#39 Daimler in Alabama
German carmaker Daimler announced that it will move part of its C-class production to Alabama. Besides Germany, the C-class has already been produced in two other countries for a while – South Africa and China. The facility in Tuscaloosa, Alabama that so far has specialized in Daimler’s M-, GL- and R-class vehicles. When the production first started in Alabama about 10 years ago it received high acclaim for its high efficiency and novel approach to dealing with cultural differences. Not many difficulties to be expected in this case – too bad for this blog. But hey, who knows? It’s still a German company in the United States!
November 11, 2010 @ 2:50 am
“Not many difficulties to be expected in this case” everything is possible! even if we know that the production started 10 years ago, we really dont know much about the processes under which, this factory is running on. first, we have to see what is the relation between mercedes benz and the factory in the US because that could play a huge factor in determining the sucess of the company and the level of productivity of the workers. Second, we do have to look at the nationality of the management that is running the company, because we do already know that there is a huge difference between the way german managers and US managers deal with problems. wffectively in the last 10 years, we didnt encouter any problems but with the factors of globalisation, this may change drastically!
we just have to stick around and keep a close eye on this matter due to the big differences in the types of work and this difference might trigger a huge problem.
January 16, 2011 @ 4:22 pm
I totally agree with Gilard when it comes to the statement “not many difficulties to be expected in this case”, because as he said, everything is possible! We just have to think back to the Daimler-Chrysler Merger and its huge problems with the differences in management styles due to the cultural mismatch. Even when the facility in Alabama received high acclaim for its high efficiency and novel approach to dealing with cultural differences 10 years ago, today we don’t know anything about the (new) management team responsible for the C-class, what nationality they have, what views they have, what beliefs they pursue aso. So it is almost ridiculous to say that there are not many difficulties to be expected in this case.
What about the immense difference in the score of uncertainty avoidance? The US is a country which has a relatively low uncertainty avoidance (score 46). People in such countries are more tolerant of opinions different from what they are used to; they try to have as few rules as possible, and on the philosophical and religious level they are relativist and allow many currents to flow side by side. People within these cultures are more phlegmatic and contemplative, and not expected by their environment to express emotions. A low ranking in the uncertainty avoidance dimension is indicative of a society that has fewer rules and does not attempt to control all outcomes and results. It also has a greater level of tolerance for a variety of ideas, thoughts, and beliefs. The Germans in contrast have a high uncertainty avoidance score of 65. People in such countries try to minimize the possibility of risky situations by strict laws and rules, safety and security measures, and on the philosophical and religious level by a belief in absolute Truth; ‘there can only be one Truth and we have it’. People in uncertainty avoiding countries are also more emotional, and motivated by inner nervous energy. Can this really fit (perfectly) together in a business context? …
Another point we have to consider is the individualism. The US is with a score of 91 the country with the highest score in the world, whereas Germany only has a score of 67. (the world average is 43) Both countries show a high individualism, but the US is even more pronounced. This ranking for the United States indicates a society with a more individualistic attitude and relatively loose bonds with others. Two individualistic countries working together might also be suboptimal, because the populace in these countries is more self-reliant and looks out for themselves and their close family members, instead of effectively working together as a team. So everybody might work for themselves and might not care for the business of the other partner.
As the rankings of the dimensions “Masculinity” (US=62, Germany=66) and “Power Distance” (US=40, Germany=35) are almost equal, I don’t think that there will occur drastic difficulties concerning these two dimensions. But nevertheless, you never know…
January 16, 2011 @ 4:23 pm
I totally agree with Gilard when it comes to the statement “not many difficulties to be expected in this case”, because as he said, everything is possible! We just have to think back to the Daimler-Chrysler Merger and its huge problems with the differences in management styles due to the cultural mismatch. Even when the facility in Alabama received high acclaim for its high efficiency and novel approach to dealing with cultural differences 10 years ago, today we don’t know anything about the (new) management team responsible for the C-class, what nationality they have, what views they have, what beliefs they pursue aso. So it is almost ridiculous to say that there are not many difficulties to be expected in this case.
What about the immense difference in the score of uncertainty avoidance? The US is a country which has a relatively low uncertainty avoidance (score 46). People in such countries are more tolerant of opinions different from what they are used to; they try to have as few rules as possible, and on the philosophical and religious level they are relativist and allow many currents to flow side by side. People within these cultures are more phlegmatic and contemplative, and not expected by their environment to express emotions. A low ranking in the uncertainty avoidance dimension is indicative of a society that has fewer rules and does not attempt to control all outcomes and results. It also has a greater level of tolerance for a variety of ideas, thoughts, and beliefs. The Germans in contrast have a high uncertainty avoidance score of 65. People in such countries try to minimize the possibility of risky situations by strict laws and rules, safety and security measures, and on the philosophical and religious level by a belief in absolute Truth; ‘there can only be one Truth and we have it’. People in uncertainty avoiding countries are also more emotional, and motivated by inner nervous energy. Can this really fit (perfectly) together in a business context? …
Another point we have to consider is the individualism. The US is with a score of 91 the country with the highest score in the world, whereas Germany only has a score of 67. (the world average is 43) Both countries show a high individualism, but the US is even more pronounced. This ranking for the United States indicates a society with a more individualistic attitude and relatively loose bonds with others. Two individualistic countries working together might also be suboptimal, because the populace in these countries is more self-reliant and looks out for themselves and their close family members, instead of effectively working together as a team. So everybody might work for themselves and might not care for the business of the other partner.
As the rankings of the dimensions “Masculinity” (US=62, Germany=66) and “Power Distance” (US=40, Germany=35) are almost equal, I don’t think that there will occur drastic difficulties concerning these two dimensions. But nevertheless, you never know…
December 15, 2011 @ 2:26 pm
My opinion is almost equal to the comment of Vera posted on 16th of January this year. I think it is impossible to say that no difficulties occur if Daimler, a German company, moves a part of business to the United States (Alabama). A perfect framework to screen the possible cultural differences is the framework of Hofstede as Vera did. Hofstede is an expert for cultural science from the Netherlands. He defines four main cultural aspects: Power Distance, Individualism, Masculinity and Uncertainty Avoidance. Vera has discussed Uncertainty Avoidance and Individualism in detail. Nevertheless, I think main points concerning individualism are missing and should be taken into consideration, as well. As both of the countries show a high degree of individualism, various differences can be still figured out because Germany has a quite lower level than the US.
When I looked into the process of the Daimler-Chrysler merger few years ago, I recognized banal but significant differences through individualism, such as the duration of meetings in the German (Daimler-Benz) and the American company (Chrysler). In Germany, people are used to keep discussions going for long time because they aim on a group decision with consensus (=sign for low individualism). Americans avoid long meetings to find a universal solution because individual decisions are almost of higher priority than collectivistic ones and they are considered better than group decisions, as well. (=sign for high individualism) Only based on this fact, it would be complicated to find a balance between German and American managers. Who will decide how meetings should be, for example? Therefore, the decision-making process will be difficult, as well, because German managers are likely not to act authoritarian in contrast to American managers, which is a sign for a rather low power distance in Germany and quite high power distance in America. American managers want to decide autocratically (=sign for high individualism) and German managers prefer talking with subordinates and other persons before the decision is made. (=sign for low individualism) Concerning the scores of both countries it is unexpected that the scores are quite similar, however Germany is ranked 35th and US is ranked 40th in this connection.
Furthermore, there are differences through the salaries (=indicator of power distance) of American and German CEOs, which could lead to discussions, as well. While American CEOs are rewarded handsomely (=sign for high power distance) what is quite normal in American business, German employees dislike huge pay disparities. It is not common to accept any steep revision of top management salaries in Germany because all should have equal rights and should, therefore, almost get similar salaries (=sign for low power distance). Referring to this fact, Daimler has to find a solution or a balance to make all employee payments and salaries a common level. As you can see, despite Germany and the US are close together within the country ranks of power distance there are almost many difference to consider.
I would like to finish my argumentation in this case with one question referring to the starting lines of this blog: After all information given in this comment and the previous ones, are you sure that there won’t be any difficulties when Daimler moves out a part of production to Alabama??