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

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´. 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. This article argues that such a failure mainly arose from the mismanagement of human factors. Opposite company images and sharply different cultures were characteristic of this complex merger, the success of which requires an effective post-merger people integration program. Nevertheless, the two boards of directors were reluctant working together and failed to find common ground. Focusing on financial results, managers did not clearly identify the values that could transcend the cultural differences. Furthermore Daimler´s hegemony leads to growing dislike among employees. Add to that deep distrust since Daimler CEO claimed that he intended to overtake Chrysler from the start. Therefore, this project was heading straight for failure. Not because of cultural clash but due to how the problems were managed. What could then have been done by managers to generate greater synergy effects and to avoid such a catastrophe?