Diversity in a Global Organization

Companies that intend to have a global workforce should understand the culture, customs, values, and beliefs of a particular country. An organization’s failure to perform due diligence can lead to disaster. Let’s look at the merger of the Daimler-Chrysler. Daimler, a German-based company, and Chrysler, an American based company decided to merge together in 1998. Aside from a lack of teamwork and two egos who got rich off the deal, cultural differences were one of the biggest reasons the merger failed. The organizational culture of Americans and Germans differ. Chrysler’s atmosphere was more relaxed and easy-going, while Daimler was more structured and highly stressed.  Additionally, there were different views on pay scales and travel expenses. The fact that most of the German employees were fluent in English, while most Americans were not familiar with the German language was also an indication that there was a cultural disconnect. The cultural difference was not the primary reason for the failure, but it was a catalyst. Ultimately, the merger ended in 2007; Daimler “end[ed] up actually paying $650 million to unload Chrysler to end its exposure to billions in ongoing losses [and] health care costs.”

Having a global business does not end with understanding and embracing the differences in the workplace, but also the diversity of potential customers or clients. An example is EuroDisney. After successfully opening a number of locations across the United States and Tokyo, The Walt Disney Company believed it would be a great idea to open a location in France, more specifically Paris. Though this seemed like a clever idea, The Walt Disney Company failed to truly understand the French culture. For starters, the Walt Disney Company neglected to consider Europeans, especially Frenchmen, regularly consume alcohol with meals when they banned the consumption of alcoholic beverages at EuroDisney. Alcohol is prohibited from all Disney properties. After an uproar, The Walt Disney Company changed its position and allowed alcohol on the EuroDisney premises. Another example of cultural misunderstanding was Walt Disney Company’s nativity to the time in which Europeans eat lunch.  Unlike Americans who eat lunch at various times of the day, Europeans typically eat around the same time 12:30 pm; this caused long lines at lunch and overwhelmed staff. Fortunately, in 1995 after a name change to Disneyland Paris and a number of improvements, the park was able to make a major turnaround.  

What are your thoughts regarding the Daimler-Chrysler and EuroDisney situations?