Essay on Business Strategy

   Strategies are basically a framework that businesses follow to reach their goals and objectives. It is first necessary to make clear distinctions between deliberate and emergent strategies. Strategies are known as the pure deliberate strategies when three conditions are met. The first is that the organization should have an idea about that strategy before. In a sense that the organization needs to have a clear understanding of what they want to achieve. The second condition is that all the concerned people in the organization should be agreeing to the plan. Lastly, the strategies should not be influenced from any external factors for example, market or technological factors. In the real world meeting these three conditions is a complicated task however; some conditions are met in organizations. It would be fine to say that deliberate strategies are a top-down approach in an organization that are deliberately designed in such a way that it is guaranteed that a business will achieved its desired goals.

        On the other hand, pure emergent strategies are those that are done by consistent actions over time but without any specific intention. The idea is that most of the time strategies emerged without any deliberate attempt. Once again in the real world it is difficult to imagine that there can be any strategies that can be put into place without any intention at all. But there are cases where the leadership imposes actions in the organization that lead to emergent strategies. According to (Moore, 2011) emergent strategies are created when the organization learns what works in practice.

        Referring to the case a number of examples of deliberate and emergent strategies can be seen. The deliberate strategy was that the top management of the two companies wanted to go for the merger because they believed that it will result in synergy and huge gains. This came out to be true as DCX total made revenue of $155.3 billion. Another deliberate strategy was to make sure that the differences in the culture of the two organizations did not act as a hindrance in the progress of DCX. Both the organizations were thus allowed to maintain their own cultures and they were given classes in order to make it easier for them to adapt to some changes. An example of this was that how the Germans were being made to learn how to make free decisions and the Americans were made were encouraged when they made free plans. These strategies turned to be successful initially as on November 17th 1998 German workers with their consent celebrated the success of the organization in American style cheerleaders.

        Example of emergent strategy can be that when the two top CEO’s of the Chrysler were fired in 2000. These events demotivated the workers and they did not felt good. This is an example of emergent strategy because it was not a step that the company wanted to take however, with the given circumstances they had to take this decision. Another example can be taken when DCX announced in 2001 that 26000 jobs were to be lost in the Chrysler division, Zetsche clarified that he did not wanted this happen but somehow the unfortunate events demand this action.

   Part a

        Mergers take place when two companies mutually decide that they want to operate as one entity. Acquisitions take place when one organization takes over the other organization by buying it.  Companies merge and acquire other companies because there are numerous advantages of doing so. We will discuss some of these below.

            Mostly organizations want to take such steps in order to take advantage of synergy. Synergy refers to the fact that whenever two organizations combine the costs decreases and so the profitability and performance gets better. Another reason companies merger or acquire is to either diversify or to increase their business focus. In case the goal of the organization is to diversify, then companies merge with other companies that are unrelated in terms of the goods and services that they provide so their dependence on just one company decreases. In case the company wants to increase its business focus then it merges with companies that have deeper market penetration. Thirdly, some companies merge in order to grow. When firms merge the total market share increases and so does their future growth opportunities. Another common reason for mergers and acquisitions is to decrease some great amount of cost. This can either be done by buying its supplier or distributor. This will reduce costs since the company can save the level of margins that suppliers and distributors used to keep for themselves. Moreover, another common reason is to eliminate competition. If any organization feels that there is a competitor that is posing threat to its business then the company will but it. This also results in larger market share for the company that is acquiring.

        The case also shows several reasons because of which the two companies were convinced that they wanted to merge. They claimed that this merger was going to be a merger of equals” The two companies were performing remarkably well in the market separately so the top management thought that it would be great to merge in order to create a large automobile company. The merger made the DCX company the third largest company in the world in terms of revenue generation, earnings and market capitalization. Moreover, in 1998 massive sales of around 4 million cars and trucks were made. The DCX Company was all set to earn huge amount of profits by growing and taking over larger geographical area of automobile industry. Furthermore, now the company was also providing a wide range of products that too meant that it will perform well.

Part b:

        Even though mergers and acquisitions have several benefits that are some problems that can lead to the decision of merger and acquisitions turning out to be harmful. Firstly, it is important to realize that when a company grows the role of its employers and employees changes too. An employee that was initially working in a small company cannot expect that his way of work will remain the same once the size of the company increases after mergers. All the actors involved need to know how to operate a larger company especially the CEO otherwise a sudden increase in the size of the operations of the company can result in chaos. Secondly, the process of mergers and acquisitions need a lot of legal involvements so it’s important to make sure that the company is taking into account the laws and regulations of the country where this merger or acquisition is going to take place. This is because if laws are not followed then it can result in legal action being taken that can cause harmful effects. It needs to be made sure that there is proper documentation. Another problem that usually arises is that companies often after mergers think that the revenues that it will generate will be way too high. This is not the case at times because practically it is not possible to generate such high levels of revenues shortly after the merger. The major problem here is that the management becomes overly optimistic about the merged company. Furthermore, the biggest issue is of difference in culture that makes it impossible for the company to take advantage of the merger. This is the difference that created difficulties for the DCX Company. The problem is that often mergers result in a “us” and “them” situation rather than a “we” situation. The employees of the company are unwilling to give up their way of doing things and adopt the others. This lack of compromise often creates a lot of trouble. The difference can be in numerous dimensions. This leads to an unsatisfied team of workers that are not working hardly for the company hence, the productivity and overall efficiency of the company goes down. Specifically discussing the case of DCX we can see that the American and German culture were to different to be merged. There were differences in pay, work style and may other things. For instance, Daimler- Benz used a top to down management style where most decisions were made by upper management but Chrysler made use of a more centralized approach where decisions were made collectively and feedbacks were important. Another example was that Americans encouraged new ideas that could meet the impossible goals whereas, the Germans liked to follow set guidelines and come up with plans that were supported by analytical research. These differences slowed down the integration process of the company. Soon it the way Daimler-Benz was trying to operate Chrysler in a German way failed. The teams of both the companies showed complete resistance when it came to working together as one company. So it can be said that perhaps differences in cultures of organization are difficult to blur as employees always find it difficult to change their way of doing things.

   The theory known as the Hofstede cultural dimension theory was developed by Greet Hofstede. Basically this theory was given to show and make people understand the differences between different cultures and how can these affect businesses that operate in different cultures. The six categories that Greet thought define cultures were power distance index, collectivism vs. Individualism, Uncertainty avoidance index, femininity vs. masculinity, short term vs. long term orientation and restraint vs. Indulgence. He described low distance power and high distance. Low distance is where the power equally distributed whereas; high distance power is where there is extreme inequality. The first category that is the power distance index measure the extent to which power and inequality are tolerated. High distance is where people embrace hierarchy and low distance is where people are egalitarian. The second category measures the extent to which people are dependent because they are integrated into groups. High distance is where people prefer individualism and low power is when people believe in collective goals hence support collectivism. The third category shows to what extend people are ok with uncertainty. High uncertainty avoidance is where uncertainty is not tolerated and avoided whereas, low is the opposite where there are lax rules. Moreover, the fourth category gives importance on the society’s view about sexuality equality. Masculinity is where there are distinct gender roles and wealth building is considered important. Femininity is where there are fluid gender roles and the overall society is modest.            Long term orientation and short term orientation basically makes difference between how the society views its time horizon. Long term orientation is in a society that is future oriented emphasizes on long term growth. Short term orientation is where the society gives more important to the present than future, it emphasis on instant gratification and quick results. Indulgence vs. Restraint talks about the extent the society is able to control its desires and impulses. The society gives more importance to indulgence if it focuses on enjoying life to the fullest and having fun whereas, restraint is in a society that places greater importance on social norms.

            Keeping this theory in consideration it can be seen that the two companies presented in the case study were different. They can be considered different according to the power distance category. The Germans can be said to have a high power distance whereas the Americans had low distance power as the Germans where more rule oriented and the Americans had participative style of management. When it come to uncertainty avoidance index we can say that the Germans liked to do a lot of research and paperwork before any decision was to be made so they were uncomfortable with uncertainty whereas, the Americans liked to keep their messages short and avoided paperwork so they were comfortable with uncertainty. The Germans can be considered to be low powered with it comes to restraint vs. indulgence because they supported the idea of normative repression. The Americans on the other hand can be considered as high powered in this category because they believed that they should not avoid their satisfaction. Furthermore, the Germans were more long term oriented but the Americans were more short term oriented.

References of Business Strategy:

Corporate Finance Institute. (2019). Hofstede’s Cultural Dimensions Theory - Overview and Categories. [online] Available at: https://corporatefinanceinstitute.com/resources/knowledge/other/hofstedes-cultural-dimensions-theory/ [Accessed 12 Apr. 2019]

Forbes.com. (2019). 7 Potential Pitfalls With Mergers & Acquisitions. [online] Available at: https://www.forbes.com/sites/georgedeeb/2016/11/02/7-potential-pitfalls-with-mergers-acquisitions/#714dd082170f [Accessed 12 Apr. 2019].

My2.ewb.ca. (2019). [online] Available at: http://my2.ewb.ca/site_media/static/library/files/1177/of-strategies-deliberate-and-emergent.pdf [Accessed 12 Apr. 2019].