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DaimlerChrysler Merger: The Quest to Create One Company Harvard Case Solution & Analysis
Home >> Management Case Studies >> DaimlerChrysler Merger: The Quest to Create One Company
The merger is always a big challenge for the companies. In the case of the merger of Daimler and Chrysler, there were many issues which both companies had to handle. The merger of these two automobile giants was a big challenge. There were requirements for solving the issues like blending of corporate and national cultures and operations. The head of the companies knew that the merger would bring the cultural issues for both of the companies as Daimler belonged to Europe and Chrysler was an American automobile company. Both companies had faced the challenges and succeeded in their history and also had an idea what challenges they were supposed to face in the merger.
The major problem with the merger was that the employees of the companies were of different nationalities. The employees were from Germany and America. The history of both the nationalities was not that good, as they shared the history of the blood-shedding battles, revenge and many disturbing events, this factor was considered to be beyond the hands of the CEOs of America and Germany. As both of these nationalities had the cultural and history differences, the employees could be directed towards the goals and success, but their feelings could not be eliminated completely, for their colleagues.
Both of the companies had the different cultural heritage which was reflected from their modern shape of companies regarding their histories. The Germans had gone through tough battles in the past, so they were quite used to living in the dictatorship environment. That is why the German employees were very disciplined and formal. They were quite committed towards their work and also they were used to work under tough and strict conditions. They worked in a way that they developed set of rules and worked according to their rules. This could be easily seen in the hierarchy of Daimler.
The culture of Chrysler reflected the American corporate culture which is why, the employees had the attitude of being relaxed, though working hard, but according to their rules and regulations they believed in the environment which was quite relaxed as compared to the Daimler’s corporate environment. The employees of Chrysler were quite casual in terms of their work, their dressing and other. That was a big cultural difference between the American and German corporate culture. The Chrysler’s employees used to drink coffee at the time of the meeting and attended the meeting in casual dresses. It was perceived that the Americans were not serious about their work and the orders.
Whereas, Daimler had a very strict environment, the tolerance level was found to be zero. The management was quite strict and it was observed that they used to take rational decisions and also that they fired many employees on the basis of their low performance. This type of strictness and organization culture was not helping Americans to mix with the Germans and also to go according to them.
Impact of Cultural Differences
The cultural differences are one of the main problems for the companies. The main thing that companies have to analyze is that whether both the companies can adjust to the cultural differences and if the companies are international so they have to consider that as well before they merge.
Similarly, Daimler and Chrysler were also involved in a merger, but the merger faced many problems and challenges for both the organizations. As Daimler was German company and Chrysler was an American. Both the companies had different cultures which caused many problems for the organizations. This caused a lot of impact on the merger of both the companies. The cultural difference between both the companies resulted in many problems. It was the source of the confusion, distrust and low in the employees of both the organizations. The main challenge for the CEOs of both the companies was that bringing the employees of the companies together. Even if they were successful in bringing them together for achieving goals, they were not successful to eliminate the feelings they had for each other, despite the historical facts related to both cultures.
The international mergers are always a risk, as Daimler was in Europe and Chrysler was in North America. There was a huge communication gap between the two organizations. It was hard to integrate the merger between both the companies as there was a lack of coordination among the employees of the companies. Daimler and Chrysler’s challenge was not only creating a bridge between the corporate cultures of both the organizations, but there was a need of overcoming the problems that arose due to national cultural differences. The cultural distance was causing the problems for both the organizations, the management style was not being adopted and also this resulted in cultural crash.....................
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Centers for historic merger Daimler-Benz AG and Chrysler Corporation and the subsequent search integration. The subtext to this central question include a comparison and contrast of cultures operating and business processes of the two companies, as well as their history, position in the auto industry, and corporate values and image. Also focuses on the dynamics of integration by two companies. The use of "what if" scenarios, students can explore the role of top management in a merger, its execution, and the subsequent integration efforts. Gives students the opportunity to present and develop a strategy for integration. Best suited for research in strategic management, corporate entrepreneurship, global management, leadership and change management or organizational behavior. "Hide by Allan R. Cohen Source: Babson College 27 pages. Publication Date: January 1, 2000. Prod. #: BAB041-PDF-ENG
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Daimler-Benz Chief Executive JÃ¼rgen Schrempp had concluded as early as 1996 that his company’s automotive operations needed a partner to compete in the increasingly globalized marketplace. Chrysler’s Eaton was drawing the same conclusion in 1997 based on two factors emerging around the same time: the Asian economic crisis , which was cutting into demand, and worldwide excess auto manufacturing capacity, which was looming and would inevitably lead to industry consolidation. With annual global overcapacity as high as 18.2 million vehicles predicted for the early 21st century, it became clearer that Daimler-Benz and Chrysler could survive as merely regional players if they continued to go it alone.
After several months of negotiations, Daimler-Benz and Chrysler reached a merger agreement in May 1998 to create DaimlerChrysler AG in a $37 billion deal. The deal was consummated in November 1998, forming an auto behemoth with total revenues of $130 billion, factories in 34 countries on four continents, and combined annual unit sales of 4.4 million cars and trucks. The two companies fit well together geographically, Daimler strong in Europe and Chrysler in North America, and in terms of product lines, with Daimler’s luxurious and high-quality passenger cars and Chrysler’s line of low-production-cost trucks, minivans, and sport utility vehicles. Although this was ostensibly a merger of equals–the company set up co-headquarters in Stuttgart and Auburn Hills, naming Eaton and Schrempp co-chairmen–it soon became clear that the Germans were taking over the Americans. DaimlerChrysler was set up as a German firm for tax and accounting purposes, and the early 2000 departures of Thomas Stallkamp, the initial head of DaimlerChrysler’s U.S. operations, and Eaton (who was originally slated to remain until as late as November 2001) left Schrempp in clear command of the company.
During 1999 DaimlerChrysler concentrated on squeezing out $1.4 billion in annual cost savings from the integration of procurement and other functional departments. The company organized its automotive businesses into three divisions: Mercedes-Benz Passenger Cars/smart, the Chrysler Group, and Commercial Vehicles. In November 1999 DaimlerChrysler announced that it would begin phasing out the aging Plymouth brand. The Debis services division was merged with Chrysler’s services arm to form DaimlerChrysler Services, while DASA was renamed DaimlerChrysler Aerospace. Late in 1999 the company reached an agreement to merge DaimlerChrysler Aerospace with two other European aerospace firms, the French Aerospatiale Matra and the Spanish CASA, to form the European Aeronautic Defence and Space Company (EADS). DaimlerChrysler would hold a 30 percent stake in EADS, which would be the largest aerospace firm in Europe and the third largest in the world.
In early 2000, DaimlerChrysler set the lofty goal of becoming the number one automaker in the world within three years. The company’s most pressing needs were to bolster its presence in Asia, where less than 4 percent of the company’s overall revenue was generated, and to gain a larger share of the small car market in Europe. Filling both of these bills was DaimlerChrysler’s purchase of a 34 percent stake in Mitsubishi Motors Corporation for $2 billion, a deal announced in late March. The company later increased its interest in Mitsubishi when it purchased a 3.3 percent stake from Volvo. In another key early 2000 development, DaimlerChrysler agreed to join with GM and Ford to create an Internet-based global business-to-business supplier exchange named Covisint.
DaimlerChrysler’s lofty goal would remain unrealized however, as the company faced a host of challenges. The Chrysler Group division was plagued by high costs and weak sales which ultimately cost James P. Holden his CEO position. Buoyed by its strong sales in the mid-1990s, Chrysler had spent heavily on product development in the late 1990s and bolstered its work force while costs were skyrocketing. By the second half of 2000 Chrysler lost $1.8 billion while spending over $5 billion. Dieter Zetsche was tapped to reorganize the faltering U.S. division. He launched a major restructuring effort in February 2001 that included cutting $2 billion in costs, making additional cuts in supplier costs, slashing 20 percent of its workforce, and making changes to Chrysler’s product line that included the elimination of the Jeep Cherokee (the Grand Cherokee remained in the product line) and the launch of the Jeep Liberty.
At the same time, global economies began to weaken in the aftermath of the September 11, 2001, terrorist attacks. To entice customers, car makers began offering buyer incentives that began to wreak havoc on profits. Industry analysts began to speculate that the 1998 merger may have been a mistake–Schrempp’s proclamation that the deal would create the most profitable car maker in world had indeed fallen short. In fact, the company’s market capitalization was $38 billion in September 2003. Before the union Daimler’s market cap had been $47 billion.
Meanwhile, the company’s Mercedes division plugged along launching the E-Class sedan, the SLK roadster, and the Maybach luxury vehicle. In 2003, Chrysler launched the Crossfire, a roadster developed with Mercedes components, and the Pacifica, a SUV/minivan. It also began to heavily market its powerful Hemi engine, which could be purchased for the Dodge Ram pickup and its passenger cars. In early 2004, Chrysler’s 300C sedan and the Dodge Magnum sports wagon made their debut.
Competition remained fierce in the auto industry prompting DaimlerChrysler to make several changes in its strategy. In December 2003, the company sold its MTU Aero Engines business. That year the firm acquired a 43 percent stake in Mitsubishi Fuso Truck and Bus Corporation hoping to cash in on Asia’s growing truck market. Perhaps its most drastic move, however, came in April 2004 when DaimlerChrysler’s supervisory board voted against providing funds to bailout Mitsubishi Motors, which by now was struggling under losses and a huge debt load. Mitsubishi played a crucial role in Schrempp’s Asian expansion strategy and it developed the platforms for Chrysler’s compact and midsize cars. The failure to provide funds put a strain on the business relationship between the two and threatened to result in huge problems for Chrysler, which had cut back on engineering capacity as it relied on Mitsubishi to develop its small and mid-sized cars.
At the same time, DaimlerChrysler moved ahead in the Chinese market–without Mitsubishi and without another partner, Hyundai. To bolster is presence in the region, DaimlerChrysler restructured its joint venture with Beijing Automotive Industry Holding Co. Ltd. and set plans in motion to tie up with Chinese Fujian Motor Industry Group and the Taiwanese China Motor Corporation to launch several cars in the Chinese market by 2005. Rumors circulated that DaimlerChrysler’s relationship with Hyundai was faltering as a result, and in 2004 the company signaled that it would sell its interest in the South Korean automaker.
By 2004, Schrempp’s DaimlerChrysler was a far cry from what the 1998 merger promised to deliver. The company’s financial record was lackluster, bogged down by Chrysler’s $637 million loss in 2003. DaimlerChrysler remained the world’s number three car maker, leaving the 2000 goal–to become the number one auto company in the world–unfulfilled. Whether the merger would provide the hoped-for results remained to be seen.
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Business Strategy Case Of Daimler And Chrysler: Merger And Acquisition Review
The merger and acquisition: background and strategy.
Discuss about the Business Strategy case of Daimler and Chrysler.
Daimler Ag is one of the most popular German based automotive companies that mostly manufacture engines, motor vehicles as well as automobile. In the year of 1998 the company entered into a merger and acquisition with another most popular Michigan based automotive company, Chrysler Group LLC. The merged business entities started to operate their business under the name of DaimlerChrysler AG. However, the merging had transpired only for a short time i.e. until 2007, it has presented a great deal of examples for a strong point of merging along with various drawbacks (Cartwright and Cooper 2012). According to the CEO of both of the companies, the main purpose of the merger and acquisition was to form a multi-billion business formation by uniting both successful business entities. The strategic move was mainly aimed to drive out the competition of the market and thereby dominate the automotive industry.
Despite all of that, it was evident that Chrysler was in dire need of this particular kind of strategic move, which ensured financial support. The last internal struggle to overthrow the hostile takeover by its shareholder had damaged the company’s financial foundation. In addition to that, the company sensed a necessity of change and business expansion. In this context, Daimler-Benz has been proved to be the most perfect match for Chrysler as it is a financially self-sufficient multinational business organization (Phillips and Zhdanov 2013). On the other hand, Daimler had the perfect opportunity of diversifying the product range with an effective fashion. Most of the business scholars agreed that the merger and acquisition between Daimler and Chrysler would be successful because of their lack of conflicting interest.
However, in the end the merger and acquisition proved to be a futile effort due to numerous imperative discrepancies between these two companies. The foremost issue which had been identified was the contradictory corporate culture which had raised a critical concern regarding the work environment of the merged companies (Ferris et al. 2013). In the same context, it had also been observed that unlike Chrysler’s tendency of being innovative and exploring, Daimler mostly relied on the hierarchy as well as formality, where business activities were concerned. Moreover, the cross border cultural contrast also has been a major obstacle for successfully making the merger successful. Employee expectations, management style as well as public relation had a great amount differences which ultimately hindered the actual merging and acquisition process at a whole.
Benefits and Drawbacks of the Merging
The merger and acquisition refers to the process where two or more companies undergo through a transaction process where the ownership of the companies, business organizations as well as the various operating units are combined as well as transferred. The mergers and acquisition is mostly focused with the growth, shrinkage as well as change of the entire business setting. The major focus of the Mergers and acquisition is mostly focused on attaining the most necessary improvement of the competitive position of the respective business organizations (Angwin 2012). In the contemporary world, the extensive study of mergers and acquisitions ha identified that the majority of the business organizations are deeply inclined towards this particular strategic movement.
From the traditional sense of the legal concept, the term merger is considered as the consolidation of two different business entities focused in transforming into one single business entity in the global market. At the same time, acquisition refers to the legal arrangement whereby any given organization controls the ownership of the equity interests, assets as well as stocks of the other business organization (Boschma and Hartog 2014). However, these business movements both are deeply focused on the consolidation of the entire organizational assets, liabilities along with strategic activities.
In the context of working of merger and acquisition activities, one organization takes over another company or business body. This purchase can range from full to partial ownership of assets and liabilities. In this process, the two companies formulate another distinct and distinguishable enterprise, where the existence of the previous companies does not remain at all. There are two different kinds of merger and acquisition activities noted in the contemporary market (Cartwright and Cooper 2012). These classifications are called private and public merger and acquisition. The classification of the merger and acquisition activities greatly relies on the registration of the merging company or the acquiring company on the public stock market. Therefore, in these existing market environment the organizations use the merger and acquisition strategy as a value creation strategy.
The current examples in the existing marketing environment has identified that the market and acquisition can be parted in two different category which are friendly as well as hostile. The current study of the merger and acquisition has identified that achieving success has been proved to be highly difficult for the contemporary organizations. It has been observed from the current marketing study, that companies which are highly focused on the acquiring other companies in a chronological fashion, are greatly successful (Cartwright and Cooper 2014). On the other hand, the companies who have a tendency of acquiring companies occasionally mostly struggle to adjust with the external market environments.
Concept of Mergers and Acquisition
The organizations of the existing market have evolved the buyout scenario which has been proved to be most successful as well as realistic practices in the current market situation. In addition to that, the market has formed a form of buyout system known as ECO buyout which is deeply focused on buyout in regards to the co-community ownership as well as new generation buyout (Ferris et al. 2013). There are two distinct buyout systems which are known by MIBO and MEIBO. The approach of the merging and acquisition can be distinguished in two different parts, such as the friendly and hostile merger and acquisition. Both approaches of merger and acquisition depend on the intention of employees, shareholders as well as board of directors of the target companies.
Acquisitions and Mergers are mainly categorized in four broad categories based on the product and the market structure in which the acquirer and occupied company operates before the merger.
Horizontal merger is said to take place when there are two firms operating in the same kind of trade and along the same environmental location as well. The most famous example of horizontal merger is the acquisition or merger of Times bank by or with HDFC Bank.
Vertical merger amalgamates the operability of a provider along with a purchaser. In the case of a backward upright merger, the customer acquires the provider. For example, RPG Group’s acquirement of Harrison Malayalam equipped it with a control over rubber, which in turn serves as a major input for another group of company. However, on the other hand, in the case of forward merger suppliers acquire the customers. This can be seen in the case of acquisition of Quest Apparels (manufacturer of denim jeans) by Arvind Mill (well-known manufacturer of denim fabrics).
A market/ knowledge extension merger takes place between two firms of similar category whose sales does not overlie but may get bigger by the geographical and manufactured goods market.
Conglomerate merger takes place between firms, which are not related in business activities. The main purpose of amalgamation is to make proper use of financial resources, diversification of risk in association with a synergy of managerial functions.
There are a number of motives, which are associated with mergers and acquisitions. These motives range from economies of scale to managerial motives.
The theory of differential efficiency focuses on the differential efficiencies associated with different management of different organizations. Kolev et al. (2012) pointed out that there is a positive correlation between corporate efficiency at the managerial level and the sale price of dividends of that company. This clearly means that if a management of a company is poor, market price of shares of that company can definitely be low in comparison to the other companies of the same industry. This difference in share prices of the companies depicts that there is a chance of potential capital gain if the management of the company is transferred to a more efficient hand.
Types of Mergers
The inefficient management theory is associated with differential efficiency theory. Takeover is considered as the effort exerted by the shareholders of the acquired company to control the management of the company. Sometimes, managers are faced with a problem of abandoning their existing strategies, even when these strategies are not effectively contributing to the growth process of the company. Whenever the need for restructuring is overlooked by the higher management, the capital market via the market for corporate control comes into action for the purpose of rescue (Krishnan and Masulis 2013). The target company’s shareholders pass on the control to the more competent management by taking over the market.
There are some other motives as well; these are operating synergy, pure diversification, agency problems, market power and so on.
The inclusive study on the topic of merger and acquisition has promoted that there are several competing theories which are highly influential for merger and acquisition. The most popular theories of merger and acquisition are disciplinary mergers theory as well as synergistic mergers theory.
1. Disciplinary Mergers Theory: The disciplinary mergers theory is highly focused with pursuing the objectives by the firm’s managers in the context of discipline target rather than focusing on the maximization of profit of the firm. There are recognizable numbers of managers who are focused on meeting the goals rather than focusing on profitability. However, on the contrary it has been also observed that efficiency of the operational practices can be affected by the difference of focus. Therefore, the disciplinary mergers theory can have a greater adverse effect on the performance of the company. The acquirers mostly notice that despite of the poor performance of the organization, whether they owns a profitable amount of assets or not (Galpin and Herndon 2014). After that, the acquirers are focused on disciplining the performance of the respective performance in order to implement their assets to gain the necessary profits. This way the acquiring management body transforms the poor companies’ performance into their full potential with a proper discipline. This kind of merger and acquisition activities is noted as disciplinary mergers theory.
2. Synergistic mergers theory: The synergistic mergers theory is highly focused on combining the target of both enterprises along with improving their whole performance in a collaborative fashion. The acquirers are well accounted of the necessary complementarities between the organizations target as well as business (Gomes et al. 2013). The marketing scholars as well as managers have successfully identified that target of the business can enhance their collaborative performance in order to gain a distinct edge in respect to the overall profits along with revenue generation. In addition to that, the combined assets as well as efforts can be highly effective to gain the necessary competitive advantages in order to thwart the rivals.
There are various researchers who have tried to investigate the reason of failure of merger and acquisition. As stated by Goyal and Joshi (2012) more than 50% of the merger and acquisition fails due to cultural differences. According to Halkos and Tzeremes (2013), there are various reasons behind the failure of merger and acquisitions. They include economic fluctuations, incompatible facilities and technologies and cultural differences. Success of integration depends on the significance paid by both the companies and the strategic fit in the pre-acquisition stage. However, it can be found that strategic fit is given more importance at the cost of organizational fit in the pre-combination stage of the merger. As stated by Holburn and Vanden Bergh (2014), it leads to unsatisfactory outcomes of mergers and acquisitions. According to Ishii and Xuan (2014), organizational fit can be described as the match between administrative practices and the personal practices to acquire the target organization. On the other hand, strategic fit can be defined as the degree to which a target organization augments the acquirer’s strategy. Hence, it has significant impact on the non-financial and financial goals of the company. As acquisition requires combining various organizational activities, issues related with organizational requirements have to be considered. As stated by Mahesh and Prasad (2012), if during the period of acquisition, the organizational fits are considered then the outcome of merger or acquisition can be less effective. According to Park et al. (2013), integration can be focused as an important part that ensures success of merger. In the following paragraphs, the making and significance of HR integration has been discussed.
Integration between two companies can vary from total amalgamation to partial absorption or absolute independence of the main association. Thus, this description is determined that the level of integration straightly connects to the buying company’s objective. In most cases, integration takes place when two companies become a single new body on every stage (Goyaland Joshi 2012). In addition, it is possible that integration can be separated into some different parts and can be defined on precise levels.
Integration of people: This situation takes place when new employees and old employees have similar commercial culture and all the workers feel that they are a part of the organization.
Integration of systems: This situation takes place when all the employees are connected to single corporate system. It is also essential that the system is operating smoothly without disruption.
Integration of manufacture: This happens when construction processes are assimilated to expand an individual manufacture method.
After clarifying the meaning of integration, the important thing is to address an essential question, which is, “When does the procedure of integration actually begin?” As mentioned by Goyaland Joshi (2012), preparation for integration process starts when a target is being considered. He also mentions that there are five primary key elements of the process of integration known as strategic and financial objectives, transactions stage, transition stage and incorporation stage and evaluation (Halkos and Tzeremes2013).. It is evident that a firm’s approach to integration was based on two serious size of gaining.
In the contemporary market, the human resource management plays a very significant role in respect to the effective working of the merger and acquisition. In this context, the major processes which are included are assimilating employees of both acquired as well as merging companies into a merged entity (Phillips and Zhdanov 2013). There are two distinct sub processes of the entire HR integration process. The foremost sub process is highly focused on exercising culture developing, learning facilitation, new products training as well as communication. On the other hand, the second sub process is deeply concentrated on the organizational structure combination, service conditions, and reward system as well as employee relations. This particular process has effectively pointed out that most organizations failed to achieve success with the mergers and acquisitions business movement because of the negligible concern on the human resources factor of the strategic approach.
In the same context, the extensive study of merger and acquisition indicated there are vital ten success factors which are highly crucial for the growth of the organization at the time of merger and acquisition activities. These factors are classified into two different factors such as HR related factors as well as economic factors. The economic factors include search of acquisition, financial resources, due diligence, integration plan as well as synergies (Piesse et al. 2013). On the other hand, The HR related factors are management team, environment of learning, culture of the organization, communication as well as intellectual capital. In the current context, the most adverse effect of the merger and acquisition practices which has been identified is ‘Merger syndrome’. It is referred as the major reason of disappointing outcomes of the merger and acquisition. These adverse effects are personal preoccupation, rumor mongering, job performance distractions as well as psychosomatic reaction. These factors are highly handled by the Human Resource Management of the acquire organizations.
According to Angwin (2012), transition in the human resource management cannot be presented as an event. It should be represented as a process. There are tendifferent steps for completing a successful human resource transition. The steps are development of proper plan for the integration project, performing the human resource due diligence review, analyzing and comparing the difference between the compensations and different values, comparing and contrasting beneficial strategies and analyzing the values, developing strategies for integrating the employees by providing more values, determining the leadership styles, addressing the duplicity in organizational operations, preparing proper communicational strategy for the employees, defining the data requirements of the transition and developing employee retention strategy within the organization. Boschma and Hartog (2014) mentioned that quick decisions are important for the effective practices of the human resource transitions. It is extremely important to discuss the decisions regarding the transitions openly as group discussions. The effectiveness of the leadership style is the most vital factor of the human resource transition process. The time taken for the decision making and the way of communicating the decisions with the employees is the main fact behind the success of the whole transition process. The decisions should be applied immediately as per the requirement of the organization but have to be efficiently communicated and discussed with the employees in a convenient way. Contextual leadership style is able to build a community that can help develop a co-operative workforce within the organization (Cartwright and Cooper 2012). The leadership style must have to be supportive at the time of applying the transitions in the whole human resource management of an organization.
As Maksimovic et al. (2013) mentioned that, merger can reduce competition and provides the monopoly of power a company. With lesser competition and higher market share, a new organization can increase price for customers. For example, there is a merger developed between British Airways and BMI. As stated by Gomes et al. (2013), this merger provided British Airways higher opportunity to attain greater percentage of flights departure to Heathrow and it provides higher scope for the company for increasing the base price. As stated by Ferris et al. (2013), merger can increase market monopoly and can lead to less choice for consumers. It is undesirable in any market condition. According to Phillips and Zhdanov (2013), merger can lead to job losses. As stated by Grant (2016), job losses can occur due to aggressive takeover done by an “asset stripping” organization. Sometimes it has been found that firms can merge in order to get rid of the under-performing sectors of the organization.
As mentioned by Alluru et al. (2016) the importance of mergers varies from one case to another. Depending on the case scenario, the cost and benefits of each merger can vary. The desirability of merger can be analyzed by its capability to reduce market competition and its significance to improve economies of scale for any industry.
As mentioned Alluru et al. (2016) the importance of mergers varies from one case to another. Depending on the case scenario, the cost and benefits of each merger can vary. The desirability of merger can be analyzed by its capability to reduce market competition and its significance to improve economies of scale for any industry. There are several important advantages and disadvantages of mergers which are discussed below.
Research and development
In some industries, it has become crucial to invest in research and development in order to discover new products. As mentioned by Lindsay and Berridge (2012) merger can enable a company to become more profitable. It also enables a company to gain greater funds that can be invested on research and development. According to Cheng and Seeger (2012), merger is important in industries like drug research
Economies of sale
The major advantage of merger is that, it can give rise to potential economies of scale. As mentioned by Weber and Yedidia Tarba (2012), it is known as horizontal merger. According to Riad et al. (2012), horizontal scale can be quite extensive if the industry has high fixed cost. On the contrary, Kafouros and Forsans (2012) argued that, if merger becomes vertical, then the scope of economics becomes lower.
As stated by Reuer et al. (2012) in some industries mergers can occur in order to avoid duplication. For example, two car making companies can compete in the same country.
Regulation of monopoly
Sometimes a company can gain market monopoly power from a merger. However, it does not mean that a company will increase the price of products if it is sufficiently regulated by the government. As Zhou and Li (2012) stated, most of the governments have developed price control policies to limit the increase of price of a specific product. Hence, companies can gain benefits from the economies of scale and consumers do not have to face monopoly of prices.
As Maksimovic et al. (2013) mentioned, a merger can reduce competition and provide monopoly of power to a company. With lesser competition and higher market share, a new organization can increase price for customers. For example, there is a merger developed between British Airways and BMI. As stated by Gomes et al. (2013) this merger had provided British Airways higher percentage of flights leave to Heathrow and it provides higher scope for the company to set scope to set higher price.
As stated by Ferris et al. (2013) merger can increase market monopoly and can lead to less choice for consumers. It is undesirable in any market condition.
Decreasing job options
According to Phillips and Zhdanov (2013), a merger can lead to job losses. As stated by Grant (2016), job losses can occur due to aggressive takeover done by an “asset stripping” organization. Sometimes it has been found that firms can merge in order to get rid of the under-performing sectors of the organization.
As Sakas et al. (2014) stated external factors are the events that take place outside a company. These factors are tough to predict and control. According to Jadvar and Colletti (2014), external factors can be more dangerous for a company given the fact that these factors are unpredictable. Some examples of external environment are such as economic fluctuations, competitive revelry, political factors, government regulations and the industry analysis. As Li and Liu (2014) mentioned, with the help of SWOT analysis and Porter’s 5 forces, the external environments of Daimler-Chrysler merger has been analyzed.
Power of buyers
Buyer’s power of the company was high as modern lifestyles had a propensity to live in convenience. As Wagner and Hollenbeck (2014) stated that, due to the increase recession care buyers have become more price-sensitive. They became more attracted towards eco-friendly cars to save money for diesel and petrol. As stated by Hill et al. (2014), consumers are a large portion of the industry’s output, and it is for this reason that the European car industry became environment conscious.
Power of suppliers
Supplier’s power for the automotive industry was low, as there were many suppliers in the car market of Europe.
Threat of new entrants
The threat of new entrants in the automotive industry was low, as the barrier of market entry was high due to the high requirement of financial resources for R&D, in order to make product differentiation.
Threat of product substitutions
The threat of product substitution for the company was medium. Europeans can substitute automobiles to other transportation such as Bicycles and Euro trains. As Pervaiz and Zafar (2014) stated, customers on longer distance travel often use low cost airlines and railways.
As Cartwright (2012) stated that, competitive rivalry for the global automotive industry was high. There are various competitors such as AUDI, BMW, Toyota, Porsche, and Hyundai who are able to give tough competition to the Daimler-Chrysler merger.
Daimler-Chrysler merger combines two strong companies. Gottlieb Daimler had established an engine car making company named as Mercedes-Benz. As stated by Maksimovic et al. (2013) the Daimler-Chrysler merger had become a leader in innovation within 1 year of starting a business. Strong existing product brands of Mercedes and increasing market share of both strong companies helped the merger to gain record revenue in the form of unique and individual business entity.
Daimler-Chrysler merger combined two different cultures. The management process of organizing, planning and controlling of the company Daimler-Benz was more efficient and safe. However, the management of company Chrysler is known for its risk taking approach. Daimler-Benz emphasized on design, quality and engineering and after sales service. On the other hand, Chrysler was more focused on developing high volume and low cost car manufacturing and product distribution (Pervaiz and Zafar2014).
Due to these contrasting cultures of these two merging organizations, employees became more confused and their job satisfaction level was also decreased. As stated by Zhou and Li (2012) , employers were leaving the company at a high rate, as they were not able to cope with the new organizational culture. It is harder for the new management team to inspire employees about the mission and vision of the organization. It has been found that, lack of governance is another weakness of the Daimler-Chrysler merger. As Hill et al. (2014) stated Juergen Schrempp and Bob Eaton did not follow a coordinated course of action during the phase of transition of the merger. It has been found that the low level of contact between two top managements decreased the efficiency of the Daimler-Chrysler merger. As Li and Liu (2014) mentioned, American dynamism faded under the subtle of German pressure. As Sakas et al. (2014) mentioned that a strong cultural and language barrier of US and Germany is the major weakness of the organization.
The Daimler-Chrysler merger had the opportunity to improve quality of production and engineering skills of employees. The company should have tried to look to increase distribution into the key markets of UK, Australia and Asian countries like India and China. The company also needed to look for new distribution channels to increase sales performance of the organization
The major threats of the company were that, it did not have an appropriate brand corporate identity, which decreased the brand loyalty of the company. As Phillips and Zhdanov (2013) stated, the amount of competition in the automotive industry had been increasing rapidly, as most of the car manufacturing companies increased investment on research and marketing of hybrid automotive. It was one of the major threats for the Daimler-Chrysler merger.
As Li and Liu (2014) stated, it is the role of government to stimulate the car industry and yet impose control over the use of cars. It helps governments to develop an acceptable infrastructure and analyze the demand of car making industry among people of the country. It has been found that governments of most of the countries support car making companies, as they are a good source of job vacancy. The US government saves Chrysler with help of special Federal loan program (Cartwright 2012). As a renowned car making company, the Daimler-Chrysler merger has to face national government issues related with security policy and environment policy.
According to Phillips and Zhdanov (2013), during the time of merger, if organizations try to exist, they have to grow fast. Hence, the merger can become successful. The basic philosophy of merger is “eat or get eaten.” It has been found that price of cars in European countries are falling due to decline in the value of Euro. This price fluctuation increases the amount of merger and acquisition. As stated by Hill et al. (2014), due to the price fluctuation, Daimler-Chrysler merger had to face downfall in the sales. Increase of competition in the automotive industry and hike of the fuel price became obstacle for the success of the merger.
As stated by Sakas et al. (2014), during the last century, cars have transformed the lifestyles of peoples in developing countries. It provides a new degree of freedom to people and new opportunities for work and leisure. Daimler-Chrysler had mainly positioned itself in three major automotive markets of Europe, North America and Asia. As stated by Cartwright (2012), rich population, who are quite fond of new car models composes these three markets. The company developed a large range of products that can attract peoples from all the societies.
Daimler-Chrysler had to take care about the technological changes that take place in the automotive industry in the last decade. The company had to invest a large amount of money in technology to take care of the environmental issues and to secure the customers as well. The company had to think about developing vehicles that run on bio-fuel or hybrid fuel. In order to become a sustainable and environment friendly organization, Daimler-Chrysler had to look to develop electric cars or bio-diesel cars.
In this section it has been discussed how the resources and capabilities of two organizations assist the merger to gain strategic advantage in the merger.
The company Chrysler planned a market test that adequately revealed the value of the company Chrysler. It is known as sub rosa plan. The government of US asked the court to give permission to the company to be marketed with multiple bankruptcy claims. However, in the year of 2009, the US treasury and the US auto task force had rejected the stand-alone viability plan. The auto task force has announced to provide US $ 6 billion federal loan to the company Chrysler. In order to improve the financial condition, the company had made alliance with Mercedes. It was known as Daimler-Chrysler merger. During this merger the company Chrysler had restructured its debt and had to negotiate with the UAW and CAW unions in order decrease benefits of employees and to enhance productivity.
On the other hand, the marketing mix of the company Mercedes is one of the best. As stated by Pervaiz and Zafar (2014), Mercedes is recognized as one of the most recognized global automobile companies. Effective development of advertising and marketing strategies helps the company to become the leader of the competitive automobile industry. The company is currently producing a wide range of advanced cars, trucks, cars and buses. The company has manufacturing facilities all over the world. As stated by Li and Liu (2014) product is the strongest P in the marketing mix of company Mercedes. The company has developed this merger in order to gain higher market share globally.
The company Chrysler had to face a net loss of US$ 1.6 billion. The problem of the company continued till 2008 due to the declining sales (Hill et al. 2014). For this reason, in the year of 2008, General Manager of the company Chrysler started the discussion about the merger with Mercedes. In the year of 2008, it has been announced that the company requires US $4 billion in order to continue its operation. In the year of 2009, the company sought US $7 billion financial aid from the government of US. The main reason behind the merger for the company Chrysler was that the sales figure of the company is declined by 54%. On the other hand every product of Mercedes helped to meet the unique needs and requirements of individuals. Mercedes also introduced a flexible finance offering to improve the experience of customers. This finance was known as STAR finance. As stated by Cartwright (2012), it includes options such as bullet finance, step-down finance and step-up finance. It helps the company to improve its productivity and profitability continuously. When the company Mercedes merged with Chrysler it tries to implement STAR finance within the business operation of the new emerged company.
Operation and logistics
Chrysler group developed a logistics operation plan to improve its business operation. The company has approached the Canadian Pacific Expressway division to use their new launched intermodal system that runs between Detroit and Montreal. The company developed a preliminary market study, for checking financial viability of the company’s logistics program. When the Daimler-Chrysler merger is developed, a small team was developed to investigate the delivery operations in the standpoint of Daimler-Chrysler. The company has used just-in-time approach. The company Chrysler has taken help from a just-in-time coordinator from a Mercedes plant located in Germany. The just-in-time coordinator works at Brampton as a part of the ongoing information program for the Daimler-Chrysler merger.
The company Chrysler was an American multinational automaker company was first developed as the Chrysler Corporation in the year of 1925 (Pervaiz and Zafar2014). The company faced some issues related with productivity and profitability due to economic fluctuation during the year of 2007. While the company makes merger with Mercedes, the company has developed some major changes in the human resource management system.
The company has developed an effective development plan in order to attract more skilled and talented employees towards the company. As Cartwright (2012) mentioned the career planning process of the organization includes hiring planning and performance planning. The company has also developed various innovative activities that can help find out the skill, ability, experience and values of employees (Phillips and Zhdanov 2013). It helps to improve self-awareness, self-concept and career improvement plan for employees. The newly merged company also took care of career management plan for all employees. As stated by Pervaiz and Zafar (2014), it includes employee development, training programs and seminars. The company also takes the help of podcasts, screen capture, seminars and online learning activity to improve the skill and knowledge level of employees. As stated by Li and Liu (2014) the company Mercedes hires employees from diverse cultures. The management of Mercedes provided empowerment to their employees; so that they could take their own decisions in critical conditions. The management of Mercedes prohibits any kind of discrimination. When Mercedes merged with Chrysler, it tries to bring all those ethical practices in the human resource department.
Table 1: Proposal for implementation of Merger and acquisition strategies for Daimler-Chrysler merger
(Source: Created by author)
Daimler-Chrysler merger combined of two different cultures. The major differences of culture mostly regulated during the function team-orientation. Considering the management process of organizing, planning and controlling of the company, Daimler-Benz is more efficient and safe than the respective merger. However, the management of Chrysler is known for its risk taking approach. Daimler-Benz emphasizes on design, quality and engineering and after sales service. On the other hand, Chrysler is more focused on developing high volume and low cost car manufacturing and product distribution
Daimler-Chrysler had to take care about the technological changes that take place in the automotive industry in the last decade. The company should have invested a large amount of money in technology to take care of the environmental issues and to secure the customers as well. The company could think about developing vehicles that run on bio-fuel or hybrid fuel in order to become a sustainable and environment friendly organization. It can be said that, Daimler-Chrysler could focus to develop electric cars or bio-diesel cars.
If the organizations try to exist, they have to grow fast. Hence, the merger can become successful. The basic philosophy of merger is “eat or get eaten”. It has been found that price of cars in European countries are falling due to the fall off Euro. This price fluctuation increases the amount of merger and acquisition. Owing to the price fluctuation, Daimler-Chrysler merger had to face downfall in the sales. Increase of competition in the automotive industry and hike of the fuel price have become obstacle for the success of the merger.
From the traditional sense of legal concept the merger is considered as the consolidation of two different business entities which can be focused to transforming into one single business entity in the global market. At the same time, the acquisition refers to the legal arrangement where any given organization controls the ownership of the equity interests, assets as well as sticks of the other business organization. However, the respective two basic business movements both are deeply focused on the consolidation of the entire organizational assets, liabilities along with strategic activities. Moreover, the company should also be developing an effective change management plan in order to facilitate the merger and acquisition process for both the companies. The career planning process of the organization includes hiring planning, performance planning. The company also has developed various innovative activities that can help to find out the skill, ability, experience and values of employees. It would be helpful in improving self-awareness, self-concept and career improvement plan for employees. The newly merged company also takes care of change management plan for all employees. The plan should include employee development, training programs and seminars. The company should also be taking help of podcasts, screen capture, seminars and online learning activity to improve the skill and knowledge level of employees. The company Mercedes hires employees from diverse cultures. The management of Mercedes should be providing empowerment to their employees; so that they can take their own decisions in critical conditions. The management of Mercedes prohibits any kind of discrimination. When Mercedes merges with Chrysler, it should be trying to bring all those ethical practices in the human resource department. Daimler-Chrysler has to take care about the technological changes that take place in the automotive industry in the future.
In this assignment, the importance of merger and acquisition has been discussed. In order analyze the advantages and disadvantages of merger and acquisition the case study of Daimler-Chrysler has been selected. The desirability of merger can be analyzed by its capability to reduce market competition and its significance to improve economies of scale for any industry. Merger can enable a company to become more profitable. It also enables a company to gain greater funds that can be invested on research and development. It can give rise to potential economies of scale, which is known as horizontal merger. Horizontal scale can be quite extensive if the industry has high fixed cost. On the contrary, if a merger becomes vertical, then the scope of economics becomes lower. In some industries, mergers can occur in order to avoid duplication which is applicable for two car making rival companies in the same country. It has been found that sometimes a company can gain market monopoly power from a merger. However, it does not mean that a company a higher the price of products if it is sufficiently regulated by the government.
There are some disadvantages of merger and acquisition which has also been discussed in this assignment. The major disadvantages of merger and acquisition are higher price, less choice, decreasing job options. Merger can reduce competition and provide monopoly of power to a company. With lesser competition and higher market share, a new organization can increase price for customers. Mergers can increase market monopoly and can lead to fewer choices for consumers. It is undesirable in any market condition. Mergers can lead to job losses. Job losses can occur due to aggressive takeover done by an “asset stripping” organization. Sometimes it has been found that firms can merge in order to get rid of the under-performing sectors of the organization.
In order to analyze the advantage and disadvantage of Daimler-Chrysler merger, an internal and external analysis has been done. In the year of 1998 World’s two leading car manufacturer companies agreed to combine their business. They claimed it to be “merger of equals.” This merger provided a greater scope of formingthe large automobile company, which ranked third in terms of revenues. However, it has been found that the German and American styles of management differed drastically. Merger and acquisition takes place in order to realize the synergies between two or more organizations. However, Daimler-Chrysler merger failed to understand the synergies that were expected from the merger. It has been found that cultures of two organizations differ highly. Chrysler encourages creativity while Daimler believes in methodical decision-making. There is a high disparity found in the company Chrysler. While Daimler-Benz dislikes huge pay disparities. Chrysler believes in flat structure while top-down management approach is used in Daimler-Benz Company. At first, German management granted Chrysler the freedom to do their work according to their will. They wanted to use the efficiency of Chrysler. However, majority of the key players left the company within 1 year and the remaining employees became demoralize and de-motivated.
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Case 1: Daimler–Chrysler Merger: a Cultural Mismatch
In May, 1998, Daimler-Benz1 and Chrysler Corporation, two of the world's leading car manufacturers, agreed to combine their businesses in what they claimed to be a 'merger of equals'. The DaimlerChrysler (DCX) merger took approximately one year to finalise. The process began when Jurgen Schrempp3 and Robert Eaton4 met to discuss the possible merger on 18 January 1998. After receiving approval from a number of groups, the merger was completed on 12 November 1998.
Journal of European Industrial Training
15TH INTERNATIONAL PUBLIC RELATIONS RESEARCH CONFERENCE - USING THEORY FOR STRATEGIC PRACTICE THROUGH GLOBAL ENGAGEMENT AND CONFLICT RESEARCH March 8-10, 2012. Li, Z.C. & Spaulding, C.A. (eds.)
The paper analyses intra-corporate conflict, based on the case study of the DaimlerChrysler merger. This analysis is then broadened to compare PR and its contexts in Germany and the USA. The authors apply the International Corporate Communication Compass to the DaimlerChrysler deal to show what advantages could have been gained by using PR theory to map out areas of conflict and harmony in a cross-cultural corporate merger, showing how such theory could be applied to similar situations in the future.
This case study concentrates on comparing the German and U.S. corporate governance systems using the recent experiences of DaimlerChrysler AG and its chairman, Jürgen Schrempp, as reported in the international business press to illuminate differences in investor relations communications practices, in particular. The recent experience of DaimlerChrysler, because of its highly visible role as a " trailblazer " in the U.S. financial markets and due to the difficulties it has encountered, presents an excellent example for analysis of the governance issues inherent in a German-American direct foreign investment situation. Gaining a better understanding of the problems encountered by DaimlerChrysler should allow European business leaders to proactively design their own communications strategy including identifying potential pitfalls for their firms. Without this understanding, European firms could be discouraged from continuing to take advantage of the benefits of international financing and investment available from capital sources in U.S. stock and bond markets and business expansion opportunities in the U.S. product and service markets.
Journal of World Business
Negotiations and Mergers-Daimler & Chrysler
Kwesi Atta Sakyi
Negotiations are inevitable in business and in every facet of life. Often parties to a negotiation come to the negotiating table with wrong assumptions, unrealistic expectations, and what academics label as blinded awareness and focus failure because they fail to realise the import of information which is made available and which can lead to negotiation success. Lack of listening properly and being magnanimous at the negotiation table causes negotiation failure. Negotiators often engage in stereotyping, resort to heightened emotions, and provocation of adversaries through bullying, arm-twisting and logrolling and horse trading tactics. Often negotiators fail to take cognizance of contextual and extenuating circumstances because they seek selfish and parochial interests in a winner-take all, zero-sum scenario where they assume they are dealing with a fixed pie situation, and their axiomatic positions cannot be compromised. This essay on negotiation failure regarding the Daimler-Chrysler merger failure draws parallels from history and geo-politics, citing the Cold War era standoff, Shuttle diplomacy regarding the Strategic Arms Limitation Treaties (SALT), the Oil-for-food UN-Iraqi deal, and the Israeli-Palestinian imbroglio as typical negotiations some of which were successes and others failures. The author of this essay makes the assumption that negotiation is not a one-off process but a continuous work in progress of establishing long term rapport, good will, and building bridges of friendship and investment in long term binding bonds of mutual coexistence.
A study of impact of corporate culture on performance of International Mergers in Acquisitions using a number of caselets
The M&A Collection Themes in Best Practice : Themes in Best Practice
Haris Pratama Loeis
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Daimler-Chrysler Merger Case
Rationale of a failure, research paper (undergraduate), 2008, 20 pages, grade: a-, nicolas martelin (author), table of content.
The rational for a merger, the failure
Pre - Merger Situation: Daimler
Pre - Merger Situation: Chrysler
The Meeting of Minds
A Spectacular Failure
The rationale for the failure, issues related to cultural di ff erences
Cultural Issues Introduction
Cultural Aspects of the Corporate Structure
Cultural Aspects of the Leadership Style
Cultural Aspects of the Company Values
Conclusion & Recommendations
Conclusion of the case study, recommended course of action
Pre-merger situation: daimler.
In 1926 was founded in Stuttgart, Germany Daimler-Benz AG, a manufacturer of automobiles, motor vehicles, and engines. It is already the result of a merger between Benz & Cie (founded by Karl Benz) and Daimler Motoren Gesellschaft (founded by Gottlieb Daimler and Wilhlem Maybach). Both companies agreed that, from the actual date of the merger on, each and every car produces in Daimler-Benz factory would use the brand name “Mercedes-Benz”, which was until then only the name of a series of cars from Daimler Motoren Gesellschaft. “Daimler-Benz” was not use as a brand name for the very simple reason that the name of Daimler as a brand name of automobiles had been sold by Daimler Motoren Gesellschaft in 1900 (when its co-founder, Gottlieb Daimler, died) for use by other companies. 
The new entity rapidly made its name in motor sports as its cars were regarded as high end race automobiles.
During World War II, the company dramatically improved its technology by creating a series of aircraft, tank, and submarine engines.
Mercedes became then synonymous with high quality and luxury and the company Daimler-Benz got successful with the European upper-class.
Pre-Merger Situation: Chrysler
The roots of Chrysler Corporation goes back to 1925, when the American car manufacturer Maxwell Motor Company is reorganized into Chrysler Corporation by Walter P. Chrysler (“A brief look at Walter P. Chrysler”, WPC News). Walter Chrysler launched its first car with the name “Chrysler” tagged on it by designing it as a well-engineered automobile but at a fairly affordable price. Manufacturing well-engineered cars while keeping on cutting prices became Chrysler’s bottom line.
With brands like Dodge, Jeep, Plymouth, and - of course - Chrysler, the company was viewed as the one of the main cars provider for the American working and middle class, along with General Motors (GM) and Ford. With these two other American car manufacturer, Chrysler Corporation made up the “Big three” group: the three biggest automobile manufacturer in the United States (U.S.).
Headquartered in Auburn Hills, Michigan, the Corporation was - back in the mid-1990s - nothing less than the most profitable car producer in the world (“The DaimlerChrysler Merger”, Tuck School of Business at Dartmouth, 2002, no. 1-0071). This number one position was then maintained by the increasing sales of trucks, vans, and large sedan cars in the United States. In 1997, the company even reached a peak in terms of market shares in the U.S., at an impressive figure of 23%.
Having said that, business has not exactly been a bed of roses for the Chrysler Corporation. Somewhere along the line, it had faced four times bankruptcy between World War II and 1990, and its boom-bust revenue flow pattern had earned it a “come-back kid” reputation (“The DaimlerChrysler Merger”, Tuck School of Business at Dartmouth, 2002, no. 1-0071).
From the outlines of each company’s situation stated above, what could have made them merged together? At first sight, not much. But if you get closer to each situation during the few years prior to the merger, all of a sudden, a merger makes sense.
In 1997, Chrysler was at the top of the car industry in the U.S., with a full range of best-seller cars within its products range. However, the same year, Chrysler CEO Bob Eaton foresaw some obstacles coming up on the company’s development in America. "I think, Eaton said, there may be a perfect storm brewing around the industry today. I see a cold front, a nor'easter, and a hurricane converging on us all at once (“Taken for a Ride: How Daimler-Benz Drove off with Chrysler”, Vlasic, Bill and Bradley Stertz, New York: Harper Collins, 2001, p. 174)”. “The cold front was chronic overcapacity, the nor'easter was a retail revolution that empowered buyers, and the hurricane was a wave of environmental concerns that threatened the very existence of the internal combustion engine (“The DaimlerChrysler Merger”, Tuck School of Business at Dartmouth, 2002, no. 1-0071).
Even though the company from Auburn Hills was doing pretty good within its main market (the United Sates), owning almost one fourth of the whole American market thanks to its Sport Utility Vehicles (SUV), trucks, and minivans, it lacked a real presence in foreign markets. And with the rather pessimistic forecasts of CEO Eaton for the U.S. market, it was clear that Chrysler had to extent its international reach.
In the meantime, in Germany, Daimler-Benz faced the reverse problem: while the manufacturer from Stuttgart was then the world’s most profitable car maker (“The DaimlerChrysler Merger - One Company, Two Cultures”. Tobias Wolf. Northeastern University Boston, 2005), and despite an internationally well-known brand - Mercedes -, its luxury vehicles had captured less than one percent of the American market in 1997 ("Daimler-Benz AG" Standard & Poors Stock Reports. New York: Standard & Poors, Inc., July 21, 1997).
Besides, “automobile analysts were expecting that only ten out of the 30 car makers could survive in the increasing competitive global market and that companies either had to seek for a merger partner or would become an acquisition target in the long run. According to analysts, sales of at least four million cars would be necessary to become one of the future top players in the automobile business (“The DaimlerChrysler Merger - One Company, Two Cultures”. Tobias Wolf. Northeastern University Boston, 2005)”.
With, on one hand, a company (Chrysler Corporation) willing to tackle the European market, and, on the other hand, Daimler-Benz eager to sell more cars in the U.S., a merger between the two companies had some sense. Moreover, besides the “simple” geographical match, was also a good product match as Chrysler produced SUV, trucks, minivans, and large sedan cars, while Daimler-Benz focused on luxury vehicles. Eventually, the extremely competitive situation of the industry, would make it difficult for a company to survive on its own in the long run. In other words, it seemed to be a logical fit.
 Data retrieved from Daimler.com, “Videocast” and Wikipedia.org “Daimler-Benz”.
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