Incompatibility in cross-border alliances

The media often portray business organizations as warring enemies who define

their own success by the demise of their competitors. Executives sometimes

use similar imagery to motivate their "troops." What such images ignore are the

strong interdependencies among business organizations and the degree to which

cooperation results in mutual gains. Just as nations have discovered the benefits

of economic cooperation, businesses have learned that success often depends on

forming strategic alliances.

Successfully managing strategic alliances is surprisingly difficult, however. The

1998 DaimlerChrysler cross-border merger illustrates some of the management

challenges inherent in managing cross-border alliances. Competitive forces in the

global auto industry initially led the two companies to merge. The combination

looked good on paper, but cultural differences interfered with management's

ability to quickly reap the economic benefits they had anticipated.