4.1 globalisation and international

Module Title

Globalisation and International HRM

Assignment Number

2

Module Code

HRMG 3203

Assignment Title

Individual Report

Module Leader

Dr Amarachi Amaugo

Assignment Weighting

60%

Assignment Release Date:

1st October, 2023

Submission Date/Time:

Friday, 5th April, 2024 11:59am

Assessment Information – What you need to do

This assignment is an individual assignment. 

This assignment requires you to write 1500 words (+/-10%) Individual Report (60%)

Assessment 2 – 1500 words (+/-10%) Individual Report (60%)

Individual Report

Please pick part A or B and critically respond to the questions.

Part A

·

· Daimler – Chrysler Cultural Mismatch Case Study

Daimler–Chrysler Merger: A Cultural

Mismatch

Introduction

In May, 1998, Daimler-Benz1 and Chrysler Corporation, two of the world’s leading car manufacturers, agreed to combine their businesses in what they claimed to be a ‘merger of equals’. The DaimlerChrysler (DCX) merger took approximately one year to finalise. The process began when Jurgen Schrempp3 and Robert Eaton4 met to discuss the possible merger on 18 January 1998. After receiving approval from a number of groups, the merger was completed on 12 November 1998.

The merger resulted in a large automobile company, ranked third in the world in terms of revenues, market capitalisation and earnings, and fifth6 in the number of units (passenger cars and commercial vehicles combined) sold. DCX generated revenues of $155.3 billion and sold 4 million cars and trucks in 1998. Schrempp and Eaton jointly led the merged entity, as co-chairmen and co-CEOs. DCX sources were confident that the new company was well poised to exploit the growth opportunities offered by the global automotive market in terms of geographical and product segment coverage.

However, analysts felt that to make the merger a success, several important issues needed to be addressed. The most significant of these was organisational culture. German and American styles of management differed sharply. A cultural clash would be a major hurdle to the realisation of the synergies identified before the merger. To minimise this clash of cultures, Schrempp decided to allow both groups to maintain their existing cultures.

The former Chrysler group was given autonomy to manufacture mass-market cars and trucks, while the Germans continued to build luxury Mercedes. However, analysts felt that this strategy wouldn’t last long. When Chrysler performed badly in 2000, its American president, James P. Holden, was replaced with Dieter Zetsche from Germany. Analysts felt that Zetsche would impose Daimler’s culture on its American counterpart. A few senior Chrysler executives had already left and more German executives were joining Chrysler at senior positions.

In an interview with the Financial Times in early 1999, Schrempp admitted that the DCX deal was never really intended to be a merger of equals and claimed that Daimler-Benz had acquired Chrysler. Analysts felt that this statement probably wouldn’t help the merger process.

Clash of cultures

DCX’s success depended on integrating two starkly different corporate cultures. ‘If they can’t create a climate of learning from each other,’ warned Ulrich Steger, a management professor at IMD, the Lausanne business school, ‘they could be heading for an unbelievable catastrophe.’ Daimler- Benz was characterised by methodical decision-making while Chrysler encouraged creativity. Chrysler was the very symbol of American adaptability and resilience. Chrysler valued efficiency, empowerment, and fairly egalitarian relations among staff; whereas Daimler-Benz seemed to value respect for authority, bureaucratic precision and

centralised decision-making. These cultural differences soon became manifest in the daily activities of the company. For example, Chrysler executives quickly became frustrated with the attention Daimler-Benz executives gave to trivial matters, such as the shape of a pamphlet sent to employees. Daimler-Benz executives were equally perplexed when Eaton showed his emotions with tears in a speech to other executives. Chrysler was one of the leanest

and nimblest car companies in the world; while Daimler- Benz had long represented the epitome of German industrial might (its Mercedes cars were arguably the best example of German quality and engineering).

Another key issue at DCX was the differences in pay structures between the two pre-merger entities. Germans disliked huge pay disparities and were unlikely to accept any steep revision of top management salaries. But American CEOs were rewarded handsomely: Eaton earned a total compensation of $10.9 million in 1997. Complications would arise if an American manager posted to Stuttgart ended up reporting to a German manager who was earning half his salary. Chrysler could cut pay only at the risk of losing its talented managers. Schrempp mooted the idea of overcoming the problem through a low basic salary and high performance-based bonus, unlike anything seen in Europe. Base pay would be lower than Germans were used to, but the pay structure would have more variables such as stock options (an American feature).

Germans and Americans also had different working styles. The Germans were used to lengthy reports and extended discussions. On the other hand, the Americans performed little paperwork and liked to keep their meetings short. Americans favoured fast-paced trial-and-error experimentation, whereas Germans drew up painstakingly detailed plans and implemented them precisely. In general, the Germans perceived the Americans as ‘chaotic’ while the Americans felt that the Germans were stubborn ‘militarists’.

Chrysler managers believed in spotting opportunities and going for them. However, post-merger, they were trapped in the German style of planning, constantly being told what to do. Steve Harris, Chrysler’s former communications chief (who defected to General Motors) commented, ‘The Germans played literally by the book – theirs. You’d go into a meeting and have to turn to Volume 7, Section 42, page 597.’ The Germans prided themselves on analytical research that produced a plan, while the Americans reached for the impossible and kept coming up with new ideas to achieve these ‘impossible’ goals.

Before the merger, Daimler-Benz was known for its top down management approach. Chrysler, by contrast, seemed to be a humble collection of colourful consensus managers. DCX claimed that the merger process would be complete in 12 months. However, analysts felt that the authoritarian German management methods would prove foreign to the non-hierarchical style at Chrysler, making the integration of the two cultures difficult. From the start, the cultural differences made DCX’s post-marriage period of adjustment difficult. No sooner was the merger announced; Schrempp started issuing reams of organisational flow charts to the employees. Every phase was given titles like ‘synergy tracking’; and every group had its weekly meeting schedule. DCX also set up a ‘post-merger integration’ (PMI) structure in which 12 ‘issue-resolution teams’ were assigned to push and cajole their counterparts into combining everything from supplies to research. Every time there was disagreement, the integration process for that group was halted until a solution was found.

Attempts to bridge the chasm

DCX took several initiatives to bring the two cultures closer. Press reports indicated that in Stuttgart, the more formal Germans were experimenting with casual dress. The Germans were also taking classes on cultural awareness. The Americans at DCX were encouraged to make more specific plans, while the Germans were urged to experiment more freely.

Analysts felt that there were many indications that the Americans and the Germans might come closer. The Americans were impressed by their German counterparts’ skill with the English language (though they tried to cut down on slang to simplify speech when the Germans were in town). To reciprocate, many Americans were taking lessons in German. When the DCX stock began trading on 17 November 1998, German workers celebrated with

American-style cheerleaders, a country & western band called The Hillbillies, doughnuts and corn on the cob. At a Detroit piano bar, the Americans were taken by surprise when they realised that the Germans knew the lyrics of old rock-and-roll songs.

Daimler’s hegemony

In 2000, there was a management exodus at Chrysler headquarters in Detroit: two successive Chrysler presidents, James Holden and Thomas Stallkamp, both American, were fired. Holden was fired after only seven months in the position. Stallkamp replaced Holden and was forced to resign after only 12 months as CEO. Unreal as it might seem, two highly regarded Chrysler executives were fired from their CEO positions in the space of 19 months. Zatsche, the newly appointed CEO of Chrysler USA, was a Daimler executive and a close confidant of Schrempp. He, in turn, appointed Wolfgang Bernhard, another Daimler executive, as COO. Neither had any real exposure to the US marketplace. This turn of events demoralised Chrysler’s workers. According to an employee, most of the workers were disgusted and frustrated because they felt they were being punished. The employees were expecting big layoffs, and were worried that the company would be sold out.

Analysts felt that after the merger Chrysler would no longer exist as an entity. In fact Chrysler was reduced to a mere operating division of DCX. The Daimler-Benz management presence permeated every important function at Chrysler USA. There was no Chrysler presence on the DCX supervisory board or the board of management. By the end of 2000, there were only 128000 Chrysler employees still working in the US operations, all anxious and demoralised. Ex-Chrysler managers felt that Daimler-Benz was steadily leading Chrysler into a state of chaos.

Schrempp himself said that he never intended the merger be one of equals. He openly acknowledged that if Daimler-Benz’s real intentions were publicly known before the merger, there would have been no deal. However, in a press interview, Schrempp largely retracted his statements by saying that if the strategy were to take over Chrysler Daimler would never have included them in the name of the new corporate entity. Analysts felt that these contradictory statements had severely tarnished Schrempp’s image, both in Germany and the US.

Given these chaotic circumstances, Chrysler reported a third-quarter loss of $512 million for the period ending 30 September 2000; and its share value slipped below $40 from a high of $108 in January 1999.

DCX in trouble

Analysts were of the opinion that DCX should eliminate between 20 000 and 40 000 jobs at its North American Chrysler division and permanently close at least one of its 13 plants in the US and Canada because of huge financial losses in 2000. After third-quarter losses of more than half a billion dollars, and projections of even higher losses in the fourth quarter and into 2001, Schrempp told employees that Chrysler had only 13.5 per cent of the US market, but it was staffed as if it had a 20 per cent share.

In early 2001, DCX announced that it would slash 26 000 jobs at its ailing Chrysler division. ‘No one wants this to happen. I personally wish it didn’t have to happen,’ said Zetsche. He called the moves painful but necessary in the face of ‘brutal’ competition and low US sales. Zetsche said a large part of the job cutting would be through retirement programmes, layoffs, attrition and other means. About three-quarters of the job cuts would be made in 2001, he said. In addition, production would be curbed at factories in Canada and four states in the US by slowing assembly lines and trimming the number of shifts.

However, analysts interpreted this move as a failure of the German and American auto-makers to live up to their promise. One of them said, ‘Instead of making the billions of dollars in cost savings and synergies at the time of the merger, they’re making desperate cuts to get Chrysler back in the black.’

Why the merger failed to realise synergies

Analysts felt that, strategically, the merger made good business sense. But opposing cultures and management styles proved to be a hindrance to the realisation of synergies. Daimler-Benz attempted to run Chrysler USA operations in the same way as it would run its German operations. This approach was doomed to failure. In September 2001, Business Week wrote, ‘The merger has so far fallen disastrously short of the goal. Distrust between Auburn Hills and Stuttgart has made cooperation on even the simplest of matters difficult. Coming to terms with issues like which parts Mercedes-Benz would share with Chrysler was almost impossible. The Germans and the Americans had been out of sync from the start. The two proud management teams resisted working together, were wary of change and weren’t willing to compromise. Daimler- Chrysler have combined nothing beyond some administrative departments, such as finance and public relations.’

Questions

Mergers and acquisitions take place to realise the synergies between the two or more companies involved.

1. Using Cultural theories, explain why do you think the Daimler-Chrysler merger failed to realise the synergies that were expected from it?

2. Discuss some realistic recommendations which will help to address the issues that should be addressed to make cross-cultural merger a success.

___________________________________________________________

Part B

____________________________________________________

Question 2:

Choose either pay & rewards or recruitment, and critically discuss whether it is best for MNCs (multinational corporations) to globally integrate their (pay & rewards or recruitment) HR strategies for managers or whether it is best to adapt them to local conditions. Provide specific examples and case studies from the literature as support.

Choose ONE out of the following two international HR strategies, focusing on either:

1. Pay and Rewards

2. Recruitment

This essay is placed in the broader debate on global integration versus local adaptation. Global integration requires the transfer of HR practices. According to Ghoshal and Bartlett’s (1998) concept of the ‘transnational’ company, the transfer of practices among the MNC network is the most efficient way to innovate and share best practice. However, not all MNCs engage in diffusion; not all practices are transferred; and not all outcomes are the same.

The answer would benefit from a critical understanding of key IHRM models. It should carefully weigh pressures of global integration vs. pressures of local adaptation of HR practices. You should critically weigh different influences on the transfer process: The MNC sector; the organisational structure and corporate strategy of MNC (e.g. the method of affiliate establishment as either Greenfield investment or merger); the influence of national institutional and cultural systems of home and host countries; and organisational politics. Do these promote or hinder the transfer of HR practices? You do not need to discuss all of these, but show you are aware of alternative explanations. Focus on what you consider to be the most important influence on the transfer process specifically when it comes to recruitment or pay of managers. Consult the readings from on Pay, or on recruitment. You can also use examples and readings from Term 1.

This essay could either argue for a strong local adaption of pay/recruitment policies, or for strong global integration. Consider whether global integration necessarily means the direct translation and standardisation of HR policies, or whether global integration and local adaptation can go hand in hand.

Provide specific examples. Draw on the key and further readings of the lectures and seminars, and find additional sources. You can complement the reading list with sources written in your main mother tongue as long as they relate to HRM and/or ER.

Criteria for Assessment - How you will be marked

Please see below the criteria by which your work will be assessed. 

Assessment Criteria

Your assignment will be marked according to the following criteria:

1) Understanding and Reading (15%): The depth of your reading (number, range and quality of sources) and understanding of it. You are expected to read the essential and further readings for the question that you choose. You need to use these readings to support your argument/discussion; you cannot rely on personal opinion or unsupported statements.

2) Critical Analysis (60%): The level of critical analysis in your writing and the quality of the argument developed. You cannot rely on simple description, but have to apply knowledge and theory from the readings to critically engage with the material.

3) Structure (15%): Your ability to develop a clear, logical structure for your essay which addresses the question and guides the reader. Your essay and outline should include a clear introduction, a cogently argued main body, and a conclusion that summarises the argument and answers the overall question.

4) Presentation and Referencing (10%): Your ability to express yourself clearly in English using appropriate terminology, correct spelling and grammar. The extent to which your essay is correctly referenced using the Harvard system of referencing in-text and with a reference list.

Further information on University mark descriptors can be found here. 

This assignment is designed to assess the following learning outcomes: 

1) A critical understanding of 'Globalisation' as an approach and an ideology, particular in relation to national contexts and labour.

2) To analyse and evaluate how national institutional and cultural differences shape employment practices and to engage critically with the debates surrounding National Business Systems and HRM.

3) Ability to construct a critical analysis of the role of MNCs.

4) Understand and examine the concept of IHRM and the processes involved in constructing IHRM strategies and practices with implications for ethical issues.

Assessment Details

The word count is 1500 words (+/-10%).

There will be a penalty of a deduction of 10% of the mark for work exceeding the word limit by 10% or more.

The word limit includes tables, figures, quotations and citations, but excludes the references list and appendices.

Assessment Submission Guidelines

1) Your assignment will be anonymously marked so you must not identify yourself other than by using your student number (P number) anywhere on, or within, the assignment. You must include your student number (P Number) and the name of your tutor from our seminar group in your cover page

2) Your assignment must be submitted online via Turnitin only and not at SAC.

3) The front cover of your assignment should include:-

· Your P Number

· Module Code: HRMG3203

· Name of the Module Leader

· Name of Seminar Group Tutor

· Date of Submission

· Word Count

· Title of the Assignment: Your 1 chosen essay question

No other information should be included on the cover.

4) Coursework must be submitted in Arial point 12 font, and double-line spacing.

· You may increase the font size slightly for headings, but should not change the font or size in the main text.

· Answer each question under a separate main heading.

· Report must be 1,500 words (+/-10%).

5) There should be no header or footer that identifies you on any page of your assignment – either by name or number.

6) Harvard referencing rules apply. Evidence of reading is important and therefore sources (reference) must be correctly cited in the text and fully referenced in the reference list at the end of the report.

7) There should be a single alphabetic reference list, in Harvard style, placed at the end of the assignment.

8) An assignment uploaded to Turnitin, after the 12.00 noon deadline will automatically be capped at a maximum of 40%.

9) Faculty penalties for Bad Academic Practice and plagiarism apply.

Detailed Outline for formatting your report

How to Submit your Assessment

The assessment must be submitted by 11:59 (GMT/BST) on 5th April, 2024. No paper copies are required. You can access the submission link through the module web.

· Your coursework will be given a zero mark if you do not submit a copy through Turnitin. Please take care to ensure that you have fully submitted your work.

· Please ensure that you have submitted your work using the correct file format, unreadable files will receive a mark of zero. The Faculty accepts Microsoft Office and PDF documents.

· All work submitted after the submission deadline without a valid and approved reason will be subject to the University regulations on late submissions.

· If an assessment is submitted up to 14 days late the mark for the work will be capped at the pass mark of 40 per cent for undergraduate modules or 50 per cent for postgraduate modules

· If an assessment is submitted beyond 14 calendar days late the work will receive a mark of zero per cent

· The above applies to a student’s first attempt at the assessment. If work submitted as a reassessment of a previously failed assessment task is submitted later than the deadline the work will immediately be given a mark of zero per cent

· If an assessment which is marked as pass/fail rather than given a percentage mark is submitted later than the deadline, the work will immediately be marked as a fail

· The University wants you to do your best. However, we know that sometimes events happen which mean that you can’t submit your coursework by the deadline – these events should be beyond your control and not easy to predict.  If this happens, you can apply for an extension to your deadline for up to two weeks, or if you need longer, you can apply for a deferral, which takes you to the next assessment period (for example, to the re-sit period following the main Assessment Boards). You must apply before the deadline. You will find information about applying for extensions and deferrals here.

· Students MUST keep a copy and/or an electronic file of their assignment.

· Checks will be made on your work using anti-plagiarism software and approved plagiarism checking websites.

Return of Marked Work

You can expect to have feedback returned to you on (15 working days). If for any reason there is a delay you will be kept informed. Marks and feedback will be provided online/in class/face to face. It is important that you access the feedback you receive as this will help to make improvements to your later work, you can request a meeting with your Module Leader or Personal Tutor to discuss your feedback in more detail.

Marks will have been internally moderated only, and will therefore be provisional; your mark will be formally agreed later in the year once the external examiner has completed their review. More information on assessment and feedback can be found here.

Academic Integrity and Generative AI Use

In submitting a piece of work for assessment it is essential that you understand the University's requirements for maintaining academic integrity and ensure that the work does not contravene University regulations. Some examples of behaviour that would not be considered acceptable include plagiarism, re-use of previously assessed work, collusion with others and purchasing your assignment from a third party. For more information on academic offences, bad academic practice, and academic penalties, please read chapter four of our academic regulations.

Module leaders are allowed to decide what approach they wish to take on Generative AI use. Choose one of the two statements in bold below. Delete the statement that does not apply. If you opt for selective use, you will need to specify what can be used and how it may be used.

Generative AI tools cannot be used for this assessment. You must not use generative artificial intelligence (AI) to generate any materials or content in relation to your assessment.

Generative AI tools may be used selectively for this assessment.  Module Leaders will need to define in what ways they want students to use AI tools and how they wish them to use them.

Any use of generative AI needs to be appropriately acknowledged. Students should add a statement explaining which technologies were used, how they were used and how this output was then used to complete the assignment. Direct use of outputs should be cited.

Examples of a student acknowledgement statement are shown below:

Statement of acknowledgment 1 - generative AI used when module leader allows it.

I have used ( list all AI system (s) used and links e.g., Google’s Bard, https://bard.google.com) to ( provide details of how you have used generative artificial intelligence e.g., to breakdown some of the concepts taught on the module). The prompt (s) I have used are ( include the prompt (s) e.g., you are an enthusiastic tutor who is also an experienced economist, help me understand the concept of game theory with explanations and examples). What was generated from these prompts was used to ( explain how they were used in your submission, e.g., develop a section on game theory exemplars).

Statement of acknowledgment 2 – generative AI not used when module leader allows it.

This assessment has not used any generative-AI.

You can find the library guide on generative AI use here - https://library.dmu.ac.uk/genai

Academic Support and Your Well-being

Referencing is the process of acknowledging other people’s work when you have used it in your assignment or research. It allows the reader to locate your source material as quickly and easily as possible so that they can read these sources themselves and verify the validity of your arguments. Referencing provides the link between what you write and the evidence on which it is based.

You identify the sources that you have used by citing them in the text of your assignment (called  citations or  in-text citations) and referencing them at the end of your assignment (called the  reference list or  end-text citations). The reference list only includes the sources cited in your text. The main referencing guide can be found here and includes information on the basics of referencing and achieving good academic practice. It also has tabs for the specific referencing styles depending on whether you require Harvard style used in business or OSCOLA style used by the Law school.

The University has a wealth of support services available to students; further information can be obtained from Student Gateway, the Student Advice Centre, Library and Learning Services and, most importantly, your Personal Tutor. If you are struggling with your assessments and/or deadlines please do seek help as soon as possible so that appropriate support and guidance can be identified and put in place for you. More information can be found on the  Healthy DMU pages .