Role of leadership when merging companies - Essay Example

Running Head: Business The Role of Leadership and Organizational Culture in the Merging of Chrysler and Fiat of Submission Introduction Organization culture is represented in what leadership establishes as its main concerns, specifically, what it deals with, controls, incentives, and strategies. Organizational culture can be viewed in the way leadership responds to important organizational decisions (Hunt, 2009), such as merging and acquisition (M&A). The obligations of the leader in M&A involve building a clear-cut perception of the organizational culture which is one of the major components that encourage cooperation or mutual relationships between the merging companies (Stahl & Mendenhall, 2005).

This teamwork between companies is essential to enhance the potential success of the merging. Basically, every organization has a culture, an interconnected value system, shared by the majority of the organization’s members. Organizational culture also involves and is influenced by the trend of effective internal reactions to adjust to external problems and threats (Keyton, 2005). Since the culture is an outcome of previous achievements, it will oppose change such as that brought about by merger or acquisition.

Hence, the role of leadership is to facilitate the transition of organizational culture during the process of merging (Hunt, 2009). The auto industry has been historically known for its horizontal formations (Badrtalei & Bates, 2007). The future merging of American automaker Chrysler and Italian automaker Fiat will be discussed in this essay. The possible success or failure of this merging will be discussed in terms of the management perspective and organizational culture differences between the two totally distinct automakers.

Organizational Challenges to the Chrysler-Fiat Merge It is obvious that American and Italian cultures are starkly dissimilar. The collective bargaining process of Chrysler and Fiat is different. Chrysler has a personal evaluation process that has motivated its personnel to have a sense of ownership (Seijts, 2005). The organizational condition is largely different within Fiat. It was more built in the area of internal delivery but quite unstable in the area of human resources and needs analysis, but Fiat is now trying to enhance its knowledge dissemination and communication (Clarke & Chanlat, 2009).

Chrysler and Fiat are also different in terms of corporate leadership. The former has a dynamic cultural environment (Hollank & Walter, 2009) whereas the latter has a firmly controlled cultural and corporate change (Clarke & Chanlat, 2009). However, the merging of Chrysler and Fiat may be successful due to the similarities of the priorities of their corporate culture. Both are committed to the development of transformational leaders, innovation, and employee outcomes (Hollank & Walter, 2009).

Teambuilding may hinder or reinforce the success of the Chrysler-Fiat merge. Employee morale fulfils a vital function during a merger. If organizational communications are addressed successfully at this critical point of the merging, the two companies will be able to generate a feeling of pride, accountability, and culture in their staff and personnel (Seijts, 2005) for the newly formed company. Conclusions Competition has consistently been advantageous to the auto industry of the United States and Italy.

Hence, the appropriate culture enhances the likelihood of success as described by the initial objective of merger and acquisition. Transformational approaches to leadership will be crucial to the success of the merging between Chrysler and Fiat. This form of leadership involves overall employee satisfaction and performance, organizational loyalty, and decreased turnover. Leadership will therefore play a crucial role in the success of Chrysler and Fiat. References Badrtalei, J. & Bates, D.L. (2007).

“Effect of Organizational Cultures on Mergers and Acquisitions: The Case of Daimlerchrysler,” International Journal of Management, 24(2), 303+ Clarke, T. & Chanlat, J. (2009). European Corporate Governance: Readings and Perspectives. London: Routledge. Hollank, D. & Walter, S. (2009). Cultural Clash and Cultural Due Diligence at DaimlerChrysler. Germany: GRIN Verlag. Hunt, P. (2009). Structuring Mergers & Acquisitions: A Guide to Creating Shareholder Value. London: Wolters Kluwer Law & Business.

Keyton, J. (2005). Communication and organizational culture: a key to understanding work experiences. London: Sage Publications. Seijts, G. (2005). Cases in Organizational Behavior. London: Sage Publications, Inc. Stahl, G. & Mendenhall, M. (2005). Mergers and Acquisitions: Managing Culture and Human Resources. New York: Stanford University Press.