would like to continue to explore those areas at a less hectic pace<nowiki>”</nowiki>. Were both parties truly willing to cooperate wholeheartedly and to enter compromises to succeed in the numerous integration processes? A negative answer is the root cause of an unachieved integration.

==Time<ref> Sue Cartwright, Cary L. Cooper. ''Mergers and Acquisitions: The Human Factor Paperback'' . January 1, 1992 </ref>==

The Time subject group is all about managing the timely completion of the project. Feasible deadlines taking all known constraints into account need to be set. Processes covered by the latter subject group are the development of schedule for project activities, estimating each activity duration, the progress monitoring and the schedule control.

One failure in managing time in DaimlerChrysler merger was that too little time was devoted to each activity. Let´s take a concrete example: Daimler-Benz and Chrysler began formal negotiations on January 12, 1998 and only five months later, the merger was announced worldwide. Susan Cartwright – past President of the British Academy Management – asserts that the period of time from the germ of the merger idea till an agreement is reached is estimated to last around two years. Speeding up the pre-merger preparation, the precise objectives of the fusion and the way to achieve them could not have been defined accurately.
Furthermore, the merger was completed on November 12, 1998. Time needed by employees to adapt to the new circumstances was not taken into account in the deadlines. One more mismanagement which is added to the others.

==Communication==
In the standard ISO 21500:2012, three key processes are defined to ensure appropriate exchange of project information: Plan communications, Distribute information and Manage communications. But within DaimlerChrysler project none of them were totally met. In order to appreciate the scale of the problem, it should be pointed out that even managers and CEOs experienced serious difficulties in discussing solutions and achieving a consensus. According to a Daimler-Benz executive, <nowiki>"</nowiki>Eaton went weeks without speaking with Jürgen [Schrempp]. He preferred to maintain lower-level contact. Jürgen, meanwhile, left Chrysler alone.<nowiki>"</nowiki> <ref> [http://mba.tuck.dartmouth.edu/pdf/2002-1-0071.pdf] Professor Sydney Finkelstein. ''The DaimlerChrysler Merger.''Tuck School of Business at Dartmouth. 2002 </ref> One would have expected that both CEOs would have share their different view in order to discover common goal and operate as an effective team at the top. Given the seeming clash of culture described in the first paragraph, it was crucial to start the discussion to create healthy relationship and release the company´s potential. The clearer the communication, the better issues are addressed. But with a lack of communication among leaders, no far-reaching communication plan could be implemented among all stakeholders involved, not to mention the distribution of the information. Both internal and external communications were chaotic. It is likely that the standard ISO 21500 would have make managers more aware of the processes related to communication required to be efficiently tackled.

==Stakeholders==
The stakeholder subject group is concerned with identifying and managing all stakeholders. Both their expectations and influence on the project need to be analyzed to classify them. The table 6 provides a power-interest matrix, which is crucial to draw up appropriate management strategies for effectively engaging with them. The external stakeholders are written in italics, the others are internal.

{| border="1" cellpadding="3" cellspacing="0" style="margin:auto;"
|+ '''Table 6 : Power and interest matrix'''
|-
! rowspan="2" style="background: #ffedd3;" | Level of interest
! colspan="5" style="background: #ffedd3;" | Level of power
|-
|style="background: #fff4d3;" align=center | ''' Low '''
|style="background: #fff4d3;" align=center| ''' High '''
|-
|style="background: #fff4d3;" align=center |'''High'''
|
[[Employee]]

Trade Union

''[[Clients]]''

''Suppliers''

''Government''

''Society''
|
Directors

Managers

''[[Stockholders]]''
|-
|style="background: #fff4d3;" align=center |'''Low'''
|
''Competitors''
|

|-
|}

To analyze the management of all of these stakeholders one by one would be tedious. However it is relevant to focus on several categories according to the table 6. Special focus will be laid on the stakeholders written in red in the table above. Therefore, both high power/high interest and low power/high interest stakeholders will be looked at. Furthermore, two of them are internal, whereas the other is internal.
All of them were significantly affected by the DaimlerChrysler project due to mismanagement.

===Employees===
Employees, low-power and high-interest stakeholders, must be kept informed and managers should ensure that no major issues are arising.
However, this was not the case in the DaimlerChrysler merger: employees felt overlooked, disregarded and left out of the merger process. But to what extent CEOs and managers were responsible in this climate of distrust and dislike?

First, soon after the merger, it became obvious that Daimler was taking over the whole company´s management. Chrysler President Stallkamp retirement at the end of 1999 was followed by the one of James P. Holdem, top-level executive of the Chrysler Group. They were replaced by two German managers: Dieter Zetsche and Wolfgang Bernhard. Being lowered to divisional status, it is understandable that American´s morale suffer from this German hegemony. Employee felt eclipsed and were disgusted. They also were worried that DaimlerChrysler would dismiss some of them. But the problems are not confined to be here. Indeed, Jürgen Schrempp attitude only made the situation worse. In autumn 2000, DaimlerChrysler CEO acknowledged in the German financial daily Handelsblatt that <nowiki>“</nowiki>The Merger of Equals statement was necessary in order to earn the support of Chrysler's workers and the American public, but it was never reality<nowiki>"</nowiki>. Many American regarded this statement as a betrayal, since he intended to deceive them from the outset. It appears clear that it is due to board of directors failure in acting responsibly towards these stakeholders that deep-seated distrust ran deep.

But this mismanagement of the project stakeholders can lead to far-reaching consequences on the project success itself. Indeed, it could be that some employees simply do not work as efficiently because they suppose the Board of Directors doesn’t care about the Chrysler entity – so why should they? Decreased performance would result in it.

It is to notice that even though the standard ''ISO 21500: 2012'' did not exist at that time, the fact that employee influence to succeed such a process was of importance was already known. MaryAnn Keller, founder and managing partner of MaryAnn Keller & Associates LLC, namely stated in June 1998 that <nowiki>“</nowiki>The success of any combination depends on the ability of the new organization to win over the hearts and minds of employees.<nowiki>”</nowiki> <ref> [http://murphylibrary.uwlax.edu/digital/jur/2002/carpiaux.pdf] Nicole Carpiaux. ''DaimlerChrysler : Wunderkind or Problem Child ?'' Faculty Sponsor : Leticia Peña, Department of Management. </ref> The managers of DaimlerChrysler should then be aware that is really a management issue to embrace workers instead to neglect them in order to obtain the best they can offer.

===Clients===
And what about the consumers, low-power and high interest stakeholders?

Once again, one could argue that managers failed to define as well as to meet their needs.
One example is given for illustration. At the time, the DaimlerChrysler A-Class was 1.25 to 2 times more expensive than similar vehicles sold by Volkswagen, Renault or Fiat. This higher price was not deterrent since clients were aware that Daimler-Benz primarily asset was quality and safety. However, in 1999, the A-class failed an emergency maneuver test conducted by a Swedish television station. <ref> Bill Vlasic, Bradley A. Stertz. ''Taken for a Ride: How Daimler-Benz Drove off with Chrysler''. Harper Paperbacks,
2001, p. 300.
</ref> Consequently, client´s satisfaction suddenly drop off the map. The DaimlerChrysler vehicle was considered as an overpriced car which did not achieve engineering excellence compared to the highly competitive European compact market. The crux of the problem may be that the German entity have tried to implant the American low development costs into its entities, disregarding the high expectations of the clients. This paragraph appears to prove that trying to generate synergy savings the managers failed in responding the customer´s needs.

===Stockholders===
Last but not least, the management of both high power and high interest stakeholders needs to be considered. Take the stockholders.

An overwhelming majority of them favored the project of merger in 1998. Approvals ratings reached 99.9% at Daimler-Benz and 97.5% at Chrysler. It may be inferred that, at the outset of the project, managers successfully took into account the processes required to satisfy the shareholders. It did not take long, however, for some of them to express their disappointment. This was the case for Kirk Kerkorian, the third largest proprietor of DailerChrysler stock and largest Chrysler shareholder before the merger. In November 2000, the latter filed a $9 billion lawsuit against DaimlerChrysler for falsifying the terms of the fusion as a “merger of equals”. He was upset with the German hegemony and stated he had voted to turn its shares for stock in DaimlerChrysler without having considered the American entity would be reduced to a mere division. Two months later, he cut his take in the merged company by a third. Even though the managers were not directly involved in this discontent, the lack of acting responsibly of the Board of the director is obvious.

To conclude, the completion of the processes related to each of these three stakeholders lacked efficiency. The managers failed in implementing the required activities to satisfy them and this will become a major hindrance to the project completion.

=Conclusion=
Many factors may affect the failure of the DaimlerChrysler project, but most of them may have been due to its mismanagement. Such a union was notoriously risky, especially due to the opposite companies it combined. To deliver the intent benefits, particular care should then have been taken by managers to tackle all the project management processes.

The use of the standard ''ISO 21500 : 2012'' was made to group the processes in term of Subject Group. It appears clear that there were some omissions, particularly regarding Integration, Time, Communication and Stakeholders. This standard has proven to be useful to analyze a project management, especially in case of cross-boarders project. It is a shame that such a unifying international approach was only established in 2012.

= References =

<references />

[[Category:Project Management]]
[[Category:Human Behaviour]]
[[Category:Complexity]]

Analyzing the failure of the DaimlerChrysler merger from a project management perspective

2014-12-01T19:41:19Z

'''Abstract'''

In the late 90´s, German Daimler-Benz AG and American Chrysler Corporation announced their intention to combine their strengths within a so-called `merger of equals´ <ref> Grässlin, Jürgen. ''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> . Becoming the fifth largest automaker in the world, both companies hoped to overcome together the automotive industry crisis. However, nothing worked out as planned, so much so that in 2007 Daimler-Benz sold all its shares of the Chrysler division.

Could the use of a norm have guaranteed the success of the DaimlerChrysler merger ? This question will be answered with regard to the ISO 21500:2012 guideline for project management.

According to the latter, a definition of project management and the processes it involves will be provided.Then, an analysis of the origin of DaimlerChrysler project will be carried out. It will also be shown to what extent this fusion was mismanaged with regard to the subject groups defined in the ISO 21500:2012. Last but not least the benefits of using this standard to successfully conduct a complex project will be discussed.

=Introduction=
In the early 21st century, no comprehensive standard on project management was accepted despite the substantial demand for project management skills. However, in 2006, the need for a unifying international approach was recognized by the International Organization for Standard (ISO). The work of over hundreds experts in project management from around the globe resulted in ''ISO 21500: 2012 -Guidance on project management''. This norm defines universal project management terminologies, as well as the principles and processes it involves. It provides a basic guide against which any organization can compare its current project management practices and determine areas in need of improvement. But how to practically apply it to a project? A specific example of project failure prior to introducing ISO 21500 will be provided to analyze which project management processes were disregarded. More particularly, the merger of the German automaker Daimler-Benz with the American Chrysler Corporation will be examined with the perspective of subject group.

= ISO 21500 : 2012, A focus on processes <ref> ISO 21500:2012 ''Guidance on project management'' </ref> <ref> Anton Zandhuis, Rommert Stellingwerf. ''ISO 215000, Guidance on Project managenent, A Pocket Guide''. Van Haren Publishing. 2013 </ref>=

What is a project? A definition is provided by the ISO 21500: “A unique set of processes consisting of coordinated and controlled activities with start and end dates, performed to achieve project objectives.” The concept of processes seems to be at the crux of project management issues. The definition of how to manage a project stresses this point: “Project management is performed through processes”.

Specifically, the norm splits the method of managing a project into 39 elementary processes. Depending on the perspective, the latter are grouped into five process groups (Initiating, Planning, Controlling and Closing) or into ten subject groups (Integration, Stakeholder, Scope, Resource, Time, Cost, Risk, Quality, Procurement and Communication). The classification of these processes is provided in the following table.

{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 1 : Project management cross-referenced to process and subject groups (ISO 21500 : 2012)'''
|-
! rowspan="2" style="background: #ffedd3;" | SUBJECT GROUPS
! colspan="5" style="background: #ffedd3;" | PROCESS GROUPS
|-
|style="background: #fff4d3;" align=center | '''Initiating'''
|style="background: #fff4d3;" align=center| '''Planning'''
|style="background: #fff4d3;" align=center| '''Implementing'''
|style="background: #fff4d3;" align=center | '''Controlling'''
|style="background: #fff4d3;" align=center | '''Closing'''
|-
|style="background: #fff4d3;" |'''Integration'''
|
4.3.2 Develop project chart
|
4.3.3. Develop project plans
|
4.3.4 Direct project work
|
4.3.5 Control project work

4.3.6 Control changes
|
4.3.7 Close project or phase

4.3.8 Collect lessons learned
|-
|style="background: #fff4d3;" |'''Stakeholder'''
|
4.3.9 Identify stakeholders
|

|
4.3.10 Manage stakeholders
|

|

|-
|style="background: #fff4d3;" |'''Scope'''
|

|
4.3.11 Define scope

4.3.12 Create work breakdown structure

4.3.13 Define activities
|

|
4.3.14 Control scope
|

|-
|style="background: #fff4d3;" |'''Resource'''
|
4.3.15 Establish project team
|
4.3.16 Estimate resources

4.3.17 Define project organization
|
4.3.18 Develop project team
|
4.3.19 Control resources

4.3.20 Manage project team
|

|-
|style="background: #fff4d3;" |'''Time'''
|

|
4.3.21 Sequence activities

4.3.22 Estimate activity durations

4.3.23 Develop schedule
|

|
4.3.24 Control schedule
|

|-
|style="background: #fff4d3;" |'''Cost'''
|

|
4.3.25 Estimate costs

4.3.26 Develop budget
|

|
4.3.27 Control costs
|

|-
|style="background: #fff4d3;" |'''Risk'''
|

|
4.3.28 Identify risks

4.3.29 Asses risks
|
4.3.30 Treat risks
|
4.3.31 Control risks
|
|-
|style="background: #fff4d3;" |'''Quality'''
|

|
4.3.32 Plan quality
|
4.3.33 Perform quality assurance
|
4.3.34 Perform quality control
|

|-
|style="background: #fff4d3;" |'''Procurement'''
|

|
4.3.35 Plan procurements
|
4.3.36 Select suppliers
|
4.3.37 Administer procurements
|

|-
|style="background: #fff4d3;" |'''Communication'''
|

|
4.3.38 Plan communications
|
4.3.39 Distribute information
|
4.3.40 Manage communications
|

|}

The perspective of subject groups will be adopted to consider the management of DaimlerChrysler project. A subject is a theme in which processes are classified according to its related activities.

But before that, the project of DaimlerChrysler merger is regarded.

=DaimlerChrysler merger project <ref> Julia Hollmann, Aletéia de Moura Carpes, Thiago Antonio Beuron. ''The DaimlerChrylser Merger- A cultural mismatch ?'' Faculty Sponsor : Universität Paderborn- Germany, Department of International Business Studies. Universidade Federal de Santa Maria- Brazil, Department of Administration. 2010 </ref> =
==The genesis of the project==
In the late 90´s, the automotive industry had to face multiples challenges due to the excess manufacturing capacity, the growth of ecological awareness, and the retail revolution that empowered buyers. To strengthen their position during this crisis, the automakers Daimler-Benz and Chrysler Corporation decided to merge. This project aimed to combine each other´s product designs, manufacturing resources and distribution systems.
The following table shows the complementary of the two companies, which wanted to unit their knowledge and their market in order to gain a competitive advantage.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 2 : The complementary of the two companies '''
|
! style="background: #ffedd3;" |'''Daimler-Benz AG'''
! style="background: #ffedd3;" |'''Chrysler Corporation'''
|-
! style="background: #ffedd3;" |'''Head office location'''
|
Germany
|
United States
|-
! style="background: #ffedd3;" |'''Geographical reach'''
|
European market
|
U.S. American market
|-
! style="background: #ffedd3;" |'''Product ranges'''
|
Uncompromising quality products
|
Car models that meet the American demand for adventurousness
|}


Both synergies and economies of scale were likely to proliferate.

How the project was set up is explained in the following paragraph. However, its detailed description falls outside the scope of this article.

==The execution of the project==
On May 7th 1998, the signing of the combination agreement between Daimler-Benz and Chrysler was publicly announced. Daimler-Benz CEO Jürgen Schrempp described the union as "a merger of equals, a merger of growth, and a merger of unprecedented strength".
The equal status of the two organizations was reflected in the newly established entity name, DaimlerChrysler, as well as in the combination of the two former boards of management to form the one of DaimlerChrysler. Furthermore, it was agreed that Schrempp and Eaton, former CEO of the Chrysler Corporation, would jointly led the entity as co-chairmen and co-CEOs. It was also decided that Eaton would stay up to three years.
The two following tables provide more data about DaimlerChrysler right after the merger and the expected results of this project.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 3 : Characteristics of DaimlerChrysler right after the merger'''
|-
! style="background: #ffedd3;" |'''Number of employees '''
|442,000 employees
½ in Germany

1/3 in North America

1/6 spread across 200 countries around the world
|-
! style="background: #ffedd3;" |'''Daimler-Benz AG Market capitalization'''
|$ 92 billion
|}



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 4 : Expected results'''
! style="background: #ffedd3;" |Annual revenues of the combined company
|$ 132 billion
|-
! style="background: #ffedd3;" |Increase in sales
|13%
|-
! style="background: #ffedd3;" |Cost savings brought within 2 or 3 years
|$ 3,5 billion a year
|}


So far, this fusion appears to be very beneficial for all parties involved. However the wish for synergy effects never came true and the project drove Chrysler into chaos. In May 2007, the merger of Chrysler and Daimler-Benz was dissolved. Can this failure be ascribed to mismanagement?

The purpose of this article is now to point out which processes, related to the different subject groups definied in ISO 21500:2012 were disregarded and may have led to the project failure.

=The mismanagement of some subject groups <ref> Wanda Curlee, Robert L. Gordon . ''Complexity Theory and Project Management. ''. New York : Wiley, 2011, p. 129-133 </ref> =

Four subject groups will successively be considered : Integration, Time, Communication and Stakeholders. A mismanagement of some processes related to these four specific subject groups is namely to be seen.

==Integration <ref> Grässlin, Jürgen.''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> <ref> ''DaimlerChrysler confronts the challenges of global integration'', Human Resource Management International Digest, Vol 12 Iss :2 P.5-8</ref> ==

The Integration subject group includes the processes required to identify, define, combine, unify, coordinate, control and close the various activities and processes related to the project (ISO 21500:2012 - 4.2.3.2).

Within this merger, the unification and combination of all operations within the established entity needed to be achieved. To meet this target, a newly corporate culture had to be defined to align working styles. The latters namely radically differ due to major cultural differences, as shown in the following table.



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 5 : Comparison between the German and the American working styles'''
|-
|
! style="background: #ffedd3;" | '''Germany'''
! style="background: #ffedd3;"|'''United States'''
|-
! style="background: #ffedd3;" align="left" |'''Employee working style'''
| Work in a team-oriented environment
| Work individually
|-
! style="background: #ffedd3;" align="left" |'''Writing report'''
| Lengthy reports
| Little paper
|-
! style="background: #ffedd3;" align="left" |'''Decision-making process'''
|
Methodical, based on very detailed plans
|
Using creativity, based on trial-and-error method
|-
! style="background: #ffedd3;" align="left" |'''Meeting'''
|
Extended discussions
|
Short meeting
|-
! style="background: #ffedd3;" align="left" |'''Organizational structure'''
|
Pronounced hierarchy based on top-down-management
|
Flat organizational hierarchy stimulating empowerment of the employees
|-
! style="background: #ffedd3;" align="left" |'''Risk appetite'''
|
Risk adverse culture
|
Risk takers
|}


Due to the fact that this merger was a so-called `merger of equals´, the integration of the two cultures was to combine them to generate a new shared corporate one. It was namely vital that both organizations learn from each other to generate synergy effects. Managers have here a central role to play to define and coordinate the development of this new culture.

Eaton affirmed that it was at the top of the agenda and Thomas Stallkamp, Chrysler President during the negotiation phase, was charged with overseeing this integration process. Some effort went into harmonizing the two corporate cultures. Many seminars and workshops were organized to sensitizing the employees for working with new colleagues with diverging working methods. Furthermore, German was taught to many American managers.

However, given the large gap between the two organizations, it would appear that managers should have undertaken more activities and CEOs should have allocated more resources to bridge the chasm of cultural differences.

In fact, no strong and cohesive organizational culture was created, as illustrated in daily misunderstandings. For instance, the attention Daimler-Benz leaders paid to writing a leaflet sent to employee annoyed Chrysler executives. At the end of 1999, the resignation of Thomas Stallkamp, a 19-year veteran of Chrysler who was highly regarded, might be seen as a failure of the merger integration process after all the effort. Stallkamp is quoted as saying: <nowiki>“</nowiki>The majority of my career has been spent implementing supply chain management. I would like to continue to explore those areas at a less hectic pace<nowiki>”</nowiki>. Were both parties truly willing to cooperate wholeheartedly and to enter compromises to succeed in the numerous integration processes? A negative answer is the root cause of an unachieved integration.

==Time<ref> Sue Cartwright, Cary L. Cooper. ''Mergers and Acquisitions: The Human Factor Paperback'' . January 1, 1992 </ref>==

The Time Subject group is all about managing the timely completion of the project. Feasible deadlines taking all known constraints into account need to be set. Processes covered by the latter subject group are the development of schedule for project activities, estimating each activity duration, the progress monitoring and the schedule control.

One failure in managing time in DaimlerChrysler merger was that too little time was devoted to each activity. Let´s take a concrete example: Daimler-Benz and Chrysler began formal negotiations on January 12, 1998 and only five months later, the merger was announced worldwide. Susan Cartwright – past President of the British Academy Management – asserts that the period of time from the germ of the merger idea till an agreement is reached is estimated to last around two years. Speeding up the pre-merger preparation, the precise objectives of the fusion and the way to achieve them could not have been defined accurately.
Furthermore, the merger was completed on November 12, 1998. Time needed by employees to adapt to the new circumstances was not taken into account in the deadlines. One more mismanagement which is added to the others.

==Communication==
In the standard ISO 21500:2012, three key processes are defined to ensure appropriate exchange of project information: Plan communications, Distribute information and Manage communications. But within DaimlerChrysler project none of them were totally met. In order to appreciate the scale of the problem, it should be pointed out that even managers and CEOs experienced serious difficulties in discussing solutions and achieving a consensus. According to a Daimler-Benz executive, <nowiki>"</nowiki>Eaton went weeks without speaking with Jürgen [Schrempp]. He preferred to maintain lower-level contact. Jürgen, meanwhile, left Chrysler alone.<nowiki>"</nowiki> <ref> [http://mba.tuck.dartmouth.edu/pdf/2002-1-0071.pdf] Professor Sydney Finkelstein. ''The DaimlerChrysler Merger.''Tuck School of Business at Dartmouth. 2002 </ref> One would have expected that both CEOs would have share their different view in order to discover common goal and operate as an effective team at the top. Given the seeming clash of culture described in the first paragraph, it was crucial to start the discussion to create healthy relationship and release the company´s potential. The clearer the communication, the better issues are addressed. But with a lack of communication among leaders, no far-reaching communication plan could be implemented among all stakeholders involved, not to mention the distribution of the information. Both internal and external communications were chaotic. It is likely that the standard ISO 21500 would have make managers more aware of the processes related to communication required to be efficiently tackled.

==Stakeholders==
The stakeholder subject group is concerned with identifying and managing all stakeholders. Both their expectations and influence on the project need to be analyzed to classify them. The table 6 provides a power-interest matrix, which is crucial to draw up appropriate management strategies for effectively engaging with them. The external stakeholders are written in italics, the others are internal.

{| border="1" cellpadding="3" cellspacing="0" style="margin:auto;"
|+ '''Table 6 : Power and interest matrix'''
|-
! rowspan="2" style="background: #ffedd3;" | Level of interest
! colspan="5" style="background: #ffedd3;" | Level of power
|-
|style="background: #fff4d3;" align=center | ''' Low '''
|style="background: #fff4d3;" align=center| ''' High '''
|-
|style="background: #fff4d3;" align=center |'''High'''
|
[[Employee]]

Trade Union

''[[Clients]]''

''Suppliers''

''Government''

''Society''
|
Directors

Managers

''[[Stockholders]]''
|-
|style="background: #fff4d3;" align=center |'''Low'''
|
''Competitors''
|

|-
|}

To analyze the management of all of these stakeholders one by one would be tedious. However it is relevant to focus on several categories according to the table 6. Special focus will be laid on the stakeholders written in red in the table above. Therefore, both high power/high interest and low power/high interest stakeholders will be looked at. Furthermore, two of them are internal, whereas the other is internal.
All of them were significantly affected by the DaimlerChrysler project due to mismanagement.

===Employees===
Employees, low-power and high-interest stakeholders, must be kept informed and managers should ensure that no major issues are arising.
However, this was not the case in the DaimlerChrysler merger: employees felt overlooked, disregarded and left out of the merger process. But to what extent CEOs and managers were responsible in this climate of distrust and dislike?

First, soon after the merger, it became obvious that Daimler was taking over the whole company´s management. Chrysler President Stallkamp retirement at the end of 1999 was followed by the one of James P. Holdem, top-level executive of the Chrysler Group. They were replaced by two German managers: Dieter Zetsche and Wolfgang Bernhard. Being lowered to divisional status, it is understandable that American´s morale suffer from this German hegemony. Employee felt eclipsed and were disgusted. They also were worried that DaimlerChrysler would dismiss some of them. But the problems are not confined to be here. Indeed, Jürgen Schrempp attitude only made the situation worse. In autumn 2000, DaimlerChrysler CEO acknowledged in the German financial daily Handelsblatt that <nowiki>“</nowiki>The Merger of Equals statement was necessary in order to earn the support of Chrysler's workers and the American public, but it was never reality<nowiki>"</nowiki>. Many American regarded this statement as a betrayal, since he intended to deceive them from the outset. It appears clear that it is due to board of directors failure in acting responsibly towards these stakeholders that deep-seated distrust ran deep.

But this mismanagement of the project stakeholders can lead to far-reaching consequences on the project success itself. Indeed, it could be that some employees simply do not work as efficiently because they suppose the Board of Directors doesn’t care about the Chrysler entity – so why should they? Decreased performance would result in it.

It is to notice that even though the standard ''ISO 21500: 2012'' did not exist at that time, the fact that employee influence to succeed such a process was of importance was already known. MaryAnn Keller, founder and managing partner of MaryAnn Keller & Associates LLC, namely stated in June 1998 that <nowiki>“</nowiki>The success of any combination depends on the ability of the new organization to win over the hearts and minds of employees.<nowiki>”</nowiki> <ref> [http://murphylibrary.uwlax.edu/digital/jur/2002/carpiaux.pdf] Nicole Carpiaux. ''DaimlerChrysler : Wunderkind or Problem Child ?'' Faculty Sponsor : Leticia Peña, Department of Management. </ref> The managers of DaimlerChrysler should then be aware that is really a management issue to embrace workers instead to neglect them in order to obtain the best they can offer.

===Clients===
And what about the consumers, low-power and high interest stakeholders?

Once again, one could argue that managers failed to define as well as to meet their needs.
One example is given for illustration. At the time, the DaimlerChrysler A-Class was 1.25 to 2 times more expensive than similar vehicles sold by Volkswagen, Renault or Fiat. This higher price was not deterrent since clients were aware that Daimler-Benz primarily asset was quality and safety. However, in 1999, the A-class failed an emergency maneuver test conducted by a Swedish television station. <ref> Bill Vlasic, Bradley A. Stertz. ''Taken for a Ride: How Daimler-Benz Drove off with Chrysler''. Harper Paperbacks,
2001, p. 300.
</ref> Consequently, client´s satisfaction suddenly drop off the map. The DaimlerChrysler vehicle was considered as an overpriced car which did not achieve engineering excellence compared to the highly competitive European compact market. The crux of the problem may be that the German entity have tried to implant the American low development costs into its entities, disregarding the high expectations of the clients. This paragraph appears to prove that trying to generate synergy savings the managers failed in responding the customer´s needs.

===Stockholders===
Last but not least, the management of both high power and high interest stakeholders needs to be considered. Take the stockholders.

An overwhelming majority of them favored the project of merger in 1998. Approvals ratings reached 99.9% at Daimler-Benz and 97.5% at Chrysler. It may be inferred that, at the outset of the project, managers successfully took into account the processes required to satisfy the shareholders. It did not take long, however, for some of them to express their disappointment. This was the case for Kirk Kerkorian, the third largest proprietor of DailerChrysler stock and largest Chrysler shareholder before the merger. In November 2000, the latter filed a $9 billion lawsuit against DaimlerChrysler for falsifying the terms of the fusion as a “merger of equals”. He was upset with the German hegemony and stated he had voted to turn its shares for stock in DaimlerChrysler without having considered the American entity would be reduced to a mere division. Two months later, he cut his take in the merged company by a third. Even though the managers were not directly involved in this discontent, the lack of acting responsibly of the Board of the director is obvious.

To conclude, the completion of the processes related to each of these three stakeholders lacked efficiency. The managers failed in implementing the required activities to satisfy them and this will become a major hindrance to the project completion.

=Conclusion=
Many factors may affect the failure of the DaimlerChrysler project, but most of them may have been due to its mismanagement. Such a union was notoriously risky, especially due to the opposite companies it combined. To deliver the intent benefits, particular care should then have been taken by managers to tackle all the project management processes.

The use of the standard ''ISO 21500 : 2012'' was made to group the processes in term of Subject Group. It appears clear that there were some omissions, particularly regarding Integration, Time, Communication and Stakeholders. This standard has proven to be useful to analyze a project management, especially in case of cross-boarders project. It is a shame that such a unifying international approach was only established in 2012.

= References =

<references />

[[Category:Project Management]]
[[Category:Human Behaviour]]
[[Category:Complexity]]

Analyzing the failure of the DaimlerChrysler merger from a project management perspective

2014-12-01T19:38:22Z

'''Abstract'''

In the late 90´s, German Daimler-Benz AG and American Chrysler Corporation announced their intention to combine their strengths within a so-called `merger of equals´ <ref> Grässlin, Jürgen. ''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> . Becoming the fifth largest automaker in the world, both companies hoped to overcome together the automotive industry crisis. However, nothing worked out as planned, so much so that in 2007 Daimler-Benz sold all its shares of the Chrysler division.

Could the use of a norm have guaranteed the success of the DaimlerChrysler merger ? This question will be answered with regard to the ISO 21500:2012 guideline for project management.

According to the latter, a definition of project management and the processes it involves will be provided.Then, an analysis of the origin of DaimlerChrysler project will be carried out. It will also be shown to what extent this fusion was mismanaged with regard to the subject groups defined in the ISO 21500:2012. Last but not least the benefits of using this standard to successfully conduct a complex project will be discussed.

=Introduction=
In the early 21st century, no comprehensive standard on project management was accepted despite the substantial demand for project management skills. However, in 2006, the need for a unifying international approach was recognized by the International Organization for Standard (ISO). The work of over hundreds experts in project management from around the globe resulted in ''ISO 21500: 2012 -Guidance on project management''. This norm defines universal project management terminologies, as well as the principles and processes it involves. It provides a basic guide against which any organization can compare its current project management practices and determine areas in need of improvement. But how to practically apply it to a project? A specific example of project failure prior to introducing ISO 21500 will be provided to analyze which project management processes were disregarded. More particularly, the merger of the German automaker Daimler-Benz with the American Chrysler Corporation will be examined with the perspective of subject group.

= ISO 21500 : 2012, A focus on processes <ref> ISO 21500:2012 ''Guidance on project management'' </ref> <ref> Anton Zandhuis, Rommert Stellingwerf. ''ISO 215000, Guidance on Project managenent, A Pocket Guide''. Van Haren Publishing. 2013 </ref>=

What is a project? A definition is provided by the ISO 21500: “A unique set of processes consisting of coordinated and controlled activities with start and end dates, performed to achieve project objectives.” The concept of processes seems to be at the crux of project management issues. The definition of how to manage a project stresses this point: “Project management is performed through processes”.

Specifically, the norm splits the method of managing a project into 39 elementary processes. Depending on the perspective, the latter are grouped into five process groups (Initiating, Planning, Controlling and Closing) or into ten subject groups (Integration, Stakeholder, Scope, Resource, Time, Cost, Risk, Quality, Procurement and Communication). The classification of these processes is provided in the following table.

{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 1 : Project management cross-referenced to process and subject groups (ISO 21500 : 2012)'''
|-
! rowspan="2" style="background: #ffedd3;" | SUBJECT GROUPS
! colspan="5" style="background: #ffedd3;" | PROCESS GROUPS
|-
|style="background: #fff4d3;" align=center | '''Initiating'''
|style="background: #fff4d3;" align=center| '''Planning'''
|style="background: #fff4d3;" align=center| '''Implementing'''
|style="background: #fff4d3;" align=center | '''Controlling'''
|style="background: #fff4d3;" align=center | '''Closing'''
|-
|style="background: #fff4d3;" |'''Integration'''
|
4.3.2 Develop project chart
|
4.3.3. Develop project plans
|
4.3.4 Direct project work
|
4.3.5 Control project work

4.3.6 Control changes
|
4.3.7 Close project or phase

4.3.8 Collect lessons learned
|-
|style="background: #fff4d3;" |'''Stakeholder'''
|
4.3.9 Identify stakeholders
|

|
4.3.10 Manage stakeholders
|

|

|-
|style="background: #fff4d3;" |'''Scope'''
|

|
4.3.11 Define scope

4.3.12 Create work breakdown structure

4.3.13 Define activities
|

|
4.3.14 Control scope
|

|-
|style="background: #fff4d3;" |'''Resource'''
|
4.3.15 Establish project team
|
4.3.16 Estimate resources

4.3.17 Define project organization
|
4.3.18 Develop project team
|
4.3.19 Control resources

4.3.20 Manage project team
|

|-
|style="background: #fff4d3;" |'''Time'''
|

|
4.3.21 Sequence activities

4.3.22 Estimate activity durations

4.3.23 Develop schedule
|

|
4.3.24 Control schedule
|

|-
|style="background: #fff4d3;" |'''Cost'''
|

|
4.3.25 Estimate costs

4.3.26 Develop budget
|

|
4.3.27 Control costs
|

|-
|style="background: #fff4d3;" |'''Risk'''
|

|
4.3.28 Identify risks

4.3.29 Asses risks
|
4.3.30 Treat risks
|
4.3.31 Control risks
|
|-
|style="background: #fff4d3;" |'''Quality'''
|

|
4.3.32 Plan quality
|
4.3.33 Perform quality assurance
|
4.3.34 Perform quality control
|

|-
|style="background: #fff4d3;" |'''Procurement'''
|

|
4.3.35 Plan procurements
|
4.3.36 Select suppliers
|
4.3.37 Administer procurements
|

|-
|style="background: #fff4d3;" |'''Communication'''
|

|
4.3.38 Plan communications
|
4.3.39 Distribute information
|
4.3.40 Manage communications
|

|}

The perspective of subject groups will be adopted to consider the management of DaimlerChrysler project. A subject is a theme in which processes are classified according to its related activities.

But before that, the project of DaimlerChrysler merger is regarded.

=DaimlerChrysler merger project <ref> Julia Hollmann, Aletéia de Moura Carpes, Thiago Antonio Beuron. ''The DaimlerChrylser Merger- A cultural mismatch ?'' Faculty Sponsor : Universität Paderborn- Germany, Department of International Business Studies. Universidade Federal de Santa Maria- Brazil, Department of Administration. 2010 </ref> =
==The genesis of the project==
In the late 90´s, the automotive industry had to face multiples challenges due to the excess manufacturing capacity, the growth of ecological awareness, and the retail revolution that empowered buyers. To strengthen their position during this crisis, the automakers Daimler-Benz and Chrysler Corporation decided to merge. This project aimed to combine each other´s product designs, manufacturing resources and distribution systems.
The following table shows the complementary of the two companies, which wanted to unit their knowledge and their market in order to gain a competitive advantage.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 2 : The complementary of the two companies '''
|
! style="background: #ffedd3;" |'''Daimler-Benz AG'''
! style="background: #ffedd3;" |'''Chrysler Corporation'''
|-
! style="background: #ffedd3;" |'''Head office location'''
|
Germany
|
United States
|-
! style="background: #ffedd3;" |'''Geographical reach'''
|
European market
|
U.S. American market
|-
! style="background: #ffedd3;" |'''Product ranges'''
|
Uncompromising quality products
|
Car models that meet the American demand for adventurousness
|}


Both synergies and economies of scale were likely to proliferate.

How the project was set up is explained in the following paragraph. However, its detailed description falls outside the scope of this article.

==The execution of the project==
On May 7th 1998, the signing of the combination agreement between Daimler-Benz and Chrysler was publicly announced. Daimler-Benz CEO Jürgen Schrempp described the union as "a merger of equals, a merger of growth, and a merger of unprecedented strength".
The equal status of the two organizations was reflected in the newly established entity name, DaimlerChrysler, as well as in the combination of the two former boards of management to form the one of DaimlerChrysler. Furthermore, it was agreed that Schrempp and Eaton, former CEO of the Chrysler Corporation, would jointly led the entity as co-chairmen and co-CEOs. It was also decided that Eaton would stay up to three years.
The two following tables provide more data about DaimlerChrysler right after the merger and the expected results of this project.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 3 : Characteristics of DaimlerChrysler right after the merger'''
|-
! style="background: #ffedd3;" |'''Number of employees '''
|442,000 employees
½ in Germany

1/3 in North America

1/6 spread across 200 countries around the world
|-
! style="background: #ffedd3;" |'''Daimler-Benz AG Market capitalization'''
|$ 92 billion
|}



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 4 : Expected results'''
! style="background: #ffedd3;" |Annual revenues of the combined company
|$ 132 billion
|-
! style="background: #ffedd3;" |Increase in sales
|13%
|-
! style="background: #ffedd3;" |Cost savings brought within 2 or 3 years
|$ 3,5 billion a year
|}


So far, this fusion appears to be very beneficial for all parties involved. However the wish for synergy effects never came true and the project drove Chrysler into chaos. In May 2007, the merger of Chrysler and Daimler-Benz was dissolved. Can this failure be ascribed to mismanagement?

The purpose of this article is now to point out which processes, related to the different subject groups definied in ISO 21500:2012 were disregarded and may have led to the project failure.

=The mismanagement of some subject groups <ref> Wanda Curlee, Robert L. Gordon . ''Complexity Theory and Project Management. ''. New York : Wiley, 2011, p. 129-133 </ref> =

Four subject groups will successively be considered : Integration, Time, Communication and Stakeholders. A mismanagement of some processes related to these four specific subject groups is namely to be seen.

==Integration <ref> Grässlin, Jürgen.''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> <ref> ''DaimlerChrysler confronts the challenges of global integration'', Human Resource Management International Digest, Vol 12 Iss :2 P.5-8</ref> ==

The Integration subject group includes the processes required to identify, define, combine, unify, coordinate, control and close the various activities and processes related to the project (ISO 21500:2012 - 4.2.3.2).

Within this merger, the unification and combination of all operations within the established entity needed to be achieved. To meet this target, a newly corporate culture had to be defined to align working styles. The latters namely radically differ due to major cultural differences, as shown in the following table.



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 5 : Comparison between the German and the American working styles'''
|-
|
! style="background: #ffedd3;" | '''Germany'''
! style="background: #ffedd3;"|'''United States'''
|-
! style="background: #ffedd3;" align="left" |'''Employee working style'''
| Work in a team-oriented environment
| Work individually
|-
! style="background: #ffedd3;" align="left" |'''Writing report'''
| Lengthy reports
| Little paper
|-
! style="background: #ffedd3;" align="left" |'''Decision-making process'''
|
Methodical, based on very detailed plans
|
Using creativity, based on trial-and-error method
|-
! style="background: #ffedd3;" align="left" |'''Meeting'''
|
Extended discussions
|
Short meeting
|-
! style="background: #ffedd3;" align="left" |'''Organizational structure'''
|
Pronounced hierarchy based on top-down-management
|
Flat organizational hierarchy stimulating empowerment of the employees
|-
! style="background: #ffedd3;" align="left" |'''Risk appetite'''
|
Risk adverse culture
|
Risk takers
|}


Due to the fact that this merger was a so-called `merger of equals´, the integration of the two cultures was to combine them to generate a new shared corporate one. It was namely vital that both organizations learn from each other to generate synergy effects. Managers have here a central role to play to define and coordinate the development of this new culture.

Eaton affirmed that it was at the top of the agenda and Thomas Stallkamp, Chrysler President during the negotiation phase, was charged with overseeing this integration process. Some effort went into harmonizing the two corporate cultures. Many seminars and workshops were organized to sensitizing the employees for working with new colleagues with diverging working methods. Furthermore, German was taught to many American managers.

However, given the large gap between the two organizations, it would appear that managers should have undertaken more activities and CEOs should have allocated more resources to bridge the chasm of cultural differences.

In fact, no strong and cohesive organizational culture was created, as illustrated in daily misunderstandings. For instance, the attention Daimler-Benz leaders paid to writing a leaflet sent to employee annoyed Chrysler executives. At the end of 1999, the resignation of Thomas Stallkamp, a 19-year veteran of Chrysler who was highly regarded, might be seen as failure of the merger integration process after all the effort. He is quoted as saying: <nowiki>“</nowiki>The majority of my career has been spent implementing supply chain management. I would like to continue to explore those areas at a less hectic pace<nowiki>”</nowiki>. Were both parties truly willing to cooperate wholeheartedly and to enter compromises to succeed in the numerous integration processes? A negative answer is the root cause of the unachieved integration.

==Time<ref> Sue Cartwright, Cary L. Cooper. ''Mergers and Acquisitions: The Human Factor Paperback'' . January 1, 1992 </ref>==

The Time Subject group is all about managing the timely completion of the project. Feasible deadlines taking all known constraints into account need to be set. Processes covered by the latter subject group are the development of schedule for project activities, estimating each activity duration, the progress monitoring and the schedule control.

One failure in managing time in DaimlerChrysler merger was that too little time was devoted to each activity. Let´s take a concrete example: Daimler-Benz and Chrysler began formal negotiations on January 12, 1998 and only five months later, the merger was announced worldwide. Susan Cartwright – past President of the British Academy Management – asserts that the period of time from the germ of the merger idea till an agreement is reached is estimated to last around two years. Speeding up the pre-merger preparation, the precise objectives of the fusion and the way to achieve them could not have been defined accurately.
Furthermore, the merger was completed on November 12, 1998. Time needed by employees to adapt to the new circumstances was not taken into account in the deadlines. One more mismanagement which is added to the others.

==Communication==
In the standard ISO 21500:2012, three key processes are defined to ensure appropriate exchange of project information: Plan communications, Distribute information and Manage communications. But within DaimlerChrysler project none of them were totally met. In order to appreciate the scale of the problem, it should be pointed out that even managers and CEOs experienced serious difficulties in discussing solutions and achieving a consensus. According to a Daimler-Benz executive, <nowiki>"</nowiki>Eaton went weeks without speaking with Jürgen [Schrempp]. He preferred to maintain lower-level contact. Jürgen, meanwhile, left Chrysler alone.<nowiki>"</nowiki> <ref> [http://mba.tuck.dartmouth.edu/pdf/2002-1-0071.pdf] Professor Sydney Finkelstein. ''The DaimlerChrysler Merger.''Tuck School of Business at Dartmouth. 2002 </ref> One would have expected that both CEOs would have share their different view in order to discover common goal and operate as an effective team at the top. Given the seeming clash of culture described in the first paragraph, it was crucial to start the discussion to create healthy relationship and release the company´s potential. The clearer the communication, the better issues are addressed. But with a lack of communication among leaders, no far-reaching communication plan could be implemented among all stakeholders involved, not to mention the distribution of the information. Both internal and external communications were chaotic. It is likely that the standard ISO 21500 would have make managers more aware of the processes related to communication required to be efficiently tackled.

==Stakeholders==
The stakeholder subject group is concerned with identifying and managing all stakeholders. Both their expectations and influence on the project need to be analyzed to classify them. The table 6 provides a power-interest matrix, which is crucial to draw up appropriate management strategies for effectively engaging with them. The external stakeholders are written in italics, the others are internal.

{| border="1" cellpadding="3" cellspacing="0" style="margin:auto;"
|+ '''Table 6 : Power and interest matrix'''
|-
! rowspan="2" style="background: #ffedd3;" | Level of interest
! colspan="5" style="background: #ffedd3;" | Level of power
|-
|style="background: #fff4d3;" align=center | ''' Low '''
|style="background: #fff4d3;" align=center| ''' High '''
|-
|style="background: #fff4d3;" align=center |'''High'''
|
[[Employee]]

Trade Union

''[[Clients]]''

''Suppliers''

''Government''

''Society''
|
Directors

Managers

''[[Stockholders]]''
|-
|style="background: #fff4d3;" align=center |'''Low'''
|
''Competitors''
|

|-
|}

To analyze the management of all of these stakeholders one by one would be tedious. However it is relevant to focus on several categories according to the table 6. Special focus will be laid on the stakeholders written in red in the table above. Therefore, both high power/high interest and low power/high interest stakeholders will be looked at. Furthermore, two of them are internal, whereas the other is internal.
All of them were significantly affected by the DaimlerChrysler project due to mismanagement.

===Employees===
Employees, low-power and high-interest stakeholders, must be kept informed and managers should ensure that no major issues are arising.
However, this was not the case in the DaimlerChrysler merger: employees felt overlooked, disregarded and left out of the merger process. But to what extent CEOs and managers were responsible in this climate of distrust and dislike?

First, soon after the merger, it became obvious that Daimler was taking over the whole company´s management. Chrysler President Stallkamp retirement at the end of 1999 was followed by the one of James P. Holdem, top-level executive of the Chrysler Group. They were replaced by two German managers: Dieter Zetsche and Wolfgang Bernhard. Being lowered to divisional status, it is understandable that American´s morale suffer from this German hegemony. Employee felt eclipsed and were disgusted. They also were worried that DaimlerChrysler would dismiss some of them. But the problems are not confined to be here. Indeed, Jürgen Schrempp attitude only made the situation worse. In autumn 2000, DaimlerChrysler CEO acknowledged in the German financial daily Handelsblatt that <nowiki>“</nowiki>The Merger of Equals statement was necessary in order to earn the support of Chrysler's workers and the American public, but it was never reality<nowiki>"</nowiki>. Many American regarded this statement as a betrayal, since he intended to deceive them from the outset. It appears clear that it is due to board of directors failure in acting responsibly towards these stakeholders that deep-seated distrust ran deep.

But this mismanagement of the project stakeholders can lead to far-reaching consequences on the project success itself. Indeed, it could be that some employees simply do not work as efficiently because they suppose the Board of Directors doesn’t care about the Chrysler entity – so why should they? Decreased performance would result in it.

It is to notice that even though the standard ''ISO 21500: 2012'' did not exist at that time, the fact that employee influence to succeed such a process was of importance was already known. MaryAnn Keller, founder and managing partner of MaryAnn Keller & Associates LLC, namely stated in June 1998 that <nowiki>“</nowiki>The success of any combination depends on the ability of the new organization to win over the hearts and minds of employees.<nowiki>”</nowiki> <ref> [http://murphylibrary.uwlax.edu/digital/jur/2002/carpiaux.pdf] Nicole Carpiaux. ''DaimlerChrysler : Wunderkind or Problem Child ?'' Faculty Sponsor : Leticia Peña, Department of Management. </ref> The managers of DaimlerChrysler should then be aware that is really a management issue to embrace workers instead to neglect them in order to obtain the best they can offer.

===Clients===
And what about the consumers, low-power and high interest stakeholders?

Once again, one could argue that managers failed to define as well as to meet their needs.
One example is given for illustration. At the time, the DaimlerChrysler A-Class was 1.25 to 2 times more expensive than similar vehicles sold by Volkswagen, Renault or Fiat. This higher price was not deterrent since clients were aware that Daimler-Benz primarily asset was quality and safety. However, in 1999, the A-class failed an emergency maneuver test conducted by a Swedish television station. <ref> Bill Vlasic, Bradley A. Stertz. ''Taken for a Ride: How Daimler-Benz Drove off with Chrysler''. Harper Paperbacks,
2001, p. 300.
</ref> Consequently, client´s satisfaction suddenly drop off the map. The DaimlerChrysler vehicle was considered as an overpriced car which did not achieve engineering excellence compared to the highly competitive European compact market. The crux of the problem may be that the German entity have tried to implant the American low development costs into its entities, disregarding the high expectations of the clients. This paragraph appears to prove that trying to generate synergy savings the managers failed in responding the customer´s needs.

===Stockholders===
Last but not least, the management of both high power and high interest stakeholders needs to be considered. Take the stockholders.

An overwhelming majority of them favored the project of merger in 1998. Approvals ratings reached 99.9% at Daimler-Benz and 97.5% at Chrysler. It may be inferred that, at the outset of the project, managers successfully took into account the processes required to satisfy the shareholders. It did not take long, however, for some of them to express their disappointment. This was the case for Kirk Kerkorian, the third largest proprietor of DailerChrysler stock and largest Chrysler shareholder before the merger. In November 2000, the latter filed a $9 billion lawsuit against DaimlerChrysler for falsifying the terms of the fusion as a “merger of equals”. He was upset with the German hegemony and stated he had voted to turn its shares for stock in DaimlerChrysler without having considered the American entity would be reduced to a mere division. Two months later, he cut his take in the merged company by a third. Even though the managers were not directly involved in this discontent, the lack of acting responsibly of the Board of the director is obvious.

To conclude, the completion of the processes related to each of these three stakeholders lacked efficiency. The managers failed in implementing the required activities to satisfy them and this will become a major hindrance to the project completion.

=Conclusion=
Many factors may affect the failure of the DaimlerChrysler project, but most of them may have been due to its mismanagement. Such a union was notoriously risky, especially due to the opposite companies it combined. To deliver the intent benefits, particular care should then have been taken by managers to tackle all the project management processes.

The use of the standard ''ISO 21500 : 2012'' was made to group the processes in term of Subject Group. It appears clear that there were some omissions, particularly regarding Integration, Time, Communication and Stakeholders. This standard has proven to be useful to analyze a project management, especially in case of cross-boarders project. It is a shame that such a unifying international approach was only established in 2012.

= References =

<references />

[[Category:Project Management]]
[[Category:Human Behaviour]]
[[Category:Complexity]]

Analyzing the failure of the DaimlerChrysler merger from a project management perspective

2014-12-01T19:36:35Z

'''Abstract'''

In the late 90´s, German Daimler-Benz AG and American Chrysler Corporation announced their intention to combine their strengths within a so-called `merger of equals´ <ref> Grässlin, Jürgen. ''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> . Becoming the fifth largest automaker in the world, both companies hoped to overcome together the automotive industry crisis. However, nothing worked out as planned, so much so that in 2007 Daimler-Benz sold all its shares of the Chrysler division.

Could the use of a norm have guaranteed the success of the DaimlerChrysler merger ? This question will be answered with regard to the ISO 21500:2012 guideline for project management.

According to the latter, a definition of project management and the processes it involves will be provided.Then, an analysis of the origin of DaimlerChrysler project will be carried out. It will also be shown to what extent this fusion was mismanaged with regard to the subject groups defined in the ISO 21500:2012. Last but not least the benefits of using this standard to successfully conduct a complex project will be discussed.

=Introduction=
In the early 21st century, no comprehensive standard on project management was accepted despite the substantial demand for project management skills. However, in 2006, the need for a unifying international approach was recognized by the International Organization for Standard (ISO). The work of over hundreds experts in project management from around the globe resulted in ''ISO 21500: 2012 -Guidance on project management''. This norm defines universal project management terminologies, as well as the principles and processes it involves. It provides a basic guide against which any organization can compare its current project management practices and determine areas in need of improvement. But how to practically apply it to a project? A specific example of project failure prior to introducing ISO 21500 will be provided to analyze which project management processes were disregarded. More particularly, the merger of the German automaker Daimler-Benz with the American Chrysler Corporation will be examined with the perspective of subject group.

= ISO 21500 : 2012, A focus on processes <ref> ISO 21500:2012 ''Guidance on project management'' </ref> <ref> Anton Zandhuis, Rommert Stellingwerf. ''ISO 215000, Guidance on Project managenent, A Pocket Guide''. Van Haren Publishing. 2013 </ref>=

What is a project? A definition is provided by the ISO 21500: “A unique set of processes consisting of coordinated and controlled activities with start and end dates, performed to achieve project objectives.” The concept of processes seems to be at the crux of project management issues. The definition of how to manage a project stresses this point: “Project management is performed through processes”.

Specifically, the norm splits the method of managing a project into 39 elementary processes. Depending on the perspective, the latter are grouped into five process groups (Initiating, Planning, Controlling and Closing) or into ten subject groups (Integration, Stakeholder, Scope, Resource, Time, Cost, Risk, Quality, Procurement and Communication). The classification of these processes is provided in the following table.

{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 1 : Project management cross-referenced to process and subject groups (ISO 21500 : 2012)'''
|-
! rowspan="2" style="background: #ffedd3;" | SUBJECT GROUPS
! colspan="5" style="background: #ffedd3;" | PROCESS GROUPS
|-
|style="background: #fff4d3;" align=center | '''Initiating'''
|style="background: #fff4d3;" align=center| '''Planning'''
|style="background: #fff4d3;" align=center| '''Implementing'''
|style="background: #fff4d3;" align=center | '''Controlling'''
|style="background: #fff4d3;" align=center | '''Closing'''
|-
|style="background: #fff4d3;" |'''Integration'''
|
4.3.2 Develop project chart
|
4.3.3. Develop project plans
|
4.3.4 Direct project work
|
4.3.5 Control project work

4.3.6 Control changes
|
4.3.7 Close project or phase

4.3.8 Collect lessons learned
|-
|style="background: #fff4d3;" |'''Stakeholder'''
|
4.3.9 Identify stakeholders
|

|
4.3.10 Manage stakeholders
|

|

|-
|style="background: #fff4d3;" |'''Scope'''
|

|
4.3.11 Define scope

4.3.12 Create work breakdown structure

4.3.13 Define activities
|

|
4.3.14 Control scope
|

|-
|style="background: #fff4d3;" |'''Resource'''
|
4.3.15 Establish project team
|
4.3.16 Estimate resources

4.3.17 Define project organization
|
4.3.18 Develop project team
|
4.3.19 Control resources

4.3.20 Manage project team
|

|-
|style="background: #fff4d3;" |'''Time'''
|

|
4.3.21 Sequence activities

4.3.22 Estimate activity durations

4.3.23 Develop schedule
|

|
4.3.24 Control schedule
|

|-
|style="background: #fff4d3;" |'''Cost'''
|

|
4.3.25 Estimate costs

4.3.26 Develop budget
|

|
4.3.27 Control costs
|

|-
|style="background: #fff4d3;" |'''Risk'''
|

|
4.3.28 Identify risks

4.3.29 Asses risks
|
4.3.30 Treat risks
|
4.3.31 Control risks
|
|-
|style="background: #fff4d3;" |'''Quality'''
|

|
4.3.32 Plan quality
|
4.3.33 Perform quality assurance
|
4.3.34 Perform quality control
|

|-
|style="background: #fff4d3;" |'''Procurement'''
|

|
4.3.35 Plan procurements
|
4.3.36 Select suppliers
|
4.3.37 Administer procurements
|

|-
|style="background: #fff4d3;" |'''Communication'''
|

|
4.3.38 Plan communications
|
4.3.39 Distribute information
|
4.3.40 Manage communications
|

|}

The perspective of subject groups will be adopted to consider the management of DaimlerChrysler project. A subject is a theme in which processes are classified according to its related activities.

But before that, the project of DaimlerChrysler merger is regarded.

=DaimlerChrysler merger project <ref> Julia Hollmann, Aletéia de Moura Carpes, Thiago Antonio Beuron. ''The DaimlerChrylser Merger- A cultural mismatch ?'' Faculty Sponsor : Universität Paderborn- Germany, Department of International Business Studies. Universidade Federal de Santa Maria- Brazil, Department of Administration. 2010 </ref> =
==The genesis of the project==
In the late 90´s, the automotive industry had to face multiples challenges due to the excess manufacturing capacity, the growth of ecological awareness, and the retail revolution that empowered buyers. To strengthen their position during this crisis, the automakers Daimler-Benz and Chrysler Corporation decided to merge. This project aimed to combine each other´s product designs, manufacturing resources and distribution systems.
The following table shows the complementary of the two companies, which wanted to unit their knowledge and their market in order to gain a competitive advantage.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 2 : The complementary of the two companies '''
|
! style="background: #ffedd3;" |'''Daimler-Benz AG'''
! style="background: #ffedd3;" |'''Chrysler Corporation'''
|-
! style="background: #ffedd3;" |'''Head office location'''
|
Germany
|
United States
|-
! style="background: #ffedd3;" |'''Geographical reach'''
|
European market
|
U.S. American market
|-
! style="background: #ffedd3;" |'''Product ranges'''
|
Uncompromising quality products
|
Car models that meet the American demand for adventurousness
|}


Both synergies and economies of scale were likely to proliferate.

How the project was set up is explained in the following paragraph. However, its detailed description falls outside the scope of this article.

==The execution of the project==
On May 7th 1998, the signing of the combination agreement between Daimler-Benz and Chrysler was publicly announced. Daimler-Benz CEO Jürgen Schrempp described the union as "a merger of equals, a merger of growth, and a merger of unprecedented strength".
The equal status of the two organizations was reflected in the newly established entity name, DaimlerChrysler, as well as in the combination of the two former boards of management to form the one of DaimlerChrysler. Furthermore, it was agreed that Schrempp and Eaton, former CEO of the Chrysler Corporation, would jointly led the entity as co-chairmen and co-CEOs. It was also decided that Eaton would stay up to three years.
The two following tables provide more data about DaimlerChrysler right after the merger and the expected results of this project.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 3 : Characteristics of DaimlerChrysler right after the merger'''
|-
! style="background: #ffedd3;" |'''Number of employees '''
|442,000 employees
½ in Germany

1/3 in North America

1/6 spread across 200 countries around the world
|-
! style="background: #ffedd3;" |'''Daimler-Benz AG Market capitalization'''
|$ 92 billion
|}



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 4 : Expected results'''
! style="background: #ffedd3;" |Annual revenues of the combined company
|$ 132 billion
|-
! style="background: #ffedd3;" |Increase in sales
|13%
|-
! style="background: #ffedd3;" |Cost savings brought within 2 or 3 years
|$ 3,5 billion a year
|}


So far, this fusion appears to be very beneficial for all parties involved. However the wish for synergy effects never came true and the project drove Chrysler into chaos. In May 2007, the merger of Chrysler and Daimler-Benz was dissolved. Can this failure be ascribed to mismanagement?

The purpose of this article is now to point out which processes, related to the different subject groups definied in ISO 21500:2012 were disregarded and may have led to the project failure.

=The mismanagement of some subject groups <ref> Wanda Curlee, Robert L. Gordon . ''Complexity Theory and Project Management. ''. New York : Wiley, 2011, p. 129-133 </ref> =

Four subject groups will successively be considered : Integration, Time, Communication and Stakeholders. A mismanagement of some processes related to these four specific subject groups is namely to be seen.

==Integration <ref> Grässlin, Jürgen.''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> <ref> ''DaimlerChrysler confronts the challenges of global integration'', Human Resource Management International Digest, Vol 12 Iss :2 P.5-8</ref> ==

The Integration subject group includes the processes required to identify, define, combine, unify, coordinate, control and close the various activities and processes related to the project (ISO 21500:2012 - 4.2.3.2).

Within this merger, the unification and combination of all operations within the established entity needed to be achieved. To meet this target, a newly corporate culture had to be defined to align working styles. The latters namely radically differ due to major cultural differences, as shown in the following table.



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 5 : Comparison between the German and the American working styles'''
|-
|
! style="background: #ffedd3;" | '''Germany'''
! style="background: #ffedd3;"|'''United States'''
|-
! style="background: #ffedd3;" align="left" |'''Employee working style'''
| Work in a team-oriented environment
| Work individually
|-
! style="background: #ffedd3;" align="left" |'''Writing report'''
| Lengthy reports
| Little paper
|-
! style="background: #ffedd3;" align="left" |'''Decision-making process'''
|
Methodical, based on very detailed plans
|
Using creativity, based on trial-and-error method
|-
! style="background: #ffedd3;" align="left" |'''Meeting'''
|
Extended discussions
|
Short meeting
|-
! style="background: #ffedd3;" align="left" |'''Organizational structure'''
|
Pronounced hierarchy based on top-down-management
|
Flat organizational hierarchy stimulating empowerment of the employees
|-
! style="background: #ffedd3;" align="left" |'''Risk appetite'''
|
Risk adverse culture
|
Risk takers
|}


Due to the fact that this merger was a so-called `merger of equals´, the integration of the two cultures was to combine them to generate a new shared corporate one. It was namely vital that both organizations learn from each other to generate synergy effects. Managers have here a central role to play to define and coordinate the development of this new culture.

Eaton affirmed that it was at the top of the agenda and Thomas Stallkamp, Chrysler President during the negotiation phase, was charged with overseeing this integration process. Some effort went into harmonizing the two corporate cultures. Many seminars and workshops were organized to sensitizing the employees for working with new colleagues with a diverging working methods. Furthermore, German was taught to many American managers.

However, given the large gap between the two organizations, it would appear that managers should have undertaken more activities and CEOs should have allocated more resources to bridge the chasm of cultural differences.

In fact, no strong and cohesive organizational culture was created, as illustrated in daily misunderstandings. For instance, the attention Daimler-Benz leaders paid to writing a leaflet sent to employee annoyed Chrysler executives. At the end of 1999, the resignation of Thomas Stallkamp, a 19-year veteran of Chrysler who was highly regarded, might be seen as failure of the merger integration process after all the effort. He is quoted as saying: <nowiki>“</nowiki>The majority of my career has been spent implementing supply chain management. I would like to continue to explore those areas at a less hectic pace<nowiki>”</nowiki>. Were both parties truly willing to cooperate wholeheartedly and to enter compromises to succeed in the numerous integration processes? A negative answer is the root cause of the unachieved integration.

==Time<ref> Sue Cartwright, Cary L. Cooper. ''Mergers and Acquisitions: The Human Factor Paperback'' . January 1, 1992 </ref>==

The Time Subject group is all about managing the timely completion of the project. Feasible deadlines taking all known constraints into account need to be set. Processes covered by the latter subject group are the development of schedule for project activities, estimating each activity duration, the progress monitoring and the schedule control.

One failure in managing time in DaimlerChrysler merger was that too little time was devoted to each activity. Let´s take a concrete example: Daimler-Benz and Chrysler began formal negotiations on January 12, 1998 and only five months later, the merger was announced worldwide. Susan Cartwright – past President of the British Academy Management – asserts that the period of time from the germ of the merger idea till an agreement is reached is estimated to last around two years. Speeding up the pre-merger preparation, the precise objectives of the fusion and the way to achieve them could not have been defined accurately.
Furthermore, the merger was completed on November 12, 1998. Time needed by employees to adapt to the new circumstances was not taken into account in the deadlines. One more mismanagement which is added to the others.

==Communication==
In the standard ISO 21500:2012, three key processes are defined to ensure appropriate exchange of project information: Plan communications, Distribute information and Manage communications. But within DaimlerChrysler project none of them were totally met. In order to appreciate the scale of the problem, it should be pointed out that even managers and CEOs experienced serious difficulties in discussing solutions and achieving a consensus. According to a Daimler-Benz executive, <nowiki>"</nowiki>Eaton went weeks without speaking with Jürgen [Schrempp]. He preferred to maintain lower-level contact. Jürgen, meanwhile, left Chrysler alone.<nowiki>"</nowiki> <ref> [http://mba.tuck.dartmouth.edu/pdf/2002-1-0071.pdf] Professor Sydney Finkelstein. ''The DaimlerChrysler Merger.''Tuck School of Business at Dartmouth. 2002 </ref> One would have expected that both CEOs would have share their different view in order to discover common goal and operate as an effective team at the top. Given the seeming clash of culture described in the first paragraph, it was crucial to start the discussion to create healthy relationship and release the company´s potential. The clearer the communication, the better issues are addressed. But with a lack of communication among leaders, no far-reaching communication plan could be implemented among all stakeholders involved, not to mention the distribution of the information. Both internal and external communications were chaotic. It is likely that the standard ISO 21500 would have make managers more aware of the processes related to communication required to be efficiently tackled.

==Stakeholders==
The stakeholder subject group is concerned with identifying and managing all stakeholders. Both their expectations and influence on the project need to be analyzed to classify them. The table 6 provides a power-interest matrix, which is crucial to draw up appropriate management strategies for effectively engaging with them. The external stakeholders are written in italics, the others are internal.

{| border="1" cellpadding="3" cellspacing="0" style="margin:auto;"
|+ '''Table 6 : Power and interest matrix'''
|-
! rowspan="2" style="background: #ffedd3;" | Level of interest
! colspan="5" style="background: #ffedd3;" | Level of power
|-
|style="background: #fff4d3;" align=center | ''' Low '''
|style="background: #fff4d3;" align=center| ''' High '''
|-
|style="background: #fff4d3;" align=center |'''High'''
|
[[Employee]]

Trade Union

''[[Clients]]''

''Suppliers''

''Government''

''Society''
|
Directors

Managers

''[[Stockholders]]''
|-
|style="background: #fff4d3;" align=center |'''Low'''
|
''Competitors''
|

|-
|}

To analyze the management of all of these stakeholders one by one would be tedious. However it is relevant to focus on several categories according to the table 6. Special focus will be laid on the stakeholders written in red in the table above. Therefore, both high power/high interest and low power/high interest stakeholders will be looked at. Furthermore, two of them are internal, whereas the other is internal.
All of them were significantly affected by the DaimlerChrysler project due to mismanagement.

===Employees===
Employees, low-power and high-interest stakeholders, must be kept informed and managers should ensure that no major issues are arising.
However, this was not the case in the DaimlerChrysler merger: employees felt overlooked, disregarded and left out of the merger process. But to what extent CEOs and managers were responsible in this climate of distrust and dislike?

First, soon after the merger, it became obvious that Daimler was taking over the whole company´s management. Chrysler President Stallkamp retirement at the end of 1999 was followed by the one of James P. Holdem, top-level executive of the Chrysler Group. They were replaced by two German managers: Dieter Zetsche and Wolfgang Bernhard. Being lowered to divisional status, it is understandable that American´s morale suffer from this German hegemony. Employee felt eclipsed and were disgusted. They also were worried that DaimlerChrysler would dismiss some of them. But the problems are not confined to be here. Indeed, Jürgen Schrempp attitude only made the situation worse. In autumn 2000, DaimlerChrysler CEO acknowledged in the German financial daily Handelsblatt that <nowiki>“</nowiki>The Merger of Equals statement was necessary in order to earn the support of Chrysler's workers and the American public, but it was never reality<nowiki>"</nowiki>. Many American regarded this statement as a betrayal, since he intended to deceive them from the outset. It appears clear that it is due to board of directors failure in acting responsibly towards these stakeholders that deep-seated distrust ran deep.

But this mismanagement of the project stakeholders can lead to far-reaching consequences on the project success itself. Indeed, it could be that some employees simply do not work as efficiently because they suppose the Board of Directors doesn’t care about the Chrysler entity – so why should they? Decreased performance would result in it.

It is to notice that even though the standard ''ISO 21500: 2012'' did not exist at that time, the fact that employee influence to succeed such a process was of importance was already known. MaryAnn Keller, founder and managing partner of MaryAnn Keller & Associates LLC, namely stated in June 1998 that <nowiki>“</nowiki>The success of any combination depends on the ability of the new organization to win over the hearts and minds of employees.<nowiki>”</nowiki> <ref> [http://murphylibrary.uwlax.edu/digital/jur/2002/carpiaux.pdf] Nicole Carpiaux. ''DaimlerChrysler : Wunderkind or Problem Child ?'' Faculty Sponsor : Leticia Peña, Department of Management. </ref> The managers of DaimlerChrysler should then be aware that is really a management issue to embrace workers instead to neglect them in order to obtain the best they can offer.

===Clients===
And what about the consumers, low-power and high interest stakeholders?

Once again, one could argue that managers failed to define as well as to meet their needs.
One example is given for illustration. At the time, the DaimlerChrysler A-Class was 1.25 to 2 times more expensive than similar vehicles sold by Volkswagen, Renault or Fiat. This higher price was not deterrent since clients were aware that Daimler-Benz primarily asset was quality and safety. However, in 1999, the A-class failed an emergency maneuver test conducted by a Swedish television station. <ref> Bill Vlasic, Bradley A. Stertz. ''Taken for a Ride: How Daimler-Benz Drove off with Chrysler''. Harper Paperbacks,
2001, p. 300.
</ref> Consequently, client´s satisfaction suddenly drop off the map. The DaimlerChrysler vehicle was considered as an overpriced car which did not achieve engineering excellence compared to the highly competitive European compact market. The crux of the problem may be that the German entity have tried to implant the American low development costs into its entities, disregarding the high expectations of the clients. This paragraph appears to prove that trying to generate synergy savings the managers failed in responding the customer´s needs.

===Stockholders===
Last but not least, the management of both high power and high interest stakeholders needs to be considered. Take the stockholders.

An overwhelming majority of them favored the project of merger in 1998. Approvals ratings reached 99.9% at Daimler-Benz and 97.5% at Chrysler. It may be inferred that, at the outset of the project, managers successfully took into account the processes required to satisfy the shareholders. It did not take long, however, for some of them to express their disappointment. This was the case for Kirk Kerkorian, the third largest proprietor of DailerChrysler stock and largest Chrysler shareholder before the merger. In November 2000, the latter filed a $9 billion lawsuit against DaimlerChrysler for falsifying the terms of the fusion as a “merger of equals”. He was upset with the German hegemony and stated he had voted to turn its shares for stock in DaimlerChrysler without having considered the American entity would be reduced to a mere division. Two months later, he cut his take in the merged company by a third. Even though the managers were not directly involved in this discontent, the lack of acting responsibly of the Board of the director is obvious.

To conclude, the completion of the processes related to each of these three stakeholders lacked efficiency. The managers failed in implementing the required activities to satisfy them and this will become a major hindrance to the project completion.

=Conclusion=
Many factors may affect the failure of the DaimlerChrysler project, but most of them may have been due to its mismanagement. Such a union was notoriously risky, especially due to the opposite companies it combined. To deliver the intent benefits, particular care should then have been taken by managers to tackle all the project management processes.

The use of the standard ''ISO 21500 : 2012'' was made to group the processes in term of Subject Group. It appears clear that there were some omissions, particularly regarding Integration, Time, Communication and Stakeholders. This standard has proven to be useful to analyze a project management, especially in case of cross-boarders project. It is a shame that such a unifying international approach was only established in 2012.

= References =

<references />

[[Category:Project Management]]
[[Category:Human Behaviour]]
[[Category:Complexity]]

Analyzing the failure of the DaimlerChrysler merger from a project management perspective

2014-12-01T19:33:56Z

Lyngby: /* The mismanagement of some subject groups Wanda Curlee, Robert L. Gordon . Complexity Theory and Project Management. . New York : Wiley, 2011, p. 129-133 */

'''Abstract'''

In the late 90´s, German Daimler-Benz AG and American Chrysler Corporation announced their intention to combine their strengths within a so-called `merger of equals´ <ref> Grässlin, Jürgen. ''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> . Becoming the fifth largest automaker in the world, both companies hoped to overcome together the automotive industry crisis. However, nothing worked out as planned, so much so that in 2007 Daimler-Benz sold all its shares of the Chrysler division.

Could the use of a norm have guaranteed the success of the DaimlerChrysler merger ? This question will be answered with regard to the ISO 21500:2012 guideline for project management.

According to the latter, a definition of project management and the processes it involves will be provided.Then, an analysis of the origin of DaimlerChrysler project will be carried out. It will also be shown to what extent this fusion was mismanaged with regard to the subject groups defined in the ISO 21500:2012. Last but not least the benefits of using this standard to successfully conduct a complex project will be discussed.

=Introduction=
In the early 21st century, no comprehensive standard on project management was accepted despite the substantial demand for project management skills. However, in 2006, the need for a unifying international approach was recognized by the International Organization for Standard (ISO). The work of over hundreds experts in project management from around the globe resulted in ''ISO 21500: 2012 -Guidance on project management''. This norm defines universal project management terminologies, as well as the principles and processes it involves. It provides a basic guide against which any organization can compare its current project management practices and determine areas in need of improvement. But how to practically apply it to a project? A specific example of project failure prior to introducing ISO 21500 will be provided to analyze which project management processes were disregarded. More particularly, the merger of the German automaker Daimler-Benz with the American Chrysler Corporation will be examined with the perspective of subject group.

= ISO 21500 : 2012, A focus on processes <ref> ISO 21500:2012 ''Guidance on project management'' </ref> <ref> Anton Zandhuis, Rommert Stellingwerf. ''ISO 215000, Guidance on Project managenent, A Pocket Guide''. Van Haren Publishing. 2013 </ref>=

What is a project? A definition is provided by the ISO 21500: “A unique set of processes consisting of coordinated and controlled activities with start and end dates, performed to achieve project objectives.” The concept of processes seems to be at the crux of project management issues. The definition of how to manage a project stresses this point: “Project management is performed through processes”.

Specifically, the norm splits the method of managing a project into 39 elementary processes. Depending on the perspective, the latter are grouped into five process groups (Initiating, Planning, Controlling and Closing) or into ten subject groups (Integration, Stakeholder, Scope, Resource, Time, Cost, Risk, Quality, Procurement and Communication). The classification of these processes is provided in the following table.

{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 1 : Project management cross-referenced to process and subject groups (ISO 21500 : 2012)'''
|-
! rowspan="2" style="background: #ffedd3;" | SUBJECT GROUPS
! colspan="5" style="background: #ffedd3;" | PROCESS GROUPS
|-
|style="background: #fff4d3;" align=center | '''Initiating'''
|style="background: #fff4d3;" align=center| '''Planning'''
|style="background: #fff4d3;" align=center| '''Implementing'''
|style="background: #fff4d3;" align=center | '''Controlling'''
|style="background: #fff4d3;" align=center | '''Closing'''
|-
|style="background: #fff4d3;" |'''Integration'''
|
4.3.2 Develop project chart
|
4.3.3. Develop project plans
|
4.3.4 Direct project work
|
4.3.5 Control project work

4.3.6 Control changes
|
4.3.7 Close project or phase

4.3.8 Collect lessons learned
|-
|style="background: #fff4d3;" |'''Stakeholder'''
|
4.3.9 Identify stakeholders
|

|
4.3.10 Manage stakeholders
|

|

|-
|style="background: #fff4d3;" |'''Scope'''
|

|
4.3.11 Define scope

4.3.12 Create work breakdown structure

4.3.13 Define activities
|

|
4.3.14 Control scope
|

|-
|style="background: #fff4d3;" |'''Resource'''
|
4.3.15 Establish project team
|
4.3.16 Estimate resources

4.3.17 Define project organization
|
4.3.18 Develop project team
|
4.3.19 Control resources

4.3.20 Manage project team
|

|-
|style="background: #fff4d3;" |'''Time'''
|

|
4.3.21 Sequence activities

4.3.22 Estimate activity durations

4.3.23 Develop schedule
|

|
4.3.24 Control schedule
|

|-
|style="background: #fff4d3;" |'''Cost'''
|

|
4.3.25 Estimate costs

4.3.26 Develop budget
|

|
4.3.27 Control costs
|

|-
|style="background: #fff4d3;" |'''Risk'''
|

|
4.3.28 Identify risks

4.3.29 Asses risks
|
4.3.30 Treat risks
|
4.3.31 Control risks
|
|-
|style="background: #fff4d3;" |'''Quality'''
|

|
4.3.32 Plan quality
|
4.3.33 Perform quality assurance
|
4.3.34 Perform quality control
|

|-
|style="background: #fff4d3;" |'''Procurement'''
|

|
4.3.35 Plan procurements
|
4.3.36 Select suppliers
|
4.3.37 Administer procurements
|

|-
|style="background: #fff4d3;" |'''Communication'''
|

|
4.3.38 Plan communications
|
4.3.39 Distribute information
|
4.3.40 Manage communications
|

|}

The perspective of subject groups will be adopted to consider the management of DaimlerChrysler project. A subject is a theme in which processes are classified according to its related activities.

But before that, the project of DaimlerChrysler merger is regarded.

=DaimlerChrysler merger project <ref> Julia Hollmann, Aletéia de Moura Carpes, Thiago Antonio Beuron. ''The DaimlerChrylser Merger- A cultural mismatch ?'' Faculty Sponsor : Universität Paderborn- Germany, Department of International Business Studies. Universidade Federal de Santa Maria- Brazil, Department of Administration. 2010 </ref> =
==The genesis of the project==
In the late 90´s, the automotive industry had to face multiples challenges due to the excess manufacturing capacity, the growth of ecological awareness, and the retail revolution that empowered buyers. To strengthen their position during this crisis, the automakers Daimler-Benz and Chrysler Corporation decided to merge. This project aimed to combine each other´s product designs, manufacturing resources and distribution systems.
The following table shows the complementary of the two companies, which wanted to unit their knowledge and their market in order to gain a competitive advantage.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 2 : The complementary of the two companies '''
|
! style="background: #ffedd3;" |'''Daimler-Benz AG'''
! style="background: #ffedd3;" |'''Chrysler Corporation'''
|-
! style="background: #ffedd3;" |'''Head office location'''
|
Germany
|
United States
|-
! style="background: #ffedd3;" |'''Geographical reach'''
|
European market
|
U.S. American market
|-
! style="background: #ffedd3;" |'''Product ranges'''
|
Uncompromising quality products
|
Car models that meet the American demand for adventurousness
|}


Both synergies and economies of scale were likely to proliferate.

How the project was set up is explained in the following paragraph. However, its detailed description falls outside the scope of this article.

==The execution of the project==
On May 7th 1998, the signing of the combination agreement between Daimler-Benz and Chrysler was publicly announced. Daimler-Benz CEO Jürgen Schrempp described the union as "a merger of equals, a merger of growth, and a merger of unprecedented strength".
The equal status of the two organizations was reflected in the newly established entity name, DaimlerChrysler, as well as in the combination of the two former boards of management to form the one of DaimlerChrysler. Furthermore, it was agreed that Schrempp and Eaton, former CEO of the Chrysler Corporation, would jointly led the entity as co-chairmen and co-CEOs. It was also decided that Eaton would stay up to three years.
The two following tables provide more data about DaimlerChrysler right after the merger and the expected results of this project.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 3 : Characteristics of DaimlerChrysler right after the merger'''
|-
! style="background: #ffedd3;" |'''Number of employees '''
|442,000 employees
½ in Germany

1/3 in North America

1/6 spread across 200 countries around the world
|-
! style="background: #ffedd3;" |'''Daimler-Benz AG Market capitalization'''
|$ 92 billion
|}



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 4 : Expected results'''
! style="background: #ffedd3;" |Annual revenues of the combined company
|$ 132 billion
|-
! style="background: #ffedd3;" |Increase in sales
|13%
|-
! style="background: #ffedd3;" |Cost savings brought within 2 or 3 years
|$ 3,5 billion a year
|}


So far, this fusion appears to be very beneficial for all parties involved. However the wish for synergy effects never came true and the project drove Chrysler into chaos. In May 2007, the merger of Chrysler and Daimler-Benz was dissolved. Can this failure be ascribed to mismanagement?

The purpose of this article is now to point out which processes, related to the different subject groups definied in ISO 21500:2012 were disregarded and may have led to the project failure.

=The mismanagement of some subject groups <ref> Wanda Curlee, Robert L. Gordon . ''Complexity Theory and Project Management. ''. New York : Wiley, 2011, p. 129-133 </ref> =

Four subject groups will successively be considered : Integration, Time, Communication and Stakeholders. A mismanagement of some processes related to these four specific subject groups is namely to be seen.

==Integration <ref> Grässlin, Jürgen.''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> <ref> ''DaimlerChrysler confronts the challenges of global integration'', Human Resource Management International Digest, Vol 12 Iss :2 P.5-8</ref> ==

The Integration subject group includes the processes required to identify, define, combine, unify, coordinate, control and close the various activities and processes related to the project (ISO 21500:2012 - 4.2.3.2).

Within this merger, the unification and combination of all operations within the established entity needed to be achieved. To meet this target, a newly corporate culture had to be defined to align working styles. The latter namely radically differ due to major cultural differences, as shown in the following table.



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 5 : Comparison between the German and the American working styles'''
|-
|
! style="background: #ffedd3;" | '''Germany'''
! style="background: #ffedd3;"|'''United States'''
|-
! style="background: #ffedd3;" align="left" |'''Employee working style'''
| Work in a team-oriented environment
| Work individually
|-
! style="background: #ffedd3;" align="left" |'''Writing report'''
| Lengthy reports
| Little paper
|-
! style="background: #ffedd3;" align="left" |'''Decision-making process'''
|
Methodical, based on very detailed plans
|
Using creativity, based on trial-and-error method
|-
! style="background: #ffedd3;" align="left" |'''Meeting'''
|
Extended discussions
|
Short meeting
|-
! style="background: #ffedd3;" align="left" |'''Organizational structure'''
|
Pronounced hierarchy based on top-down-management
|
Flat organizational hierarchy stimulating empowerment of the employees
|-
! style="background: #ffedd3;" align="left" |'''Risk appetite'''
|
Risk adverse culture
|
Risk takers
|}


Due to the fact that this merger was a so-called `merger of equals´, the integration of the two cultures was to combine them to generate a new shared corporate one. It was namely vital that both organizations learn from each other to generate synergy effects. Managers have here a central role to play to define and coordinate the development of this new culture.

Eaton affirmed that it was at the top of the agenda and Thomas Stallkamp, Chrysler President during the negotiation phase, was charged with overseeing this integration process. Some effort went into harmonizing the two corporate cultures. Many seminars and workshops were organized to sensitizing the employees for working with new colleagues with a diverging working methods. Furthermore, German was taught to many American managers.

However, given the large gap between the two organizations, it would appear that managers should have undertaken more activities and CEOs should have allocated more resources to bridge the chasm of cultural differences.

In fact, no strong and cohesive organizational culture was created, as illustrated in daily misunderstandings. For instance, the attention Daimler-Benz leaders paid to writing a leaflet sent to employee annoyed Chrysler executives. At the end of 1999, the resignation of Thomas Stallkamp, a 19-year veteran of Chrysler who was highly regarded, might be seen as failure of the merger integration process after all the effort. He is quoted as saying: <nowiki>“</nowiki>The majority of my career has been spent implementing supply chain management. I would like to continue to explore those areas at a less hectic pace<nowiki>”</nowiki>. Were both parties truly willing to cooperate wholeheartedly and to enter compromises to succeed in the numerous integration processes? A negative answer is the root cause of the unachieved integration.

==Time<ref> Sue Cartwright, Cary L. Cooper. ''Mergers and Acquisitions: The Human Factor Paperback'' . January 1, 1992 </ref>==

The Time Subject group is all about managing the timely completion of the project. Feasible deadlines taking all known constraints into account need to be set. Processes covered by the latter subject group are the development of schedule for project activities, estimating each activity duration, the progress monitoring and the schedule control.

One failure in managing time in DaimlerChrysler merger was that too little time was devoted to each activity. Let´s take a concrete example: Daimler-Benz and Chrysler began formal negotiations on January 12, 1998 and only five months later, the merger was announced worldwide. Susan Cartwright – past President of the British Academy Management – asserts that the period of time from the germ of the merger idea till an agreement is reached is estimated to last around two years. Speeding up the pre-merger preparation, the precise objectives of the fusion and the way to achieve them could not have been defined accurately.
Furthermore, the merger was completed on November 12, 1998. Time needed by employees to adapt to the new circumstances was not taken into account in the deadlines. One more mismanagement which is added to the others.

==Communication==
In the standard ISO 21500:2012, three key processes are defined to ensure appropriate exchange of project information: Plan communications, Distribute information and Manage communications. But within DaimlerChrysler project none of them were totally met. In order to appreciate the scale of the problem, it should be pointed out that even managers and CEOs experienced serious difficulties in discussing solutions and achieving a consensus. According to a Daimler-Benz executive, <nowiki>"</nowiki>Eaton went weeks without speaking with Jürgen [Schrempp]. He preferred to maintain lower-level contact. Jürgen, meanwhile, left Chrysler alone.<nowiki>"</nowiki> <ref> [http://mba.tuck.dartmouth.edu/pdf/2002-1-0071.pdf] Professor Sydney Finkelstein. ''The DaimlerChrysler Merger.''Tuck School of Business at Dartmouth. 2002 </ref> One would have expected that both CEOs would have share their different view in order to discover common goal and operate as an effective team at the top. Given the seeming clash of culture described in the first paragraph, it was crucial to start the discussion to create healthy relationship and release the company´s potential. The clearer the communication, the better issues are addressed. But with a lack of communication among leaders, no far-reaching communication plan could be implemented among all stakeholders involved, not to mention the distribution of the information. Both internal and external communications were chaotic. It is likely that the standard ISO 21500 would have make managers more aware of the processes related to communication required to be efficiently tackled.

==Stakeholders==
The stakeholder subject group is concerned with identifying and managing all stakeholders. Both their expectations and influence on the project need to be analyzed to classify them. The table 6 provides a power-interest matrix, which is crucial to draw up appropriate management strategies for effectively engaging with them. The external stakeholders are written in italics, the others are internal.

{| border="1" cellpadding="3" cellspacing="0" style="margin:auto;"
|+ '''Table 6 : Power and interest matrix'''
|-
! rowspan="2" style="background: #ffedd3;" | Level of interest
! colspan="5" style="background: #ffedd3;" | Level of power
|-
|style="background: #fff4d3;" align=center | ''' Low '''
|style="background: #fff4d3;" align=center| ''' High '''
|-
|style="background: #fff4d3;" align=center |'''High'''
|
[[Employee]]

Trade Union

''[[Clients]]''

''Suppliers''

''Government''

''Society''
|
Directors

Managers

''[[Stockholders]]''
|-
|style="background: #fff4d3;" align=center |'''Low'''
|
''Competitors''
|

|-
|}

To analyze the management of all of these stakeholders one by one would be tedious. However it is relevant to focus on several categories according to the table 6. Special focus will be laid on the stakeholders written in red in the table above. Therefore, both high power/high interest and low power/high interest stakeholders will be looked at. Furthermore, two of them are internal, whereas the other is internal.
All of them were significantly affected by the DaimlerChrysler project due to mismanagement.

===Employees===
Employees, low-power and high-interest stakeholders, must be kept informed and managers should ensure that no major issues are arising.
However, this was not the case in the DaimlerChrysler merger: employees felt overlooked, disregarded and left out of the merger process. But to what extent CEOs and managers were responsible in this climate of distrust and dislike?

First, soon after the merger, it became obvious that Daimler was taking over the whole company´s management. Chrysler President Stallkamp retirement at the end of 1999 was followed by the one of James P. Holdem, top-level executive of the Chrysler Group. They were replaced by two German managers: Dieter Zetsche and Wolfgang Bernhard. Being lowered to divisional status, it is understandable that American´s morale suffer from this German hegemony. Employee felt eclipsed and were disgusted. They also were worried that DaimlerChrysler would dismiss some of them. But the problems are not confined to be here. Indeed, Jürgen Schrempp attitude only made the situation worse. In autumn 2000, DaimlerChrysler CEO acknowledged in the German financial daily Handelsblatt that <nowiki>“</nowiki>The Merger of Equals statement was necessary in order to earn the support of Chrysler's workers and the American public, but it was never reality<nowiki>"</nowiki>. Many American regarded this statement as a betrayal, since he intended to deceive them from the outset. It appears clear that it is due to board of directors failure in acting responsibly towards these stakeholders that deep-seated distrust ran deep.

But this mismanagement of the project stakeholders can lead to far-reaching consequences on the project success itself. Indeed, it could be that some employees simply do not work as efficiently because they suppose the Board of Directors doesn’t care about the Chrysler entity – so why should they? Decreased performance would result in it.

It is to notice that even though the standard ''ISO 21500: 2012'' did not exist at that time, the fact that employee influence to succeed such a process was of importance was already known. MaryAnn Keller, founder and managing partner of MaryAnn Keller & Associates LLC, namely stated in June 1998 that <nowiki>“</nowiki>The success of any combination depends on the ability of the new organization to win over the hearts and minds of employees.<nowiki>”</nowiki> <ref> [http://murphylibrary.uwlax.edu/digital/jur/2002/carpiaux.pdf] Nicole Carpiaux. ''DaimlerChrysler : Wunderkind or Problem Child ?'' Faculty Sponsor : Leticia Peña, Department of Management. </ref> The managers of DaimlerChrysler should then be aware that is really a management issue to embrace workers instead to neglect them in order to obtain the best they can offer.

===Clients===
And what about the consumers, low-power and high interest stakeholders?

Once again, one could argue that managers failed to define as well as to meet their needs.
One example is given for illustration. At the time, the DaimlerChrysler A-Class was 1.25 to 2 times more expensive than similar vehicles sold by Volkswagen, Renault or Fiat. This higher price was not deterrent since clients were aware that Daimler-Benz primarily asset was quality and safety. However, in 1999, the A-class failed an emergency maneuver test conducted by a Swedish television station. <ref> Bill Vlasic, Bradley A. Stertz. ''Taken for a Ride: How Daimler-Benz Drove off with Chrysler''. Harper Paperbacks,
2001, p. 300.
</ref> Consequently, client´s satisfaction suddenly drop off the map. The DaimlerChrysler vehicle was considered as an overpriced car which did not achieve engineering excellence compared to the highly competitive European compact market. The crux of the problem may be that the German entity have tried to implant the American low development costs into its entities, disregarding the high expectations of the clients. This paragraph appears to prove that trying to generate synergy savings the managers failed in responding the customer´s needs.

===Stockholders===
Last but not least, the management of both high power and high interest stakeholders needs to be considered. Take the stockholders.

An overwhelming majority of them favored the project of merger in 1998. Approvals ratings reached 99.9% at Daimler-Benz and 97.5% at Chrysler. It may be inferred that, at the outset of the project, managers successfully took into account the processes required to satisfy the shareholders. It did not take long, however, for some of them to express their disappointment. This was the case for Kirk Kerkorian, the third largest proprietor of DailerChrysler stock and largest Chrysler shareholder before the merger. In November 2000, the latter filed a $9 billion lawsuit against DaimlerChrysler for falsifying the terms of the fusion as a “merger of equals”. He was upset with the German hegemony and stated he had voted to turn its shares for stock in DaimlerChrysler without having considered the American entity would be reduced to a mere division. Two months later, he cut his take in the merged company by a third. Even though the managers were not directly involved in this discontent, the lack of acting responsibly of the Board of the director is obvious.

To conclude, the completion of the processes related to each of these three stakeholders lacked efficiency. The managers failed in implementing the required activities to satisfy them and this will become a major hindrance to the project completion.

=Conclusion=
Many factors may affect the failure of the DaimlerChrysler project, but most of them may have been due to its mismanagement. Such a union was notoriously risky, especially due to the opposite companies it combined. To deliver the intent benefits, particular care should then have been taken by managers to tackle all the project management processes.

The use of the standard ''ISO 21500 : 2012'' was made to group the processes in term of Subject Group. It appears clear that there were some omissions, particularly regarding Integration, Time, Communication and Stakeholders. This standard has proven to be useful to analyze a project management, especially in case of cross-boarders project. It is a shame that such a unifying international approach was only established in 2012.

= References =

<references />

[[Category:Project Management]]
[[Category:Human Behaviour]]
[[Category:Complexity]]

Analyzing the failure of the DaimlerChrysler merger from a project management perspective

2014-12-01T19:33:11Z

'''Abstract'''

In the late 90´s, German Daimler-Benz AG and American Chrysler Corporation announced their intention to combine their strengths within a so-called `merger of equals´ <ref> Grässlin, Jürgen. ''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> . Becoming the fifth largest automaker in the world, both companies hoped to overcome together the automotive industry crisis. However, nothing worked out as planned, so much so that in 2007 Daimler-Benz sold all its shares of the Chrysler division.

Could the use of a norm have guaranteed the success of the DaimlerChrysler merger ? This question will be answered with regard to the ISO 21500:2012 guideline for project management.

According to the latter, a definition of project management and the processes it involves will be provided.Then, an analysis of the origin of DaimlerChrysler project will be carried out. It will also be shown to what extent this fusion was mismanaged with regard to the subject groups defined in the ISO 21500:2012. Last but not least the benefits of using this standard to successfully conduct a complex project will be discussed.

=Introduction=
In the early 21st century, no comprehensive standard on project management was accepted despite the substantial demand for project management skills. However, in 2006, the need for a unifying international approach was recognized by the International Organization for Standard (ISO). The work of over hundreds experts in project management from around the globe resulted in ''ISO 21500: 2012 -Guidance on project management''. This norm defines universal project management terminologies, as well as the principles and processes it involves. It provides a basic guide against which any organization can compare its current project management practices and determine areas in need of improvement. But how to practically apply it to a project? A specific example of project failure prior to introducing ISO 21500 will be provided to analyze which project management processes were disregarded. More particularly, the merger of the German automaker Daimler-Benz with the American Chrysler Corporation will be examined with the perspective of subject group.

= ISO 21500 : 2012, A focus on processes <ref> ISO 21500:2012 ''Guidance on project management'' </ref> <ref> Anton Zandhuis, Rommert Stellingwerf. ''ISO 215000, Guidance on Project managenent, A Pocket Guide''. Van Haren Publishing. 2013 </ref>=

What is a project? A definition is provided by the ISO 21500: “A unique set of processes consisting of coordinated and controlled activities with start and end dates, performed to achieve project objectives.” The concept of processes seems to be at the crux of project management issues. The definition of how to manage a project stresses this point: “Project management is performed through processes”.

Specifically, the norm splits the method of managing a project into 39 elementary processes. Depending on the perspective, the latter are grouped into five process groups (Initiating, Planning, Controlling and Closing) or into ten subject groups (Integration, Stakeholder, Scope, Resource, Time, Cost, Risk, Quality, Procurement and Communication). The classification of these processes is provided in the following table.

{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 1 : Project management cross-referenced to process and subject groups (ISO 21500 : 2012)'''
|-
! rowspan="2" style="background: #ffedd3;" | SUBJECT GROUPS
! colspan="5" style="background: #ffedd3;" | PROCESS GROUPS
|-
|style="background: #fff4d3;" align=center | '''Initiating'''
|style="background: #fff4d3;" align=center| '''Planning'''
|style="background: #fff4d3;" align=center| '''Implementing'''
|style="background: #fff4d3;" align=center | '''Controlling'''
|style="background: #fff4d3;" align=center | '''Closing'''
|-
|style="background: #fff4d3;" |'''Integration'''
|
4.3.2 Develop project chart
|
4.3.3. Develop project plans
|
4.3.4 Direct project work
|
4.3.5 Control project work

4.3.6 Control changes
|
4.3.7 Close project or phase

4.3.8 Collect lessons learned
|-
|style="background: #fff4d3;" |'''Stakeholder'''
|
4.3.9 Identify stakeholders
|

|
4.3.10 Manage stakeholders
|

|

|-
|style="background: #fff4d3;" |'''Scope'''
|

|
4.3.11 Define scope

4.3.12 Create work breakdown structure

4.3.13 Define activities
|

|
4.3.14 Control scope
|

|-
|style="background: #fff4d3;" |'''Resource'''
|
4.3.15 Establish project team
|
4.3.16 Estimate resources

4.3.17 Define project organization
|
4.3.18 Develop project team
|
4.3.19 Control resources

4.3.20 Manage project team
|

|-
|style="background: #fff4d3;" |'''Time'''
|

|
4.3.21 Sequence activities

4.3.22 Estimate activity durations

4.3.23 Develop schedule
|

|
4.3.24 Control schedule
|

|-
|style="background: #fff4d3;" |'''Cost'''
|

|
4.3.25 Estimate costs

4.3.26 Develop budget
|

|
4.3.27 Control costs
|

|-
|style="background: #fff4d3;" |'''Risk'''
|

|
4.3.28 Identify risks

4.3.29 Asses risks
|
4.3.30 Treat risks
|
4.3.31 Control risks
|
|-
|style="background: #fff4d3;" |'''Quality'''
|

|
4.3.32 Plan quality
|
4.3.33 Perform quality assurance
|
4.3.34 Perform quality control
|

|-
|style="background: #fff4d3;" |'''Procurement'''
|

|
4.3.35 Plan procurements
|
4.3.36 Select suppliers
|
4.3.37 Administer procurements
|

|-
|style="background: #fff4d3;" |'''Communication'''
|

|
4.3.38 Plan communications
|
4.3.39 Distribute information
|
4.3.40 Manage communications
|

|}

The perspective of subject groups will be adopted to consider the management of DaimlerChrysler project. A subject is a theme in which processes are classified according to its related activities.

But before that, the project of DaimlerChrysler merger is regarded.

=DaimlerChrysler merger project <ref> Julia Hollmann, Aletéia de Moura Carpes, Thiago Antonio Beuron. ''The DaimlerChrylser Merger- A cultural mismatch ?'' Faculty Sponsor : Universität Paderborn- Germany, Department of International Business Studies. Universidade Federal de Santa Maria- Brazil, Department of Administration. 2010 </ref> =
==The genesis of the project==
In the late 90´s, the automotive industry had to face multiples challenges due to the excess manufacturing capacity, the growth of ecological awareness, and the retail revolution that empowered buyers. To strengthen their position during this crisis, the automakers Daimler-Benz and Chrysler Corporation decided to merge. This project aimed to combine each other´s product designs, manufacturing resources and distribution systems.
The following table shows the complementary of the two companies, which wanted to unit their knowledge and their market in order to gain a competitive advantage.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 2 : The complementary of the two companies '''
|
! style="background: #ffedd3;" |'''Daimler-Benz AG'''
! style="background: #ffedd3;" |'''Chrysler Corporation'''
|-
! style="background: #ffedd3;" |'''Head office location'''
|
Germany
|
United States
|-
! style="background: #ffedd3;" |'''Geographical reach'''
|
European market
|
U.S. American market
|-
! style="background: #ffedd3;" |'''Product ranges'''
|
Uncompromising quality products
|
Car models that meet the American demand for adventurousness
|}


Both synergies and economies of scale were likely to proliferate.

How the project was set up is explained in the following paragraph. However, its detailed description falls outside the scope of this article.

==The execution of the project==
On May 7th 1998, the signing of the combination agreement between Daimler-Benz and Chrysler was publicly announced. Daimler-Benz CEO Jürgen Schrempp described the union as "a merger of equals, a merger of growth, and a merger of unprecedented strength".
The equal status of the two organizations was reflected in the newly established entity name, DaimlerChrysler, as well as in the combination of the two former boards of management to form the one of DaimlerChrysler. Furthermore, it was agreed that Schrempp and Eaton, former CEO of the Chrysler Corporation, would jointly led the entity as co-chairmen and co-CEOs. It was also decided that Eaton would stay up to three years.
The two following tables provide more data about DaimlerChrysler right after the merger and the expected results of this project.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 3 : Characteristics of DaimlerChrysler right after the merger'''
|-
! style="background: #ffedd3;" |'''Number of employees '''
|442,000 employees
½ in Germany

1/3 in North America

1/6 spread across 200 countries around the world
|-
! style="background: #ffedd3;" |'''Daimler-Benz AG Market capitalization'''
|$ 92 billion
|}



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 4 : Expected results'''
! style="background: #ffedd3;" |Annual revenues of the combined company
|$ 132 billion
|-
! style="background: #ffedd3;" |Increase in sales
|13%
|-
! style="background: #ffedd3;" |Cost savings brought within 2 or 3 years
|$ 3,5 billion a year
|}


So far, this fusion appears to be very beneficial for all parties involved. However the wish for synergy effects never came true and the project drove Chrysler into chaos. In May 2007, the merger of Chrysler and Daimler-Benz was dissolved. Can this failure be ascribed to mismanagement?

The purpose of this article is now to point out which processes, related to the different subject groups definied in ISO 21500:2012 were disregarded and may have led to the project failure.

=The mismanagement of some subject groups <ref> Wanda Curlee, Robert L. Gordon . ''Complexity Theory and Project Management. ''. New York : Wiley, 2011, p. 129-133 </ref> =

Integration, Time, Communication and Stakeholders will be considered. A mismanagement of some processes related to these four specific subject groups is namely to be seen.

==Integration <ref> Grässlin, Jürgen.''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> <ref> ''DaimlerChrysler confronts the challenges of global integration'', Human Resource Management International Digest, Vol 12 Iss :2 P.5-8</ref> ==

The Integration subject group includes the processes required to identify, define, combine, unify, coordinate, control and close the various activities and processes related to the project (ISO 21500:2012 - 4.2.3.2).

Within this merger, the unification and combination of all operations within the established entity needed to be achieved. To meet this target, a newly corporate culture had to be defined to align working styles. The latter namely radically differ due to major cultural differences, as shown in the following table.



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 5 : Comparison between the German and the American working styles'''
|-
|
! style="background: #ffedd3;" | '''Germany'''
! style="background: #ffedd3;"|'''United States'''
|-
! style="background: #ffedd3;" align="left" |'''Employee working style'''
| Work in a team-oriented environment
| Work individually
|-
! style="background: #ffedd3;" align="left" |'''Writing report'''
| Lengthy reports
| Little paper
|-
! style="background: #ffedd3;" align="left" |'''Decision-making process'''
|
Methodical, based on very detailed plans
|
Using creativity, based on trial-and-error method
|-
! style="background: #ffedd3;" align="left" |'''Meeting'''
|
Extended discussions
|
Short meeting
|-
! style="background: #ffedd3;" align="left" |'''Organizational structure'''
|
Pronounced hierarchy based on top-down-management
|
Flat organizational hierarchy stimulating empowerment of the employees
|-
! style="background: #ffedd3;" align="left" |'''Risk appetite'''
|
Risk adverse culture
|
Risk takers
|}


Due to the fact that this merger was a so-called `merger of equals´, the integration of the two cultures was to combine them to generate a new shared corporate one. It was namely vital that both organizations learn from each other to generate synergy effects. Managers have here a central role to play to define and coordinate the development of this new culture.

Eaton affirmed that it was at the top of the agenda and Thomas Stallkamp, Chrysler President during the negotiation phase, was charged with overseeing this integration process. Some effort went into harmonizing the two corporate cultures. Many seminars and workshops were organized to sensitizing the employees for working with new colleagues with a diverging working methods. Furthermore, German was taught to many American managers.

However, given the large gap between the two organizations, it would appear that managers should have undertaken more activities and CEOs should have allocated more resources to bridge the chasm of cultural differences.

In fact, no strong and cohesive organizational culture was created, as illustrated in daily misunderstandings. For instance, the attention Daimler-Benz leaders paid to writing a leaflet sent to employee annoyed Chrysler executives. At the end of 1999, the resignation of Thomas Stallkamp, a 19-year veteran of Chrysler who was highly regarded, might be seen as failure of the merger integration process after all the effort. He is quoted as saying: <nowiki>“</nowiki>The majority of my career has been spent implementing supply chain management. I would like to continue to explore those areas at a less hectic pace<nowiki>”</nowiki>. Were both parties truly willing to cooperate wholeheartedly and to enter compromises to succeed in the numerous integration processes? A negative answer is the root cause of the unachieved integration.

==Time<ref> Sue Cartwright, Cary L. Cooper. ''Mergers and Acquisitions: The Human Factor Paperback'' . January 1, 1992 </ref>==

The Time Subject group is all about managing the timely completion of the project. Feasible deadlines taking all known constraints into account need to be set. Processes covered by the latter subject group are the development of schedule for project activities, estimating each activity duration, the progress monitoring and the schedule control.

One failure in managing time in DaimlerChrysler merger was that too little time was devoted to each activity. Let´s take a concrete example: Daimler-Benz and Chrysler began formal negotiations on January 12, 1998 and only five months later, the merger was announced worldwide. Susan Cartwright – past President of the British Academy Management – asserts that the period of time from the germ of the merger idea till an agreement is reached is estimated to last around two years. Speeding up the pre-merger preparation, the precise objectives of the fusion and the way to achieve them could not have been defined accurately.
Furthermore, the merger was completed on November 12, 1998. Time needed by employees to adapt to the new circumstances was not taken into account in the deadlines. One more mismanagement which is added to the others.

==Communication==
In the standard ISO 21500:2012, three key processes are defined to ensure appropriate exchange of project information: Plan communications, Distribute information and Manage communications. But within DaimlerChrysler project none of them were totally met. In order to appreciate the scale of the problem, it should be pointed out that even managers and CEOs experienced serious difficulties in discussing solutions and achieving a consensus. According to a Daimler-Benz executive, <nowiki>"</nowiki>Eaton went weeks without speaking with Jürgen [Schrempp]. He preferred to maintain lower-level contact. Jürgen, meanwhile, left Chrysler alone.<nowiki>"</nowiki> <ref> [http://mba.tuck.dartmouth.edu/pdf/2002-1-0071.pdf] Professor Sydney Finkelstein. ''The DaimlerChrysler Merger.''Tuck School of Business at Dartmouth. 2002 </ref> One would have expected that both CEOs would have share their different view in order to discover common goal and operate as an effective team at the top. Given the seeming clash of culture described in the first paragraph, it was crucial to start the discussion to create healthy relationship and release the company´s potential. The clearer the communication, the better issues are addressed. But with a lack of communication among leaders, no far-reaching communication plan could be implemented among all stakeholders involved, not to mention the distribution of the information. Both internal and external communications were chaotic. It is likely that the standard ISO 21500 would have make managers more aware of the processes related to communication required to be efficiently tackled.

==Stakeholders==
The stakeholder subject group is concerned with identifying and managing all stakeholders. Both their expectations and influence on the project need to be analyzed to classify them. The table 6 provides a power-interest matrix, which is crucial to draw up appropriate management strategies for effectively engaging with them. The external stakeholders are written in italics, the others are internal.

{| border="1" cellpadding="3" cellspacing="0" style="margin:auto;"
|+ '''Table 6 : Power and interest matrix'''
|-
! rowspan="2" style="background: #ffedd3;" | Level of interest
! colspan="5" style="background: #ffedd3;" | Level of power
|-
|style="background: #fff4d3;" align=center | ''' Low '''
|style="background: #fff4d3;" align=center| ''' High '''
|-
|style="background: #fff4d3;" align=center |'''High'''
|
[[Employee]]

Trade Union

''[[Clients]]''

''Suppliers''

''Government''

''Society''
|
Directors

Managers

''[[Stockholders]]''
|-
|style="background: #fff4d3;" align=center |'''Low'''
|
''Competitors''
|

|-
|}

To analyze the management of all of these stakeholders one by one would be tedious. However it is relevant to focus on several categories according to the table 6. Special focus will be laid on the stakeholders written in red in the table above. Therefore, both high power/high interest and low power/high interest stakeholders will be looked at. Furthermore, two of them are internal, whereas the other is internal.
All of them were significantly affected by the DaimlerChrysler project due to mismanagement.

===Employees===
Employees, low-power and high-interest stakeholders, must be kept informed and managers should ensure that no major issues are arising.
However, this was not the case in the DaimlerChrysler merger: employees felt overlooked, disregarded and left out of the merger process. But to what extent CEOs and managers were responsible in this climate of distrust and dislike?

First, soon after the merger, it became obvious that Daimler was taking over the whole company´s management. Chrysler President Stallkamp retirement at the end of 1999 was followed by the one of James P. Holdem, top-level executive of the Chrysler Group. They were replaced by two German managers: Dieter Zetsche and Wolfgang Bernhard. Being lowered to divisional status, it is understandable that American´s morale suffer from this German hegemony. Employee felt eclipsed and were disgusted. They also were worried that DaimlerChrysler would dismiss some of them. But the problems are not confined to be here. Indeed, Jürgen Schrempp attitude only made the situation worse. In autumn 2000, DaimlerChrysler CEO acknowledged in the German financial daily Handelsblatt that <nowiki>“</nowiki>The Merger of Equals statement was necessary in order to earn the support of Chrysler's workers and the American public, but it was never reality<nowiki>"</nowiki>. Many American regarded this statement as a betrayal, since he intended to deceive them from the outset. It appears clear that it is due to board of directors failure in acting responsibly towards these stakeholders that deep-seated distrust ran deep.

But this mismanagement of the project stakeholders can lead to far-reaching consequences on the project success itself. Indeed, it could be that some employees simply do not work as efficiently because they suppose the Board of Directors doesn’t care about the Chrysler entity – so why should they? Decreased performance would result in it.

It is to notice that even though the standard ''ISO 21500: 2012'' did not exist at that time, the fact that employee influence to succeed such a process was of importance was already known. MaryAnn Keller, founder and managing partner of MaryAnn Keller & Associates LLC, namely stated in June 1998 that <nowiki>“</nowiki>The success of any combination depends on the ability of the new organization to win over the hearts and minds of employees.<nowiki>”</nowiki> <ref> [http://murphylibrary.uwlax.edu/digital/jur/2002/carpiaux.pdf] Nicole Carpiaux. ''DaimlerChrysler : Wunderkind or Problem Child ?'' Faculty Sponsor : Leticia Peña, Department of Management. </ref> The managers of DaimlerChrysler should then be aware that is really a management issue to embrace workers instead to neglect them in order to obtain the best they can offer.

===Clients===
And what about the consumers, low-power and high interest stakeholders?

Once again, one could argue that managers failed to define as well as to meet their needs.
One example is given for illustration. At the time, the DaimlerChrysler A-Class was 1.25 to 2 times more expensive than similar vehicles sold by Volkswagen, Renault or Fiat. This higher price was not deterrent since clients were aware that Daimler-Benz primarily asset was quality and safety. However, in 1999, the A-class failed an emergency maneuver test conducted by a Swedish television station. <ref> Bill Vlasic, Bradley A. Stertz. ''Taken for a Ride: How Daimler-Benz Drove off with Chrysler''. Harper Paperbacks,
2001, p. 300.
</ref> Consequently, client´s satisfaction suddenly drop off the map. The DaimlerChrysler vehicle was considered as an overpriced car which did not achieve engineering excellence compared to the highly competitive European compact market. The crux of the problem may be that the German entity have tried to implant the American low development costs into its entities, disregarding the high expectations of the clients. This paragraph appears to prove that trying to generate synergy savings the managers failed in responding the customer´s needs.

===Stockholders===
Last but not least, the management of both high power and high interest stakeholders needs to be considered. Take the stockholders.

An overwhelming majority of them favored the project of merger in 1998. Approvals ratings reached 99.9% at Daimler-Benz and 97.5% at Chrysler. It may be inferred that, at the outset of the project, managers successfully took into account the processes required to satisfy the shareholders. It did not take long, however, for some of them to express their disappointment. This was the case for Kirk Kerkorian, the third largest proprietor of DailerChrysler stock and largest Chrysler shareholder before the merger. In November 2000, the latter filed a $9 billion lawsuit against DaimlerChrysler for falsifying the terms of the fusion as a “merger of equals”. He was upset with the German hegemony and stated he had voted to turn its shares for stock in DaimlerChrysler without having considered the American entity would be reduced to a mere division. Two months later, he cut his take in the merged company by a third. Even though the managers were not directly involved in this discontent, the lack of acting responsibly of the Board of the director is obvious.

To conclude, the completion of the processes related to each of these three stakeholders lacked efficiency. The managers failed in implementing the required activities to satisfy them and this will become a major hindrance to the project completion.

=Conclusion=
Many factors may affect the failure of the DaimlerChrysler project, but most of them may have been due to its mismanagement. Such a union was notoriously risky, especially due to the opposite companies it combined. To deliver the intent benefits, particular care should then have been taken by managers to tackle all the project management processes.

The use of the standard ''ISO 21500 : 2012'' was made to group the processes in term of Subject Group. It appears clear that there were some omissions, particularly regarding Integration, Time, Communication and Stakeholders. This standard has proven to be useful to analyze a project management, especially in case of cross-boarders project. It is a shame that such a unifying international approach was only established in 2012.

= References =

<references />

[[Category:Project Management]]
[[Category:Human Behaviour]]
[[Category:Complexity]]

Analyzing the failure of the DaimlerChrysler merger from a project management perspective

2014-12-01T19:32:14Z

'''Abstract'''

In the late 90´s, German Daimler-Benz AG and American Chrysler Corporation announced their intention to combine their strengths within a so-called `merger of equals´ <ref> Grässlin, Jürgen. ''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> . Becoming the fifth largest automaker in the world, both companies hoped to overcome together the automotive industry crisis. However, nothing worked out as planned, so much so that in 2007 Daimler-Benz sold all its shares of the Chrysler division.

Could the use of a norm have guaranteed the success of the DaimlerChrysler merger ? This question will be answered with regard to the ISO 21500:2012 guideline for project management.

According to the latter, a definition of project management and the processes it involves will be provided.Then, an analysis of the origin of DaimlerChrysler project will be carried out. It will also be shown to what extent this fusion was mismanaged with regard to the subject groups defined in the ISO 21500:2012. Last but not least the benefits of using this standard to successfully conduct a complex project will be discussed.

=Introduction=
In the early 21st century, no comprehensive standard on project management was accepted despite the substantial demand for project management skills. However, in 2006, the need for a unifying international approach was recognized by the International Organization for Standard (ISO). The work of over hundreds experts in project management from around the globe resulted in ''ISO 21500: 2012 -Guidance on project management''. This norm defines universal project management terminologies, as well as the principles and processes it involves. It provides a basic guide against which any organization can compare its current project management practices and determine areas in need of improvement. But how to practically apply it to a project? A specific example of project failure prior to introducing ISO 21500 will be provided to analyze which project management processes were disregarded. More particularly, the merger of the German automaker Daimler-Benz with the American Chrysler Corporation will be examined with the perspective of subject group.

= ISO 21500 : 2012, A focus on processes <ref> ISO 21500:2012 ''Guidance on project management'' </ref> <ref> Anton Zandhuis, Rommert Stellingwerf. ''ISO 215000, Guidance on Project managenent, A Pocket Guide''. Van Haren Publishing. 2013 </ref>=

What is a project? A definition is provided by the ISO 21500: “A unique set of processes consisting of coordinated and controlled activities with start and end dates, performed to achieve project objectives.” The concept of processes seems to be at the crux of project management issues. The definition of how to manage a project stresses this point: “Project management is performed through processes”.

Specifically, the norm splits the method of managing a project into 39 elementary processes. Depending on the perspective, the latter are grouped into five process groups (Initiating, Planning, Controlling and Closing) or into ten subject groups (Integration, Stakeholder, Scope, Resource, Time, Cost, Risk, Quality, Procurement and Communication). The classification of these processes is provided in the following table.

{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 1 : Project management cross-referenced to process and subject groups (ISO 21500 : 2012)'''
|-
! rowspan="2" style="background: #ffedd3;" | SUBJECT GROUPS
! colspan="5" style="background: #ffedd3;" | PROCESS GROUPS
|-
|style="background: #fff4d3;" align=center | '''Initiating'''
|style="background: #fff4d3;" align=center| '''Planning'''
|style="background: #fff4d3;" align=center| '''Implementing'''
|style="background: #fff4d3;" align=center | '''Controlling'''
|style="background: #fff4d3;" align=center | '''Closing'''
|-
|style="background: #fff4d3;" |'''Integration'''
|
4.3.2 Develop project chart
|
4.3.3. Develop project plans
|
4.3.4 Direct project work
|
4.3.5 Control project work

4.3.6 Control changes
|
4.3.7 Close project or phase

4.3.8 Collect lessons learned
|-
|style="background: #fff4d3;" |'''Stakeholder'''
|
4.3.9 Identify stakeholders
|

|
4.3.10 Manage stakeholders
|

|

|-
|style="background: #fff4d3;" |'''Scope'''
|

|
4.3.11 Define scope

4.3.12 Create work breakdown structure

4.3.13 Define activities
|

|
4.3.14 Control scope
|

|-
|style="background: #fff4d3;" |'''Resource'''
|
4.3.15 Establish project team
|
4.3.16 Estimate resources

4.3.17 Define project organization
|
4.3.18 Develop project team
|
4.3.19 Control resources

4.3.20 Manage project team
|

|-
|style="background: #fff4d3;" |'''Time'''
|

|
4.3.21 Sequence activities

4.3.22 Estimate activity durations

4.3.23 Develop schedule
|

|
4.3.24 Control schedule
|

|-
|style="background: #fff4d3;" |'''Cost'''
|

|
4.3.25 Estimate costs

4.3.26 Develop budget
|

|
4.3.27 Control costs
|

|-
|style="background: #fff4d3;" |'''Risk'''
|

|
4.3.28 Identify risks

4.3.29 Asses risks
|
4.3.30 Treat risks
|
4.3.31 Control risks
|
|-
|style="background: #fff4d3;" |'''Quality'''
|

|
4.3.32 Plan quality
|
4.3.33 Perform quality assurance
|
4.3.34 Perform quality control
|

|-
|style="background: #fff4d3;" |'''Procurement'''
|

|
4.3.35 Plan procurements
|
4.3.36 Select suppliers
|
4.3.37 Administer procurements
|

|-
|style="background: #fff4d3;" |'''Communication'''
|

|
4.3.38 Plan communications
|
4.3.39 Distribute information
|
4.3.40 Manage communications
|

|}

The perspective of subject groups will be adopted to consider the management of DaimlerChrysler project. A subject is a theme in which processes are classified according to its related activities.

But before that, the project of DaimlerChrysler merger is regarded.

=DaimlerChrysler merger project <ref> Julia Hollmann, Aletéia de Moura Carpes, Thiago Antonio Beuron. ''The DaimlerChrylser Merger- A cultural mismatch ?'' Faculty Sponsor : Universität Paderborn- Germany, Department of International Business Studies. Universidade Federal de Santa Maria- Brazil, Department of Administration. 2010 </ref> =
==The genesis of the project==
In the late 90´s, the automotive industry had to face multiples challenges due to the excess manufacturing capacity, the growth of ecological awareness, and the retail revolution that empowered buyers. To strengthen their position during this crisis, the automakers Daimler-Benz and Chrysler Corporation decided to merge. This project aimed to combine each other´s product designs, manufacturing resources and distribution systems.
The following table shows the complementary of the two companies, which wanted to unit their knowledge and their market in order to gain a competitive advantage.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 2 : The complementary of the two companies '''
|
! style="background: #ffedd3;" |'''Daimler-Benz AG'''
! style="background: #ffedd3;" |'''Chrysler Corporation'''
|-
! style="background: #ffedd3;" |'''Head office location'''
|
Germany
|
United States
|-
! style="background: #ffedd3;" |'''Geographical reach'''
|
European market
|
U.S. American market
|-
! style="background: #ffedd3;" |'''Product ranges'''
|
Uncompromising quality products
|
Car models that meet the American demand for adventurousness
|}


Both synergies and economies of scale were likely to proliferate.

How the project was set up is explained in the following paragraph. However, its detailed description falls outside the scope of this article.

==The execution of the project==
On May 7th 1998, the signing of the combination agreement between Daimler-Benz and Chrysler was publicly announced. Daimler-Benz CEO Jürgen Schrempp described the union as "a merger of equals, a merger of growth, and a merger of unprecedented strength".
The equal status of the two organizations was reflected in the newly established entity name, DaimlerChrysler, as well as in the combination of the two former boards of management to form the one of DaimlerChrysler. Furthermore, it was agreed that Schrempp and Eaton, former CEO of the Chrysler Corporation, would jointly led the entity as co-chairmen and co-CEOs. It was also decided that Eaton would stay up to three years.
The two following tables provide more data about DaimlerChrysler right after the merger and the expected results of this project.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 3 : Characteristics of DaimlerChrysler right after the merger'''
|-
! style="background: #ffedd3;" |'''Number of employees '''
|442,000 employees
½ in Germany

1/3 in North America

1/6 spread across 200 countries around the world
|-
! style="background: #ffedd3;" |'''Daimler-Benz AG Market capitalization'''
|$ 92 billion
|}



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 4 : Expected results'''
! style="background: #ffedd3;" |Annual revenues of the combined company
|$ 132 billion
|-
! style="background: #ffedd3;" |Increase in sales
|13%
|-
! style="background: #ffedd3;" |Cost savings brought within 2 or 3 years
|$ 3,5 billion a year
|}


So far, this fusion appears to be very beneficial for all parties involved. However the wish for synergy effects never came true and the project drove Chrysler into chaos. In May 2007, the merger of Chrysler and Daimler-Benz was dissolved. Can this failure be ascribed to mismanagement?

The purpose of this article is now to point out which processes, related to the different subject groups definied in ISO 21500:2012 were disregarded and may have led to the project failure.

=The mismanagement of some subject groups <ref> Wanda Curlee, Robert L. Gordon . ''Complexity Theory and Project Management. ''. New York : Wiley, 2011, p. 129-133 </ref> =

Integration, Time, Communication and Stakeholders will be considered. A mismanagement of some processes related to these four specific subject groups is namely to be seen.

==Integration <ref> Grässlin, Jürgen.''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> <ref> ''DaimlerChrysler confronts the challenges of global integration'', Human Resource Management International Digest, Vol 12 Iss :2 P.5-8</ref> ==
Four subject groups are successively addressed: Integration, Time, Communication and Stakeholders.
The Integration Subject group includes the processes required to identify, define, combine, unify, coordinate, control and close the various activities and processes related to the project (ISO 21500:2012 - 4.2.3.2).

Within this merger, the unification and combination of all operations within the established entity needed to be achieved. To meet this target, a newly corporate culture had to be defined to align working styles. The latter namely radically differ due to major cultural differences, as shown in the following table.



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 5 : Comparison between the German and the American working styles'''
|-
|
! style="background: #ffedd3;" | '''Germany'''
! style="background: #ffedd3;"|'''United States'''
|-
! style="background: #ffedd3;" align="left" |'''Employee working style'''
| Work in a team-oriented environment
| Work individually
|-
! style="background: #ffedd3;" align="left" |'''Writing report'''
| Lengthy reports
| Little paper
|-
! style="background: #ffedd3;" align="left" |'''Decision-making process'''
|
Methodical, based on very detailed plans
|
Using creativity, based on trial-and-error method
|-
! style="background: #ffedd3;" align="left" |'''Meeting'''
|
Extended discussions
|
Short meeting
|-
! style="background: #ffedd3;" align="left" |'''Organizational structure'''
|
Pronounced hierarchy based on top-down-management
|
Flat organizational hierarchy stimulating empowerment of the employees
|-
! style="background: #ffedd3;" align="left" |'''Risk appetite'''
|
Risk adverse culture
|
Risk takers
|}


Due to the fact that this merger was a so-called `merger of equals´, the integration of the two cultures was to combine them to generate a new shared corporate one. It was namely vital that both organizations learn from each other to generate synergy effects. Managers have here a central role to play to define and coordinate the development of this new culture.

Eaton affirmed that it was at the top of the agenda and Thomas Stallkamp, Chrysler President during the negotiation phase, was charged with overseeing this integration process. Some effort went into harmonizing the two corporate cultures. Many seminars and workshops were organized to sensitizing the employees for working with new colleagues with a diverging working methods. Furthermore, German was taught to many American managers.

However, given the large gap between the two organizations, it would appear that managers should have undertaken more activities and CEOs should have allocated more resources to bridge the chasm of cultural differences.

In fact, no strong and cohesive organizational culture was created, as illustrated in daily misunderstandings. For instance, the attention Daimler-Benz leaders paid to writing a leaflet sent to employee annoyed Chrysler executives. At the end of 1999, the resignation of Thomas Stallkamp, a 19-year veteran of Chrysler who was highly regarded, might be seen as failure of the merger integration process after all the effort. He is quoted as saying: <nowiki>“</nowiki>The majority of my career has been spent implementing supply chain management. I would like to continue to explore those areas at a less hectic pace<nowiki>”</nowiki>. Were both parties truly willing to cooperate wholeheartedly and to enter compromises to succeed in the numerous integration processes? A negative answer is the root cause of the unachieved integration.

==Time<ref> Sue Cartwright, Cary L. Cooper. ''Mergers and Acquisitions: The Human Factor Paperback'' . January 1, 1992 </ref>==

The Time Subject group is all about managing the timely completion of the project. Feasible deadlines taking all known constraints into account need to be set. Processes covered by the latter subject group are the development of schedule for project activities, estimating each activity duration, the progress monitoring and the schedule control.

One failure in managing time in DaimlerChrysler merger was that too little time was devoted to each activity. Let´s take a concrete example: Daimler-Benz and Chrysler began formal negotiations on January 12, 1998 and only five months later, the merger was announced worldwide. Susan Cartwright – past President of the British Academy Management – asserts that the period of time from the germ of the merger idea till an agreement is reached is estimated to last around two years. Speeding up the pre-merger preparation, the precise objectives of the fusion and the way to achieve them could not have been defined accurately.
Furthermore, the merger was completed on November 12, 1998. Time needed by employees to adapt to the new circumstances was not taken into account in the deadlines. One more mismanagement which is added to the others.

==Communication==
In the standard ISO 21500:2012, three key processes are defined to ensure appropriate exchange of project information: Plan communications, Distribute information and Manage communications. But within DaimlerChrysler project none of them were totally met. In order to appreciate the scale of the problem, it should be pointed out that even managers and CEOs experienced serious difficulties in discussing solutions and achieving a consensus. According to a Daimler-Benz executive, <nowiki>"</nowiki>Eaton went weeks without speaking with Jürgen [Schrempp]. He preferred to maintain lower-level contact. Jürgen, meanwhile, left Chrysler alone.<nowiki>"</nowiki> <ref> [http://mba.tuck.dartmouth.edu/pdf/2002-1-0071.pdf] Professor Sydney Finkelstein. ''The DaimlerChrysler Merger.''Tuck School of Business at Dartmouth. 2002 </ref> One would have expected that both CEOs would have share their different view in order to discover common goal and operate as an effective team at the top. Given the seeming clash of culture described in the first paragraph, it was crucial to start the discussion to create healthy relationship and release the company´s potential. The clearer the communication, the better issues are addressed. But with a lack of communication among leaders, no far-reaching communication plan could be implemented among all stakeholders involved, not to mention the distribution of the information. Both internal and external communications were chaotic. It is likely that the standard ISO 21500 would have make managers more aware of the processes related to communication required to be efficiently tackled.

==Stakeholders==
The stakeholder subject group is concerned with identifying and managing all stakeholders. Both their expectations and influence on the project need to be analyzed to classify them. The table 6 provides a power-interest matrix, which is crucial to draw up appropriate management strategies for effectively engaging with them. The external stakeholders are written in italics, the others are internal.

{| border="1" cellpadding="3" cellspacing="0" style="margin:auto;"
|+ '''Table 6 : Power and interest matrix'''
|-
! rowspan="2" style="background: #ffedd3;" | Level of interest
! colspan="5" style="background: #ffedd3;" | Level of power
|-
|style="background: #fff4d3;" align=center | ''' Low '''
|style="background: #fff4d3;" align=center| ''' High '''
|-
|style="background: #fff4d3;" align=center |'''High'''
|
[[Employee]]

Trade Union

''[[Clients]]''

''Suppliers''

''Government''

''Society''
|
Directors

Managers

''[[Stockholders]]''
|-
|style="background: #fff4d3;" align=center |'''Low'''
|
''Competitors''
|

|-
|}

To analyze the management of all of these stakeholders one by one would be tedious. However it is relevant to focus on several categories according to the table 6. Special focus will be laid on the stakeholders written in red in the table above. Therefore, both high power/high interest and low power/high interest stakeholders will be looked at. Furthermore, two of them are internal, whereas the other is internal.
All of them were significantly affected by the DaimlerChrysler project due to mismanagement.

===Employees===
Employees, low-power and high-interest stakeholders, must be kept informed and managers should ensure that no major issues are arising.
However, this was not the case in the DaimlerChrysler merger: employees felt overlooked, disregarded and left out of the merger process. But to what extent CEOs and managers were responsible in this climate of distrust and dislike?

First, soon after the merger, it became obvious that Daimler was taking over the whole company´s management. Chrysler President Stallkamp retirement at the end of 1999 was followed by the one of James P. Holdem, top-level executive of the Chrysler Group. They were replaced by two German managers: Dieter Zetsche and Wolfgang Bernhard. Being lowered to divisional status, it is understandable that American´s morale suffer from this German hegemony. Employee felt eclipsed and were disgusted. They also were worried that DaimlerChrysler would dismiss some of them. But the problems are not confined to be here. Indeed, Jürgen Schrempp attitude only made the situation worse. In autumn 2000, DaimlerChrysler CEO acknowledged in the German financial daily Handelsblatt that <nowiki>“</nowiki>The Merger of Equals statement was necessary in order to earn the support of Chrysler's workers and the American public, but it was never reality<nowiki>"</nowiki>. Many American regarded this statement as a betrayal, since he intended to deceive them from the outset. It appears clear that it is due to board of directors failure in acting responsibly towards these stakeholders that deep-seated distrust ran deep.

But this mismanagement of the project stakeholders can lead to far-reaching consequences on the project success itself. Indeed, it could be that some employees simply do not work as efficiently because they suppose the Board of Directors doesn’t care about the Chrysler entity – so why should they? Decreased performance would result in it.

It is to notice that even though the standard ''ISO 21500: 2012'' did not exist at that time, the fact that employee influence to succeed such a process was of importance was already known. MaryAnn Keller, founder and managing partner of MaryAnn Keller & Associates LLC, namely stated in June 1998 that <nowiki>“</nowiki>The success of any combination depends on the ability of the new organization to win over the hearts and minds of employees.<nowiki>”</nowiki> <ref> [http://murphylibrary.uwlax.edu/digital/jur/2002/carpiaux.pdf] Nicole Carpiaux. ''DaimlerChrysler : Wunderkind or Problem Child ?'' Faculty Sponsor : Leticia Peña, Department of Management. </ref> The managers of DaimlerChrysler should then be aware that is really a management issue to embrace workers instead to neglect them in order to obtain the best they can offer.

===Clients===
And what about the consumers, low-power and high interest stakeholders?

Once again, one could argue that managers failed to define as well as to meet their needs.
One example is given for illustration. At the time, the DaimlerChrysler A-Class was 1.25 to 2 times more expensive than similar vehicles sold by Volkswagen, Renault or Fiat. This higher price was not deterrent since clients were aware that Daimler-Benz primarily asset was quality and safety. However, in 1999, the A-class failed an emergency maneuver test conducted by a Swedish television station. <ref> Bill Vlasic, Bradley A. Stertz. ''Taken for a Ride: How Daimler-Benz Drove off with Chrysler''. Harper Paperbacks,
2001, p. 300.
</ref> Consequently, client´s satisfaction suddenly drop off the map. The DaimlerChrysler vehicle was considered as an overpriced car which did not achieve engineering excellence compared to the highly competitive European compact market. The crux of the problem may be that the German entity have tried to implant the American low development costs into its entities, disregarding the high expectations of the clients. This paragraph appears to prove that trying to generate synergy savings the managers failed in responding the customer´s needs.

===Stockholders===
Last but not least, the management of both high power and high interest stakeholders needs to be considered. Take the stockholders.

An overwhelming majority of them favored the project of merger in 1998. Approvals ratings reached 99.9% at Daimler-Benz and 97.5% at Chrysler. It may be inferred that, at the outset of the project, managers successfully took into account the processes required to satisfy the shareholders. It did not take long, however, for some of them to express their disappointment. This was the case for Kirk Kerkorian, the third largest proprietor of DailerChrysler stock and largest Chrysler shareholder before the merger. In November 2000, the latter filed a $9 billion lawsuit against DaimlerChrysler for falsifying the terms of the fusion as a “merger of equals”. He was upset with the German hegemony and stated he had voted to turn its shares for stock in DaimlerChrysler without having considered the American entity would be reduced to a mere division. Two months later, he cut his take in the merged company by a third. Even though the managers were not directly involved in this discontent, the lack of acting responsibly of the Board of the director is obvious.

To conclude, the completion of the processes related to each of these three stakeholders lacked efficiency. The managers failed in implementing the required activities to satisfy them and this will become a major hindrance to the project completion.

=Conclusion=
Many factors may affect the failure of the DaimlerChrysler project, but most of them may have been due to its mismanagement. Such a union was notoriously risky, especially due to the opposite companies it combined. To deliver the intent benefits, particular care should then have been taken by managers to tackle all the project management processes.

The use of the standard ''ISO 21500 : 2012'' was made to group the processes in term of Subject Group. It appears clear that there were some omissions, particularly regarding Integration, Time, Communication and Stakeholders. This standard has proven to be useful to analyze a project management, especially in case of cross-boarders project. It is a shame that such a unifying international approach was only established in 2012.

= References =

<references />

[[Category:Project Management]]
[[Category:Human Behaviour]]
[[Category:Complexity]]

Analyzing the failure of the DaimlerChrysler merger from a project management perspective

2014-12-01T19:31:52Z

Lyngby: /* The mismanagement of some subject groups Wanda Curlee, Robert L. Gordon . Complexity Theory and Project Management. . New York : Wiley, 2011, p. 129-133 */

'''Abstract'''

In the late 90´s, German Daimler-Benz AG and American Chrysler Corporation announced their intention to combine their strengths within a so-called `merger of equals´ <ref> Grässlin, Jürgen. ''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> . Becoming the fifth largest automaker in the world, both companies hoped to overcome together the automotive industry crisis. However, nothing worked out as planned, so much so that in 2007 Daimler-Benz sold all its shares of the Chrysler division.

Could the use of a norm have guaranteed the success of the DaimlerChrysler merger ? This question will be answered with regard to the ISO 21500:2012 guideline for project management.

According to the latter, a definition of project management and the processes it involves will be provided.Then, an analysis of the origin of DaimlerChrysler project will be carried out. It will also be shown to what extent this fusion was mismanaged with regard to the subject groups defined in the ISO 21500:2012. Last but not least the benefits of using this standard to successfully conduct a complex project will be discussed.

=Introduction=
In the early 21st century, no comprehensive standard on project management was accepted despite the substantial demand for project management skills. However, in 2006, the need for a unifying international approach was recognized by the International Organization for Standard (ISO). The work of over hundreds experts in project management from around the globe resulted in ''ISO 21500: 2012 -Guidance on project management''. This norm defines universal project management terminologies, as well as the principles and processes it involves. It provides a basic guide against which any organization can compare its current project management practices and determine areas in need of improvement. But how to practically apply it to a project? A specific example of project failure prior to introducing ISO 21500 will be provided to analyze which project management processes were disregarded. More particularly, the merger of the German automaker Daimler-Benz with the American Chrysler Corporation will be examined with the perspective of subject group.

= ISO 21500 : 2012, A focus on processes <ref> ISO 21500:2012 ''Guidance on project management'' </ref> <ref> Anton Zandhuis, Rommert Stellingwerf. ''ISO 215000, Guidance on Project managenent, A Pocket Guide''. Van Haren Publishing. 2013 </ref>=

What is a project? A definition is provided by the ISO 21500: “A unique set of processes consisting of coordinated and controlled activities with start and end dates, performed to achieve project objectives.” The concept of processes seems to be at the crux of project management issues. The definition of how to manage a project stresses this point: “Project management is performed through processes”.

Specifically, the norm splits the method of managing a project into 39 elementary processes. Depending on the perspective, the latter are grouped into five process groups (Initiating, Planning, Controlling and Closing) or into ten subject groups (Integration, Stakeholder, Scope, Resource, Time, Cost, Risk, Quality, Procurement and Communication). The classification of these processes is provided in the following table.

{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 1 : Project management cross-referenced to process and subject groups (ISO 21500 : 2012)'''
|-
! rowspan="2" style="background: #ffedd3;" | SUBJECT GROUPS
! colspan="5" style="background: #ffedd3;" | PROCESS GROUPS
|-
|style="background: #fff4d3;" align=center | '''Initiating'''
|style="background: #fff4d3;" align=center| '''Planning'''
|style="background: #fff4d3;" align=center| '''Implementing'''
|style="background: #fff4d3;" align=center | '''Controlling'''
|style="background: #fff4d3;" align=center | '''Closing'''
|-
|style="background: #fff4d3;" |'''Integration'''
|
4.3.2 Develop project chart
|
4.3.3. Develop project plans
|
4.3.4 Direct project work
|
4.3.5 Control project work

4.3.6 Control changes
|
4.3.7 Close project or phase

4.3.8 Collect lessons learned
|-
|style="background: #fff4d3;" |'''Stakeholder'''
|
4.3.9 Identify stakeholders
|

|
4.3.10 Manage stakeholders
|

|

|-
|style="background: #fff4d3;" |'''Scope'''
|

|
4.3.11 Define scope

4.3.12 Create work breakdown structure

4.3.13 Define activities
|

|
4.3.14 Control scope
|

|-
|style="background: #fff4d3;" |'''Resource'''
|
4.3.15 Establish project team
|
4.3.16 Estimate resources

4.3.17 Define project organization
|
4.3.18 Develop project team
|
4.3.19 Control resources

4.3.20 Manage project team
|

|-
|style="background: #fff4d3;" |'''Time'''
|

|
4.3.21 Sequence activities

4.3.22 Estimate activity durations

4.3.23 Develop schedule
|

|
4.3.24 Control schedule
|

|-
|style="background: #fff4d3;" |'''Cost'''
|

|
4.3.25 Estimate costs

4.3.26 Develop budget
|

|
4.3.27 Control costs
|

|-
|style="background: #fff4d3;" |'''Risk'''
|

|
4.3.28 Identify risks

4.3.29 Asses risks
|
4.3.30 Treat risks
|
4.3.31 Control risks
|
|-
|style="background: #fff4d3;" |'''Quality'''
|

|
4.3.32 Plan quality
|
4.3.33 Perform quality assurance
|
4.3.34 Perform quality control
|

|-
|style="background: #fff4d3;" |'''Procurement'''
|

|
4.3.35 Plan procurements
|
4.3.36 Select suppliers
|
4.3.37 Administer procurements
|

|-
|style="background: #fff4d3;" |'''Communication'''
|

|
4.3.38 Plan communications
|
4.3.39 Distribute information
|
4.3.40 Manage communications
|

|}

The perspective of subject groups will be adopted to consider the management of DaimlerChrysler project. A subject is a theme in which processes are classified according to its related activities.

But before that, the project of DaimlerChrysler merger is regarded.

=DaimlerChrysler merger project <ref> Julia Hollmann, Aletéia de Moura Carpes, Thiago Antonio Beuron. ''The DaimlerChrylser Merger- A cultural mismatch ?'' Faculty Sponsor : Universität Paderborn- Germany, Department of International Business Studies. Universidade Federal de Santa Maria- Brazil, Department of Administration. 2010 </ref> =
==The genesis of the project==
In the late 90´s, the automotive industry had to face multiples challenges due to the excess manufacturing capacity, the growth of ecological awareness, and the retail revolution that empowered buyers. To strengthen their position during this crisis, the automakers Daimler-Benz and Chrysler Corporation decided to merge. This project aimed to combine each other´s product designs, manufacturing resources and distribution systems.
The following table shows the complementary of the two companies, which wanted to unit their knowledge and their market in order to gain a competitive advantage.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 2 : The complementary of the two companies '''
|
! style="background: #ffedd3;" |'''Daimler-Benz AG'''
! style="background: #ffedd3;" |'''Chrysler Corporation'''
|-
! style="background: #ffedd3;" |'''Head office location'''
|
Germany
|
United States
|-
! style="background: #ffedd3;" |'''Geographical reach'''
|
European market
|
U.S. American market
|-
! style="background: #ffedd3;" |'''Product ranges'''
|
Uncompromising quality products
|
Car models that meet the American demand for adventurousness
|}


Both synergies and economies of scale were likely to proliferate.

How the project was set up is explained in the following paragraph. However, its detailed description falls outside the scope of this article.

==The execution of the project==
On May 7th 1998, the signing of the combination agreement between Daimler-Benz and Chrysler was publicly announced. Daimler-Benz CEO Jürgen Schrempp described the union as "a merger of equals, a merger of growth, and a merger of unprecedented strength".
The equal status of the two organizations was reflected in the newly established entity name, DaimlerChrysler, as well as in the combination of the two former boards of management to form the one of DaimlerChrysler. Furthermore, it was agreed that Schrempp and Eaton, former CEO of the Chrysler Corporation, would jointly led the entity as co-chairmen and co-CEOs. It was also decided that Eaton would stay up to three years.
The two following tables provide more data about DaimlerChrysler right after the merger and the expected results of this project.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 3 : Characteristics of DaimlerChrysler right after the merger'''
|-
! style="background: #ffedd3;" |'''Number of employees '''
|442,000 employees
½ in Germany

1/3 in North America

1/6 spread across 200 countries around the world
|-
! style="background: #ffedd3;" |'''Daimler-Benz AG Market capitalization'''
|$ 92 billion
|}



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 4 : Expected results'''
! style="background: #ffedd3;" |Annual revenues of the combined company
|$ 132 billion
|-
! style="background: #ffedd3;" |Increase in sales
|13%
|-
! style="background: #ffedd3;" |Cost savings brought within 2 or 3 years
|$ 3,5 billion a year
|}


So far, this fusion appears to be very beneficial for all parties involved. However the wish for synergy effects never came true and the project drove Chrysler into chaos. In May 2007, the merger of Chrysler and Daimler-Benz was dissolved. Can this failure be ascribed to mismanagement?

The purpose of this article is now to point out which processes, related to the different subject groups definied in ISO 21500:2012 were disregarded and may have led to the project failure.

=The mismanagement of some subject groups <ref> Wanda Curlee, Robert L. Gordon . ''Complexity Theory and Project Management. ''. New York : Wiley, 2011, p. 129-133 </ref> =

Integration, Time, Communication and Stakeholders will be considered. A mismanagement of some processes related to these four specific subject groups is namely to be seen.

==Integration <ref> Grässlin, Jürgen.''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> <ref> ''DaimlerChrysler confronts the challenges of global integration'', Human Resource Management International Digest, Vol 12 Iss :2 P.5-8</ref> ==
Four Subject groups are successively addressed: Integration, Time, Communication and Stakeholders.
The Integration Subject group includes the processes required to identify, define, combine, unify, coordinate, control and close the various activities and processes related to the project (ISO 21500:2012 - 4.2.3.2).

Within this merger, the unification and combination of all operations within the established entity needed to be achieved. To meet this target, a newly corporate culture had to be defined to align working styles. The latter namely radically differ due to major cultural differences, as shown in the following table.



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 5 : Comparison between the German and the American working styles'''
|-
|
! style="background: #ffedd3;" | '''Germany'''
! style="background: #ffedd3;"|'''United States'''
|-
! style="background: #ffedd3;" align="left" |'''Employee working style'''
| Work in a team-oriented environment
| Work individually
|-
! style="background: #ffedd3;" align="left" |'''Writing report'''
| Lengthy reports
| Little paper
|-
! style="background: #ffedd3;" align="left" |'''Decision-making process'''
|
Methodical, based on very detailed plans
|
Using creativity, based on trial-and-error method
|-
! style="background: #ffedd3;" align="left" |'''Meeting'''
|
Extended discussions
|
Short meeting
|-
! style="background: #ffedd3;" align="left" |'''Organizational structure'''
|
Pronounced hierarchy based on top-down-management
|
Flat organizational hierarchy stimulating empowerment of the employees
|-
! style="background: #ffedd3;" align="left" |'''Risk appetite'''
|
Risk adverse culture
|
Risk takers
|}


Due to the fact that this merger was a so-called `merger of equals´, the integration of the two cultures was to combine them to generate a new shared corporate one. It was namely vital that both organizations learn from each other to generate synergy effects. Managers have here a central role to play to define and coordinate the development of this new culture.

Eaton affirmed that it was at the top of the agenda and Thomas Stallkamp, Chrysler President during the negotiation phase, was charged with overseeing this integration process. Some effort went into harmonizing the two corporate cultures. Many seminars and workshops were organized to sensitizing the employees for working with new colleagues with a diverging working methods. Furthermore, German was taught to many American managers.

However, given the large gap between the two organizations, it would appear that managers should have undertaken more activities and CEOs should have allocated more resources to bridge the chasm of cultural differences.

In fact, no strong and cohesive organizational culture was created, as illustrated in daily misunderstandings. For instance, the attention Daimler-Benz leaders paid to writing a leaflet sent to employee annoyed Chrysler executives. At the end of 1999, the resignation of Thomas Stallkamp, a 19-year veteran of Chrysler who was highly regarded, might be seen as failure of the merger integration process after all the effort. He is quoted as saying: <nowiki>“</nowiki>The majority of my career has been spent implementing supply chain management. I would like to continue to explore those areas at a less hectic pace<nowiki>”</nowiki>. Were both parties truly willing to cooperate wholeheartedly and to enter compromises to succeed in the numerous integration processes? A negative answer is the root cause of the unachieved integration.

==Time<ref> Sue Cartwright, Cary L. Cooper. ''Mergers and Acquisitions: The Human Factor Paperback'' . January 1, 1992 </ref>==

The Time Subject group is all about managing the timely completion of the project. Feasible deadlines taking all known constraints into account need to be set. Processes covered by the latter subject group are the development of schedule for project activities, estimating each activity duration, the progress monitoring and the schedule control.

One failure in managing time in DaimlerChrysler merger was that too little time was devoted to each activity. Let´s take a concrete example: Daimler-Benz and Chrysler began formal negotiations on January 12, 1998 and only five months later, the merger was announced worldwide. Susan Cartwright – past President of the British Academy Management – asserts that the period of time from the germ of the merger idea till an agreement is reached is estimated to last around two years. Speeding up the pre-merger preparation, the precise objectives of the fusion and the way to achieve them could not have been defined accurately.
Furthermore, the merger was completed on November 12, 1998. Time needed by employees to adapt to the new circumstances was not taken into account in the deadlines. One more mismanagement which is added to the others.

==Communication==
In the standard ISO 21500:2012, three key processes are defined to ensure appropriate exchange of project information: Plan communications, Distribute information and Manage communications. But within DaimlerChrysler project none of them were totally met. In order to appreciate the scale of the problem, it should be pointed out that even managers and CEOs experienced serious difficulties in discussing solutions and achieving a consensus. According to a Daimler-Benz executive, <nowiki>"</nowiki>Eaton went weeks without speaking with Jürgen [Schrempp]. He preferred to maintain lower-level contact. Jürgen, meanwhile, left Chrysler alone.<nowiki>"</nowiki> <ref> [http://mba.tuck.dartmouth.edu/pdf/2002-1-0071.pdf] Professor Sydney Finkelstein. ''The DaimlerChrysler Merger.''Tuck School of Business at Dartmouth. 2002 </ref> One would have expected that both CEOs would have share their different view in order to discover common goal and operate as an effective team at the top. Given the seeming clash of culture described in the first paragraph, it was crucial to start the discussion to create healthy relationship and release the company´s potential. The clearer the communication, the better issues are addressed. But with a lack of communication among leaders, no far-reaching communication plan could be implemented among all stakeholders involved, not to mention the distribution of the information. Both internal and external communications were chaotic. It is likely that the standard ISO 21500 would have make managers more aware of the processes related to communication required to be efficiently tackled.

==Stakeholders==
The stakeholder subject group is concerned with identifying and managing all stakeholders. Both their expectations and influence on the project need to be analyzed to classify them. The table 6 provides a power-interest matrix, which is crucial to draw up appropriate management strategies for effectively engaging with them. The external stakeholders are written in italics, the others are internal.

{| border="1" cellpadding="3" cellspacing="0" style="margin:auto;"
|+ '''Table 6 : Power and interest matrix'''
|-
! rowspan="2" style="background: #ffedd3;" | Level of interest
! colspan="5" style="background: #ffedd3;" | Level of power
|-
|style="background: #fff4d3;" align=center | ''' Low '''
|style="background: #fff4d3;" align=center| ''' High '''
|-
|style="background: #fff4d3;" align=center |'''High'''
|
[[Employee]]

Trade Union

''[[Clients]]''

''Suppliers''

''Government''

''Society''
|
Directors

Managers

''[[Stockholders]]''
|-
|style="background: #fff4d3;" align=center |'''Low'''
|
''Competitors''
|

|-
|}

To analyze the management of all of these stakeholders one by one would be tedious. However it is relevant to focus on several categories according to the table 6. Special focus will be laid on the stakeholders written in red in the table above. Therefore, both high power/high interest and low power/high interest stakeholders will be looked at. Furthermore, two of them are internal, whereas the other is internal.
All of them were significantly affected by the DaimlerChrysler project due to mismanagement.

===Employees===
Employees, low-power and high-interest stakeholders, must be kept informed and managers should ensure that no major issues are arising.
However, this was not the case in the DaimlerChrysler merger: employees felt overlooked, disregarded and left out of the merger process. But to what extent CEOs and managers were responsible in this climate of distrust and dislike?

First, soon after the merger, it became obvious that Daimler was taking over the whole company´s management. Chrysler President Stallkamp retirement at the end of 1999 was followed by the one of James P. Holdem, top-level executive of the Chrysler Group. They were replaced by two German managers: Dieter Zetsche and Wolfgang Bernhard. Being lowered to divisional status, it is understandable that American´s morale suffer from this German hegemony. Employee felt eclipsed and were disgusted. They also were worried that DaimlerChrysler would dismiss some of them. But the problems are not confined to be here. Indeed, Jürgen Schrempp attitude only made the situation worse. In autumn 2000, DaimlerChrysler CEO acknowledged in the German financial daily Handelsblatt that <nowiki>“</nowiki>The Merger of Equals statement was necessary in order to earn the support of Chrysler's workers and the American public, but it was never reality<nowiki>"</nowiki>. Many American regarded this statement as a betrayal, since he intended to deceive them from the outset. It appears clear that it is due to board of directors failure in acting responsibly towards these stakeholders that deep-seated distrust ran deep.

But this mismanagement of the project stakeholders can lead to far-reaching consequences on the project success itself. Indeed, it could be that some employees simply do not work as efficiently because they suppose the Board of Directors doesn’t care about the Chrysler entity – so why should they? Decreased performance would result in it.

It is to notice that even though the standard ''ISO 21500: 2012'' did not exist at that time, the fact that employee influence to succeed such a process was of importance was already known. MaryAnn Keller, founder and managing partner of MaryAnn Keller & Associates LLC, namely stated in June 1998 that <nowiki>“</nowiki>The success of any combination depends on the ability of the new organization to win over the hearts and minds of employees.<nowiki>”</nowiki> <ref> [http://murphylibrary.uwlax.edu/digital/jur/2002/carpiaux.pdf] Nicole Carpiaux. ''DaimlerChrysler : Wunderkind or Problem Child ?'' Faculty Sponsor : Leticia Peña, Department of Management. </ref> The managers of DaimlerChrysler should then be aware that is really a management issue to embrace workers instead to neglect them in order to obtain the best they can offer.

===Clients===
And what about the consumers, low-power and high interest stakeholders?

Once again, one could argue that managers failed to define as well as to meet their needs.
One example is given for illustration. At the time, the DaimlerChrysler A-Class was 1.25 to 2 times more expensive than similar vehicles sold by Volkswagen, Renault or Fiat. This higher price was not deterrent since clients were aware that Daimler-Benz primarily asset was quality and safety. However, in 1999, the A-class failed an emergency maneuver test conducted by a Swedish television station. <ref> Bill Vlasic, Bradley A. Stertz. ''Taken for a Ride: How Daimler-Benz Drove off with Chrysler''. Harper Paperbacks,
2001, p. 300.
</ref> Consequently, client´s satisfaction suddenly drop off the map. The DaimlerChrysler vehicle was considered as an overpriced car which did not achieve engineering excellence compared to the highly competitive European compact market. The crux of the problem may be that the German entity have tried to implant the American low development costs into its entities, disregarding the high expectations of the clients. This paragraph appears to prove that trying to generate synergy savings the managers failed in responding the customer´s needs.

===Stockholders===
Last but not least, the management of both high power and high interest stakeholders needs to be considered. Take the stockholders.

An overwhelming majority of them favored the project of merger in 1998. Approvals ratings reached 99.9% at Daimler-Benz and 97.5% at Chrysler. It may be inferred that, at the outset of the project, managers successfully took into account the processes required to satisfy the shareholders. It did not take long, however, for some of them to express their disappointment. This was the case for Kirk Kerkorian, the third largest proprietor of DailerChrysler stock and largest Chrysler shareholder before the merger. In November 2000, the latter filed a $9 billion lawsuit against DaimlerChrysler for falsifying the terms of the fusion as a “merger of equals”. He was upset with the German hegemony and stated he had voted to turn its shares for stock in DaimlerChrysler without having considered the American entity would be reduced to a mere division. Two months later, he cut his take in the merged company by a third. Even though the managers were not directly involved in this discontent, the lack of acting responsibly of the Board of the director is obvious.

To conclude, the completion of the processes related to each of these three stakeholders lacked efficiency. The managers failed in implementing the required activities to satisfy them and this will become a major hindrance to the project completion.

=Conclusion=
Many factors may affect the failure of the DaimlerChrysler project, but most of them may have been due to its mismanagement. Such a union was notoriously risky, especially due to the opposite companies it combined. To deliver the intent benefits, particular care should then have been taken by managers to tackle all the project management processes.

The use of the standard ''ISO 21500 : 2012'' was made to group the processes in term of Subject Group. It appears clear that there were some omissions, particularly regarding Integration, Time, Communication and Stakeholders. This standard has proven to be useful to analyze a project management, especially in case of cross-boarders project. It is a shame that such a unifying international approach was only established in 2012.

= References =

<references />

[[Category:Project Management]]
[[Category:Human Behaviour]]
[[Category:Complexity]]

Analyzing the failure of the DaimlerChrysler merger from a project management perspective

2014-12-01T19:28:25Z

Lyngby: /* The genesis of the project */

'''Abstract'''

In the late 90´s, German Daimler-Benz AG and American Chrysler Corporation announced their intention to combine their strengths within a so-called `merger of equals´ <ref> Grässlin, Jürgen. ''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> . Becoming the fifth largest automaker in the world, both companies hoped to overcome together the automotive industry crisis. However, nothing worked out as planned, so much so that in 2007 Daimler-Benz sold all its shares of the Chrysler division.

Could the use of a norm have guaranteed the success of the DaimlerChrysler merger ? This question will be answered with regard to the ISO 21500:2012 guideline for project management.

According to the latter, a definition of project management and the processes it involves will be provided.Then, an analysis of the origin of DaimlerChrysler project will be carried out. It will also be shown to what extent this fusion was mismanaged with regard to the subject groups defined in the ISO 21500:2012. Last but not least the benefits of using this standard to successfully conduct a complex project will be discussed.

=Introduction=
In the early 21st century, no comprehensive standard on project management was accepted despite the substantial demand for project management skills. However, in 2006, the need for a unifying international approach was recognized by the International Organization for Standard (ISO). The work of over hundreds experts in project management from around the globe resulted in ''ISO 21500: 2012 -Guidance on project management''. This norm defines universal project management terminologies, as well as the principles and processes it involves. It provides a basic guide against which any organization can compare its current project management practices and determine areas in need of improvement. But how to practically apply it to a project? A specific example of project failure prior to introducing ISO 21500 will be provided to analyze which project management processes were disregarded. More particularly, the merger of the German automaker Daimler-Benz with the American Chrysler Corporation will be examined with the perspective of subject group.

= ISO 21500 : 2012, A focus on processes <ref> ISO 21500:2012 ''Guidance on project management'' </ref> <ref> Anton Zandhuis, Rommert Stellingwerf. ''ISO 215000, Guidance on Project managenent, A Pocket Guide''. Van Haren Publishing. 2013 </ref>=

What is a project? A definition is provided by the ISO 21500: “A unique set of processes consisting of coordinated and controlled activities with start and end dates, performed to achieve project objectives.” The concept of processes seems to be at the crux of project management issues. The definition of how to manage a project stresses this point: “Project management is performed through processes”.

Specifically, the norm splits the method of managing a project into 39 elementary processes. Depending on the perspective, the latter are grouped into five process groups (Initiating, Planning, Controlling and Closing) or into ten subject groups (Integration, Stakeholder, Scope, Resource, Time, Cost, Risk, Quality, Procurement and Communication). The classification of these processes is provided in the following table.

{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 1 : Project management cross-referenced to process and subject groups (ISO 21500 : 2012)'''
|-
! rowspan="2" style="background: #ffedd3;" | SUBJECT GROUPS
! colspan="5" style="background: #ffedd3;" | PROCESS GROUPS
|-
|style="background: #fff4d3;" align=center | '''Initiating'''
|style="background: #fff4d3;" align=center| '''Planning'''
|style="background: #fff4d3;" align=center| '''Implementing'''
|style="background: #fff4d3;" align=center | '''Controlling'''
|style="background: #fff4d3;" align=center | '''Closing'''
|-
|style="background: #fff4d3;" |'''Integration'''
|
4.3.2 Develop project chart
|
4.3.3. Develop project plans
|
4.3.4 Direct project work
|
4.3.5 Control project work

4.3.6 Control changes
|
4.3.7 Close project or phase

4.3.8 Collect lessons learned
|-
|style="background: #fff4d3;" |'''Stakeholder'''
|
4.3.9 Identify stakeholders
|

|
4.3.10 Manage stakeholders
|

|

|-
|style="background: #fff4d3;" |'''Scope'''
|

|
4.3.11 Define scope

4.3.12 Create work breakdown structure

4.3.13 Define activities
|

|
4.3.14 Control scope
|

|-
|style="background: #fff4d3;" |'''Resource'''
|
4.3.15 Establish project team
|
4.3.16 Estimate resources

4.3.17 Define project organization
|
4.3.18 Develop project team
|
4.3.19 Control resources

4.3.20 Manage project team
|

|-
|style="background: #fff4d3;" |'''Time'''
|

|
4.3.21 Sequence activities

4.3.22 Estimate activity durations

4.3.23 Develop schedule
|

|
4.3.24 Control schedule
|

|-
|style="background: #fff4d3;" |'''Cost'''
|

|
4.3.25 Estimate costs

4.3.26 Develop budget
|

|
4.3.27 Control costs
|

|-
|style="background: #fff4d3;" |'''Risk'''
|

|
4.3.28 Identify risks

4.3.29 Asses risks
|
4.3.30 Treat risks
|
4.3.31 Control risks
|
|-
|style="background: #fff4d3;" |'''Quality'''
|

|
4.3.32 Plan quality
|
4.3.33 Perform quality assurance
|
4.3.34 Perform quality control
|

|-
|style="background: #fff4d3;" |'''Procurement'''
|

|
4.3.35 Plan procurements
|
4.3.36 Select suppliers
|
4.3.37 Administer procurements
|

|-
|style="background: #fff4d3;" |'''Communication'''
|

|
4.3.38 Plan communications
|
4.3.39 Distribute information
|
4.3.40 Manage communications
|

|}

The perspective of subject groups will be adopted to consider the management of DaimlerChrysler project. A subject is a theme in which processes are classified according to its related activities.

But before that, the project of DaimlerChrysler merger is regarded.

=DaimlerChrysler merger project <ref> Julia Hollmann, Aletéia de Moura Carpes, Thiago Antonio Beuron. ''The DaimlerChrylser Merger- A cultural mismatch ?'' Faculty Sponsor : Universität Paderborn- Germany, Department of International Business Studies. Universidade Federal de Santa Maria- Brazil, Department of Administration. 2010 </ref> =
==The genesis of the project==
In the late 90´s, the automotive industry had to face multiples challenges due to the excess manufacturing capacity, the growth of ecological awareness, and the retail revolution that empowered buyers. To strengthen their position during this crisis, the automakers Daimler-Benz and Chrysler Corporation decided to merge. This project aimed to combine each other´s product designs, manufacturing resources and distribution systems.
The following table shows the complementary of the two companies, which wanted to unit their knowledge and their market in order to gain a competitive advantage.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 2 : The complementary of the two companies '''
|
! style="background: #ffedd3;" |'''Daimler-Benz AG'''
! style="background: #ffedd3;" |'''Chrysler Corporation'''
|-
! style="background: #ffedd3;" |'''Head office location'''
|
Germany
|
United States
|-
! style="background: #ffedd3;" |'''Geographical reach'''
|
European market
|
U.S. American market
|-
! style="background: #ffedd3;" |'''Product ranges'''
|
Uncompromising quality products
|
Car models that meet the American demand for adventurousness
|}


Both synergies and economies of scale were likely to proliferate.

How the project was set up is explained in the following paragraph. However, its detailed description falls outside the scope of this article.

==The execution of the project==
On May 7th 1998, the signing of the combination agreement between Daimler-Benz and Chrysler was publicly announced. Daimler-Benz CEO Jürgen Schrempp described the union as "a merger of equals, a merger of growth, and a merger of unprecedented strength".
The equal status of the two organizations was reflected in the newly established entity name, DaimlerChrysler, as well as in the combination of the two former boards of management to form the one of DaimlerChrysler. Furthermore, it was agreed that Schrempp and Eaton, former CEO of the Chrysler Corporation, would jointly led the entity as co-chairmen and co-CEOs. It was also decided that Eaton would stay up to three years.
The two following tables provide more data about DaimlerChrysler right after the merger and the expected results of this project.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 3 : Characteristics of DaimlerChrysler right after the merger'''
|-
! style="background: #ffedd3;" |'''Number of employees '''
|442,000 employees
½ in Germany

1/3 in North America

1/6 spread across 200 countries around the world
|-
! style="background: #ffedd3;" |'''Daimler-Benz AG Market capitalization'''
|$ 92 billion
|}



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 4 : Expected results'''
! style="background: #ffedd3;" |Annual revenues of the combined company
|$ 132 billion
|-
! style="background: #ffedd3;" |Increase in sales
|13%
|-
! style="background: #ffedd3;" |Cost savings brought within 2 or 3 years
|$ 3,5 billion a year
|}


So far, this fusion appears to be very beneficial for all parties involved. However the wish for synergy effects never came true and the project drove Chrysler into chaos. In May 2007, the merger of Chrysler and Daimler-Benz was dissolved. Can this failure be ascribed to mismanagement?

The purpose of this article is now to point out which processes, related to the different subject groups definied in ISO 21500:2012 were disregarded and may have led to the project failure.

=The mismanagement of some subject groups <ref> Wanda Curlee, Robert L. Gordon . ''Complexity Theory and Project Management. ''. New York : Wiley, 2011, p. 129-133 </ref> =

Integration, Time, Communication and Stakeholders will be considered. The mismanagement of some processes related to these four specific subject groups is namely to be seen.

==Integration <ref> Grässlin, Jürgen.''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> <ref> ''DaimlerChrysler confronts the challenges of global integration'', Human Resource Management International Digest, Vol 12 Iss :2 P.5-8</ref> ==
Four Subject groups are successively addressed: Integration, Time, Communication and Stakeholders.
The Integration Subject group includes the processes required to identify, define, combine, unify, coordinate, control and close the various activities and processes related to the project (ISO 21500:2012 - 4.2.3.2).

Within this merger, the unification and combination of all operations within the established entity needed to be achieved. To meet this target, a newly corporate culture had to be defined to align working styles. The latter namely radically differ due to major cultural differences, as shown in the following table.



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 5 : Comparison between the German and the American working styles'''
|-
|
! style="background: #ffedd3;" | '''Germany'''
! style="background: #ffedd3;"|'''United States'''
|-
! style="background: #ffedd3;" align="left" |'''Employee working style'''
| Work in a team-oriented environment
| Work individually
|-
! style="background: #ffedd3;" align="left" |'''Writing report'''
| Lengthy reports
| Little paper
|-
! style="background: #ffedd3;" align="left" |'''Decision-making process'''
|
Methodical, based on very detailed plans
|
Using creativity, based on trial-and-error method
|-
! style="background: #ffedd3;" align="left" |'''Meeting'''
|
Extended discussions
|
Short meeting
|-
! style="background: #ffedd3;" align="left" |'''Organizational structure'''
|
Pronounced hierarchy based on top-down-management
|
Flat organizational hierarchy stimulating empowerment of the employees
|-
! style="background: #ffedd3;" align="left" |'''Risk appetite'''
|
Risk adverse culture
|
Risk takers
|}


Due to the fact that this merger was a so-called `merger of equals´, the integration of the two cultures was to combine them to generate a new shared corporate one. It was namely vital that both organizations learn from each other to generate synergy effects. Managers have here a central role to play to define and coordinate the development of this new culture.

Eaton affirmed that it was at the top of the agenda and Thomas Stallkamp, Chrysler President during the negotiation phase, was charged with overseeing this integration process. Some effort went into harmonizing the two corporate cultures. Many seminars and workshops were organized to sensitizing the employees for working with new colleagues with a diverging working methods. Furthermore, German was taught to many American managers.

However, given the large gap between the two organizations, it would appear that managers should have undertaken more activities and CEOs should have allocated more resources to bridge the chasm of cultural differences.

In fact, no strong and cohesive organizational culture was created, as illustrated in daily misunderstandings. For instance, the attention Daimler-Benz leaders paid to writing a leaflet sent to employee annoyed Chrysler executives. At the end of 1999, the resignation of Thomas Stallkamp, a 19-year veteran of Chrysler who was highly regarded, might be seen as failure of the merger integration process after all the effort. He is quoted as saying: <nowiki>“</nowiki>The majority of my career has been spent implementing supply chain management. I would like to continue to explore those areas at a less hectic pace<nowiki>”</nowiki>. Were both parties truly willing to cooperate wholeheartedly and to enter compromises to succeed in the numerous integration processes? A negative answer is the root cause of the unachieved integration.

==Time<ref> Sue Cartwright, Cary L. Cooper. ''Mergers and Acquisitions: The Human Factor Paperback'' . January 1, 1992 </ref>==

The Time Subject group is all about managing the timely completion of the project. Feasible deadlines taking all known constraints into account need to be set. Processes covered by the latter subject group are the development of schedule for project activities, estimating each activity duration, the progress monitoring and the schedule control.

One failure in managing time in DaimlerChrysler merger was that too little time was devoted to each activity. Let´s take a concrete example: Daimler-Benz and Chrysler began formal negotiations on January 12, 1998 and only five months later, the merger was announced worldwide. Susan Cartwright – past President of the British Academy Management – asserts that the period of time from the germ of the merger idea till an agreement is reached is estimated to last around two years. Speeding up the pre-merger preparation, the precise objectives of the fusion and the way to achieve them could not have been defined accurately.
Furthermore, the merger was completed on November 12, 1998. Time needed by employees to adapt to the new circumstances was not taken into account in the deadlines. One more mismanagement which is added to the others.

==Communication==
In the standard ISO 21500:2012, three key processes are defined to ensure appropriate exchange of project information: Plan communications, Distribute information and Manage communications. But within DaimlerChrysler project none of them were totally met. In order to appreciate the scale of the problem, it should be pointed out that even managers and CEOs experienced serious difficulties in discussing solutions and achieving a consensus. According to a Daimler-Benz executive, <nowiki>"</nowiki>Eaton went weeks without speaking with Jürgen [Schrempp]. He preferred to maintain lower-level contact. Jürgen, meanwhile, left Chrysler alone.<nowiki>"</nowiki> <ref> [http://mba.tuck.dartmouth.edu/pdf/2002-1-0071.pdf] Professor Sydney Finkelstein. ''The DaimlerChrysler Merger.''Tuck School of Business at Dartmouth. 2002 </ref> One would have expected that both CEOs would have share their different view in order to discover common goal and operate as an effective team at the top. Given the seeming clash of culture described in the first paragraph, it was crucial to start the discussion to create healthy relationship and release the company´s potential. The clearer the communication, the better issues are addressed. But with a lack of communication among leaders, no far-reaching communication plan could be implemented among all stakeholders involved, not to mention the distribution of the information. Both internal and external communications were chaotic. It is likely that the standard ISO 21500 would have make managers more aware of the processes related to communication required to be efficiently tackled.

==Stakeholders==
The stakeholder subject group is concerned with identifying and managing all stakeholders. Both their expectations and influence on the project need to be analyzed to classify them. The table 6 provides a power-interest matrix, which is crucial to draw up appropriate management strategies for effectively engaging with them. The external stakeholders are written in italics, the others are internal.

{| border="1" cellpadding="3" cellspacing="0" style="margin:auto;"
|+ '''Table 6 : Power and interest matrix'''
|-
! rowspan="2" style="background: #ffedd3;" | Level of interest
! colspan="5" style="background: #ffedd3;" | Level of power
|-
|style="background: #fff4d3;" align=center | ''' Low '''
|style="background: #fff4d3;" align=center| ''' High '''
|-
|style="background: #fff4d3;" align=center |'''High'''
|
[[Employee]]

Trade Union

''[[Clients]]''

''Suppliers''

''Government''

''Society''
|
Directors

Managers

''[[Stockholders]]''
|-
|style="background: #fff4d3;" align=center |'''Low'''
|
''Competitors''
|

|-
|}

To analyze the management of all of these stakeholders one by one would be tedious. However it is relevant to focus on several categories according to the table 6. Special focus will be laid on the stakeholders written in red in the table above. Therefore, both high power/high interest and low power/high interest stakeholders will be looked at. Furthermore, two of them are internal, whereas the other is internal.
All of them were significantly affected by the DaimlerChrysler project due to mismanagement.

===Employees===
Employees, low-power and high-interest stakeholders, must be kept informed and managers should ensure that no major issues are arising.
However, this was not the case in the DaimlerChrysler merger: employees felt overlooked, disregarded and left out of the merger process. But to what extent CEOs and managers were responsible in this climate of distrust and dislike?

First, soon after the merger, it became obvious that Daimler was taking over the whole company´s management. Chrysler President Stallkamp retirement at the end of 1999 was followed by the one of James P. Holdem, top-level executive of the Chrysler Group. They were replaced by two German managers: Dieter Zetsche and Wolfgang Bernhard. Being lowered to divisional status, it is understandable that American´s morale suffer from this German hegemony. Employee felt eclipsed and were disgusted. They also were worried that DaimlerChrysler would dismiss some of them. But the problems are not confined to be here. Indeed, Jürgen Schrempp attitude only made the situation worse. In autumn 2000, DaimlerChrysler CEO acknowledged in the German financial daily Handelsblatt that <nowiki>“</nowiki>The Merger of Equals statement was necessary in order to earn the support of Chrysler's workers and the American public, but it was never reality<nowiki>"</nowiki>. Many American regarded this statement as a betrayal, since he intended to deceive them from the outset. It appears clear that it is due to board of directors failure in acting responsibly towards these stakeholders that deep-seated distrust ran deep.

But this mismanagement of the project stakeholders can lead to far-reaching consequences on the project success itself. Indeed, it could be that some employees simply do not work as efficiently because they suppose the Board of Directors doesn’t care about the Chrysler entity – so why should they? Decreased performance would result in it.

It is to notice that even though the standard ''ISO 21500: 2012'' did not exist at that time, the fact that employee influence to succeed such a process was of importance was already known. MaryAnn Keller, founder and managing partner of MaryAnn Keller & Associates LLC, namely stated in June 1998 that <nowiki>“</nowiki>The success of any combination depends on the ability of the new organization to win over the hearts and minds of employees.<nowiki>”</nowiki> <ref> [http://murphylibrary.uwlax.edu/digital/jur/2002/carpiaux.pdf] Nicole Carpiaux. ''DaimlerChrysler : Wunderkind or Problem Child ?'' Faculty Sponsor : Leticia Peña, Department of Management. </ref> The managers of DaimlerChrysler should then be aware that is really a management issue to embrace workers instead to neglect them in order to obtain the best they can offer.

===Clients===
And what about the consumers, low-power and high interest stakeholders?

Once again, one could argue that managers failed to define as well as to meet their needs.
One example is given for illustration. At the time, the DaimlerChrysler A-Class was 1.25 to 2 times more expensive than similar vehicles sold by Volkswagen, Renault or Fiat. This higher price was not deterrent since clients were aware that Daimler-Benz primarily asset was quality and safety. However, in 1999, the A-class failed an emergency maneuver test conducted by a Swedish television station. <ref> Bill Vlasic, Bradley A. Stertz. ''Taken for a Ride: How Daimler-Benz Drove off with Chrysler''. Harper Paperbacks,
2001, p. 300.
</ref> Consequently, client´s satisfaction suddenly drop off the map. The DaimlerChrysler vehicle was considered as an overpriced car which did not achieve engineering excellence compared to the highly competitive European compact market. The crux of the problem may be that the German entity have tried to implant the American low development costs into its entities, disregarding the high expectations of the clients. This paragraph appears to prove that trying to generate synergy savings the managers failed in responding the customer´s needs.

===Stockholders===
Last but not least, the management of both high power and high interest stakeholders needs to be considered. Take the stockholders.

An overwhelming majority of them favored the project of merger in 1998. Approvals ratings reached 99.9% at Daimler-Benz and 97.5% at Chrysler. It may be inferred that, at the outset of the project, managers successfully took into account the processes required to satisfy the shareholders. It did not take long, however, for some of them to express their disappointment. This was the case for Kirk Kerkorian, the third largest proprietor of DailerChrysler stock and largest Chrysler shareholder before the merger. In November 2000, the latter filed a $9 billion lawsuit against DaimlerChrysler for falsifying the terms of the fusion as a “merger of equals”. He was upset with the German hegemony and stated he had voted to turn its shares for stock in DaimlerChrysler without having considered the American entity would be reduced to a mere division. Two months later, he cut his take in the merged company by a third. Even though the managers were not directly involved in this discontent, the lack of acting responsibly of the Board of the director is obvious.

To conclude, the completion of the processes related to each of these three stakeholders lacked efficiency. The managers failed in implementing the required activities to satisfy them and this will become a major hindrance to the project completion.

=Conclusion=
Many factors may affect the failure of the DaimlerChrysler project, but most of them may have been due to its mismanagement. Such a union was notoriously risky, especially due to the opposite companies it combined. To deliver the intent benefits, particular care should then have been taken by managers to tackle all the project management processes.

The use of the standard ''ISO 21500 : 2012'' was made to group the processes in term of Subject Group. It appears clear that there were some omissions, particularly regarding Integration, Time, Communication and Stakeholders. This standard has proven to be useful to analyze a project management, especially in case of cross-boarders project. It is a shame that such a unifying international approach was only established in 2012.

= References =

<references />

[[Category:Project Management]]
[[Category:Human Behaviour]]
[[Category:Complexity]]

Analyzing the failure of the DaimlerChrysler merger from a project management perspective

2014-12-01T19:26:52Z

'''Abstract'''

In the late 90´s, German Daimler-Benz AG and American Chrysler Corporation announced their intention to combine their strengths within a so-called `merger of equals´ <ref> Grässlin, Jürgen. ''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> . Becoming the fifth largest automaker in the world, both companies hoped to overcome together the automotive industry crisis. However, nothing worked out as planned, so much so that in 2007 Daimler-Benz sold all its shares of the Chrysler division.

Could the use of a norm have guaranteed the success of the DaimlerChrysler merger ? This question will be answered with regard to the ISO 21500:2012 guideline for project management.

According to the latter, a definition of project management and the processes it involves will be provided.Then, an analysis of the origin of DaimlerChrysler project will be carried out. It will also be shown to what extent this fusion was mismanaged with regard to the subject groups defined in the ISO 21500:2012. Last but not least the benefits of using this standard to successfully conduct a complex project will be discussed.

=Introduction=
In the early 21st century, no comprehensive standard on project management was accepted despite the substantial demand for project management skills. However, in 2006, the need for a unifying international approach was recognized by the International Organization for Standard (ISO). The work of over hundreds experts in project management from around the globe resulted in ''ISO 21500: 2012 -Guidance on project management''. This norm defines universal project management terminologies, as well as the principles and processes it involves. It provides a basic guide against which any organization can compare its current project management practices and determine areas in need of improvement. But how to practically apply it to a project? A specific example of project failure prior to introducing ISO 21500 will be provided to analyze which project management processes were disregarded. More particularly, the merger of the German automaker Daimler-Benz with the American Chrysler Corporation will be examined with the perspective of subject group.

= ISO 21500 : 2012, A focus on processes <ref> ISO 21500:2012 ''Guidance on project management'' </ref> <ref> Anton Zandhuis, Rommert Stellingwerf. ''ISO 215000, Guidance on Project managenent, A Pocket Guide''. Van Haren Publishing. 2013 </ref>=

What is a project? A definition is provided by the ISO 21500: “A unique set of processes consisting of coordinated and controlled activities with start and end dates, performed to achieve project objectives.” The concept of processes seems to be at the crux of project management issues. The definition of how to manage a project stresses this point: “Project management is performed through processes”.

Specifically, the norm splits the method of managing a project into 39 elementary processes. Depending on the perspective, the latter are grouped into five process groups (Initiating, Planning, Controlling and Closing) or into ten subject groups (Integration, Stakeholder, Scope, Resource, Time, Cost, Risk, Quality, Procurement and Communication). The classification of these processes is provided in the following table.

{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 1 : Project management cross-referenced to process and subject groups (ISO 21500 : 2012)'''
|-
! rowspan="2" style="background: #ffedd3;" | SUBJECT GROUPS
! colspan="5" style="background: #ffedd3;" | PROCESS GROUPS
|-
|style="background: #fff4d3;" align=center | '''Initiating'''
|style="background: #fff4d3;" align=center| '''Planning'''
|style="background: #fff4d3;" align=center| '''Implementing'''
|style="background: #fff4d3;" align=center | '''Controlling'''
|style="background: #fff4d3;" align=center | '''Closing'''
|-
|style="background: #fff4d3;" |'''Integration'''
|
4.3.2 Develop project chart
|
4.3.3. Develop project plans
|
4.3.4 Direct project work
|
4.3.5 Control project work

4.3.6 Control changes
|
4.3.7 Close project or phase

4.3.8 Collect lessons learned
|-
|style="background: #fff4d3;" |'''Stakeholder'''
|
4.3.9 Identify stakeholders
|

|
4.3.10 Manage stakeholders
|

|

|-
|style="background: #fff4d3;" |'''Scope'''
|

|
4.3.11 Define scope

4.3.12 Create work breakdown structure

4.3.13 Define activities
|

|
4.3.14 Control scope
|

|-
|style="background: #fff4d3;" |'''Resource'''
|
4.3.15 Establish project team
|
4.3.16 Estimate resources

4.3.17 Define project organization
|
4.3.18 Develop project team
|
4.3.19 Control resources

4.3.20 Manage project team
|

|-
|style="background: #fff4d3;" |'''Time'''
|

|
4.3.21 Sequence activities

4.3.22 Estimate activity durations

4.3.23 Develop schedule
|

|
4.3.24 Control schedule
|

|-
|style="background: #fff4d3;" |'''Cost'''
|

|
4.3.25 Estimate costs

4.3.26 Develop budget
|

|
4.3.27 Control costs
|

|-
|style="background: #fff4d3;" |'''Risk'''
|

|
4.3.28 Identify risks

4.3.29 Asses risks
|
4.3.30 Treat risks
|
4.3.31 Control risks
|
|-
|style="background: #fff4d3;" |'''Quality'''
|

|
4.3.32 Plan quality
|
4.3.33 Perform quality assurance
|
4.3.34 Perform quality control
|

|-
|style="background: #fff4d3;" |'''Procurement'''
|

|
4.3.35 Plan procurements
|
4.3.36 Select suppliers
|
4.3.37 Administer procurements
|

|-
|style="background: #fff4d3;" |'''Communication'''
|

|
4.3.38 Plan communications
|
4.3.39 Distribute information
|
4.3.40 Manage communications
|

|}

The perspective of subject groups will be adopted to consider the management of DaimlerChrysler project. A subject is a theme in which processes are classified according to its related activities.

But before that, the project of DaimlerChrysler merger is regarded.

=DaimlerChrysler merger project <ref> Julia Hollmann, Aletéia de Moura Carpes, Thiago Antonio Beuron. ''The DaimlerChrylser Merger- A cultural mismatch ?'' Faculty Sponsor : Universität Paderborn- Germany, Department of International Business Studies. Universidade Federal de Santa Maria- Brazil, Department of Administration. 2010 </ref> =
==The genesis of the project==
In the late 90´s, the automotive industry had to face multiples challenges due to the excess manufacturing capacity, the growth of ecological awareness, and the retail revolution that empowered buyers. To strengthen their position during this crisis, the automakers Daimler-Benz and Chrysler Corporation decided to merge. This project aimed to combine each other´s product designs, manufacturing resources and distribution systems.
The following table shows the complementary of the two companies, which wanted to unit their knowledge and their market in order to gain a competitive advantage.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 2 : The complementary of the two companies '''
|
! style="background: #ffedd3;" |'''Daimler-Benz AG'''
! style="background: #ffedd3;" |'''Chrysler Corporation'''
|-
! style="background: #ffedd3;" |'''Head office location'''
|
Germany
|
United States
|-
! style="background: #ffedd3;" |'''Geographical reach'''
|
European market
|
U.S. American market
|-
! style="background: #ffedd3;" |'''Product ranges'''
|
Uncompromising quality products
|
Car models that met the American demand for adventurousness
|}


Both synergies and economies of scale were likely to proliferate.

How the project was set up is explained in the following paragraph. However, its detailed description falls outside the scope of this article.

==The execution of the project==
On May 7th 1998, the signing of the combination agreement between Daimler-Benz and Chrysler was publicly announced. Daimler-Benz CEO Jürgen Schrempp described the union as "a merger of equals, a merger of growth, and a merger of unprecedented strength".
The equal status of the two organizations was reflected in the newly established entity name, DaimlerChrysler, as well as in the combination of the two former boards of management to form the one of DaimlerChrysler. Furthermore, it was agreed that Schrempp and Eaton, former CEO of the Chrysler Corporation, would jointly led the entity as co-chairmen and co-CEOs. It was also decided that Eaton would stay up to three years.
The two following tables provide more data about DaimlerChrysler right after the merger and the expected results of this project.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 3 : Characteristics of DaimlerChrysler right after the merger'''
|-
! style="background: #ffedd3;" |'''Number of employees '''
|442,000 employees
½ in Germany

1/3 in North America

1/6 spread across 200 countries around the world
|-
! style="background: #ffedd3;" |'''Daimler-Benz AG Market capitalization'''
|$ 92 billion
|}



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 4 : Expected results'''
! style="background: #ffedd3;" |Annual revenues of the combined company
|$ 132 billion
|-
! style="background: #ffedd3;" |Increase in sales
|13%
|-
! style="background: #ffedd3;" |Cost savings brought within 2 or 3 years
|$ 3,5 billion a year
|}


So far, this fusion appears to be very beneficial for all parties involved. However the wish for synergy effects never came true and the project drove Chrysler into chaos. In May 2007, the merger of Chrysler and Daimler-Benz was dissolved. Can this failure be ascribed to mismanagement?

The purpose of this article is now to point out which processes, related to the different subject groups definied in ISO 21500:2012 were disregarded and may have led to the project failure.

=The mismanagement of some subject groups <ref> Wanda Curlee, Robert L. Gordon . ''Complexity Theory and Project Management. ''. New York : Wiley, 2011, p. 129-133 </ref> =

Integration, Time, Communication and Stakeholders will be considered. The mismanagement of some processes related to these four specific subject groups is namely to be seen.

==Integration <ref> Grässlin, Jürgen.''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> <ref> ''DaimlerChrysler confronts the challenges of global integration'', Human Resource Management International Digest, Vol 12 Iss :2 P.5-8</ref> ==
Four Subject groups are successively addressed: Integration, Time, Communication and Stakeholders.
The Integration Subject group includes the processes required to identify, define, combine, unify, coordinate, control and close the various activities and processes related to the project (ISO 21500:2012 - 4.2.3.2).

Within this merger, the unification and combination of all operations within the established entity needed to be achieved. To meet this target, a newly corporate culture had to be defined to align working styles. The latter namely radically differ due to major cultural differences, as shown in the following table.



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 5 : Comparison between the German and the American working styles'''
|-
|
! style="background: #ffedd3;" | '''Germany'''
! style="background: #ffedd3;"|'''United States'''
|-
! style="background: #ffedd3;" align="left" |'''Employee working style'''
| Work in a team-oriented environment
| Work individually
|-
! style="background: #ffedd3;" align="left" |'''Writing report'''
| Lengthy reports
| Little paper
|-
! style="background: #ffedd3;" align="left" |'''Decision-making process'''
|
Methodical, based on very detailed plans
|
Using creativity, based on trial-and-error method
|-
! style="background: #ffedd3;" align="left" |'''Meeting'''
|
Extended discussions
|
Short meeting
|-
! style="background: #ffedd3;" align="left" |'''Organizational structure'''
|
Pronounced hierarchy based on top-down-management
|
Flat organizational hierarchy stimulating empowerment of the employees
|-
! style="background: #ffedd3;" align="left" |'''Risk appetite'''
|
Risk adverse culture
|
Risk takers
|}


Due to the fact that this merger was a so-called `merger of equals´, the integration of the two cultures was to combine them to generate a new shared corporate one. It was namely vital that both organizations learn from each other to generate synergy effects. Managers have here a central role to play to define and coordinate the development of this new culture.

Eaton affirmed that it was at the top of the agenda and Thomas Stallkamp, Chrysler President during the negotiation phase, was charged with overseeing this integration process. Some effort went into harmonizing the two corporate cultures. Many seminars and workshops were organized to sensitizing the employees for working with new colleagues with a diverging working methods. Furthermore, German was taught to many American managers.

However, given the large gap between the two organizations, it would appear that managers should have undertaken more activities and CEOs should have allocated more resources to bridge the chasm of cultural differences.

In fact, no strong and cohesive organizational culture was created, as illustrated in daily misunderstandings. For instance, the attention Daimler-Benz leaders paid to writing a leaflet sent to employee annoyed Chrysler executives. At the end of 1999, the resignation of Thomas Stallkamp, a 19-year veteran of Chrysler who was highly regarded, might be seen as failure of the merger integration process after all the effort. He is quoted as saying: <nowiki>“</nowiki>The majority of my career has been spent implementing supply chain management. I would like to continue to explore those areas at a less hectic pace<nowiki>”</nowiki>. Were both parties truly willing to cooperate wholeheartedly and to enter compromises to succeed in the numerous integration processes? A negative answer is the root cause of the unachieved integration.

==Time<ref> Sue Cartwright, Cary L. Cooper. ''Mergers and Acquisitions: The Human Factor Paperback'' . January 1, 1992 </ref>==

The Time Subject group is all about managing the timely completion of the project. Feasible deadlines taking all known constraints into account need to be set. Processes covered by the latter subject group are the development of schedule for project activities, estimating each activity duration, the progress monitoring and the schedule control.

One failure in managing time in DaimlerChrysler merger was that too little time was devoted to each activity. Let´s take a concrete example: Daimler-Benz and Chrysler began formal negotiations on January 12, 1998 and only five months later, the merger was announced worldwide. Susan Cartwright – past President of the British Academy Management – asserts that the period of time from the germ of the merger idea till an agreement is reached is estimated to last around two years. Speeding up the pre-merger preparation, the precise objectives of the fusion and the way to achieve them could not have been defined accurately.
Furthermore, the merger was completed on November 12, 1998. Time needed by employees to adapt to the new circumstances was not taken into account in the deadlines. One more mismanagement which is added to the others.

==Communication==
In the standard ISO 21500:2012, three key processes are defined to ensure appropriate exchange of project information: Plan communications, Distribute information and Manage communications. But within DaimlerChrysler project none of them were totally met. In order to appreciate the scale of the problem, it should be pointed out that even managers and CEOs experienced serious difficulties in discussing solutions and achieving a consensus. According to a Daimler-Benz executive, <nowiki>"</nowiki>Eaton went weeks without speaking with Jürgen [Schrempp]. He preferred to maintain lower-level contact. Jürgen, meanwhile, left Chrysler alone.<nowiki>"</nowiki> <ref> [http://mba.tuck.dartmouth.edu/pdf/2002-1-0071.pdf] Professor Sydney Finkelstein. ''The DaimlerChrysler Merger.''Tuck School of Business at Dartmouth. 2002 </ref> One would have expected that both CEOs would have share their different view in order to discover common goal and operate as an effective team at the top. Given the seeming clash of culture described in the first paragraph, it was crucial to start the discussion to create healthy relationship and release the company´s potential. The clearer the communication, the better issues are addressed. But with a lack of communication among leaders, no far-reaching communication plan could be implemented among all stakeholders involved, not to mention the distribution of the information. Both internal and external communications were chaotic. It is likely that the standard ISO 21500 would have make managers more aware of the processes related to communication required to be efficiently tackled.

==Stakeholders==
The stakeholder subject group is concerned with identifying and managing all stakeholders. Both their expectations and influence on the project need to be analyzed to classify them. The table 6 provides a power-interest matrix, which is crucial to draw up appropriate management strategies for effectively engaging with them. The external stakeholders are written in italics, the others are internal.

{| border="1" cellpadding="3" cellspacing="0" style="margin:auto;"
|+ '''Table 6 : Power and interest matrix'''
|-
! rowspan="2" style="background: #ffedd3;" | Level of interest
! colspan="5" style="background: #ffedd3;" | Level of power
|-
|style="background: #fff4d3;" align=center | ''' Low '''
|style="background: #fff4d3;" align=center| ''' High '''
|-
|style="background: #fff4d3;" align=center |'''High'''
|
[[Employee]]

Trade Union

''[[Clients]]''

''Suppliers''

''Government''

''Society''
|
Directors

Managers

''[[Stockholders]]''
|-
|style="background: #fff4d3;" align=center |'''Low'''
|
''Competitors''
|

|-
|}

To analyze the management of all of these stakeholders one by one would be tedious. However it is relevant to focus on several categories according to the table 6. Special focus will be laid on the stakeholders written in red in the table above. Therefore, both high power/high interest and low power/high interest stakeholders will be looked at. Furthermore, two of them are internal, whereas the other is internal.
All of them were significantly affected by the DaimlerChrysler project due to mismanagement.

===Employees===
Employees, low-power and high-interest stakeholders, must be kept informed and managers should ensure that no major issues are arising.
However, this was not the case in the DaimlerChrysler merger: employees felt overlooked, disregarded and left out of the merger process. But to what extent CEOs and managers were responsible in this climate of distrust and dislike?

First, soon after the merger, it became obvious that Daimler was taking over the whole company´s management. Chrysler President Stallkamp retirement at the end of 1999 was followed by the one of James P. Holdem, top-level executive of the Chrysler Group. They were replaced by two German managers: Dieter Zetsche and Wolfgang Bernhard. Being lowered to divisional status, it is understandable that American´s morale suffer from this German hegemony. Employee felt eclipsed and were disgusted. They also were worried that DaimlerChrysler would dismiss some of them. But the problems are not confined to be here. Indeed, Jürgen Schrempp attitude only made the situation worse. In autumn 2000, DaimlerChrysler CEO acknowledged in the German financial daily Handelsblatt that <nowiki>“</nowiki>The Merger of Equals statement was necessary in order to earn the support of Chrysler's workers and the American public, but it was never reality<nowiki>"</nowiki>. Many American regarded this statement as a betrayal, since he intended to deceive them from the outset. It appears clear that it is due to board of directors failure in acting responsibly towards these stakeholders that deep-seated distrust ran deep.

But this mismanagement of the project stakeholders can lead to far-reaching consequences on the project success itself. Indeed, it could be that some employees simply do not work as efficiently because they suppose the Board of Directors doesn’t care about the Chrysler entity – so why should they? Decreased performance would result in it.

It is to notice that even though the standard ''ISO 21500: 2012'' did not exist at that time, the fact that employee influence to succeed such a process was of importance was already known. MaryAnn Keller, founder and managing partner of MaryAnn Keller & Associates LLC, namely stated in June 1998 that <nowiki>“</nowiki>The success of any combination depends on the ability of the new organization to win over the hearts and minds of employees.<nowiki>”</nowiki> <ref> [http://murphylibrary.uwlax.edu/digital/jur/2002/carpiaux.pdf] Nicole Carpiaux. ''DaimlerChrysler : Wunderkind or Problem Child ?'' Faculty Sponsor : Leticia Peña, Department of Management. </ref> The managers of DaimlerChrysler should then be aware that is really a management issue to embrace workers instead to neglect them in order to obtain the best they can offer.

===Clients===
And what about the consumers, low-power and high interest stakeholders?

Once again, one could argue that managers failed to define as well as to meet their needs.
One example is given for illustration. At the time, the DaimlerChrysler A-Class was 1.25 to 2 times more expensive than similar vehicles sold by Volkswagen, Renault or Fiat. This higher price was not deterrent since clients were aware that Daimler-Benz primarily asset was quality and safety. However, in 1999, the A-class failed an emergency maneuver test conducted by a Swedish television station. <ref> Bill Vlasic, Bradley A. Stertz. ''Taken for a Ride: How Daimler-Benz Drove off with Chrysler''. Harper Paperbacks,
2001, p. 300.
</ref> Consequently, client´s satisfaction suddenly drop off the map. The DaimlerChrysler vehicle was considered as an overpriced car which did not achieve engineering excellence compared to the highly competitive European compact market. The crux of the problem may be that the German entity have tried to implant the American low development costs into its entities, disregarding the high expectations of the clients. This paragraph appears to prove that trying to generate synergy savings the managers failed in responding the customer´s needs.

===Stockholders===
Last but not least, the management of both high power and high interest stakeholders needs to be considered. Take the stockholders.

An overwhelming majority of them favored the project of merger in 1998. Approvals ratings reached 99.9% at Daimler-Benz and 97.5% at Chrysler. It may be inferred that, at the outset of the project, managers successfully took into account the processes required to satisfy the shareholders. It did not take long, however, for some of them to express their disappointment. This was the case for Kirk Kerkorian, the third largest proprietor of DailerChrysler stock and largest Chrysler shareholder before the merger. In November 2000, the latter filed a $9 billion lawsuit against DaimlerChrysler for falsifying the terms of the fusion as a “merger of equals”. He was upset with the German hegemony and stated he had voted to turn its shares for stock in DaimlerChrysler without having considered the American entity would be reduced to a mere division. Two months later, he cut his take in the merged company by a third. Even though the managers were not directly involved in this discontent, the lack of acting responsibly of the Board of the director is obvious.

To conclude, the completion of the processes related to each of these three stakeholders lacked efficiency. The managers failed in implementing the required activities to satisfy them and this will become a major hindrance to the project completion.

=Conclusion=
Many factors may affect the failure of the DaimlerChrysler project, but most of them may have been due to its mismanagement. Such a union was notoriously risky, especially due to the opposite companies it combined. To deliver the intent benefits, particular care should then have been taken by managers to tackle all the project management processes.

The use of the standard ''ISO 21500 : 2012'' was made to group the processes in term of Subject Group. It appears clear that there were some omissions, particularly regarding Integration, Time, Communication and Stakeholders. This standard has proven to be useful to analyze a project management, especially in case of cross-boarders project. It is a shame that such a unifying international approach was only established in 2012.

= References =

<references />

[[Category:Project Management]]
[[Category:Human Behaviour]]
[[Category:Complexity]]

Analyzing the failure of the DaimlerChrysler merger from a project management perspective

2014-12-01T19:26:37Z

'''Abstract'''

In the late 90´s, German Daimler-Benz AG and American Chrysler Corporation announced their intention to combine their strengths within a so-called `merger of equals´ <ref> Grässlin, Jürgen. ''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> . Becoming the fifth largest automaker in the world, both companies hoped to overcome together the automotive industry crisis. However, nothing worked out as planned, so much so that in 2007 Daimler-Benz sold all its shares of the Chrysler division.

Could the use of a norm have guaranteed the success of the DaimlerChrysler merger ? This question will be answered with regard to the ISO 21500:2012 guideline for project management.

According to the latter, a definition of project management and the processes it involves will be provided.Then, an analysis of the origin of DaimlerChrysler project will be carried out. It will also be shown to what extent this fusion was mismanaged with regard to the subject groups defined in the ISO 21500:2012. Last but not least the benefits of using this standard to successfully conduct a complex project will be discussed.

=Introduction=
In the early 21st century, no comprehensive standard on project management was accepted despite the substantial demand for project management skills. However, in 2006, the need for a unifying international approach was recognized by the International Organization for Standard (ISO). The work of over hundreds experts in project management from around the globe resulted in ''ISO 21500: 2012 -Guidance on project management''. This norm defines universal project management terminologies, as well as the principles and processes it involves. It provides a basic guide against which any organization can compare its current project management practices and determine areas in need of improvement. But how to practically apply it to a project? A specific example of project failure prior to introducing ISO 21500 will be provided to analyze which project management processes were disregarded. More particularly, the merger of the German automaker Daimler-Benz with the American Chrysler Corporation will be examined with the perspective of subject group.

= ISO 21500 : 2012, A focus on processes <ref> ISO 21500:2012 ''Guidance on project management'' </ref> <ref> Anton Zandhuis, Rommert Stellingwerf. ''ISO 215000, Guidance on Project managenent, A Pocket Guide''. Van Haren Publishing. 2013 </ref>=

What is a project? A definition is provided by the ISO 21500: “A unique set of processes consisting of coordinated and controlled activities with start and end dates, performed to achieve project objectives.” The concept of processes seems to be at the crux of project management issues. The definition of how to manage a project stresses this point: “Project management is performed through processes”.

Specifically, the norm splits the method of managing a project into 39 elementary processes. Depending on the perspective, the latter are grouped into five process groups (Initiating, Planning, Controlling and Closing) or into ten subject groups (Integration, Stakeholder, Scope, Resource, Time, Cost, Risk, Quality, Procurement and Communication). The classification of these processes is provided in the following table.

{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 1 : Project management cross-referenced to process and subject groups (ISO 21500 : 2012)'''
|-
! rowspan="2" style="background: #ffedd3;" | SUBJECT GROUPS
! colspan="5" style="background: #ffedd3;" | PROCESS GROUPS
|-
|style="background: #fff4d3;" align=center | '''Initiating'''
|style="background: #fff4d3;" align=center| '''Planning'''
|style="background: #fff4d3;" align=center| '''Implementing'''
|style="background: #fff4d3;" align=center | '''Controlling'''
|style="background: #fff4d3;" align=center | '''Closing'''
|-
|style="background: #fff4d3;" |'''Integration'''
|
4.3.2 Develop project chart
|
4.3.3. Develop project plans
|
4.3.4 Direct project work
|
4.3.5 Control project work

4.3.6 Control changes
|
4.3.7 Close project or phase

4.3.8 Collect lessons learned
|-
|style="background: #fff4d3;" |'''Stakeholder'''
|
4.3.9 Identify stakeholders
|

|
4.3.10 Manage stakeholders
|

|

|-
|style="background: #fff4d3;" |'''Scope'''
|

|
4.3.11 Define scope

4.3.12 Create work breakdown structure

4.3.13 Define activities
|

|
4.3.14 Control scope
|

|-
|style="background: #fff4d3;" |'''Resource'''
|
4.3.15 Establish project team
|
4.3.16 Estimate resources

4.3.17 Define project organization
|
4.3.18 Develop project team
|
4.3.19 Control resources

4.3.20 Manage project team
|

|-
|style="background: #fff4d3;" |'''Time'''
|

|
4.3.21 Sequence activities

4.3.22 Estimate activity durations

4.3.23 Develop schedule
|

|
4.3.24 Control schedule
|

|-
|style="background: #fff4d3;" |'''Cost'''
|

|
4.3.25 Estimate costs

4.3.26 Develop budget
|

|
4.3.27 Control costs
|

|-
|style="background: #fff4d3;" |'''Risk'''
|

|
4.3.28 Identify risks

4.3.29 Asses risks
|
4.3.30 Treat risks
|
4.3.31 Control risks
|
|-
|style="background: #fff4d3;" |'''Quality'''
|

|
4.3.32 Plan quality
|
4.3.33 Perform quality assurance
|
4.3.34 Perform quality control
|

|-
|style="background: #fff4d3;" |'''Procurement'''
|

|
4.3.35 Plan procurements
|
4.3.36 Select suppliers
|
4.3.37 Administer procurements
|

|-
|style="background: #fff4d3;" |'''Communication'''
|

|
4.3.38 Plan communications
|
4.3.39 Distribute information
|
4.3.40 Manage communications
|

|}

The perspective of subject groups will be adopted to consider the management of DaimlerChrysler project. A Subject is a theme in which processes are classified according to its related activities.

But before that, the project of DaimlerChrysler merger is regarded.

=DaimlerChrysler merger project <ref> Julia Hollmann, Aletéia de Moura Carpes, Thiago Antonio Beuron. ''The DaimlerChrylser Merger- A cultural mismatch ?'' Faculty Sponsor : Universität Paderborn- Germany, Department of International Business Studies. Universidade Federal de Santa Maria- Brazil, Department of Administration. 2010 </ref> =
==The genesis of the project==
In the late 90´s, the automotive industry had to face multiples challenges due to the excess manufacturing capacity, the growth of ecological awareness, and the retail revolution that empowered buyers. To strengthen their position during this crisis, the automakers Daimler-Benz and Chrysler Corporation decided to merge. This project aimed to combine each other´s product designs, manufacturing resources and distribution systems.
The following table shows the complementary of the two companies, which wanted to unit their knowledge and their market in order to gain a competitive advantage.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 2 : The complementary of the two companies '''
|
! style="background: #ffedd3;" |'''Daimler-Benz AG'''
! style="background: #ffedd3;" |'''Chrysler Corporation'''
|-
! style="background: #ffedd3;" |'''Head office location'''
|
Germany
|
United States
|-
! style="background: #ffedd3;" |'''Geographical reach'''
|
European market
|
U.S. American market
|-
! style="background: #ffedd3;" |'''Product ranges'''
|
Uncompromising quality products
|
Car models that met the American demand for adventurousness
|}


Both synergies and economies of scale were likely to proliferate.

How the project was set up is explained in the following paragraph. However, its detailed description falls outside the scope of this article.

==The execution of the project==
On May 7th 1998, the signing of the combination agreement between Daimler-Benz and Chrysler was publicly announced. Daimler-Benz CEO Jürgen Schrempp described the union as "a merger of equals, a merger of growth, and a merger of unprecedented strength".
The equal status of the two organizations was reflected in the newly established entity name, DaimlerChrysler, as well as in the combination of the two former boards of management to form the one of DaimlerChrysler. Furthermore, it was agreed that Schrempp and Eaton, former CEO of the Chrysler Corporation, would jointly led the entity as co-chairmen and co-CEOs. It was also decided that Eaton would stay up to three years.
The two following tables provide more data about DaimlerChrysler right after the merger and the expected results of this project.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 3 : Characteristics of DaimlerChrysler right after the merger'''
|-
! style="background: #ffedd3;" |'''Number of employees '''
|442,000 employees
½ in Germany

1/3 in North America

1/6 spread across 200 countries around the world
|-
! style="background: #ffedd3;" |'''Daimler-Benz AG Market capitalization'''
|$ 92 billion
|}



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 4 : Expected results'''
! style="background: #ffedd3;" |Annual revenues of the combined company
|$ 132 billion
|-
! style="background: #ffedd3;" |Increase in sales
|13%
|-
! style="background: #ffedd3;" |Cost savings brought within 2 or 3 years
|$ 3,5 billion a year
|}


So far, this fusion appears to be very beneficial for all parties involved. However the wish for synergy effects never came true and the project drove Chrysler into chaos. In May 2007, the merger of Chrysler and Daimler-Benz was dissolved. Can this failure be ascribed to mismanagement?

The purpose of this article is now to point out which processes, related to the different subject groups definied in ISO 21500:2012 were disregarded and may have led to the project failure.

=The mismanagement of some subject groups <ref> Wanda Curlee, Robert L. Gordon . ''Complexity Theory and Project Management. ''. New York : Wiley, 2011, p. 129-133 </ref> =

Integration, Time, Communication and Stakeholders will be considered. The mismanagement of some processes related to these four specific subject groups is namely to be seen.

==Integration <ref> Grässlin, Jürgen.''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> <ref> ''DaimlerChrysler confronts the challenges of global integration'', Human Resource Management International Digest, Vol 12 Iss :2 P.5-8</ref> ==
Four Subject groups are successively addressed: Integration, Time, Communication and Stakeholders.
The Integration Subject group includes the processes required to identify, define, combine, unify, coordinate, control and close the various activities and processes related to the project (ISO 21500:2012 - 4.2.3.2).

Within this merger, the unification and combination of all operations within the established entity needed to be achieved. To meet this target, a newly corporate culture had to be defined to align working styles. The latter namely radically differ due to major cultural differences, as shown in the following table.



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 5 : Comparison between the German and the American working styles'''
|-
|
! style="background: #ffedd3;" | '''Germany'''
! style="background: #ffedd3;"|'''United States'''
|-
! style="background: #ffedd3;" align="left" |'''Employee working style'''
| Work in a team-oriented environment
| Work individually
|-
! style="background: #ffedd3;" align="left" |'''Writing report'''
| Lengthy reports
| Little paper
|-
! style="background: #ffedd3;" align="left" |'''Decision-making process'''
|
Methodical, based on very detailed plans
|
Using creativity, based on trial-and-error method
|-
! style="background: #ffedd3;" align="left" |'''Meeting'''
|
Extended discussions
|
Short meeting
|-
! style="background: #ffedd3;" align="left" |'''Organizational structure'''
|
Pronounced hierarchy based on top-down-management
|
Flat organizational hierarchy stimulating empowerment of the employees
|-
! style="background: #ffedd3;" align="left" |'''Risk appetite'''
|
Risk adverse culture
|
Risk takers
|}


Due to the fact that this merger was a so-called `merger of equals´, the integration of the two cultures was to combine them to generate a new shared corporate one. It was namely vital that both organizations learn from each other to generate synergy effects. Managers have here a central role to play to define and coordinate the development of this new culture.

Eaton affirmed that it was at the top of the agenda and Thomas Stallkamp, Chrysler President during the negotiation phase, was charged with overseeing this integration process. Some effort went into harmonizing the two corporate cultures. Many seminars and workshops were organized to sensitizing the employees for working with new colleagues with a diverging working methods. Furthermore, German was taught to many American managers.

However, given the large gap between the two organizations, it would appear that managers should have undertaken more activities and CEOs should have allocated more resources to bridge the chasm of cultural differences.

In fact, no strong and cohesive organizational culture was created, as illustrated in daily misunderstandings. For instance, the attention Daimler-Benz leaders paid to writing a leaflet sent to employee annoyed Chrysler executives. At the end of 1999, the resignation of Thomas Stallkamp, a 19-year veteran of Chrysler who was highly regarded, might be seen as failure of the merger integration process after all the effort. He is quoted as saying: <nowiki>“</nowiki>The majority of my career has been spent implementing supply chain management. I would like to continue to explore those areas at a less hectic pace<nowiki>”</nowiki>. Were both parties truly willing to cooperate wholeheartedly and to enter compromises to succeed in the numerous integration processes? A negative answer is the root cause of the unachieved integration.

==Time<ref> Sue Cartwright, Cary L. Cooper. ''Mergers and Acquisitions: The Human Factor Paperback'' . January 1, 1992 </ref>==

The Time Subject group is all about managing the timely completion of the project. Feasible deadlines taking all known constraints into account need to be set. Processes covered by the latter subject group are the development of schedule for project activities, estimating each activity duration, the progress monitoring and the schedule control.

One failure in managing time in DaimlerChrysler merger was that too little time was devoted to each activity. Let´s take a concrete example: Daimler-Benz and Chrysler began formal negotiations on January 12, 1998 and only five months later, the merger was announced worldwide. Susan Cartwright – past President of the British Academy Management – asserts that the period of time from the germ of the merger idea till an agreement is reached is estimated to last around two years. Speeding up the pre-merger preparation, the precise objectives of the fusion and the way to achieve them could not have been defined accurately.
Furthermore, the merger was completed on November 12, 1998. Time needed by employees to adapt to the new circumstances was not taken into account in the deadlines. One more mismanagement which is added to the others.

==Communication==
In the standard ISO 21500:2012, three key processes are defined to ensure appropriate exchange of project information: Plan communications, Distribute information and Manage communications. But within DaimlerChrysler project none of them were totally met. In order to appreciate the scale of the problem, it should be pointed out that even managers and CEOs experienced serious difficulties in discussing solutions and achieving a consensus. According to a Daimler-Benz executive, <nowiki>"</nowiki>Eaton went weeks without speaking with Jürgen [Schrempp]. He preferred to maintain lower-level contact. Jürgen, meanwhile, left Chrysler alone.<nowiki>"</nowiki> <ref> [http://mba.tuck.dartmouth.edu/pdf/2002-1-0071.pdf] Professor Sydney Finkelstein. ''The DaimlerChrysler Merger.''Tuck School of Business at Dartmouth. 2002 </ref> One would have expected that both CEOs would have share their different view in order to discover common goal and operate as an effective team at the top. Given the seeming clash of culture described in the first paragraph, it was crucial to start the discussion to create healthy relationship and release the company´s potential. The clearer the communication, the better issues are addressed. But with a lack of communication among leaders, no far-reaching communication plan could be implemented among all stakeholders involved, not to mention the distribution of the information. Both internal and external communications were chaotic. It is likely that the standard ISO 21500 would have make managers more aware of the processes related to communication required to be efficiently tackled.

==Stakeholders==
The stakeholder subject group is concerned with identifying and managing all stakeholders. Both their expectations and influence on the project need to be analyzed to classify them. The table 6 provides a power-interest matrix, which is crucial to draw up appropriate management strategies for effectively engaging with them. The external stakeholders are written in italics, the others are internal.

{| border="1" cellpadding="3" cellspacing="0" style="margin:auto;"
|+ '''Table 6 : Power and interest matrix'''
|-
! rowspan="2" style="background: #ffedd3;" | Level of interest
! colspan="5" style="background: #ffedd3;" | Level of power
|-
|style="background: #fff4d3;" align=center | ''' Low '''
|style="background: #fff4d3;" align=center| ''' High '''
|-
|style="background: #fff4d3;" align=center |'''High'''
|
[[Employee]]

Trade Union

''[[Clients]]''

''Suppliers''

''Government''

''Society''
|
Directors

Managers

''[[Stockholders]]''
|-
|style="background: #fff4d3;" align=center |'''Low'''
|
''Competitors''
|

|-
|}

To analyze the management of all of these stakeholders one by one would be tedious. However it is relevant to focus on several categories according to the table 6. Special focus will be laid on the stakeholders written in red in the table above. Therefore, both high power/high interest and low power/high interest stakeholders will be looked at. Furthermore, two of them are internal, whereas the other is internal.
All of them were significantly affected by the DaimlerChrysler project due to mismanagement.

===Employees===
Employees, low-power and high-interest stakeholders, must be kept informed and managers should ensure that no major issues are arising.
However, this was not the case in the DaimlerChrysler merger: employees felt overlooked, disregarded and left out of the merger process. But to what extent CEOs and managers were responsible in this climate of distrust and dislike?

First, soon after the merger, it became obvious that Daimler was taking over the whole company´s management. Chrysler President Stallkamp retirement at the end of 1999 was followed by the one of James P. Holdem, top-level executive of the Chrysler Group. They were replaced by two German managers: Dieter Zetsche and Wolfgang Bernhard. Being lowered to divisional status, it is understandable that American´s morale suffer from this German hegemony. Employee felt eclipsed and were disgusted. They also were worried that DaimlerChrysler would dismiss some of them. But the problems are not confined to be here. Indeed, Jürgen Schrempp attitude only made the situation worse. In autumn 2000, DaimlerChrysler CEO acknowledged in the German financial daily Handelsblatt that <nowiki>“</nowiki>The Merger of Equals statement was necessary in order to earn the support of Chrysler's workers and the American public, but it was never reality<nowiki>"</nowiki>. Many American regarded this statement as a betrayal, since he intended to deceive them from the outset. It appears clear that it is due to board of directors failure in acting responsibly towards these stakeholders that deep-seated distrust ran deep.

But this mismanagement of the project stakeholders can lead to far-reaching consequences on the project success itself. Indeed, it could be that some employees simply do not work as efficiently because they suppose the Board of Directors doesn’t care about the Chrysler entity – so why should they? Decreased performance would result in it.

It is to notice that even though the standard ''ISO 21500: 2012'' did not exist at that time, the fact that employee influence to succeed such a process was of importance was already known. MaryAnn Keller, founder and managing partner of MaryAnn Keller & Associates LLC, namely stated in June 1998 that <nowiki>“</nowiki>The success of any combination depends on the ability of the new organization to win over the hearts and minds of employees.<nowiki>”</nowiki> <ref> [http://murphylibrary.uwlax.edu/digital/jur/2002/carpiaux.pdf] Nicole Carpiaux. ''DaimlerChrysler : Wunderkind or Problem Child ?'' Faculty Sponsor : Leticia Peña, Department of Management. </ref> The managers of DaimlerChrysler should then be aware that is really a management issue to embrace workers instead to neglect them in order to obtain the best they can offer.

===Clients===
And what about the consumers, low-power and high interest stakeholders?

Once again, one could argue that managers failed to define as well as to meet their needs.
One example is given for illustration. At the time, the DaimlerChrysler A-Class was 1.25 to 2 times more expensive than similar vehicles sold by Volkswagen, Renault or Fiat. This higher price was not deterrent since clients were aware that Daimler-Benz primarily asset was quality and safety. However, in 1999, the A-class failed an emergency maneuver test conducted by a Swedish television station. <ref> Bill Vlasic, Bradley A. Stertz. ''Taken for a Ride: How Daimler-Benz Drove off with Chrysler''. Harper Paperbacks,
2001, p. 300.
</ref> Consequently, client´s satisfaction suddenly drop off the map. The DaimlerChrysler vehicle was considered as an overpriced car which did not achieve engineering excellence compared to the highly competitive European compact market. The crux of the problem may be that the German entity have tried to implant the American low development costs into its entities, disregarding the high expectations of the clients. This paragraph appears to prove that trying to generate synergy savings the managers failed in responding the customer´s needs.

===Stockholders===
Last but not least, the management of both high power and high interest stakeholders needs to be considered. Take the stockholders.

An overwhelming majority of them favored the project of merger in 1998. Approvals ratings reached 99.9% at Daimler-Benz and 97.5% at Chrysler. It may be inferred that, at the outset of the project, managers successfully took into account the processes required to satisfy the shareholders. It did not take long, however, for some of them to express their disappointment. This was the case for Kirk Kerkorian, the third largest proprietor of DailerChrysler stock and largest Chrysler shareholder before the merger. In November 2000, the latter filed a $9 billion lawsuit against DaimlerChrysler for falsifying the terms of the fusion as a “merger of equals”. He was upset with the German hegemony and stated he had voted to turn its shares for stock in DaimlerChrysler without having considered the American entity would be reduced to a mere division. Two months later, he cut his take in the merged company by a third. Even though the managers were not directly involved in this discontent, the lack of acting responsibly of the Board of the director is obvious.

To conclude, the completion of the processes related to each of these three stakeholders lacked efficiency. The managers failed in implementing the required activities to satisfy them and this will become a major hindrance to the project completion.

=Conclusion=
Many factors may affect the failure of the DaimlerChrysler project, but most of them may have been due to its mismanagement. Such a union was notoriously risky, especially due to the opposite companies it combined. To deliver the intent benefits, particular care should then have been taken by managers to tackle all the project management processes.

The use of the standard ''ISO 21500 : 2012'' was made to group the processes in term of Subject Group. It appears clear that there were some omissions, particularly regarding Integration, Time, Communication and Stakeholders. This standard has proven to be useful to analyze a project management, especially in case of cross-boarders project. It is a shame that such a unifying international approach was only established in 2012.

= References =

<references />

[[Category:Project Management]]
[[Category:Human Behaviour]]
[[Category:Complexity]]

Analyzing the failure of the DaimlerChrysler merger from a project management perspective

2014-12-01T19:25:03Z

'''Abstract'''

In the late 90´s, German Daimler-Benz AG and American Chrysler Corporation announced their intention to combine their strengths within a so-called `merger of equals´ <ref> Grässlin, Jürgen. ''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> . Becoming the fifth largest automaker in the world, both companies hoped to overcome together the automotive industry crisis. However, nothing worked out as planned, so much so that in 2007 Daimler-Benz sold all its shares of the Chrysler division.

Could the use of a norm have guaranteed the success of the DaimlerChrysler merger ? This question will be answered with regard to the ISO 21500:2012 guideline for project management.

According to the latter, a definition of project management and the processes it involves will be provided.Then, an analysis of the origin of DaimlerChrysler project will be carried out. It will also be shown to what extent this fusion was mismanaged with regard to the subject groups defined in the ISO 21500:2012. Last but not least the benefits of using this standard to successfully conduct a complex project will be discussed.

=Introduction=
In the early 21st century, no comprehensive standard on project management was accepted despite the substantial demand for project management skills. However, in 2006, the need for a unifying international approach was recognized by the International Organization for Standard (ISO). The work of over hundreds experts in project management from around the globe resulted in ''ISO 21500: 2012 -Guidance on project management''. This norm defines universal project management terminologies, as well as the principles and processes it involves. It provides a basic guide against which any organization can compare its current project management practices and determine areas in need of improvement. But how to practically apply it to a project? A specific example of project failure prior to introducing ISO 21500 will be provided to analyze which project management processes were disregarded. More particularly, the merger of the German automaker Daimler-Benz with the American Chrysler Corporation will be examined with the perspective of subject group.

= ISO 21500 : 2012, A focus on processes <ref> ISO 21500:2012 ''Guidance on project management'' </ref> <ref> Anton Zandhuis, Rommert Stellingwerf. ''ISO 215000, Guidance on Project managenent, A Pocket Guide''. Van Haren Publishing. 2013 </ref>=

What is a project? A definition is provided by the ISO 21500: “A unique set of processes consisting of coordinated and controlled activities with start and end dates, performed to achieve project objectives.” The concept of processes seems to be at the crux of project management issues. The definition of how to manage a project stresses this point: “Project management is performed through processes”.

Specifically, the norm splits the method of managing a project into 39 elementary processes. Depending on the perspective, the latter are grouped into five process groups (Initiating, Planning, Controlling and Closing) or into ten subject groups (Integration, Stakeholder, Scope, Resource, Time, Cost, Risk, Quality, Procurement and Communication). The classification of these processes is provided in the following table.

{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 1 : Project management cross-referenced to process and subject groups (ISO 21500 : 2012)'''
|-
! rowspan="2" style="background: #ffedd3;" | SUBJECT GROUPS
! colspan="5" style="background: #ffedd3;" | PROCESS GROUPS
|-
|style="background: #fff4d3;" align=center | '''Initiating'''
|style="background: #fff4d3;" align=center| '''Planning'''
|style="background: #fff4d3;" align=center| '''Implementing'''
|style="background: #fff4d3;" align=center | '''Controlling'''
|style="background: #fff4d3;" align=center | '''Closing'''
|-
|style="background: #fff4d3;" |'''Integration'''
|
4.3.2 Develop project chart
|
4.3.3. Develop project plans
|
4.3.4 Direct project work
|
4.3.5 Control project work

4.3.6 Control changes
|
4.3.7 Close project or phase

4.3.8 Collect lessons learned
|-
|style="background: #fff4d3;" |'''Stakeholder'''
|
4.3.9 Identify stakeholders
|

|
4.3.10 Manage stakeholders
|

|

|-
|style="background: #fff4d3;" |'''Scope'''
|

|
4.3.11 Define scope

4.3.12 Create work breakdown structure

4.3.13 Define activities
|

|
4.3.14 Control scope
|

|-
|style="background: #fff4d3;" |'''Resource'''
|
4.3.15 Establish project team
|
4.3.16 Estimate resources

4.3.17 Define project organization
|
4.3.18 Develop project team
|
4.3.19 Control resources

4.3.20 Manage project team
|

|-
|style="background: #fff4d3;" |'''Time'''
|

|
4.3.21 Sequence activities

4.3.22 Estimate activity durations

4.3.23 Develop schedule
|

|
4.3.24 Control schedule
|

|-
|style="background: #fff4d3;" |'''Cost'''
|

|
4.3.25 Estimate costs

4.3.26 Develop budget
|

|
4.3.27 Control costs
|

|-
|style="background: #fff4d3;" |'''Risk'''
|

|
4.3.28 Identify risks

4.3.29 Asses risks
|
4.3.30 Treat risks
|
4.3.31 Control risks
|
|-
|style="background: #fff4d3;" |'''Quality'''
|

|
4.3.32 Plan quality
|
4.3.33 Perform quality assurance
|
4.3.34 Perform quality control
|

|-
|style="background: #fff4d3;" |'''Procurement'''
|

|
4.3.35 Plan procurements
|
4.3.36 Select suppliers
|
4.3.37 Administer procurements
|

|-
|style="background: #fff4d3;" |'''Communication'''
|

|
4.3.38 Plan communications
|
4.3.39 Distribute information
|
4.3.40 Manage communications
|

|}

The perspective of subject groups will be adopted to consider the management of DaimlerChrysler project. The latter are the themes in which processes are classified according to its related activities. But before that, the project of DaimlerChrysler merger is regarded.

=DaimlerChrysler merger project <ref> Julia Hollmann, Aletéia de Moura Carpes, Thiago Antonio Beuron. ''The DaimlerChrylser Merger- A cultural mismatch ?'' Faculty Sponsor : Universität Paderborn- Germany, Department of International Business Studies. Universidade Federal de Santa Maria- Brazil, Department of Administration. 2010 </ref> =
==The genesis of the project==
In the late 90´s, the automotive industry had to face multiples challenges due to the excess manufacturing capacity, the growth of ecological awareness, and the retail revolution that empowered buyers. To strengthen their position during this crisis, the automakers Daimler-Benz and Chrysler Corporation decided to merge. This project aimed to combine each other´s product designs, manufacturing resources and distribution systems.
The following table shows the complementary of the two companies, which wanted to unit their knowledge and their market in order to gain a competitive advantage.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 2 : The complementary of the two companies '''
|
! style="background: #ffedd3;" |'''Daimler-Benz AG'''
! style="background: #ffedd3;" |'''Chrysler Corporation'''
|-
! style="background: #ffedd3;" |'''Head office location'''
|
Germany
|
United States
|-
! style="background: #ffedd3;" |'''Geographical reach'''
|
European market
|
U.S. American market
|-
! style="background: #ffedd3;" |'''Product ranges'''
|
Uncompromising quality products
|
Car models that met the American demand for adventurousness
|}


Both synergies and economies of scale were likely to proliferate.

How the project was set up is explained in the following paragraph. However, its detailed description falls outside the scope of this article.

==The execution of the project==
On May 7th 1998, the signing of the combination agreement between Daimler-Benz and Chrysler was publicly announced. Daimler-Benz CEO Jürgen Schrempp described the union as "a merger of equals, a merger of growth, and a merger of unprecedented strength".
The equal status of the two organizations was reflected in the newly established entity name, DaimlerChrysler, as well as in the combination of the two former boards of management to form the one of DaimlerChrysler. Furthermore, it was agreed that Schrempp and Eaton, former CEO of the Chrysler Corporation, would jointly led the entity as co-chairmen and co-CEOs. It was also decided that Eaton would stay up to three years.
The two following tables provide more data about DaimlerChrysler right after the merger and the expected results of this project.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 3 : Characteristics of DaimlerChrysler right after the merger'''
|-
! style="background: #ffedd3;" |'''Number of employees '''
|442,000 employees
½ in Germany

1/3 in North America

1/6 spread across 200 countries around the world
|-
! style="background: #ffedd3;" |'''Daimler-Benz AG Market capitalization'''
|$ 92 billion
|}



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 4 : Expected results'''
! style="background: #ffedd3;" |Annual revenues of the combined company
|$ 132 billion
|-
! style="background: #ffedd3;" |Increase in sales
|13%
|-
! style="background: #ffedd3;" |Cost savings brought within 2 or 3 years
|$ 3,5 billion a year
|}


So far, this fusion appears to be very beneficial for all parties involved. However the wish for synergy effects never came true and the project drove Chrysler into chaos. In May 2007, the merger of Chrysler and Daimler-Benz was dissolved. Can this failure be ascribed to mismanagement?

The purpose of this article is now to point out which processes, related to the different subject groups definied in ISO 21500:2012 were disregarded and may have led to the project failure.

=The mismanagement of some subject groups <ref> Wanda Curlee, Robert L. Gordon . ''Complexity Theory and Project Management. ''. New York : Wiley, 2011, p. 129-133 </ref> =

Integration, Time, Communication and Stakeholders will be considered. The mismanagement of some processes related to these four specific subject groups is namely to be seen.

==Integration <ref> Grässlin, Jürgen.''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> <ref> ''DaimlerChrysler confronts the challenges of global integration'', Human Resource Management International Digest, Vol 12 Iss :2 P.5-8</ref> ==
Four Subject groups are successively addressed: Integration, Time, Communication and Stakeholders.
The Integration Subject group includes the processes required to identify, define, combine, unify, coordinate, control and close the various activities and processes related to the project (ISO 21500:2012 - 4.2.3.2).

Within this merger, the unification and combination of all operations within the established entity needed to be achieved. To meet this target, a newly corporate culture had to be defined to align working styles. The latter namely radically differ due to major cultural differences, as shown in the following table.



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 5 : Comparison between the German and the American working styles'''
|-
|
! style="background: #ffedd3;" | '''Germany'''
! style="background: #ffedd3;"|'''United States'''
|-
! style="background: #ffedd3;" align="left" |'''Employee working style'''
| Work in a team-oriented environment
| Work individually
|-
! style="background: #ffedd3;" align="left" |'''Writing report'''
| Lengthy reports
| Little paper
|-
! style="background: #ffedd3;" align="left" |'''Decision-making process'''
|
Methodical, based on very detailed plans
|
Using creativity, based on trial-and-error method
|-
! style="background: #ffedd3;" align="left" |'''Meeting'''
|
Extended discussions
|
Short meeting
|-
! style="background: #ffedd3;" align="left" |'''Organizational structure'''
|
Pronounced hierarchy based on top-down-management
|
Flat organizational hierarchy stimulating empowerment of the employees
|-
! style="background: #ffedd3;" align="left" |'''Risk appetite'''
|
Risk adverse culture
|
Risk takers
|}


Due to the fact that this merger was a so-called `merger of equals´, the integration of the two cultures was to combine them to generate a new shared corporate one. It was namely vital that both organizations learn from each other to generate synergy effects. Managers have here a central role to play to define and coordinate the development of this new culture.

Eaton affirmed that it was at the top of the agenda and Thomas Stallkamp, Chrysler President during the negotiation phase, was charged with overseeing this integration process. Some effort went into harmonizing the two corporate cultures. Many seminars and workshops were organized to sensitizing the employees for working with new colleagues with a diverging working methods. Furthermore, German was taught to many American managers.

However, given the large gap between the two organizations, it would appear that managers should have undertaken more activities and CEOs should have allocated more resources to bridge the chasm of cultural differences.

In fact, no strong and cohesive organizational culture was created, as illustrated in daily misunderstandings. For instance, the attention Daimler-Benz leaders paid to writing a leaflet sent to employee annoyed Chrysler executives. At the end of 1999, the resignation of Thomas Stallkamp, a 19-year veteran of Chrysler who was highly regarded, might be seen as failure of the merger integration process after all the effort. He is quoted as saying: <nowiki>“</nowiki>The majority of my career has been spent implementing supply chain management. I would like to continue to explore those areas at a less hectic pace<nowiki>”</nowiki>. Were both parties truly willing to cooperate wholeheartedly and to enter compromises to succeed in the numerous integration processes? A negative answer is the root cause of the unachieved integration.

==Time<ref> Sue Cartwright, Cary L. Cooper. ''Mergers and Acquisitions: The Human Factor Paperback'' . January 1, 1992 </ref>==

The Time Subject group is all about managing the timely completion of the project. Feasible deadlines taking all known constraints into account need to be set. Processes covered by the latter subject group are the development of schedule for project activities, estimating each activity duration, the progress monitoring and the schedule control.

One failure in managing time in DaimlerChrysler merger was that too little time was devoted to each activity. Let´s take a concrete example: Daimler-Benz and Chrysler began formal negotiations on January 12, 1998 and only five months later, the merger was announced worldwide. Susan Cartwright – past President of the British Academy Management – asserts that the period of time from the germ of the merger idea till an agreement is reached is estimated to last around two years. Speeding up the pre-merger preparation, the precise objectives of the fusion and the way to achieve them could not have been defined accurately.
Furthermore, the merger was completed on November 12, 1998. Time needed by employees to adapt to the new circumstances was not taken into account in the deadlines. One more mismanagement which is added to the others.

==Communication==
In the standard ISO 21500:2012, three key processes are defined to ensure appropriate exchange of project information: Plan communications, Distribute information and Manage communications. But within DaimlerChrysler project none of them were totally met. In order to appreciate the scale of the problem, it should be pointed out that even managers and CEOs experienced serious difficulties in discussing solutions and achieving a consensus. According to a Daimler-Benz executive, <nowiki>"</nowiki>Eaton went weeks without speaking with Jürgen [Schrempp]. He preferred to maintain lower-level contact. Jürgen, meanwhile, left Chrysler alone.<nowiki>"</nowiki> <ref> [http://mba.tuck.dartmouth.edu/pdf/2002-1-0071.pdf] Professor Sydney Finkelstein. ''The DaimlerChrysler Merger.''Tuck School of Business at Dartmouth. 2002 </ref> One would have expected that both CEOs would have share their different view in order to discover common goal and operate as an effective team at the top. Given the seeming clash of culture described in the first paragraph, it was crucial to start the discussion to create healthy relationship and release the company´s potential. The clearer the communication, the better issues are addressed. But with a lack of communication among leaders, no far-reaching communication plan could be implemented among all stakeholders involved, not to mention the distribution of the information. Both internal and external communications were chaotic. It is likely that the standard ISO 21500 would have make managers more aware of the processes related to communication required to be efficiently tackled.

==Stakeholders==
The stakeholder subject group is concerned with identifying and managing all stakeholders. Both their expectations and influence on the project need to be analyzed to classify them. The table 6 provides a power-interest matrix, which is crucial to draw up appropriate management strategies for effectively engaging with them. The external stakeholders are written in italics, the others are internal.

{| border="1" cellpadding="3" cellspacing="0" style="margin:auto;"
|+ '''Table 6 : Power and interest matrix'''
|-
! rowspan="2" style="background: #ffedd3;" | Level of interest
! colspan="5" style="background: #ffedd3;" | Level of power
|-
|style="background: #fff4d3;" align=center | ''' Low '''
|style="background: #fff4d3;" align=center| ''' High '''
|-
|style="background: #fff4d3;" align=center |'''High'''
|
[[Employee]]

Trade Union

''[[Clients]]''

''Suppliers''

''Government''

''Society''
|
Directors

Managers

''[[Stockholders]]''
|-
|style="background: #fff4d3;" align=center |'''Low'''
|
''Competitors''
|

|-
|}

To analyze the management of all of these stakeholders one by one would be tedious. However it is relevant to focus on several categories according to the table 6. Special focus will be laid on the stakeholders written in red in the table above. Therefore, both high power/high interest and low power/high interest stakeholders will be looked at. Furthermore, two of them are internal, whereas the other is internal.
All of them were significantly affected by the DaimlerChrysler project due to mismanagement.

===Employees===
Employees, low-power and high-interest stakeholders, must be kept informed and managers should ensure that no major issues are arising.
However, this was not the case in the DaimlerChrysler merger: employees felt overlooked, disregarded and left out of the merger process. But to what extent CEOs and managers were responsible in this climate of distrust and dislike?

First, soon after the merger, it became obvious that Daimler was taking over the whole company´s management. Chrysler President Stallkamp retirement at the end of 1999 was followed by the one of James P. Holdem, top-level executive of the Chrysler Group. They were replaced by two German managers: Dieter Zetsche and Wolfgang Bernhard. Being lowered to divisional status, it is understandable that American´s morale suffer from this German hegemony. Employee felt eclipsed and were disgusted. They also were worried that DaimlerChrysler would dismiss some of them. But the problems are not confined to be here. Indeed, Jürgen Schrempp attitude only made the situation worse. In autumn 2000, DaimlerChrysler CEO acknowledged in the German financial daily Handelsblatt that <nowiki>“</nowiki>The Merger of Equals statement was necessary in order to earn the support of Chrysler's workers and the American public, but it was never reality<nowiki>"</nowiki>. Many American regarded this statement as a betrayal, since he intended to deceive them from the outset. It appears clear that it is due to board of directors failure in acting responsibly towards these stakeholders that deep-seated distrust ran deep.

But this mismanagement of the project stakeholders can lead to far-reaching consequences on the project success itself. Indeed, it could be that some employees simply do not work as efficiently because they suppose the Board of Directors doesn’t care about the Chrysler entity – so why should they? Decreased performance would result in it.

It is to notice that even though the standard ''ISO 21500: 2012'' did not exist at that time, the fact that employee influence to succeed such a process was of importance was already known. MaryAnn Keller, founder and managing partner of MaryAnn Keller & Associates LLC, namely stated in June 1998 that <nowiki>“</nowiki>The success of any combination depends on the ability of the new organization to win over the hearts and minds of employees.<nowiki>”</nowiki> <ref> [http://murphylibrary.uwlax.edu/digital/jur/2002/carpiaux.pdf] Nicole Carpiaux. ''DaimlerChrysler : Wunderkind or Problem Child ?'' Faculty Sponsor : Leticia Peña, Department of Management. </ref> The managers of DaimlerChrysler should then be aware that is really a management issue to embrace workers instead to neglect them in order to obtain the best they can offer.

===Clients===
And what about the consumers, low-power and high interest stakeholders?

Once again, one could argue that managers failed to define as well as to meet their needs.
One example is given for illustration. At the time, the DaimlerChrysler A-Class was 1.25 to 2 times more expensive than similar vehicles sold by Volkswagen, Renault or Fiat. This higher price was not deterrent since clients were aware that Daimler-Benz primarily asset was quality and safety. However, in 1999, the A-class failed an emergency maneuver test conducted by a Swedish television station. <ref> Bill Vlasic, Bradley A. Stertz. ''Taken for a Ride: How Daimler-Benz Drove off with Chrysler''. Harper Paperbacks,
2001, p. 300.
</ref> Consequently, client´s satisfaction suddenly drop off the map. The DaimlerChrysler vehicle was considered as an overpriced car which did not achieve engineering excellence compared to the highly competitive European compact market. The crux of the problem may be that the German entity have tried to implant the American low development costs into its entities, disregarding the high expectations of the clients. This paragraph appears to prove that trying to generate synergy savings the managers failed in responding the customer´s needs.

===Stockholders===
Last but not least, the management of both high power and high interest stakeholders needs to be considered. Take the stockholders.

An overwhelming majority of them favored the project of merger in 1998. Approvals ratings reached 99.9% at Daimler-Benz and 97.5% at Chrysler. It may be inferred that, at the outset of the project, managers successfully took into account the processes required to satisfy the shareholders. It did not take long, however, for some of them to express their disappointment. This was the case for Kirk Kerkorian, the third largest proprietor of DailerChrysler stock and largest Chrysler shareholder before the merger. In November 2000, the latter filed a $9 billion lawsuit against DaimlerChrysler for falsifying the terms of the fusion as a “merger of equals”. He was upset with the German hegemony and stated he had voted to turn its shares for stock in DaimlerChrysler without having considered the American entity would be reduced to a mere division. Two months later, he cut his take in the merged company by a third. Even though the managers were not directly involved in this discontent, the lack of acting responsibly of the Board of the director is obvious.

To conclude, the completion of the processes related to each of these three stakeholders lacked efficiency. The managers failed in implementing the required activities to satisfy them and this will become a major hindrance to the project completion.

=Conclusion=
Many factors may affect the failure of the DaimlerChrysler project, but most of them may have been due to its mismanagement. Such a union was notoriously risky, especially due to the opposite companies it combined. To deliver the intent benefits, particular care should then have been taken by managers to tackle all the project management processes.

The use of the standard ''ISO 21500 : 2012'' was made to group the processes in term of Subject Group. It appears clear that there were some omissions, particularly regarding Integration, Time, Communication and Stakeholders. This standard has proven to be useful to analyze a project management, especially in case of cross-boarders project. It is a shame that such a unifying international approach was only established in 2012.

= References =

<references />

[[Category:Project Management]]
[[Category:Human Behaviour]]
[[Category:Complexity]]

Analyzing the failure of the DaimlerChrysler merger from a project management perspective

2014-12-01T19:22:34Z

'''Abstract'''

In the late 90´s, German Daimler-Benz AG and American Chrysler Corporation announced their intention to combine their strengths within a so-called `merger of equals´ <ref> Grässlin, Jürgen. ''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> . Becoming the fifth largest automaker in the world, both companies hoped to overcome together the automotive industry crisis. However, nothing worked out as planned, so much so that in 2007 Daimler-Benz sold all its shares of the Chrysler division.

Could the use of a norm have guaranteed the success of the DaimlerChrysler merger ? This question will be answered with regard to the ISO 21500:2012 guideline for project management.

According to the latter, a definition of project management and the processes it involves will be provided.Then, an analysis of the origin of DaimlerChrysler project will be carried out. It will also be shown to what extent this fusion was mismanaged with regard to the subject groups defined in the ISO 21500:2012. Last but not least the benefits of using this standard to successfully conduct a complex project will be discussed.

=Introduction=
In the early 21st century, no comprehensive standard on project management was accepted despite the substantial demand for project management skills. However, in 2006, the need for a unifying international approach was recognized by the International Organization for Standard (ISO). The work of over hundreds experts in project management from around the globe resulted in ''ISO 21500: 2012 -Guidance on project management''. This norm defines universal project management terminologies, as well as the principles and processes it involves. It provides a basic guide against which any organization can compare its current project management practices and determine areas in need of improvement. But how to practically apply it to a project? A specific example of project failure prior to introducing ISO 21500 will be provided to analyze which project management processes were disregarded. More particularly, the merger of the German automaker Daimler-Benz with the American Chrysler Corporation will be examined with the perspective of subject group.

= ISO 21500 : 2012, A focus on processes <ref> ISO 21500:2012 ''Guidance on project management'' </ref> <ref> Anton Zandhuis, Rommert Stellingwerf. ''ISO 215000, Guidance on Project managenent, A Pocket Guide''. Van Haren Publishing. 2013 </ref>=

What is a project? A definition is provided by the ISO 21500: “A unique set of processes consisting of coordinated and controlled activities with start and end dates, performed to achieve project objectives.” The concept of processes seems to be at the crux of project management issues. The definition of how to manage a project stresses this point: “Project management is performed through processes”.

Specifically, the norm splits the method of managing a project into 39 elementary processes. Depending on the perspective, the latter are grouped into five process groups (Initiating, Planning, Controlling and Closing) or into ten subject groups (Integration, Stakeholder, Scope, Resource, Time, Cost, Risk, Quality, Procurement and Communication). The classification of these processes is provided in the following table.

{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 1 : Project management cross-referenced to process and subject groups (ISO 21500 : 2012)'''
|-
! rowspan="2" style="background: #ffedd3;" | SUBJECT GROUPS
! colspan="5" style="background: #ffedd3;" | PROCESS GROUPS
|-
|style="background: #fff4d3;" align=center | '''Initiating'''
|style="background: #fff4d3;" align=center| '''Planning'''
|style="background: #fff4d3;" align=center| '''Implementing'''
|style="background: #fff4d3;" align=center | '''Controlling'''
|style="background: #fff4d3;" align=center | '''Closing'''
|-
|style="background: #fff4d3;" |'''Integration'''
|
4.3.2 Develop project chart
|
4.3.3. Develop project plans
|
4.3.4 Direct project work
|
4.3.5 Control project work

4.3.6 Control changes
|
4.3.7 Close project or phase

4.3.8 Collect lessons learned
|-
|style="background: #fff4d3;" |'''Stakeholder'''
|
4.3.9 Identify stakeholders
|

|
4.3.10 Manage stakeholders
|

|

|-
|style="background: #fff4d3;" |'''Scope'''
|

|
4.3.11 Define scope

4.3.12 Create work breakdown structure

4.3.13 Define activities
|

|
4.3.14 Control scope
|

|-
|style="background: #fff4d3;" |'''Resource'''
|
4.3.15 Establish project team
|
4.3.16 Estimate resources

4.3.17 Define project organization
|
4.3.18 Develop project team
|
4.3.19 Control resources

4.3.20 Manage project team
|

|-
|style="background: #fff4d3;" |'''Time'''
|

|
4.3.21 Sequence activities

4.3.22 Estimate activity durations

4.3.23 Develop schedule
|

|
4.3.24 Control schedule
|

|-
|style="background: #fff4d3;" |'''Cost'''
|

|
4.3.25 Estimate costs

4.3.28 Develop budget
|

|
4.3.27 Control costs
|

|-
|style="background: #fff4d3;" |'''Risk'''
|

|
4.3.28 Identify risks

4.3.29 Asses risks
|
4.3.30 Treat risks
|
4.3.31 Control risks
|
|-
|style="background: #fff4d3;" |'''Quality'''
|

|
4.3.32 Plan quality
|
4.3.33 Perform quality assurance
|
4.3.34 Perform quality control
|

|-
|style="background: #fff4d3;" |'''Procurement'''
|

|
4.3.35 Plan procurements
|
4.3.38 Select suppliers
|
4.3.37 Administer procurements
|

|-
|style="background: #fff4d3;" |'''Communication'''
|

|
4.3.38 Plan communications
|
4.3.39 Distribute information
|
4.3.40 Manage communications
|

|}

The perspective of subject groups will be adopted to consider the management of DaimlerChrysler project. The latter are the themes in which processes are classified according to its related activities. But before that, the project of DaimlerChrysler merger is regarded.

=DaimlerChrysler merger project <ref> Julia Hollmann, Aletéia de Moura Carpes, Thiago Antonio Beuron. ''The DaimlerChrylser Merger- A cultural mismatch ?'' Faculty Sponsor : Universität Paderborn- Germany, Department of International Business Studies. Universidade Federal de Santa Maria- Brazil, Department of Administration. 2010 </ref> =
==The genesis of the project==
In the late 90´s, the automotive industry had to face multiples challenges due to the excess manufacturing capacity, the growth of ecological awareness, and the retail revolution that empowered buyers. To strengthen their position during this crisis, the automakers Daimler-Benz and Chrysler Corporation decided to merge. This project aimed to combine each other´s product designs, manufacturing resources and distribution systems.
The following table shows the complementary of the two companies, which wanted to unit their knowledge and their market in order to gain a competitive advantage.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 2 : The complementary of the two companies '''
|
! style="background: #ffedd3;" |'''Daimler-Benz AG'''
! style="background: #ffedd3;" |'''Chrysler Corporation'''
|-
! style="background: #ffedd3;" |'''Head office location'''
|
Germany
|
United States
|-
! style="background: #ffedd3;" |'''Geographical reach'''
|
European market
|
U.S. American market
|-
! style="background: #ffedd3;" |'''Product ranges'''
|
Uncompromising quality products
|
Car models that met the American demand for adventurousness
|}


Both synergies and economies of scale were likely to proliferate.

How the project was set up is explained in the following paragraph. However, its detailed description falls outside the scope of this article.

==The execution of the project==
On May 7th 1998, the signing of the combination agreement between Daimler-Benz and Chrysler was publicly announced. Daimler-Benz CEO Jürgen Schrempp described the union as "a merger of equals, a merger of growth, and a merger of unprecedented strength".
The equal status of the two organizations was reflected in the newly established entity name, DaimlerChrysler, as well as in the combination of the two former boards of management to form the one of DaimlerChrysler. Furthermore, it was agreed that Schrempp and Eaton, former CEO of the Chrysler Corporation, would jointly led the entity as co-chairmen and co-CEOs. It was also decided that Eaton would stay up to three years.
The two following tables provide more data about DaimlerChrysler right after the merger and the expected results of this project.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 3 : Characteristics of DaimlerChrysler right after the merger'''
|-
! style="background: #ffedd3;" |'''Number of employees '''
|442,000 employees
½ in Germany

1/3 in North America

1/6 spread across 200 countries around the world
|-
! style="background: #ffedd3;" |'''Daimler-Benz AG Market capitalization'''
|$ 92 billion
|}



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 4 : Expected results'''
! style="background: #ffedd3;" |Annual revenues of the combined company
|$ 132 billion
|-
! style="background: #ffedd3;" |Increase in sales
|13%
|-
! style="background: #ffedd3;" |Cost savings brought within 2 or 3 years
|$ 3,5 billion a year
|}


So far, this fusion appears to be very beneficial for all parties involved. However the wish for synergy effects never came true and the project drove Chrysler into chaos. In May 2007, the merger of Chrysler and Daimler-Benz was dissolved. Can this failure be ascribed to mismanagement?

The purpose of this article is now to point out which processes, related to the different subject groups definied in ISO 21500:2012 were disregarded and may have led to the project failure.

=The mismanagement of some subject groups <ref> Wanda Curlee, Robert L. Gordon . ''Complexity Theory and Project Management. ''. New York : Wiley, 2011, p. 129-133 </ref> =

Integration, Time, Communication and Stakeholders will be considered. The mismanagement of some processes related to these four specific subject groups is namely to be seen.

==Integration <ref> Grässlin, Jürgen.''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> <ref> ''DaimlerChrysler confronts the challenges of global integration'', Human Resource Management International Digest, Vol 12 Iss :2 P.5-8</ref> ==
Four Subject groups are successively addressed: Integration, Time, Communication and Stakeholders.
The Integration Subject group includes the processes required to identify, define, combine, unify, coordinate, control and close the various activities and processes related to the project (ISO 21500:2012 - 4.2.3.2).

Within this merger, the unification and combination of all operations within the established entity needed to be achieved. To meet this target, a newly corporate culture had to be defined to align working styles. The latter namely radically differ due to major cultural differences, as shown in the following table.



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 5 : Comparison between the German and the American working styles'''
|-
|
! style="background: #ffedd3;" | '''Germany'''
! style="background: #ffedd3;"|'''United States'''
|-
! style="background: #ffedd3;" align="left" |'''Employee working style'''
| Work in a team-oriented environment
| Work individually
|-
! style="background: #ffedd3;" align="left" |'''Writing report'''
| Lengthy reports
| Little paper
|-
! style="background: #ffedd3;" align="left" |'''Decision-making process'''
|
Methodical, based on very detailed plans
|
Using creativity, based on trial-and-error method
|-
! style="background: #ffedd3;" align="left" |'''Meeting'''
|
Extended discussions
|
Short meeting
|-
! style="background: #ffedd3;" align="left" |'''Organizational structure'''
|
Pronounced hierarchy based on top-down-management
|
Flat organizational hierarchy stimulating empowerment of the employees
|-
! style="background: #ffedd3;" align="left" |'''Risk appetite'''
|
Risk adverse culture
|
Risk takers
|}


Due to the fact that this merger was a so-called `merger of equals´, the integration of the two cultures was to combine them to generate a new shared corporate one. It was namely vital that both organizations learn from each other to generate synergy effects. Managers have here a central role to play to define and coordinate the development of this new culture.

Eaton affirmed that it was at the top of the agenda and Thomas Stallkamp, Chrysler President during the negotiation phase, was charged with overseeing this integration process. Some effort went into harmonizing the two corporate cultures. Many seminars and workshops were organized to sensitizing the employees for working with new colleagues with a diverging working methods. Furthermore, German was taught to many American managers.

However, given the large gap between the two organizations, it would appear that managers should have undertaken more activities and CEOs should have allocated more resources to bridge the chasm of cultural differences.

In fact, no strong and cohesive organizational culture was created, as illustrated in daily misunderstandings. For instance, the attention Daimler-Benz leaders paid to writing a leaflet sent to employee annoyed Chrysler executives. At the end of 1999, the resignation of Thomas Stallkamp, a 19-year veteran of Chrysler who was highly regarded, might be seen as failure of the merger integration process after all the effort. He is quoted as saying: <nowiki>“</nowiki>The majority of my career has been spent implementing supply chain management. I would like to continue to explore those areas at a less hectic pace<nowiki>”</nowiki>. Were both parties truly willing to cooperate wholeheartedly and to enter compromises to succeed in the numerous integration processes? A negative answer is the root cause of the unachieved integration.

==Time<ref> Sue Cartwright, Cary L. Cooper. ''Mergers and Acquisitions: The Human Factor Paperback'' . January 1, 1992 </ref>==

The Time Subject group is all about managing the timely completion of the project. Feasible deadlines taking all known constraints into account need to be set. Processes covered by the latter subject group are the development of schedule for project activities, estimating each activity duration, the progress monitoring and the schedule control.

One failure in managing time in DaimlerChrysler merger was that too little time was devoted to each activity. Let´s take a concrete example: Daimler-Benz and Chrysler began formal negotiations on January 12, 1998 and only five months later, the merger was announced worldwide. Susan Cartwright – past President of the British Academy Management – asserts that the period of time from the germ of the merger idea till an agreement is reached is estimated to last around two years. Speeding up the pre-merger preparation, the precise objectives of the fusion and the way to achieve them could not have been defined accurately.
Furthermore, the merger was completed on November 12, 1998. Time needed by employees to adapt to the new circumstances was not taken into account in the deadlines. One more mismanagement which is added to the others.

==Communication==
In the standard ISO 21500:2012, three key processes are defined to ensure appropriate exchange of project information: Plan communications, Distribute information and Manage communications. But within DaimlerChrysler project none of them were totally met. In order to appreciate the scale of the problem, it should be pointed out that even managers and CEOs experienced serious difficulties in discussing solutions and achieving a consensus. According to a Daimler-Benz executive, <nowiki>"</nowiki>Eaton went weeks without speaking with Jürgen [Schrempp]. He preferred to maintain lower-level contact. Jürgen, meanwhile, left Chrysler alone.<nowiki>"</nowiki> <ref> [http://mba.tuck.dartmouth.edu/pdf/2002-1-0071.pdf] Professor Sydney Finkelstein. ''The DaimlerChrysler Merger.''Tuck School of Business at Dartmouth. 2002 </ref> One would have expected that both CEOs would have share their different view in order to discover common goal and operate as an effective team at the top. Given the seeming clash of culture described in the first paragraph, it was crucial to start the discussion to create healthy relationship and release the company´s potential. The clearer the communication, the better issues are addressed. But with a lack of communication among leaders, no far-reaching communication plan could be implemented among all stakeholders involved, not to mention the distribution of the information. Both internal and external communications were chaotic. It is likely that the standard ISO 21500 would have make managers more aware of the processes related to communication required to be efficiently tackled.

==Stakeholders==
The stakeholder subject group is concerned with identifying and managing all stakeholders. Both their expectations and influence on the project need to be analyzed to classify them. The table 6 provides a power-interest matrix, which is crucial to draw up appropriate management strategies for effectively engaging with them. The external stakeholders are written in italics, the others are internal.

{| border="1" cellpadding="3" cellspacing="0" style="margin:auto;"
|+ '''Table 6 : Power and interest matrix'''
|-
! rowspan="2" style="background: #ffedd3;" | Level of interest
! colspan="5" style="background: #ffedd3;" | Level of power
|-
|style="background: #fff4d3;" align=center | ''' Low '''
|style="background: #fff4d3;" align=center| ''' High '''
|-
|style="background: #fff4d3;" align=center |'''High'''
|
[[Employee]]

Trade Union

''[[Clients]]''

''Suppliers''

''Government''

''Society''
|
Directors

Managers

''[[Stockholders]]''
|-
|style="background: #fff4d3;" align=center |'''Low'''
|
''Competitors''
|

|-
|}

To analyze the management of all of these stakeholders one by one would be tedious. However it is relevant to focus on several categories according to the table 6. Special focus will be laid on the stakeholders written in red in the table above. Therefore, both high power/high interest and low power/high interest stakeholders will be looked at. Furthermore, two of them are internal, whereas the other is internal.
All of them were significantly affected by the DaimlerChrysler project due to mismanagement.

===Employees===
Employees, low-power and high-interest stakeholders, must be kept informed and managers should ensure that no major issues are arising.
However, this was not the case in the DaimlerChrysler merger: employees felt overlooked, disregarded and left out of the merger process. But to what extent CEOs and managers were responsible in this climate of distrust and dislike?

First, soon after the merger, it became obvious that Daimler was taking over the whole company´s management. Chrysler President Stallkamp retirement at the end of 1999 was followed by the one of James P. Holdem, top-level executive of the Chrysler Group. They were replaced by two German managers: Dieter Zetsche and Wolfgang Bernhard. Being lowered to divisional status, it is understandable that American´s morale suffer from this German hegemony. Employee felt eclipsed and were disgusted. They also were worried that DaimlerChrysler would dismiss some of them. But the problems are not confined to be here. Indeed, Jürgen Schrempp attitude only made the situation worse. In autumn 2000, DaimlerChrysler CEO acknowledged in the German financial daily Handelsblatt that <nowiki>“</nowiki>The Merger of Equals statement was necessary in order to earn the support of Chrysler's workers and the American public, but it was never reality<nowiki>"</nowiki>. Many American regarded this statement as a betrayal, since he intended to deceive them from the outset. It appears clear that it is due to board of directors failure in acting responsibly towards these stakeholders that deep-seated distrust ran deep.

But this mismanagement of the project stakeholders can lead to far-reaching consequences on the project success itself. Indeed, it could be that some employees simply do not work as efficiently because they suppose the Board of Directors doesn’t care about the Chrysler entity – so why should they? Decreased performance would result in it.

It is to notice that even though the standard ''ISO 21500: 2012'' did not exist at that time, the fact that employee influence to succeed such a process was of importance was already known. MaryAnn Keller, founder and managing partner of MaryAnn Keller & Associates LLC, namely stated in June 1998 that <nowiki>“</nowiki>The success of any combination depends on the ability of the new organization to win over the hearts and minds of employees.<nowiki>”</nowiki> <ref> [http://murphylibrary.uwlax.edu/digital/jur/2002/carpiaux.pdf] Nicole Carpiaux. ''DaimlerChrysler : Wunderkind or Problem Child ?'' Faculty Sponsor : Leticia Peña, Department of Management. </ref> The managers of DaimlerChrysler should then be aware that is really a management issue to embrace workers instead to neglect them in order to obtain the best they can offer.

===Clients===
And what about the consumers, low-power and high interest stakeholders?

Once again, one could argue that managers failed to define as well as to meet their needs.
One example is given for illustration. At the time, the DaimlerChrysler A-Class was 1.25 to 2 times more expensive than similar vehicles sold by Volkswagen, Renault or Fiat. This higher price was not deterrent since clients were aware that Daimler-Benz primarily asset was quality and safety. However, in 1999, the A-class failed an emergency maneuver test conducted by a Swedish television station. <ref> Bill Vlasic, Bradley A. Stertz. ''Taken for a Ride: How Daimler-Benz Drove off with Chrysler''. Harper Paperbacks,
2001, p. 300.
</ref> Consequently, client´s satisfaction suddenly drop off the map. The DaimlerChrysler vehicle was considered as an overpriced car which did not achieve engineering excellence compared to the highly competitive European compact market. The crux of the problem may be that the German entity have tried to implant the American low development costs into its entities, disregarding the high expectations of the clients. This paragraph appears to prove that trying to generate synergy savings the managers failed in responding the customer´s needs.

===Stockholders===
Last but not least, the management of both high power and high interest stakeholders needs to be considered. Take the stockholders.

An overwhelming majority of them favored the project of merger in 1998. Approvals ratings reached 99.9% at Daimler-Benz and 97.5% at Chrysler. It may be inferred that, at the outset of the project, managers successfully took into account the processes required to satisfy the shareholders. It did not take long, however, for some of them to express their disappointment. This was the case for Kirk Kerkorian, the third largest proprietor of DailerChrysler stock and largest Chrysler shareholder before the merger. In November 2000, the latter filed a $9 billion lawsuit against DaimlerChrysler for falsifying the terms of the fusion as a “merger of equals”. He was upset with the German hegemony and stated he had voted to turn its shares for stock in DaimlerChrysler without having considered the American entity would be reduced to a mere division. Two months later, he cut his take in the merged company by a third. Even though the managers were not directly involved in this discontent, the lack of acting responsibly of the Board of the director is obvious.

To conclude, the completion of the processes related to each of these three stakeholders lacked efficiency. The managers failed in implementing the required activities to satisfy them and this will become a major hindrance to the project completion.

=Conclusion=
Many factors may affect the failure of the DaimlerChrysler project, but most of them may have been due to its mismanagement. Such a union was notoriously risky, especially due to the opposite companies it combined. To deliver the intent benefits, particular care should then have been taken by managers to tackle all the project management processes.

The use of the standard ''ISO 21500 : 2012'' was made to group the processes in term of Subject Group. It appears clear that there were some omissions, particularly regarding Integration, Time, Communication and Stakeholders. This standard has proven to be useful to analyze a project management, especially in case of cross-boarders project. It is a shame that such a unifying international approach was only established in 2012.

= References =

<references />

[[Category:Project Management]]
[[Category:Human Behaviour]]
[[Category:Complexity]]

Analyzing the failure of the DaimlerChrysler merger from a project management perspective

2014-12-01T19:19:54Z

Lyngby: /* Introduction */

'''Abstract'''

In the late 90´s, German Daimler-Benz AG and American Chrysler Corporation announced their intention to combine their strengths within a so-called `merger of equals´ <ref> Grässlin, Jürgen. ''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> . Becoming the fifth largest automaker in the world, both companies hoped to overcome together the automotive industry crisis. However, nothing worked out as planned, so much so that in 2007 Daimler-Benz sold all its shares of the Chrysler division.

Could the use of a norm have guaranteed the success of the DaimlerChrysler merger ? This question will be answered with regard to the ISO 21500:2012 guideline for project management.

According to the latter, a definition of project management and the processes it involves will be provided.Then, an analysis of the origin of DaimlerChrysler project will be carried out. It will also be shown to what extent this fusion was mismanaged with regard to the subject groups defined in the ISO 21500:2012. Last but not least the benefits of using this standard to successfully conduct a complex project will be discussed.

=Introduction=
In the early 21st century, no comprehensive standard on project management was accepted despite the substantial demand for project management skills. However, in 2006, the need for a unifying international approach was recognized by the International Organization for Standard (ISO). The work of over hundreds experts in project management from around the globe resulted in ''ISO 21500: 2012 -Guidance on project management''. This norm defines universal project management terminologies, as well as the principles and processes it involves. It provides a basic guide against which any organization can compare its current project management practices and determine areas in need of improvement. But how to practically apply it to a project? A specific example of project failure prior to introducing ISO 21500 will be provided to analyze which project management processes were disregarded. More particularly, the merger of the German automaker Daimler-Benz with the American Chrysler Corporation will be examined with the perspective of subject group.

= ISO 21500 : 2012, A focus on processes <ref> ISO 21500:2012 ''Guidance on project management'' </ref> <ref> Anton Zandhuis, Rommert Stellingwerf. ''ISO 215000, Guidance on Project managenent, A Pocket Guide''. Van Haren Publishing. 2013 </ref>=

What is a project? A definition is provided by the ISO 21500: “A unique set of processes consisting of coordinated and controlled activities with start and end dates, performed to achieve project objectives.” The concept of processes seems to be at the crux of project management issues. The definition of how to manage a project stresses this point: “Project management is performed through processes”.
Specifically, the norm splits the method of managing a project into 39 elementary processes. Depending on the perspective, the latter are grouped into five process groups (Initiating, Planning, Controlling and Closing) or into ten subject groups (Integration, Stakeholder, Scope, Resource, Time, Cost, Risk, Quality, Procurement and Communication). The classification of these processes is provided in the following table.

{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 1 : Project management cross-referenced to process and subject groups (ISO 21500 : 2012)'''
|-
! rowspan="2" style="background: #ffedd3;" | SUBJECT GROUPS
! colspan="5" style="background: #ffedd3;" | PROCESS GROUPS
|-
|style="background: #fff4d3;" align=center | '''Initiating'''
|style="background: #fff4d3;" align=center| '''Planning'''
|style="background: #fff4d3;" align=center| '''Implementing'''
|style="background: #fff4d3;" align=center | '''Controlling'''
|style="background: #fff4d3;" align=center | '''Closing'''
|-
|style="background: #fff4d3;" |'''Integration'''
|
4.3.2 Develop project chart
|
4.3.3. Develop project plans
|
4.3.4 Direct project work
|
4.3.5 Control project work

4.3.6 Control changes
|
4.3.7 Close project or phase

4.3.8 Collect lessons learned
|-
|style="background: #fff4d3;" |'''Stakeholder'''
|
4.3.9 Identify stakeholders
|

|
4.3.10 Manage stakeholders
|

|

|-
|style="background: #fff4d3;" |'''Scope'''
|

|
4.3.11 Define scope

4.3.12 Create work breakdown structure

4.3.13 Define activities
|

|
4.3.14 Control scope
|

|-
|style="background: #fff4d3;" |'''Resource'''
|
4.3.15 Establish project team
|
4.3.16 Estimate resources

4.3.17 Define project organization
|
4.3.18 Develop project team
|
4.3.19 Control resources

4.3.20 Manage project team
|

|-
|style="background: #fff4d3;" |'''Time'''
|

|
4.3.21 Sequence activities

4.3.22 Estimate activity durations

4.3.23 Develop schedule
|

|
4.3.24 Control schedule
|

|-
|style="background: #fff4d3;" |'''Cost'''
|

|
4.3.25 Estimate costs

4.3.28 Develop budget
|

|
4.3.27 Control costs
|

|-
|style="background: #fff4d3;" |'''Risk'''
|

|
4.3.28 Identify risks

4.3.29 Asses risks
|
4.3.30 Treat risks
|
4.3.31 Control risks
|
|-
|style="background: #fff4d3;" |'''Quality'''
|

|
4.3.32 Plan quality
|
4.3.33 Perform quality assurance
|
4.3.34 Perform quality control
|

|-
|style="background: #fff4d3;" |'''Procurement'''
|

|
4.3.35 Plan procurements
|
4.3.38 Select suppliers
|
4.3.37 Administer procurements
|

|-
|style="background: #fff4d3;" |'''Communication'''
|

|
4.3.38 Plan communications
|
4.3.39 Distribute information
|
4.3.40 Manage communications
|

|}

The perspective of subject groups will be adopted to consider the management of DaimlerChrysler project. The latter are the themes in which processes are classified according to its related activities. But before that, the project of DaimlerChrysler merger is regarded.

=DaimlerChrysler merger project <ref> Julia Hollmann, Aletéia de Moura Carpes, Thiago Antonio Beuron. ''The DaimlerChrylser Merger- A cultural mismatch ?'' Faculty Sponsor : Universität Paderborn- Germany, Department of International Business Studies. Universidade Federal de Santa Maria- Brazil, Department of Administration. 2010 </ref> =
==The genesis of the project==
In the late 90´s, the automotive industry had to face multiples challenges due to the excess manufacturing capacity, the growth of ecological awareness, and the retail revolution that empowered buyers. To strengthen their position during this crisis, the automakers Daimler-Benz and Chrysler Corporation decided to merge. This project aimed to combine each other´s product designs, manufacturing resources and distribution systems.
The following table shows the complementary of the two companies, which wanted to unit their knowledge and their market in order to gain a competitive advantage.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 2 : The complementary of the two companies '''
|
! style="background: #ffedd3;" |'''Daimler-Benz AG'''
! style="background: #ffedd3;" |'''Chrysler Corporation'''
|-
! style="background: #ffedd3;" |'''Head office location'''
|
Germany
|
United States
|-
! style="background: #ffedd3;" |'''Geographical reach'''
|
European market
|
U.S. American market
|-
! style="background: #ffedd3;" |'''Product ranges'''
|
Uncompromising quality products
|
Car models that met the American demand for adventurousness
|}


Both synergies and economies of scale were likely to proliferate.

How the project was set up is explained in the following paragraph. However, its detailed description falls outside the scope of this article.

==The execution of the project==
On May 7th 1998, the signing of the combination agreement between Daimler-Benz and Chrysler was publicly announced. Daimler-Benz CEO Jürgen Schrempp described the union as "a merger of equals, a merger of growth, and a merger of unprecedented strength".
The equal status of the two organizations was reflected in the newly established entity name, DaimlerChrysler, as well as in the combination of the two former boards of management to form the one of DaimlerChrysler. Furthermore, it was agreed that Schrempp and Eaton, former CEO of the Chrysler Corporation, would jointly led the entity as co-chairmen and co-CEOs. It was also decided that Eaton would stay up to three years.
The two following tables provide more data about DaimlerChrysler right after the merger and the expected results of this project.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 3 : Characteristics of DaimlerChrysler right after the merger'''
|-
! style="background: #ffedd3;" |'''Number of employees '''
|442,000 employees
½ in Germany

1/3 in North America

1/6 spread across 200 countries around the world
|-
! style="background: #ffedd3;" |'''Daimler-Benz AG Market capitalization'''
|$ 92 billion
|}



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 4 : Expected results'''
! style="background: #ffedd3;" |Annual revenues of the combined company
|$ 132 billion
|-
! style="background: #ffedd3;" |Increase in sales
|13%
|-
! style="background: #ffedd3;" |Cost savings brought within 2 or 3 years
|$ 3,5 billion a year
|}


So far, this fusion appears to be very beneficial for all parties involved. However the wish for synergy effects never came true and the project drove Chrysler into chaos. In May 2007, the merger of Chrysler and Daimler-Benz was dissolved. Can this failure be ascribed to mismanagement?

The purpose of this article is now to point out which processes, related to the different subject groups definied in ISO 21500:2012 were disregarded and may have led to the project failure.

=The mismanagement of some subject groups <ref> Wanda Curlee, Robert L. Gordon . ''Complexity Theory and Project Management. ''. New York : Wiley, 2011, p. 129-133 </ref> =

Integration, Time, Communication and Stakeholders will be considered. The mismanagement of some processes related to these four specific subject groups is namely to be seen.

==Integration <ref> Grässlin, Jürgen.''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> <ref> ''DaimlerChrysler confronts the challenges of global integration'', Human Resource Management International Digest, Vol 12 Iss :2 P.5-8</ref> ==
Four Subject groups are successively addressed: Integration, Time, Communication and Stakeholders.
The Integration Subject group includes the processes required to identify, define, combine, unify, coordinate, control and close the various activities and processes related to the project (ISO 21500:2012 - 4.2.3.2).

Within this merger, the unification and combination of all operations within the established entity needed to be achieved. To meet this target, a newly corporate culture had to be defined to align working styles. The latter namely radically differ due to major cultural differences, as shown in the following table.



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 5 : Comparison between the German and the American working styles'''
|-
|
! style="background: #ffedd3;" | '''Germany'''
! style="background: #ffedd3;"|'''United States'''
|-
! style="background: #ffedd3;" align="left" |'''Employee working style'''
| Work in a team-oriented environment
| Work individually
|-
! style="background: #ffedd3;" align="left" |'''Writing report'''
| Lengthy reports
| Little paper
|-
! style="background: #ffedd3;" align="left" |'''Decision-making process'''
|
Methodical, based on very detailed plans
|
Using creativity, based on trial-and-error method
|-
! style="background: #ffedd3;" align="left" |'''Meeting'''
|
Extended discussions
|
Short meeting
|-
! style="background: #ffedd3;" align="left" |'''Organizational structure'''
|
Pronounced hierarchy based on top-down-management
|
Flat organizational hierarchy stimulating empowerment of the employees
|-
! style="background: #ffedd3;" align="left" |'''Risk appetite'''
|
Risk adverse culture
|
Risk takers
|}


Due to the fact that this merger was a so-called `merger of equals´, the integration of the two cultures was to combine them to generate a new shared corporate one. It was namely vital that both organizations learn from each other to generate synergy effects. Managers have here a central role to play to define and coordinate the development of this new culture.

Eaton affirmed that it was at the top of the agenda and Thomas Stallkamp, Chrysler President during the negotiation phase, was charged with overseeing this integration process. Some effort went into harmonizing the two corporate cultures. Many seminars and workshops were organized to sensitizing the employees for working with new colleagues with a diverging working methods. Furthermore, German was taught to many American managers.

However, given the large gap between the two organizations, it would appear that managers should have undertaken more activities and CEOs should have allocated more resources to bridge the chasm of cultural differences.

In fact, no strong and cohesive organizational culture was created, as illustrated in daily misunderstandings. For instance, the attention Daimler-Benz leaders paid to writing a leaflet sent to employee annoyed Chrysler executives. At the end of 1999, the resignation of Thomas Stallkamp, a 19-year veteran of Chrysler who was highly regarded, might be seen as failure of the merger integration process after all the effort. He is quoted as saying: <nowiki>“</nowiki>The majority of my career has been spent implementing supply chain management. I would like to continue to explore those areas at a less hectic pace<nowiki>”</nowiki>. Were both parties truly willing to cooperate wholeheartedly and to enter compromises to succeed in the numerous integration processes? A negative answer is the root cause of the unachieved integration.

==Time<ref> Sue Cartwright, Cary L. Cooper. ''Mergers and Acquisitions: The Human Factor Paperback'' . January 1, 1992 </ref>==

The Time Subject group is all about managing the timely completion of the project. Feasible deadlines taking all known constraints into account need to be set. Processes covered by the latter subject group are the development of schedule for project activities, estimating each activity duration, the progress monitoring and the schedule control.

One failure in managing time in DaimlerChrysler merger was that too little time was devoted to each activity. Let´s take a concrete example: Daimler-Benz and Chrysler began formal negotiations on January 12, 1998 and only five months later, the merger was announced worldwide. Susan Cartwright – past President of the British Academy Management – asserts that the period of time from the germ of the merger idea till an agreement is reached is estimated to last around two years. Speeding up the pre-merger preparation, the precise objectives of the fusion and the way to achieve them could not have been defined accurately.
Furthermore, the merger was completed on November 12, 1998. Time needed by employees to adapt to the new circumstances was not taken into account in the deadlines. One more mismanagement which is added to the others.

==Communication==
In the standard ISO 21500:2012, three key processes are defined to ensure appropriate exchange of project information: Plan communications, Distribute information and Manage communications. But within DaimlerChrysler project none of them were totally met. In order to appreciate the scale of the problem, it should be pointed out that even managers and CEOs experienced serious difficulties in discussing solutions and achieving a consensus. According to a Daimler-Benz executive, <nowiki>"</nowiki>Eaton went weeks without speaking with Jürgen [Schrempp]. He preferred to maintain lower-level contact. Jürgen, meanwhile, left Chrysler alone.<nowiki>"</nowiki> <ref> [http://mba.tuck.dartmouth.edu/pdf/2002-1-0071.pdf] Professor Sydney Finkelstein. ''The DaimlerChrysler Merger.''Tuck School of Business at Dartmouth. 2002 </ref> One would have expected that both CEOs would have share their different view in order to discover common goal and operate as an effective team at the top. Given the seeming clash of culture described in the first paragraph, it was crucial to start the discussion to create healthy relationship and release the company´s potential. The clearer the communication, the better issues are addressed. But with a lack of communication among leaders, no far-reaching communication plan could be implemented among all stakeholders involved, not to mention the distribution of the information. Both internal and external communications were chaotic. It is likely that the standard ISO 21500 would have make managers more aware of the processes related to communication required to be efficiently tackled.

==Stakeholders==
The stakeholder subject group is concerned with identifying and managing all stakeholders. Both their expectations and influence on the project need to be analyzed to classify them. The table 6 provides a power-interest matrix, which is crucial to draw up appropriate management strategies for effectively engaging with them. The external stakeholders are written in italics, the others are internal.

{| border="1" cellpadding="3" cellspacing="0" style="margin:auto;"
|+ '''Table 6 : Power and interest matrix'''
|-
! rowspan="2" style="background: #ffedd3;" | Level of interest
! colspan="5" style="background: #ffedd3;" | Level of power
|-
|style="background: #fff4d3;" align=center | ''' Low '''
|style="background: #fff4d3;" align=center| ''' High '''
|-
|style="background: #fff4d3;" align=center |'''High'''
|
[[Employee]]

Trade Union

''[[Clients]]''

''Suppliers''

''Government''

''Society''
|
Directors

Managers

''[[Stockholders]]''
|-
|style="background: #fff4d3;" align=center |'''Low'''
|
''Competitors''
|

|-
|}

To analyze the management of all of these stakeholders one by one would be tedious. However it is relevant to focus on several categories according to the table 6. Special focus will be laid on the stakeholders written in red in the table above. Therefore, both high power/high interest and low power/high interest stakeholders will be looked at. Furthermore, two of them are internal, whereas the other is internal.
All of them were significantly affected by the DaimlerChrysler project due to mismanagement.

===Employees===
Employees, low-power and high-interest stakeholders, must be kept informed and managers should ensure that no major issues are arising.
However, this was not the case in the DaimlerChrysler merger: employees felt overlooked, disregarded and left out of the merger process. But to what extent CEOs and managers were responsible in this climate of distrust and dislike?

First, soon after the merger, it became obvious that Daimler was taking over the whole company´s management. Chrysler President Stallkamp retirement at the end of 1999 was followed by the one of James P. Holdem, top-level executive of the Chrysler Group. They were replaced by two German managers: Dieter Zetsche and Wolfgang Bernhard. Being lowered to divisional status, it is understandable that American´s morale suffer from this German hegemony. Employee felt eclipsed and were disgusted. They also were worried that DaimlerChrysler would dismiss some of them. But the problems are not confined to be here. Indeed, Jürgen Schrempp attitude only made the situation worse. In autumn 2000, DaimlerChrysler CEO acknowledged in the German financial daily Handelsblatt that <nowiki>“</nowiki>The Merger of Equals statement was necessary in order to earn the support of Chrysler's workers and the American public, but it was never reality<nowiki>"</nowiki>. Many American regarded this statement as a betrayal, since he intended to deceive them from the outset. It appears clear that it is due to board of directors failure in acting responsibly towards these stakeholders that deep-seated distrust ran deep.

But this mismanagement of the project stakeholders can lead to far-reaching consequences on the project success itself. Indeed, it could be that some employees simply do not work as efficiently because they suppose the Board of Directors doesn’t care about the Chrysler entity – so why should they? Decreased performance would result in it.

It is to notice that even though the standard ''ISO 21500: 2012'' did not exist at that time, the fact that employee influence to succeed such a process was of importance was already known. MaryAnn Keller, founder and managing partner of MaryAnn Keller & Associates LLC, namely stated in June 1998 that <nowiki>“</nowiki>The success of any combination depends on the ability of the new organization to win over the hearts and minds of employees.<nowiki>”</nowiki> <ref> [http://murphylibrary.uwlax.edu/digital/jur/2002/carpiaux.pdf] Nicole Carpiaux. ''DaimlerChrysler : Wunderkind or Problem Child ?'' Faculty Sponsor : Leticia Peña, Department of Management. </ref> The managers of DaimlerChrysler should then be aware that is really a management issue to embrace workers instead to neglect them in order to obtain the best they can offer.

===Clients===
And what about the consumers, low-power and high interest stakeholders?

Once again, one could argue that managers failed to define as well as to meet their needs.
One example is given for illustration. At the time, the DaimlerChrysler A-Class was 1.25 to 2 times more expensive than similar vehicles sold by Volkswagen, Renault or Fiat. This higher price was not deterrent since clients were aware that Daimler-Benz primarily asset was quality and safety. However, in 1999, the A-class failed an emergency maneuver test conducted by a Swedish television station. <ref> Bill Vlasic, Bradley A. Stertz. ''Taken for a Ride: How Daimler-Benz Drove off with Chrysler''. Harper Paperbacks,
2001, p. 300.
</ref> Consequently, client´s satisfaction suddenly drop off the map. The DaimlerChrysler vehicle was considered as an overpriced car which did not achieve engineering excellence compared to the highly competitive European compact market. The crux of the problem may be that the German entity have tried to implant the American low development costs into its entities, disregarding the high expectations of the clients. This paragraph appears to prove that trying to generate synergy savings the managers failed in responding the customer´s needs.

===Stockholders===
Last but not least, the management of both high power and high interest stakeholders needs to be considered. Take the stockholders.

An overwhelming majority of them favored the project of merger in 1998. Approvals ratings reached 99.9% at Daimler-Benz and 97.5% at Chrysler. It may be inferred that, at the outset of the project, managers successfully took into account the processes required to satisfy the shareholders. It did not take long, however, for some of them to express their disappointment. This was the case for Kirk Kerkorian, the third largest proprietor of DailerChrysler stock and largest Chrysler shareholder before the merger. In November 2000, the latter filed a $9 billion lawsuit against DaimlerChrysler for falsifying the terms of the fusion as a “merger of equals”. He was upset with the German hegemony and stated he had voted to turn its shares for stock in DaimlerChrysler without having considered the American entity would be reduced to a mere division. Two months later, he cut his take in the merged company by a third. Even though the managers were not directly involved in this discontent, the lack of acting responsibly of the Board of the director is obvious.

To conclude, the completion of the processes related to each of these three stakeholders lacked efficiency. The managers failed in implementing the required activities to satisfy them and this will become a major hindrance to the project completion.

=Conclusion=
Many factors may affect the failure of the DaimlerChrysler project, but most of them may have been due to its mismanagement. Such a union was notoriously risky, especially due to the opposite companies it combined. To deliver the intent benefits, particular care should then have been taken by managers to tackle all the project management processes.

The use of the standard ''ISO 21500 : 2012'' was made to group the processes in term of Subject Group. It appears clear that there were some omissions, particularly regarding Integration, Time, Communication and Stakeholders. This standard has proven to be useful to analyze a project management, especially in case of cross-boarders project. It is a shame that such a unifying international approach was only established in 2012.

= References =

<references />

[[Category:Project Management]]
[[Category:Human Behaviour]]
[[Category:Complexity]]

Analyzing the failure of the DaimlerChrysler merger from a project management perspective

2014-12-01T19:16:55Z

Lyngby:

'''Abstract'''

In the late 90´s, German Daimler-Benz AG and American Chrysler Corporation announced their intention to combine their strengths within a so-called `merger of equals´ <ref> Grässlin, Jürgen. ''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> . Becoming the fifth largest automaker in the world, both companies hoped to overcome together the automotive industry crisis. However, nothing worked out as planned, so much so that in 2007 Daimler-Benz sold all its shares of the Chrysler division.

Could the use of a norm have guaranteed the success of the DaimlerChrysler merger ? This question will be answered with regard to the ISO 21500:2012 guideline for project management.

According to the latter, a definition of project management and the processes it involves will be provided.Then, an analysis of the origin of DaimlerChrysler project will be carried out. It will also be shown to what extent this fusion was mismanaged with regard to the subject groups defined in the ISO 21500:2012. Last but not least the benefits of using this standard to successfully conduct a complex project will be discussed.

=Introduction=
In the early 21st century, no comprehensive standard on project management was accepted despite the substantial demand for project management skills. However, in 2006, the need for a unifying international approach was recognized by the International Organization for Standard (ISO). The work of over hundreds experts in project management from around the globe resulted in ''ISO 21500: 2012 -Guidance on project management''. This norm defines consistent project management terminology and universal project management principles and processes. It provides a basic guide against which any organization can compare its current project management practices and determine areas in need of improvement. But how to practically apply it to a project? A specific example of project failure prior to introducing ISO 21500 will be provided to analyze which project management processes were disregarded. More particularly, the merger of the German automaker Daimler-Benz with the American Chrysler Corporation will be examined with the perspective of subject group.

= ISO 21500 : 2012, A focus on processes <ref> ISO 21500:2012 ''Guidance on project management'' </ref> <ref> Anton Zandhuis, Rommert Stellingwerf. ''ISO 215000, Guidance on Project managenent, A Pocket Guide''. Van Haren Publishing. 2013 </ref>=

What is a project? A definition is provided by the ISO 21500: “A unique set of processes consisting of coordinated and controlled activities with start and end dates, performed to achieve project objectives.” The concept of processes seems to be at the crux of project management issues. The definition of how to manage a project stresses this point: “Project management is performed through processes”.
Specifically, the norm splits the method of managing a project into 39 elementary processes. Depending on the perspective, the latter are grouped into five process groups (Initiating, Planning, Controlling and Closing) or into ten subject groups (Integration, Stakeholder, Scope, Resource, Time, Cost, Risk, Quality, Procurement and Communication). The classification of these processes is provided in the following table.

{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 1 : Project management cross-referenced to process and subject groups (ISO 21500 : 2012)'''
|-
! rowspan="2" style="background: #ffedd3;" | SUBJECT GROUPS
! colspan="5" style="background: #ffedd3;" | PROCESS GROUPS
|-
|style="background: #fff4d3;" align=center | '''Initiating'''
|style="background: #fff4d3;" align=center| '''Planning'''
|style="background: #fff4d3;" align=center| '''Implementing'''
|style="background: #fff4d3;" align=center | '''Controlling'''
|style="background: #fff4d3;" align=center | '''Closing'''
|-
|style="background: #fff4d3;" |'''Integration'''
|
4.3.2 Develop project chart
|
4.3.3. Develop project plans
|
4.3.4 Direct project work
|
4.3.5 Control project work

4.3.6 Control changes
|
4.3.7 Close project or phase

4.3.8 Collect lessons learned
|-
|style="background: #fff4d3;" |'''Stakeholder'''
|
4.3.9 Identify stakeholders
|

|
4.3.10 Manage stakeholders
|

|

|-
|style="background: #fff4d3;" |'''Scope'''
|

|
4.3.11 Define scope

4.3.12 Create work breakdown structure

4.3.13 Define activities
|

|
4.3.14 Control scope
|

|-
|style="background: #fff4d3;" |'''Resource'''
|
4.3.15 Establish project team
|
4.3.16 Estimate resources

4.3.17 Define project organization
|
4.3.18 Develop project team
|
4.3.19 Control resources

4.3.20 Manage project team
|

|-
|style="background: #fff4d3;" |'''Time'''
|

|
4.3.21 Sequence activities

4.3.22 Estimate activity durations

4.3.23 Develop schedule
|

|
4.3.24 Control schedule
|

|-
|style="background: #fff4d3;" |'''Cost'''
|

|
4.3.25 Estimate costs

4.3.28 Develop budget
|

|
4.3.27 Control costs
|

|-
|style="background: #fff4d3;" |'''Risk'''
|

|
4.3.28 Identify risks

4.3.29 Asses risks
|
4.3.30 Treat risks
|
4.3.31 Control risks
|
|-
|style="background: #fff4d3;" |'''Quality'''
|

|
4.3.32 Plan quality
|
4.3.33 Perform quality assurance
|
4.3.34 Perform quality control
|

|-
|style="background: #fff4d3;" |'''Procurement'''
|

|
4.3.35 Plan procurements
|
4.3.38 Select suppliers
|
4.3.37 Administer procurements
|

|-
|style="background: #fff4d3;" |'''Communication'''
|

|
4.3.38 Plan communications
|
4.3.39 Distribute information
|
4.3.40 Manage communications
|

|}

The perspective of subject groups will be adopted to consider the management of DaimlerChrysler project. The latter are the themes in which processes are classified according to its related activities. But before that, the project of DaimlerChrysler merger is regarded.

=DaimlerChrysler merger project <ref> Julia Hollmann, Aletéia de Moura Carpes, Thiago Antonio Beuron. ''The DaimlerChrylser Merger- A cultural mismatch ?'' Faculty Sponsor : Universität Paderborn- Germany, Department of International Business Studies. Universidade Federal de Santa Maria- Brazil, Department of Administration. 2010 </ref> =
==The genesis of the project==
In the late 90´s, the automotive industry had to face multiples challenges due to the excess manufacturing capacity, the growth of ecological awareness, and the retail revolution that empowered buyers. To strengthen their position during this crisis, the automakers Daimler-Benz and Chrysler Corporation decided to merge. This project aimed to combine each other´s product designs, manufacturing resources and distribution systems.
The following table shows the complementary of the two companies, which wanted to unit their knowledge and their market in order to gain a competitive advantage.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 2 : The complementary of the two companies '''
|
! style="background: #ffedd3;" |'''Daimler-Benz AG'''
! style="background: #ffedd3;" |'''Chrysler Corporation'''
|-
! style="background: #ffedd3;" |'''Head office location'''
|
Germany
|
United States
|-
! style="background: #ffedd3;" |'''Geographical reach'''
|
European market
|
U.S. American market
|-
! style="background: #ffedd3;" |'''Product ranges'''
|
Uncompromising quality products
|
Car models that met the American demand for adventurousness
|}


Both synergies and economies of scale were likely to proliferate.

How the project was set up is explained in the following paragraph. However, its detailed description falls outside the scope of this article.

==The execution of the project==
On May 7th 1998, the signing of the combination agreement between Daimler-Benz and Chrysler was publicly announced. Daimler-Benz CEO Jürgen Schrempp described the union as "a merger of equals, a merger of growth, and a merger of unprecedented strength".
The equal status of the two organizations was reflected in the newly established entity name, DaimlerChrysler, as well as in the combination of the two former boards of management to form the one of DaimlerChrysler. Furthermore, it was agreed that Schrempp and Eaton, former CEO of the Chrysler Corporation, would jointly led the entity as co-chairmen and co-CEOs. It was also decided that Eaton would stay up to three years.
The two following tables provide more data about DaimlerChrysler right after the merger and the expected results of this project.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 3 : Characteristics of DaimlerChrysler right after the merger'''
|-
! style="background: #ffedd3;" |'''Number of employees '''
|442,000 employees
½ in Germany

1/3 in North America

1/6 spread across 200 countries around the world
|-
! style="background: #ffedd3;" |'''Daimler-Benz AG Market capitalization'''
|$ 92 billion
|}



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 4 : Expected results'''
! style="background: #ffedd3;" |Annual revenues of the combined company
|$ 132 billion
|-
! style="background: #ffedd3;" |Increase in sales
|13%
|-
! style="background: #ffedd3;" |Cost savings brought within 2 or 3 years
|$ 3,5 billion a year
|}


So far, this fusion appears to be very beneficial for all parties involved. However the wish for synergy effects never came true and the project drove Chrysler into chaos. In May 2007, the merger of Chrysler and Daimler-Benz was dissolved. Can this failure be ascribed to mismanagement?

The purpose of this article is now to point out which processes, related to the different subject groups definied in ISO 21500:2012 were disregarded and may have led to the project failure.

=The mismanagement of some subject groups <ref> Wanda Curlee, Robert L. Gordon . ''Complexity Theory and Project Management. ''. New York : Wiley, 2011, p. 129-133 </ref> =

Integration, Time, Communication and Stakeholders will be considered. The mismanagement of some processes related to these four specific subject groups is namely to be seen.

==Integration <ref> Grässlin, Jürgen.''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> <ref> ''DaimlerChrysler confronts the challenges of global integration'', Human Resource Management International Digest, Vol 12 Iss :2 P.5-8</ref> ==
Four Subject groups are successively addressed: Integration, Time, Communication and Stakeholders.
The Integration Subject group includes the processes required to identify, define, combine, unify, coordinate, control and close the various activities and processes related to the project (ISO 21500:2012 - 4.2.3.2).

Within this merger, the unification and combination of all operations within the established entity needed to be achieved. To meet this target, a newly corporate culture had to be defined to align working styles. The latter namely radically differ due to major cultural differences, as shown in the following table.



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 5 : Comparison between the German and the American working styles'''
|-
|
! style="background: #ffedd3;" | '''Germany'''
! style="background: #ffedd3;"|'''United States'''
|-
! style="background: #ffedd3;" align="left" |'''Employee working style'''
| Work in a team-oriented environment
| Work individually
|-
! style="background: #ffedd3;" align="left" |'''Writing report'''
| Lengthy reports
| Little paper
|-
! style="background: #ffedd3;" align="left" |'''Decision-making process'''
|
Methodical, based on very detailed plans
|
Using creativity, based on trial-and-error method
|-
! style="background: #ffedd3;" align="left" |'''Meeting'''
|
Extended discussions
|
Short meeting
|-
! style="background: #ffedd3;" align="left" |'''Organizational structure'''
|
Pronounced hierarchy based on top-down-management
|
Flat organizational hierarchy stimulating empowerment of the employees
|-
! style="background: #ffedd3;" align="left" |'''Risk appetite'''
|
Risk adverse culture
|
Risk takers
|}


Due to the fact that this merger was a so-called `merger of equals´, the integration of the two cultures was to combine them to generate a new shared corporate one. It was namely vital that both organizations learn from each other to generate synergy effects. Managers have here a central role to play to define and coordinate the development of this new culture.

Eaton affirmed that it was at the top of the agenda and Thomas Stallkamp, Chrysler President during the negotiation phase, was charged with overseeing this integration process. Some effort went into harmonizing the two corporate cultures. Many seminars and workshops were organized to sensitizing the employees for working with new colleagues with a diverging working methods. Furthermore, German was taught to many American managers.

However, given the large gap between the two organizations, it would appear that managers should have undertaken more activities and CEOs should have allocated more resources to bridge the chasm of cultural differences.

In fact, no strong and cohesive organizational culture was created, as illustrated in daily misunderstandings. For instance, the attention Daimler-Benz leaders paid to writing a leaflet sent to employee annoyed Chrysler executives. At the end of 1999, the resignation of Thomas Stallkamp, a 19-year veteran of Chrysler who was highly regarded, might be seen as failure of the merger integration process after all the effort. He is quoted as saying: <nowiki>“</nowiki>The majority of my career has been spent implementing supply chain management. I would like to continue to explore those areas at a less hectic pace<nowiki>”</nowiki>. Were both parties truly willing to cooperate wholeheartedly and to enter compromises to succeed in the numerous integration processes? A negative answer is the root cause of the unachieved integration.

==Time<ref> Sue Cartwright, Cary L. Cooper. ''Mergers and Acquisitions: The Human Factor Paperback'' . January 1, 1992 </ref>==

The Time Subject group is all about managing the timely completion of the project. Feasible deadlines taking all known constraints into account need to be set. Processes covered by the latter subject group are the development of schedule for project activities, estimating each activity duration, the progress monitoring and the schedule control.

One failure in managing time in DaimlerChrysler merger was that too little time was devoted to each activity. Let´s take a concrete example: Daimler-Benz and Chrysler began formal negotiations on January 12, 1998 and only five months later, the merger was announced worldwide. Susan Cartwright – past President of the British Academy Management – asserts that the period of time from the germ of the merger idea till an agreement is reached is estimated to last around two years. Speeding up the pre-merger preparation, the precise objectives of the fusion and the way to achieve them could not have been defined accurately.
Furthermore, the merger was completed on November 12, 1998. Time needed by employees to adapt to the new circumstances was not taken into account in the deadlines. One more mismanagement which is added to the others.

==Communication==
In the standard ISO 21500:2012, three key processes are defined to ensure appropriate exchange of project information: Plan communications, Distribute information and Manage communications. But within DaimlerChrysler project none of them were totally met. In order to appreciate the scale of the problem, it should be pointed out that even managers and CEOs experienced serious difficulties in discussing solutions and achieving a consensus. According to a Daimler-Benz executive, <nowiki>"</nowiki>Eaton went weeks without speaking with Jürgen [Schrempp]. He preferred to maintain lower-level contact. Jürgen, meanwhile, left Chrysler alone.<nowiki>"</nowiki> <ref> [http://mba.tuck.dartmouth.edu/pdf/2002-1-0071.pdf] Professor Sydney Finkelstein. ''The DaimlerChrysler Merger.''Tuck School of Business at Dartmouth. 2002 </ref> One would have expected that both CEOs would have share their different view in order to discover common goal and operate as an effective team at the top. Given the seeming clash of culture described in the first paragraph, it was crucial to start the discussion to create healthy relationship and release the company´s potential. The clearer the communication, the better issues are addressed. But with a lack of communication among leaders, no far-reaching communication plan could be implemented among all stakeholders involved, not to mention the distribution of the information. Both internal and external communications were chaotic. It is likely that the standard ISO 21500 would have make managers more aware of the processes related to communication required to be efficiently tackled.

==Stakeholders==
The stakeholder subject group is concerned with identifying and managing all stakeholders. Both their expectations and influence on the project need to be analyzed to classify them. The table 6 provides a power-interest matrix, which is crucial to draw up appropriate management strategies for effectively engaging with them. The external stakeholders are written in italics, the others are internal.

{| border="1" cellpadding="3" cellspacing="0" style="margin:auto;"
|+ '''Table 6 : Power and interest matrix'''
|-
! rowspan="2" style="background: #ffedd3;" | Level of interest
! colspan="5" style="background: #ffedd3;" | Level of power
|-
|style="background: #fff4d3;" align=center | ''' Low '''
|style="background: #fff4d3;" align=center| ''' High '''
|-
|style="background: #fff4d3;" align=center |'''High'''
|
[[Employee]]

Trade Union

''[[Clients]]''

''Suppliers''

''Government''

''Society''
|
Directors

Managers

''[[Stockholders]]''
|-
|style="background: #fff4d3;" align=center |'''Low'''
|
''Competitors''
|

|-
|}

To analyze the management of all of these stakeholders one by one would be tedious. However it is relevant to focus on several categories according to the table 6. Special focus will be laid on the stakeholders written in red in the table above. Therefore, both high power/high interest and low power/high interest stakeholders will be looked at. Furthermore, two of them are internal, whereas the other is internal.
All of them were significantly affected by the DaimlerChrysler project due to mismanagement.

===Employees===
Employees, low-power and high-interest stakeholders, must be kept informed and managers should ensure that no major issues are arising.
However, this was not the case in the DaimlerChrysler merger: employees felt overlooked, disregarded and left out of the merger process. But to what extent CEOs and managers were responsible in this climate of distrust and dislike?

First, soon after the merger, it became obvious that Daimler was taking over the whole company´s management. Chrysler President Stallkamp retirement at the end of 1999 was followed by the one of James P. Holdem, top-level executive of the Chrysler Group. They were replaced by two German managers: Dieter Zetsche and Wolfgang Bernhard. Being lowered to divisional status, it is understandable that American´s morale suffer from this German hegemony. Employee felt eclipsed and were disgusted. They also were worried that DaimlerChrysler would dismiss some of them. But the problems are not confined to be here. Indeed, Jürgen Schrempp attitude only made the situation worse. In autumn 2000, DaimlerChrysler CEO acknowledged in the German financial daily Handelsblatt that <nowiki>“</nowiki>The Merger of Equals statement was necessary in order to earn the support of Chrysler's workers and the American public, but it was never reality<nowiki>"</nowiki>. Many American regarded this statement as a betrayal, since he intended to deceive them from the outset. It appears clear that it is due to board of directors failure in acting responsibly towards these stakeholders that deep-seated distrust ran deep.

But this mismanagement of the project stakeholders can lead to far-reaching consequences on the project success itself. Indeed, it could be that some employees simply do not work as efficiently because they suppose the Board of Directors doesn’t care about the Chrysler entity – so why should they? Decreased performance would result in it.

It is to notice that even though the standard ''ISO 21500: 2012'' did not exist at that time, the fact that employee influence to succeed such a process was of importance was already known. MaryAnn Keller, founder and managing partner of MaryAnn Keller & Associates LLC, namely stated in June 1998 that <nowiki>“</nowiki>The success of any combination depends on the ability of the new organization to win over the hearts and minds of employees.<nowiki>”</nowiki> <ref> [http://murphylibrary.uwlax.edu/digital/jur/2002/carpiaux.pdf] Nicole Carpiaux. ''DaimlerChrysler : Wunderkind or Problem Child ?'' Faculty Sponsor : Leticia Peña, Department of Management. </ref> The managers of DaimlerChrysler should then be aware that is really a management issue to embrace workers instead to neglect them in order to obtain the best they can offer.

===Clients===
And what about the consumers, low-power and high interest stakeholders?

Once again, one could argue that managers failed to define as well as to meet their needs.
One example is given for illustration. At the time, the DaimlerChrysler A-Class was 1.25 to 2 times more expensive than similar vehicles sold by Volkswagen, Renault or Fiat. This higher price was not deterrent since clients were aware that Daimler-Benz primarily asset was quality and safety. However, in 1999, the A-class failed an emergency maneuver test conducted by a Swedish television station. <ref> Bill Vlasic, Bradley A. Stertz. ''Taken for a Ride: How Daimler-Benz Drove off with Chrysler''. Harper Paperbacks,
2001, p. 300.
</ref> Consequently, client´s satisfaction suddenly drop off the map. The DaimlerChrysler vehicle was considered as an overpriced car which did not achieve engineering excellence compared to the highly competitive European compact market. The crux of the problem may be that the German entity have tried to implant the American low development costs into its entities, disregarding the high expectations of the clients. This paragraph appears to prove that trying to generate synergy savings the managers failed in responding the customer´s needs.

===Stockholders===
Last but not least, the management of both high power and high interest stakeholders needs to be considered. Take the stockholders.

An overwhelming majority of them favored the project of merger in 1998. Approvals ratings reached 99.9% at Daimler-Benz and 97.5% at Chrysler. It may be inferred that, at the outset of the project, managers successfully took into account the processes required to satisfy the shareholders. It did not take long, however, for some of them to express their disappointment. This was the case for Kirk Kerkorian, the third largest proprietor of DailerChrysler stock and largest Chrysler shareholder before the merger. In November 2000, the latter filed a $9 billion lawsuit against DaimlerChrysler for falsifying the terms of the fusion as a “merger of equals”. He was upset with the German hegemony and stated he had voted to turn its shares for stock in DaimlerChrysler without having considered the American entity would be reduced to a mere division. Two months later, he cut his take in the merged company by a third. Even though the managers were not directly involved in this discontent, the lack of acting responsibly of the Board of the director is obvious.

To conclude, the completion of the processes related to each of these three stakeholders lacked efficiency. The managers failed in implementing the required activities to satisfy them and this will become a major hindrance to the project completion.

=Conclusion=
Many factors may affect the failure of the DaimlerChrysler project, but most of them may have been due to its mismanagement. Such a union was notoriously risky, especially due to the opposite companies it combined. To deliver the intent benefits, particular care should then have been taken by managers to tackle all the project management processes.

The use of the standard ''ISO 21500 : 2012'' was made to group the processes in term of Subject Group. It appears clear that there were some omissions, particularly regarding Integration, Time, Communication and Stakeholders. This standard has proven to be useful to analyze a project management, especially in case of cross-boarders project. It is a shame that such a unifying international approach was only established in 2012.

= References =

<references />

[[Category:Project Management]]
[[Category:Human Behaviour]]
[[Category:Complexity]]

Analyzing the failure of the DaimlerChrysler merger from a project management perspective

2014-12-01T19:16:12Z

Lyngby:

'''Abstract'''

In the late 90´s, German Daimler-Benz AG and American Chrysler Corporation announced their intention to combine their strengths within a so-called `merger of equals´ <ref> Grässlin, Jürgen. ''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> . Becoming the fifth largest automaker in the world, both companies hoped to overcome together the automotive industry crisis. However, nothing worked out as planned, so much so that in 2007 Daimler-Benz sold all its shares of the Chrysler division.

Could the use of a norm have guaranteed the success of the DaimlerChrysler merger ? This question will be answered with regard to the ISO 21500:2012 guideline for project management.

According to the latter, a definition of project management and the processes it involves will be provided.Then, an analysis of the origin of DaimlerChrysler project will be carried out. It will also be shown to what extent this fusion was mismanaged with regard to the Subject groups defined in the ISO 21500:2012. Last but not least the benefits of using this standard to successfully conduct a complex project will be discussed.

=Introduction=
In the early 21st century, no comprehensive standard on project management was accepted despite the substantial demand for project management skills. However, in 2006, the need for a unifying international approach was recognized by the International Organization for Standard (ISO). The work of over hundreds experts in project management from around the globe resulted in ''ISO 21500: 2012 -Guidance on project management''. This norm defines consistent project management terminology and universal project management principles and processes. It provides a basic guide against which any organization can compare its current project management practices and determine areas in need of improvement. But how to practically apply it to a project? A specific example of project failure prior to introducing ISO 21500 will be provided to analyze which project management processes were disregarded. More particularly, the merger of the German automaker Daimler-Benz with the American Chrysler Corporation will be examined with the perspective of subject group.

= ISO 21500 : 2012, A focus on processes <ref> ISO 21500:2012 ''Guidance on project management'' </ref> <ref> Anton Zandhuis, Rommert Stellingwerf. ''ISO 215000, Guidance on Project managenent, A Pocket Guide''. Van Haren Publishing. 2013 </ref>=

What is a project? A definition is provided by the ISO 21500: “A unique set of processes consisting of coordinated and controlled activities with start and end dates, performed to achieve project objectives.” The concept of processes seems to be at the crux of project management issues. The definition of how to manage a project stresses this point: “Project management is performed through processes”.
Specifically, the norm splits the method of managing a project into 39 elementary processes. Depending on the perspective, the latter are grouped into five process groups (Initiating, Planning, Controlling and Closing) or into ten subject groups (Integration, Stakeholder, Scope, Resource, Time, Cost, Risk, Quality, Procurement and Communication). The classification of these processes is provided in the following table.

{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 1 : Project management cross-referenced to process and subject groups (ISO 21500 : 2012)'''
|-
! rowspan="2" style="background: #ffedd3;" | SUBJECT GROUPS
! colspan="5" style="background: #ffedd3;" | PROCESS GROUPS
|-
|style="background: #fff4d3;" align=center | '''Initiating'''
|style="background: #fff4d3;" align=center| '''Planning'''
|style="background: #fff4d3;" align=center| '''Implementing'''
|style="background: #fff4d3;" align=center | '''Controlling'''
|style="background: #fff4d3;" align=center | '''Closing'''
|-
|style="background: #fff4d3;" |'''Integration'''
|
4.3.2 Develop project chart
|
4.3.3. Develop project plans
|
4.3.4 Direct project work
|
4.3.5 Control project work

4.3.6 Control changes
|
4.3.7 Close project or phase

4.3.8 Collect lessons learned
|-
|style="background: #fff4d3;" |'''Stakeholder'''
|
4.3.9 Identify stakeholders
|

|
4.3.10 Manage stakeholders
|

|

|-
|style="background: #fff4d3;" |'''Scope'''
|

|
4.3.11 Define scope

4.3.12 Create work breakdown structure

4.3.13 Define activities
|

|
4.3.14 Control scope
|

|-
|style="background: #fff4d3;" |'''Resource'''
|
4.3.15 Establish project team
|
4.3.16 Estimate resources

4.3.17 Define project organization
|
4.3.18 Develop project team
|
4.3.19 Control resources

4.3.20 Manage project team
|

|-
|style="background: #fff4d3;" |'''Time'''
|

|
4.3.21 Sequence activities

4.3.22 Estimate activity durations

4.3.23 Develop schedule
|

|
4.3.24 Control schedule
|

|-
|style="background: #fff4d3;" |'''Cost'''
|

|
4.3.25 Estimate costs

4.3.28 Develop budget
|

|
4.3.27 Control costs
|

|-
|style="background: #fff4d3;" |'''Risk'''
|

|
4.3.28 Identify risks

4.3.29 Asses risks
|
4.3.30 Treat risks
|
4.3.31 Control risks
|
|-
|style="background: #fff4d3;" |'''Quality'''
|

|
4.3.32 Plan quality
|
4.3.33 Perform quality assurance
|
4.3.34 Perform quality control
|

|-
|style="background: #fff4d3;" |'''Procurement'''
|

|
4.3.35 Plan procurements
|
4.3.38 Select suppliers
|
4.3.37 Administer procurements
|

|-
|style="background: #fff4d3;" |'''Communication'''
|

|
4.3.38 Plan communications
|
4.3.39 Distribute information
|
4.3.40 Manage communications
|

|}

The perspective of subject groups will be adopted to consider the management of DaimlerChrysler project. The latter are the themes in which processes are classified according to its related activities. But before that, the project of DaimlerChrysler merger is regarded.

=DaimlerChrysler merger project <ref> Julia Hollmann, Aletéia de Moura Carpes, Thiago Antonio Beuron. ''The DaimlerChrylser Merger- A cultural mismatch ?'' Faculty Sponsor : Universität Paderborn- Germany, Department of International Business Studies. Universidade Federal de Santa Maria- Brazil, Department of Administration. 2010 </ref> =
==The genesis of the project==
In the late 90´s, the automotive industry had to face multiples challenges due to the excess manufacturing capacity, the growth of ecological awareness, and the retail revolution that empowered buyers. To strengthen their position during this crisis, the automakers Daimler-Benz and Chrysler Corporation decided to merge. This project aimed to combine each other´s product designs, manufacturing resources and distribution systems.
The following table shows the complementary of the two companies, which wanted to unit their knowledge and their market in order to gain a competitive advantage.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 2 : The complementary of the two companies '''
|
! style="background: #ffedd3;" |'''Daimler-Benz AG'''
! style="background: #ffedd3;" |'''Chrysler Corporation'''
|-
! style="background: #ffedd3;" |'''Head office location'''
|
Germany
|
United States
|-
! style="background: #ffedd3;" |'''Geographical reach'''
|
European market
|
U.S. American market
|-
! style="background: #ffedd3;" |'''Product ranges'''
|
Uncompromising quality products
|
Car models that met the American demand for adventurousness
|}


Both synergies and economies of scale were likely to proliferate.

How the project was set up is explained in the following paragraph. However, its detailed description falls outside the scope of this article.

==The execution of the project==
On May 7th 1998, the signing of the combination agreement between Daimler-Benz and Chrysler was publicly announced. Daimler-Benz CEO Jürgen Schrempp described the union as "a merger of equals, a merger of growth, and a merger of unprecedented strength".
The equal status of the two organizations was reflected in the newly established entity name, DaimlerChrysler, as well as in the combination of the two former boards of management to form the one of DaimlerChrysler. Furthermore, it was agreed that Schrempp and Eaton, former CEO of the Chrysler Corporation, would jointly led the entity as co-chairmen and co-CEOs. It was also decided that Eaton would stay up to three years.
The two following tables provide more data about DaimlerChrysler right after the merger and the expected results of this project.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 3 : Characteristics of DaimlerChrysler right after the merger'''
|-
! style="background: #ffedd3;" |'''Number of employees '''
|442,000 employees
½ in Germany

1/3 in North America

1/6 spread across 200 countries around the world
|-
! style="background: #ffedd3;" |'''Daimler-Benz AG Market capitalization'''
|$ 92 billion
|}



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 4 : Expected results'''
! style="background: #ffedd3;" |Annual revenues of the combined company
|$ 132 billion
|-
! style="background: #ffedd3;" |Increase in sales
|13%
|-
! style="background: #ffedd3;" |Cost savings brought within 2 or 3 years
|$ 3,5 billion a year
|}


So far, this fusion appears to be very beneficial for all parties involved. However the wish for synergy effects never came true and the project drove Chrysler into chaos. In May 2007, the merger of Chrysler and Daimler-Benz was dissolved. Can this failure be ascribed to mismanagement?

The purpose of this article is now to point out which processes, related to the different subject groups definied in ISO 21500:2012 were disregarded and may have led to the project failure.

=The mismanagement of some subject groups <ref> Wanda Curlee, Robert L. Gordon . ''Complexity Theory and Project Management. ''. New York : Wiley, 2011, p. 129-133 </ref> =

Integration, Time, Communication and Stakeholders will be considered. The mismanagement of some processes related to these four specific subject groups is namely to be seen.

==Integration <ref> Grässlin, Jürgen.''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> <ref> ''DaimlerChrysler confronts the challenges of global integration'', Human Resource Management International Digest, Vol 12 Iss :2 P.5-8</ref> ==
Four Subject groups are successively addressed: Integration, Time, Communication and Stakeholders.
The Integration Subject group includes the processes required to identify, define, combine, unify, coordinate, control and close the various activities and processes related to the project (ISO 21500:2012 - 4.2.3.2).

Within this merger, the unification and combination of all operations within the established entity needed to be achieved. To meet this target, a newly corporate culture had to be defined to align working styles. The latter namely radically differ due to major cultural differences, as shown in the following table.



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 5 : Comparison between the German and the American working styles'''
|-
|
! style="background: #ffedd3;" | '''Germany'''
! style="background: #ffedd3;"|'''United States'''
|-
! style="background: #ffedd3;" align="left" |'''Employee working style'''
| Work in a team-oriented environment
| Work individually
|-
! style="background: #ffedd3;" align="left" |'''Writing report'''
| Lengthy reports
| Little paper
|-
! style="background: #ffedd3;" align="left" |'''Decision-making process'''
|
Methodical, based on very detailed plans
|
Using creativity, based on trial-and-error method
|-
! style="background: #ffedd3;" align="left" |'''Meeting'''
|
Extended discussions
|
Short meeting
|-
! style="background: #ffedd3;" align="left" |'''Organizational structure'''
|
Pronounced hierarchy based on top-down-management
|
Flat organizational hierarchy stimulating empowerment of the employees
|-
! style="background: #ffedd3;" align="left" |'''Risk appetite'''
|
Risk adverse culture
|
Risk takers
|}


Due to the fact that this merger was a so-called `merger of equals´, the integration of the two cultures was to combine them to generate a new shared corporate one. It was namely vital that both organizations learn from each other to generate synergy effects. Managers have here a central role to play to define and coordinate the development of this new culture.

Eaton affirmed that it was at the top of the agenda and Thomas Stallkamp, Chrysler President during the negotiation phase, was charged with overseeing this integration process. Some effort went into harmonizing the two corporate cultures. Many seminars and workshops were organized to sensitizing the employees for working with new colleagues with a diverging working methods. Furthermore, German was taught to many American managers.

However, given the large gap between the two organizations, it would appear that managers should have undertaken more activities and CEOs should have allocated more resources to bridge the chasm of cultural differences.

In fact, no strong and cohesive organizational culture was created, as illustrated in daily misunderstandings. For instance, the attention Daimler-Benz leaders paid to writing a leaflet sent to employee annoyed Chrysler executives. At the end of 1999, the resignation of Thomas Stallkamp, a 19-year veteran of Chrysler who was highly regarded, might be seen as failure of the merger integration process after all the effort. He is quoted as saying: <nowiki>“</nowiki>The majority of my career has been spent implementing supply chain management. I would like to continue to explore those areas at a less hectic pace<nowiki>”</nowiki>. Were both parties truly willing to cooperate wholeheartedly and to enter compromises to succeed in the numerous integration processes? A negative answer is the root cause of the unachieved integration.

==Time<ref> Sue Cartwright, Cary L. Cooper. ''Mergers and Acquisitions: The Human Factor Paperback'' . January 1, 1992 </ref>==

The Time Subject group is all about managing the timely completion of the project. Feasible deadlines taking all known constraints into account need to be set. Processes covered by the latter subject group are the development of schedule for project activities, estimating each activity duration, the progress monitoring and the schedule control.

One failure in managing time in DaimlerChrysler merger was that too little time was devoted to each activity. Let´s take a concrete example: Daimler-Benz and Chrysler began formal negotiations on January 12, 1998 and only five months later, the merger was announced worldwide. Susan Cartwright – past President of the British Academy Management – asserts that the period of time from the germ of the merger idea till an agreement is reached is estimated to last around two years. Speeding up the pre-merger preparation, the precise objectives of the fusion and the way to achieve them could not have been defined accurately.
Furthermore, the merger was completed on November 12, 1998. Time needed by employees to adapt to the new circumstances was not taken into account in the deadlines. One more mismanagement which is added to the others.

==Communication==
In the standard ISO 21500:2012, three key processes are defined to ensure appropriate exchange of project information: Plan communications, Distribute information and Manage communications. But within DaimlerChrysler project none of them were totally met. In order to appreciate the scale of the problem, it should be pointed out that even managers and CEOs experienced serious difficulties in discussing solutions and achieving a consensus. According to a Daimler-Benz executive, <nowiki>"</nowiki>Eaton went weeks without speaking with Jürgen [Schrempp]. He preferred to maintain lower-level contact. Jürgen, meanwhile, left Chrysler alone.<nowiki>"</nowiki> <ref> [http://mba.tuck.dartmouth.edu/pdf/2002-1-0071.pdf] Professor Sydney Finkelstein. ''The DaimlerChrysler Merger.''Tuck School of Business at Dartmouth. 2002 </ref> One would have expected that both CEOs would have share their different view in order to discover common goal and operate as an effective team at the top. Given the seeming clash of culture described in the first paragraph, it was crucial to start the discussion to create healthy relationship and release the company´s potential. The clearer the communication, the better issues are addressed. But with a lack of communication among leaders, no far-reaching communication plan could be implemented among all stakeholders involved, not to mention the distribution of the information. Both internal and external communications were chaotic. It is likely that the standard ISO 21500 would have make managers more aware of the processes related to communication required to be efficiently tackled.

==Stakeholders==
The stakeholder subject group is concerned with identifying and managing all stakeholders. Both their expectations and influence on the project need to be analyzed to classify them. The table 6 provides a power-interest matrix, which is crucial to draw up appropriate management strategies for effectively engaging with them. The external stakeholders are written in italics, the others are internal.

{| border="1" cellpadding="3" cellspacing="0" style="margin:auto;"
|+ '''Table 6 : Power and interest matrix'''
|-
! rowspan="2" style="background: #ffedd3;" | Level of interest
! colspan="5" style="background: #ffedd3;" | Level of power
|-
|style="background: #fff4d3;" align=center | ''' Low '''
|style="background: #fff4d3;" align=center| ''' High '''
|-
|style="background: #fff4d3;" align=center |'''High'''
|
[[Employee]]

Trade Union

''[[Clients]]''

''Suppliers''

''Government''

''Society''
|
Directors

Managers

''[[Stockholders]]''
|-
|style="background: #fff4d3;" align=center |'''Low'''
|
''Competitors''
|

|-
|}

To analyze the management of all of these stakeholders one by one would be tedious. However it is relevant to focus on several categories according to the table 6. Special focus will be laid on the stakeholders written in red in the table above. Therefore, both high power/high interest and low power/high interest stakeholders will be looked at. Furthermore, two of them are internal, whereas the other is internal.
All of them were significantly affected by the DaimlerChrysler project due to mismanagement.

===Employees===
Employees, low-power and high-interest stakeholders, must be kept informed and managers should ensure that no major issues are arising.
However, this was not the case in the DaimlerChrysler merger: employees felt overlooked, disregarded and left out of the merger process. But to what extent CEOs and managers were responsible in this climate of distrust and dislike?

First, soon after the merger, it became obvious that Daimler was taking over the whole company´s management. Chrysler President Stallkamp retirement at the end of 1999 was followed by the one of James P. Holdem, top-level executive of the Chrysler Group. They were replaced by two German managers: Dieter Zetsche and Wolfgang Bernhard. Being lowered to divisional status, it is understandable that American´s morale suffer from this German hegemony. Employee felt eclipsed and were disgusted. They also were worried that DaimlerChrysler would dismiss some of them. But the problems are not confined to be here. Indeed, Jürgen Schrempp attitude only made the situation worse. In autumn 2000, DaimlerChrysler CEO acknowledged in the German financial daily Handelsblatt that <nowiki>“</nowiki>The Merger of Equals statement was necessary in order to earn the support of Chrysler's workers and the American public, but it was never reality<nowiki>"</nowiki>. Many American regarded this statement as a betrayal, since he intended to deceive them from the outset. It appears clear that it is due to board of directors failure in acting responsibly towards these stakeholders that deep-seated distrust ran deep.

But this mismanagement of the project stakeholders can lead to far-reaching consequences on the project success itself. Indeed, it could be that some employees simply do not work as efficiently because they suppose the Board of Directors doesn’t care about the Chrysler entity – so why should they? Decreased performance would result in it.

It is to notice that even though the standard ''ISO 21500: 2012'' did not exist at that time, the fact that employee influence to succeed such a process was of importance was already known. MaryAnn Keller, founder and managing partner of MaryAnn Keller & Associates LLC, namely stated in June 1998 that <nowiki>“</nowiki>The success of any combination depends on the ability of the new organization to win over the hearts and minds of employees.<nowiki>”</nowiki> <ref> [http://murphylibrary.uwlax.edu/digital/jur/2002/carpiaux.pdf] Nicole Carpiaux. ''DaimlerChrysler : Wunderkind or Problem Child ?'' Faculty Sponsor : Leticia Peña, Department of Management. </ref> The managers of DaimlerChrysler should then be aware that is really a management issue to embrace workers instead to neglect them in order to obtain the best they can offer.

===Clients===
And what about the consumers, low-power and high interest stakeholders?

Once again, one could argue that managers failed to define as well as to meet their needs.
One example is given for illustration. At the time, the DaimlerChrysler A-Class was 1.25 to 2 times more expensive than similar vehicles sold by Volkswagen, Renault or Fiat. This higher price was not deterrent since clients were aware that Daimler-Benz primarily asset was quality and safety. However, in 1999, the A-class failed an emergency maneuver test conducted by a Swedish television station. <ref> Bill Vlasic, Bradley A. Stertz. ''Taken for a Ride: How Daimler-Benz Drove off with Chrysler''. Harper Paperbacks,
2001, p. 300.
</ref> Consequently, client´s satisfaction suddenly drop off the map. The DaimlerChrysler vehicle was considered as an overpriced car which did not achieve engineering excellence compared to the highly competitive European compact market. The crux of the problem may be that the German entity have tried to implant the American low development costs into its entities, disregarding the high expectations of the clients. This paragraph appears to prove that trying to generate synergy savings the managers failed in responding the customer´s needs.

===Stockholders===
Last but not least, the management of both high power and high interest stakeholders needs to be considered. Take the stockholders.

An overwhelming majority of them favored the project of merger in 1998. Approvals ratings reached 99.9% at Daimler-Benz and 97.5% at Chrysler. It may be inferred that, at the outset of the project, managers successfully took into account the processes required to satisfy the shareholders. It did not take long, however, for some of them to express their disappointment. This was the case for Kirk Kerkorian, the third largest proprietor of DailerChrysler stock and largest Chrysler shareholder before the merger. In November 2000, the latter filed a $9 billion lawsuit against DaimlerChrysler for falsifying the terms of the fusion as a “merger of equals”. He was upset with the German hegemony and stated he had voted to turn its shares for stock in DaimlerChrysler without having considered the American entity would be reduced to a mere division. Two months later, he cut his take in the merged company by a third. Even though the managers were not directly involved in this discontent, the lack of acting responsibly of the Board of the director is obvious.

To conclude, the completion of the processes related to each of these three stakeholders lacked efficiency. The managers failed in implementing the required activities to satisfy them and this will become a major hindrance to the project completion.

=Conclusion=
Many factors may affect the failure of the DaimlerChrysler project, but most of them may have been due to its mismanagement. Such a union was notoriously risky, especially due to the opposite companies it combined. To deliver the intent benefits, particular care should then have been taken by managers to tackle all the project management processes.

The use of the standard ''ISO 21500 : 2012'' was made to group the processes in term of Subject Group. It appears clear that there were some omissions, particularly regarding Integration, Time, Communication and Stakeholders. This standard has proven to be useful to analyze a project management, especially in case of cross-boarders project. It is a shame that such a unifying international approach was only established in 2012.

= References =

<references />

[[Category:Project Management]]
[[Category:Human Behaviour]]
[[Category:Complexity]]

Analyzing the failure of the DaimlerChrysler merger from a project management perspective

2014-12-01T19:15:16Z

Lyngby:

'''Abstract'''

In the late 90´s, German Daimler-Benz AG and American Chrysler Corporation announced their intention to combine their strengths within a so-called `merger of equals´ <ref> Grässlin, Jürgen. ''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> . Becoming the fifth largest automaker in the world, both companies hoped to overcome together the automotive industry crisis. However, nothing worked out as planned, so much so that in 2007 Daimler-Benz sold all its shares of the Chrysler division.

Could the use of a norm have guaranteed the success of the DaimlerChrysler merger ? This question will be answered with regard to the ISO 21500:2012 guideline for project management

According to the latter, a definition of project management and the processes it involves will be provided.Then, an analysis of the origin of DaimlerChrysler project will be carried out. It will also be shown to what extent this fusion was mismanaged with regard to the Subject groups defined in the ISO 21500:2012. Last but not least the benefits of using this standard to successfully conduct a complex project will be discussed.

=Introduction=
In the early 21st century, no comprehensive standard on project management was accepted despite the substantial demand for project management skills. However, in 2006, the need for a unifying international approach was recognized by the International Organization for Standard (ISO). The work of over hundreds experts in project management from around the globe resulted in ''ISO 21500: 2012 -Guidance on project management''. This norm defines consistent project management terminology and universal project management principles and processes. It provides a basic guide against which any organization can compare its current project management practices and determine areas in need of improvement. But how to practically apply it to a project? A specific example of project failure prior to introducing ISO 21500 will be provided to analyze which project management processes were disregarded. More particularly, the merger of the German automaker Daimler-Benz with the American Chrysler Corporation will be examined with the perspective of subject group.

= ISO 21500 : 2012, A focus on processes <ref> ISO 21500:2012 ''Guidance on project management'' </ref> <ref> Anton Zandhuis, Rommert Stellingwerf. ''ISO 215000, Guidance on Project managenent, A Pocket Guide''. Van Haren Publishing. 2013 </ref>=

What is a project? A definition is provided by the ISO 21500: “A unique set of processes consisting of coordinated and controlled activities with start and end dates, performed to achieve project objectives.” The concept of processes seems to be at the crux of project management issues. The definition of how to manage a project stresses this point: “Project management is performed through processes”.
Specifically, the norm splits the method of managing a project into 39 elementary processes. Depending on the perspective, the latter are grouped into five process groups (Initiating, Planning, Controlling and Closing) or into ten subject groups (Integration, Stakeholder, Scope, Resource, Time, Cost, Risk, Quality, Procurement and Communication). The classification of these processes is provided in the following table.

{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 1 : Project management cross-referenced to process and subject groups (ISO 21500 : 2012)'''
|-
! rowspan="2" style="background: #ffedd3;" | SUBJECT GROUPS
! colspan="5" style="background: #ffedd3;" | PROCESS GROUPS
|-
|style="background: #fff4d3;" align=center | '''Initiating'''
|style="background: #fff4d3;" align=center| '''Planning'''
|style="background: #fff4d3;" align=center| '''Implementing'''
|style="background: #fff4d3;" align=center | '''Controlling'''
|style="background: #fff4d3;" align=center | '''Closing'''
|-
|style="background: #fff4d3;" |'''Integration'''
|
4.3.2 Develop project chart
|
4.3.3. Develop project plans
|
4.3.4 Direct project work
|
4.3.5 Control project work

4.3.6 Control changes
|
4.3.7 Close project or phase

4.3.8 Collect lessons learned
|-
|style="background: #fff4d3;" |'''Stakeholder'''
|
4.3.9 Identify stakeholders
|

|
4.3.10 Manage stakeholders
|

|

|-
|style="background: #fff4d3;" |'''Scope'''
|

|
4.3.11 Define scope

4.3.12 Create work breakdown structure

4.3.13 Define activities
|

|
4.3.14 Control scope
|

|-
|style="background: #fff4d3;" |'''Resource'''
|
4.3.15 Establish project team
|
4.3.16 Estimate resources

4.3.17 Define project organization
|
4.3.18 Develop project team
|
4.3.19 Control resources

4.3.20 Manage project team
|

|-
|style="background: #fff4d3;" |'''Time'''
|

|
4.3.21 Sequence activities

4.3.22 Estimate activity durations

4.3.23 Develop schedule
|

|
4.3.24 Control schedule
|

|-
|style="background: #fff4d3;" |'''Cost'''
|

|
4.3.25 Estimate costs

4.3.28 Develop budget
|

|
4.3.27 Control costs
|

|-
|style="background: #fff4d3;" |'''Risk'''
|

|
4.3.28 Identify risks

4.3.29 Asses risks
|
4.3.30 Treat risks
|
4.3.31 Control risks
|
|-
|style="background: #fff4d3;" |'''Quality'''
|

|
4.3.32 Plan quality
|
4.3.33 Perform quality assurance
|
4.3.34 Perform quality control
|

|-
|style="background: #fff4d3;" |'''Procurement'''
|

|
4.3.35 Plan procurements
|
4.3.38 Select suppliers
|
4.3.37 Administer procurements
|

|-
|style="background: #fff4d3;" |'''Communication'''
|

|
4.3.38 Plan communications
|
4.3.39 Distribute information
|
4.3.40 Manage communications
|

|}

The perspective of subject groups will be adopted to consider the management of DaimlerChrysler project. The latter are the themes in which processes are classified according to its related activities. But before that, the project of DaimlerChrysler merger is regarded.

=DaimlerChrysler merger project <ref> Julia Hollmann, Aletéia de Moura Carpes, Thiago Antonio Beuron. ''The DaimlerChrylser Merger- A cultural mismatch ?'' Faculty Sponsor : Universität Paderborn- Germany, Department of International Business Studies. Universidade Federal de Santa Maria- Brazil, Department of Administration. 2010 </ref> =
==The genesis of the project==
In the late 90´s, the automotive industry had to face multiples challenges due to the excess manufacturing capacity, the growth of ecological awareness, and the retail revolution that empowered buyers. To strengthen their position during this crisis, the automakers Daimler-Benz and Chrysler Corporation decided to merge. This project aimed to combine each other´s product designs, manufacturing resources and distribution systems.
The following table shows the complementary of the two companies, which wanted to unit their knowledge and their market in order to gain a competitive advantage.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 2 : The complementary of the two companies '''
|
! style="background: #ffedd3;" |'''Daimler-Benz AG'''
! style="background: #ffedd3;" |'''Chrysler Corporation'''
|-
! style="background: #ffedd3;" |'''Head office location'''
|
Germany
|
United States
|-
! style="background: #ffedd3;" |'''Geographical reach'''
|
European market
|
U.S. American market
|-
! style="background: #ffedd3;" |'''Product ranges'''
|
Uncompromising quality products
|
Car models that met the American demand for adventurousness
|}


Both synergies and economies of scale were likely to proliferate.

How the project was set up is explained in the following paragraph. However, its detailed description falls outside the scope of this article.

==The execution of the project==
On May 7th 1998, the signing of the combination agreement between Daimler-Benz and Chrysler was publicly announced. Daimler-Benz CEO Jürgen Schrempp described the union as "a merger of equals, a merger of growth, and a merger of unprecedented strength".
The equal status of the two organizations was reflected in the newly established entity name, DaimlerChrysler, as well as in the combination of the two former boards of management to form the one of DaimlerChrysler. Furthermore, it was agreed that Schrempp and Eaton, former CEO of the Chrysler Corporation, would jointly led the entity as co-chairmen and co-CEOs. It was also decided that Eaton would stay up to three years.
The two following tables provide more data about DaimlerChrysler right after the merger and the expected results of this project.


{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 3 : Characteristics of DaimlerChrysler right after the merger'''
|-
! style="background: #ffedd3;" |'''Number of employees '''
|442,000 employees
½ in Germany

1/3 in North America

1/6 spread across 200 countries around the world
|-
! style="background: #ffedd3;" |'''Daimler-Benz AG Market capitalization'''
|$ 92 billion
|}



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ ''' Table 4 : Expected results'''
! style="background: #ffedd3;" |Annual revenues of the combined company
|$ 132 billion
|-
! style="background: #ffedd3;" |Increase in sales
|13%
|-
! style="background: #ffedd3;" |Cost savings brought within 2 or 3 years
|$ 3,5 billion a year
|}


So far, this fusion appears to be very beneficial for all parties involved. However the wish for synergy effects never came true and the project drove Chrysler into chaos. In May 2007, the merger of Chrysler and Daimler-Benz was dissolved. Can this failure be ascribed to mismanagement?

The purpose of this article is now to point out which processes, related to the different subject groups definied in ISO 21500:2012 were disregarded and may have led to the project failure.

=The mismanagement of some subject groups <ref> Wanda Curlee, Robert L. Gordon . ''Complexity Theory and Project Management. ''. New York : Wiley, 2011, p. 129-133 </ref> =

Integration, Time, Communication and Stakeholders will be considered. The mismanagement of some processes related to these four specific subject groups is namely to be seen.

==Integration <ref> Grässlin, Jürgen.''Jürgen Schrempp and the Making of an Auto Dynasty''. New York: McGraw-Hill, 2000, p. 155 </ref> <ref> ''DaimlerChrysler confronts the challenges of global integration'', Human Resource Management International Digest, Vol 12 Iss :2 P.5-8</ref> ==
Four Subject groups are successively addressed: Integration, Time, Communication and Stakeholders.
The Integration Subject group includes the processes required to identify, define, combine, unify, coordinate, control and close the various activities and processes related to the project (ISO 21500:2012 - 4.2.3.2).

Within this merger, the unification and combination of all operations within the established entity needed to be achieved. To meet this target, a newly corporate culture had to be defined to align working styles. The latter namely radically differ due to major cultural differences, as shown in the following table.



{| border="1" cellpadding="5" cellspacing="0" style="margin:auto;"
|+ '''Table 5 : Comparison between the German and the American working styles'''
|-
|
! style="background: #ffedd3;" | '''Germany'''
! style="background: #ffedd3;"|'''United States'''
|-
! style="background: #ffedd3;" align="left" |'''Employee working style'''
| Work in a team-oriented environment
| Work individually
|-
! style="background: #ffedd3;" align="left" |'''Writing report'''
| Lengthy reports
| Little paper
|-
! style="background: #ffedd3;" align="left" |'''Decision-making process'''
|
Methodical, based on very detailed plans
|
Using creativity, based on trial-and-error method
|-
! style="background: #ffedd3;" align="left" |'''Meeting'''
|
Extended discussions
|
Short meeting
|-
! style="background: #ffedd3;" align="left" |'''Organizational structure'''
|
Pronounced hierarchy based on top-down-management
|
Flat organizational hierarchy stimulating empowerment of the employees
|-
! style="background: #ffedd3;" align="left" |'''Risk appetite'''
|
Risk adverse culture
|
Risk takers
|}


Due to the fact that this merger was a so-called `merger of equals´, the integration of the two cultures was to combine them to generate a new shared corporate one. It was namely vital that both organizations learn from each other to generate synergy effects. Managers have here a central role to play to define and coordinate the development of this new culture.

Eaton affirmed that it was at the top of the agenda and Thomas Stallkamp, Chrysler President during the negotiation phase, was charged with overseeing this integration process. Some effort went into harmonizing the two corporate cultures. Many seminars and workshops were organized to sensitizing the employees for working with new colleagues with a diverging working methods. Furthermore, German was taught to many American managers.

However, given the large gap between the two organizations, it would appear that managers should have undertaken more activities and CEOs should have allocated more resources to bridge the chasm of cultural differences.

In fact, no strong and cohesive organizational culture was created, as illustrated in daily misunderstandings. For instance, the attention Daimler-Benz leaders paid to writing a leaflet sent to employee annoyed Chrysler executives. At the end of 1999, the resignation of Thomas Stallkamp, a 19-year veteran of Chrysler who was highly regarded, might be seen as failure of the merger integration process after all the effort. He is quoted as saying: <nowiki>“</nowiki>The majority of my career has been spent implementing supply chain management. I would like to continue to explore those areas at a less hectic pace<nowiki>”</nowiki>. Were both parties truly willing to cooperate wholeheartedly and to enter compromises to succeed in the numerous integration processes? A negative answer is the root cause of the unachieved integration.

==Time<ref> Sue Cartwright, Cary L. Cooper. ''Mergers and Acquisitions: The Human Factor Paperback'' . January 1, 1992 </ref>==

The Time Subject group is all about managing the timely completion of the project. Feasible deadlines taking all known constraints into account need to be set. Processes covered by the latter subject group are the development of schedule for project activities, estimating each activity duration, the progress monitoring and the schedule control.

One failure in managing time in DaimlerChrysler merger was that too little time was devoted to each activity. Let´s take a concrete example: Daimler-Benz and Chrysler began formal negotiations on January 12, 1998 and only five months later, the merger was announced worldwide. Susan Cartwright – past President of the British Academy Management – asserts that the period of time from the germ of the merger idea till an agreement is reached is estimated to last around two years. Speeding up the pre-merger preparation, the precise objectives of the fusion and the way to achieve them could not have been defined accurately.
Furthermore, the merger was completed on November 12, 1998. Time needed by employees to adapt to the new circumstances was not taken into account in the deadlines. One more mismanagement which is added to the others.

==Communication==
In the standard ISO 21500:2012, three key processes are defined to ensure appropriate exchange of project information: Plan communications, Distribute information and Manage communications. But within DaimlerChrysler project none of them were totally met. In order to appreciate the scale of the problem, it should be pointed out that even managers and CEOs experienced serious difficulties in discussing solutions and achieving a consensus. According to a Daimler-Benz executive, <nowiki>"</nowiki>Eaton went weeks without speaking with Jürgen [Schrempp]. He preferred to maintain lower-level contact. Jürgen, meanwhile, left Chrysler alone.<nowiki>"</nowiki> <ref> [http://mba.tuck.dartmouth.edu/pdf/2002-1-0071.pdf] Professor Sydney Finkelstein. ''The DaimlerChrysler Merger.''Tuck School of Business at Dartmouth. 2002 </ref> One would have expected that both CEOs would have share their different view in order to discover common goal and operate as an effective team at the top. Given the seeming clash of culture described in the first paragraph, it was crucial to start the discussion to create healthy relationship and release the company´s potential. The clearer the communication, the better issues are addressed. But with a lack of communication among leaders, no far-reaching communication plan could be implemented among all stakeholders involved, not to mention the distribution of the information. Both internal and external communications were chaotic. It is likely that the standard ISO 21500 would have make managers more aware of the processes related to communication required to be efficiently tackled.

==Stakeholders==
The stakeholder subject group is concerned with identifying and managing all stakeholders. Both their expectations and influence on the project need to be analyzed to classify them. The table 6 provides a power-interest matrix, which is crucial to draw up appropriate management strategies for effectively engaging with them. The external stakeholders are written in italics, the others are internal.

{| border="1" cellpadding="3" cellspacing="0" style="margin:auto;"
|+ '''Table 6 : Power and interest matrix'''
|-
! rowspan="2" style="background: #ffedd3;" | Level of interest
! colspan="5" style="background: #ffedd3;" | Level of power
|-
|style="background: #fff4d3;" align=center | ''' Low '''
|style="background: #fff4d3;" align=center| ''' High '''
|-
|style="background: #fff4d3;" align=center |'''High'''
|
[[Employee]]

Trade Union

''[[Clients]]''

''Suppliers''

''Government''

''Society''
|
Directors

Managers

''[[Stockholders]]''
|-
|style="background: #fff4d3;" align=center |'''Low'''
|
''Competitors''
|

|-
|}

To analyze the management of all of these stakeholders one by one would be tedious. However it is relevant to focus on several categories according to the table 6. Special focus will be laid on the stakeholders written in red in the table above. Therefore, both high power/high interest and low power/high interest stakeholders will be looked at. Furthermore, two of them are internal, whereas the other is internal.
All of them were significantly affected by the DaimlerChrysler project due to mismanagement.

===Employees===
Employees, low-power and high-interest stakeholders, must be kept informed and managers should ensure that no major issues are arising.
However, this was not the case in the DaimlerChrysler merger: employees felt overlooked, disregarded and left out of the merger process. But to what extent CEOs and managers were responsible in this climate of distrust and dislike?

First, soon after the merger, it became obvious that Daimler was taking over the whole company´s management. Chrysler President Stallkamp retirement at the end of 1999 was followed by the one of James P. Holdem, top-level executive of the Chrysler Group. They were replaced by two German managers: Dieter Zetsche and Wolfgang Bernhard. Being lowered to divisional status, it is understandable that American´s morale suffer from this German hegemony. Employee felt eclipsed and were disgusted. They also were worried that DaimlerChrysler would dismiss some of them. But the problems are not confined to be here. Indeed, Jürgen Schrempp attitude only made the situation worse. In autumn 2000, DaimlerChrysler CEO acknowledged in the German financial daily Handelsblatt that <nowiki>“</nowiki>The Merger of Equals statement was necessary in order to earn the support of Chrysler's workers and the American public, but it was never reality<nowiki>"</nowiki>. Many American regarded this statement as a betrayal, since he intended to deceive them from the outset. It appears clear that it is due to board of directors failure in acting responsibly towards these stakeholders that deep-seated distrust ran deep.

But this mismanagement of the project stakeholders can lead to far-reaching consequences on the project success itself. Indeed, it could be that some employees simply do not work as efficiently because they suppose the Board of Directors doesn’t care about the Chrysler entity – so why should they? Decreased performance would result in it.

It is to notice that even though the standard ''ISO 21500: 2012'' did not exist at that time, the fact that employee influence to succeed such a process was of importance was already known. MaryAnn Keller, founder and managing partner of MaryAnn Keller & Associates LLC, namely stated in June 1998 that <nowiki>“</nowiki>The success of any combination depends on the ability of the new organization to win over the hearts and minds of employees.<nowiki>”</nowiki> <ref> [http://murphylibrary.uwlax.edu/digital/jur/2002/carpiaux.pdf] Nicole Carpiaux. ''DaimlerChrysler : Wunderkind or Problem Child ?'' Faculty Sponsor : Leticia Peña, Department of Management. </ref> The managers of DaimlerChrysler should then be aware that is really a management issue to embrace workers instead to neglect them in order to obtain the best they can offer.

===Clients===
And what about the consumers, low-power and high interest stakeholders?

Once again, one could argue that managers failed to define as well as to meet their needs.
One example is given for illustration. At the time, the DaimlerChrysler A-Class was 1.25 to 2 times more expensive than similar vehicles sold by Volkswagen, Renault or Fiat. This higher price was not deterrent since clients were aware that Daimler-Benz primarily asset was quality and safety. However, in 1999, the A-class failed an emergency maneuver test conducted by a Swedish television station. <ref> Bill Vlasic, Bradley A. Stertz. ''Taken for a Ride: How Daimler-Benz Drove off with Chrysler''. Harper Paperbacks,
2001, p. 300.
</ref> Consequently, client´s satisfaction suddenly drop off the map. The DaimlerChrysler vehicle was considered as an overpriced car which did not achieve engineering excellence compared to the highly competitive European compact market. The crux of the problem may be that the German entity have tried to implant the American low development costs into its entities, disregarding the high expectations of the clients. This paragraph appears to prove that trying to generate synergy savings the managers failed in responding the customer´s needs.

===Stockholders===
Last but not least, the management of both high power and high interest stakeholders needs to be considered. Take the stockholders.

An overwhelming majority of them favored the project of merger in 1998. Approvals ratings reached 99.9% at Daimler-Benz and 97.5% at Chrysler. It may be inferred that, at the outset of the project, managers successfully took into account the processes required to satisfy the shareholders. It did not take long, however, for some of them to express their disappointment. This was the case for Kirk Kerkorian, the third largest proprietor of DailerChrysler stock and largest Chrysler shareholder before the merger. In November 2000, the latter filed a $9 billion lawsuit against DaimlerChrysler for falsifying the terms of the fusion as a “merger of equals”. He was upset with the German hegemony and stated he had voted to turn its shares for stock in DaimlerChrysler without having considered the American entity would be reduced to a mere division. Two months later, he cut his take in the merged company by a third. Even though the managers were not directly involved in this discontent, the lack of acting responsibly of the Board of the director is obvious.

To conclude, the completion of the processes related to each of these three stakeholders lacked efficiency. The managers failed in implementing the required activities to satisfy them and this will become a major hindrance to the project completion.

=Conclusion=
Many factors may affect the failure of the DaimlerChrysler project, but most of them may have been due to its mismanagement. Such a union was notoriously risky, especially due to the opposite companies it combined. To deliver the intent benefits, particular care should then have been taken by managers to tackle all the project management processes.

The use of the standard ''ISO 21500 : 2012'' was made to group the processes in term of Subject Group. It appears clear that there were some omissions, particularly regarding Integration, Time, Communication and Stakeholders. This standard has proven to be useful to analyze a project management, especially in case of cross-boarders project. It is a shame that such a unifying international approach was only established in 2012.

= References =

<references />

[[Category:Project Management]]
[[Category:Human Behaviour]]
[[Category:Complexity]]