Daimler and Chrysler

This article is courtesy of time2resources. GLW

In 1998 Robert Eaton CEO of Chrysler (from the US) and Jurgen Schrempp CEO of Daimler-Benz (Germany) agreed to a merger.  Daimler paid $36bn for a 58% share of Chrysler. Shareholders in both companies approved of what was called a ‘merger of equals’ where both would benefit from the other’s strengths. However, Daimler was labour intensive and Schrempp saw economies of scale in the merger.  Eaton saw the benefits of a merger in terms of new markets and an increased global presence. 

Almost immediately problems arose. One area of concern related to the different brands.  Daimler’s Mercedes brand was seen as sophisticated, conservative and high quality.  Chrysler’s Jeep was brash, risk-taking and down market.  Daimler had great engineering skills and used advanced technology; Chrysler was renowned for its innovation and the speed of new product development. There were also a number of redundancies at Chrysler, something which had not been anticipated.

The main cause of the problems, however, was believed to be the differences in culture. Daimler had a hierarchical structure and management style.  Employees showed some signs of individualism but Hofstede’s collectivist culture was apparent throughout.  Every employee knew their position within the hierarchy and decision-making was centralised, methodical and based scientifically on data.  Jobs were undertaken for the benefit of the company.

Chrysler had a more informal, relaxed approach. Creativity and team-working was at the heart of the business and employees were empowered. Hofstede’s individualistic culture was paramount. Chrysler employees believed that Daimler was trying to impose its culture on them. Core workers at Chrysler, including senior executives and engineers, left the company. One analyst said ‘You had two companies from different countries with different languages and different styles come together’.  Perhaps it was inevitable that there would be a clash of cultures.

You can read another good article about this mismatch here

http://www.apexinstitute.ac.in/index.php?option=com_content&view=article&id=35&Itemid=29

When culture goes rotten: the failings of Mid Staffs NHS Trust

After studying it today in class, here is my attempt at a  "wow" paragraph based around the Stafford Hospital scandal and bullet point one ("factors affecting culture..")


The widely reported failures of Stafford Hospital and the Mid Staffs NHS Trust show that leadership plays a key role in determining organisational culture. Certainly inadequate leadership played a part in the scandal, as was identified in the damning report by Robert Francis QC. In the presentation of his report, Francis described the hospital failings as "a lack of care, compassion, humanity and leadership". The key leadership shortcomings included the failure to listen to patients and frontline staff and the tolerance of poor standards of care. The local NHS leaders were culpable in developing the culture of patient neglect, as they placed greater emphasis on cost control and the gaining of foundation trust status than the care given to patients. However, there were other factors at play which were affected the culture which are wider than Stafford Hospital and apply to other parts of the NHS. In terms of Charles Handy's classification of culture the  NHS would exhibit some aspects of "role culture", i.e. it is inward-looking and bureaucratic with many layers of hierarchy. This contrasts with Total Quality companies and more customer-focused organisations where the frontline staff who interact with customers are viewed as the most important employees and the role of more senior management is to support them. For instance, companies such as South-West Airlines claim they are organised in an "upside-down pyramid" with frontline staff and the customer determining the priorities and behaviours within the organisation. This is a million miles from the culture of Stafford Hospital described in the Francis report where the customer (i.e. the patient) was neglected. So as well as leadership being a key factor in the culture of the Stafford Hospital, the organisational structure of the NHS and its occasional tendency to place the interests of senior employees above those of customers  played a part in the disastrous failings that occurred there.

Essay on bullet point one: research

Here are some links which may help you in your research for the essay on bullet point one

Amazon

http://www.tutor2u.net/blog/index.php/business-studies/comments/amazon-work-hard-and-...-er-work-hard#extended

Branson

http://www.hrmagazine.co.uk/hro/features/1018119/exclusive-sir-richard-branson-talks-hr-magazine-leadership

O’Leary

http://www.guardian.co.uk/business/2010/sep/12/ryanair-move-away-from-low-fares

http://www.ashridge-people.org.uk/the-leadership-style-of-michael-oleary/

Barclays

http://www.independent.co.uk/news/business/analysis-and-features/can-antony-jenkins-get-rid-of-bob-diamonds-legacy-at-barclays-8456614.html

Culture: the 5 bullet points

The 5 bullet points for the 2013 research topic are these:

● factors influencing the culture of an organisation and cultural differences within an organisation
● the impact of organisational culture on business strategies and performance
● reasons for changes in organisational culture
● ways of changing organisational culture
● problems of changing organisational culture.

An examiner's comments on BUSS4 scripts 2012

Some useful stuff here. Thanks to Mr Mason for the tip off.

http://www.tutor2u.net/blog/index.php/business-studies/comments/buss4-in-june-2012-an-examiners-perspective

The last post: Twelve revision questions

Clearly it is impossible to know what the examiners may ask you on the BUSS4 research topic (unless you are the person who sets the paper!). However, using some of Helen Coupland-Smith's resources and some of my own, I have put together twelve exam-style revision questions (two per bullet point). As part of your revision it would be worth planning how you would respond to these questions.

1.       The motives for takeovers and mergers and how these link with corporate strategy

With reference to the item on Kraft and your own research, to what extent do you think that a corporate strategy of creating synergies is the main motive for takeovers?

With reference to the item on RBS and your own research, to what extent do you think that the personal motives and ambitions of leaders are a main motive for takeovers?  

2.       The problems of takeovers and mergers including difficulties integrating businesses successfully

With reference to the item on JLR/Tata and your own research, to what extent do you think that culture is the main reason for the success or failure of takeovers and mergers?                      

With reference to the item on Lloyds/HBOS and your own research to what extent do you think the practical difficulties of combining different operating systems is the key problem to be overcome when firms integrate?

3.       The factors influencing the success of takeovers and mergers

With reference to the item on BA/Iberia and your own research, to what extent do you think that leadership is the main factor in influencing the success of takeovers and mergers?       

With reference to the item on Kraft/Cadbury and your own research to what extent do you think that the ability to achieve synergies is the key factor influencing the success of takeovers and mergers

4.       The impact of takeovers and mergers on the performance of the businesses involved

With reference to the item on Kraft/RBS/Iberia/JLR (take your pick!) and your own research, to what extent do you think that financial performance is the only important factor in judging the success of a takeover or merger?                   

With reference to the item on Lloyds/HBOS and your own research to what extent do you think that you should judge the success/failure of takeovers and mergers over a period of 5-10 years, rather than being over-concerned with inevitable short-term difficulties?

5.       The impact on, and reaction of, stakeholders to takeovers and mergers

With reference to the item on the BA/Iberia merger and your own research, to what extent do you think that the integration of two or more firms can have a positive impact on all stakeholders?              

With reference to the item on Glencore/Xstrata and your own research to what extent do you believe shareholders are the most important stakeholder group to keep onside when two firms are seeking to merge

6. The reasons why governments might support or intervene in takeovers and mergers.

With reference to the item on foreign takeovers (eg Kraft/Cadbury, JLR/Tata) and your own research, to what extent do you think that the government should intervene to restrict the foreign takeovers of UK businesses?

With reference to the item on the Airline Industry and your own research, to what extent do you think that governments should influence the degree of competition caused by takeovers and mergers within industries?

This is my final post on this blog this year. Any additional help you need please contact me via e mail or in person in the department. Best of luck in the BUSS4 exam - I believe you will do well.

GLW

Big Bucks for Big Mick!

The long running Xstrata / Glencore saga was in the news again a few days ago for the size of the financial package that Mick Davis (Xstrata CEO) is being offered . He has been offered bonuses worth £30 million just to stay when the two companies merge! Other senior managers at the company are also being offered attractive financial packages to encourage them to stay. You can read about it in this report from the Metro newspaper:

http://www.metro.co.uk/news/900867-mining-boss-of-xstrata-offered-30m-to-stay-on-after-glencore-takeover

This issue fits nicely with bullet point 5 on the impact of mergers on stakeholders (remember …………the Xstrata shareholders have already made protests at the perceived undervaluing of Xstrata). If you were to use this example in an essay you could contrast the impact of the merger on one group of stakeholders (the 172 senior managers in Glencore/Xstratsa being offered retention deals) to the response of the shareholders who feel ripped off. In these times of recession it is becoming more common for shareholders to speak out when executive pay appears excessive, particularly if company performance does not seem to justify high rewards.