North American Chrysler merged with Germany's Daimler-Benz AG to form DaimlerChrysler in May 1998. Chrysler's profit performance and leadership in minivans during the 1990s made it an attractive partner for Daimler. The core management, engineering, manufacturing, purchasing, and design operations of Chrysler were located at one place in Auburn Hills, Michigan, facilitating decentralized and quick decision making.

"Chrysler's primary reason for teaming with Daimler-Benz is to extend its international reach" (Smith). Daimler-Benz AG's Mercedes-Benz brand stood as a symbol of Germany's economic might, but Daimler-Benz AG was known as an autocratic decision maker. "From the beginning, the high command in Stuttgart issued orders to Detroit about everything from where the headquarters would be located (Ger-many] to what kind of business cards would be used" (Jamieson).

Chrysler was successful before the merger but began to flounder soon after the merger. In fact, many began to believe that the deal was not a merger of equals but was really an acquisition. Soon after the merger, top American managers at Chrysler were replaced by German managers, and plants were closed. Furthermore, Germans headed all divisions, while Americans were laid off.

Nine years after the $36 billion dollar merger, Chrysler was sold for just $7.4 billion. Dave Healy, an analyst with Burnham Securities, said, "You had two companies from different countries with different languages and different styles come together yet there were no synergies. It was simply an exercise in empire-building by Juergen Schrempp (Daimler-Benz chairman at time of merger). Basically, Daimler paid Cerberus Capital Management to take Chrysler off its hands" (ArticlesBase). Chrysler immediately had major problems with the change.

• It was hard to imagine two more different cultures than those of Chrysler and Daimler-Benz AG.
• Chrysler is based in the heart of an American industrial neighbourhood. Daimler-Benz AG sits an ocean away in Europe.
• Chrysler's workers make decisions from the bottom up. Daimler-Benz's managers make decisions from top down.
• Chrysler's management is low-key and creates autonomy. The management at Daimler is intense, precise, and controlling.

Question

What specific cultural factors caused problems in the change process? Cite examples to support your answer.