In the 1990s, competition in the car business industry increased dramatically. Companies tried to merge or acquire their competitors in order to remain competitive and strong enough not to be absorbed by other companies. This process is still prevalent today, and takes place in most of the businesses. Globalization has become the new framework of the business realm. Chrysler and Daimler-Benz have always been well aware of these issues. Their merger resulted in the formation of the world's third biggest car manufacturer. This report will analyze Daimler-Benz and Chrysler's objectives in the merger after a study of the changing strategic and competitive environment of the industry in the 1990s.
[...] The objectives of the Daimler-Chrysler merger Their intentions were essentially to extend their size and scope as well as to combine their strengths. One of the main objectives of this merger was the conquest of new markets (World/Welt AG). In fact, these two companies complement each other perfectly in terms of product lines, geographic markets and capabilities. Chrysler was good in designing & product development, whereas Daimler was good in engineering & technology. Their products do not target the same customers. [...]
[...] The Daimler-Chrysler TV (DCTV) was launched to encourage the formation of a new common culture. The new paradigm reflects the ambitions of Daimler-Chrysler and shows how well the two previous companies could go well with each other. III. The major problems of the post-merger integration Very Fast Negotiations at the beginning: - After 4 months of negotiations, Project Gamma became a reality on May Technically, the integration process achieved impressive short term results. - After 6 months, the process slowed down: Schrempp stayed away from Chrysler for fear of encroaching on Eaton's turf. [...]
[...] From this statement started most of the issues that Daimler-Chrysler had to face, essentially based on the cultural clash. Haspelagh & Jemison(1991) - Integration Models Daimler-Chrysler first tried to adopt the symbiotic mode. But, finally, it turned to an Absorption mode. (see appendix 2.A) It shifted from a ‘merger of equals' to an acquisition in favour of Daimler- Benz. The Cultural Web See appendix 2.B Cultural web of Daimler-Benz and Chrysler before the merger: Analysis of the Cultural Web: Stories were not clear as the formula ‘merger of equals' did not fit into the reality. [...]
[...] Cultural problems: Daimler-Chrysler had a corporate vision but not a corporate culture. Their previous business cultures were very different. Consequently, they compromised it instead of creating a new common one. Daimler-Benz culture therefore took over the Chrysler one. Gradually, Schrempp sent the German Manager to replace Chrysler's executive managers. The problem came from the fact that each company had its own corporate culture. Synergy and culture Culture was seen as a major profit of the merger. However, difficulties to use benchmarking and mutual learning processes were noticed. [...]
[...] Accordingly, the second question will analyse the post merger integration and how Daimler-Chrysler faced the new problems resulting from it What were the major problems of post-merger integration which Daimler- Chrysler faced (including cultural problems)? How well were these issues addressed? On May Daimler-Benz and Chrysler proclaimed the biggest industrial merger in history. This decision was acclaimed by investors, auto analysts and the unions. All of them highlighted the complementary nature of the two groups. Even the German minister of the Exchequer saluted this decision as ‘important and intelligent' during the 71st Franco-German summit in France. [...]
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