Case Study - “Daimler and Chrysler: Lessons from a Merger”.

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CASE STUDY - “Daimler and Chrysler: lessons from a merger”.

This case study is about the merger occurred in 1998 between two big companies in the auto industry: German company Daimler-Benz and American auto manufacturer Chrysler Group. At the end, this merger appeared to be a failure because of different types of problems. Chrysler benefited from Mercedes while benefits to Daimler were harder to find, so that Daimler decided to sell 80% of its stake in Chrysler for just 7.4 billion dollars.

They were two companies from different countries with different languages and different styles that came together although there were no synergies. First of all, these firms operated in the same sector but they had different customers, goals and cultures so there was a lack of common vision and values. Daimler was a luxury brand based on excellence and superior engineering that wanted to enter new markets and develop new products, especially by raising its standing in the North American auto market. On the other hand, Chrysler addressed to “blue collars” purchasers and decided to look for a partner being aware of the overcapacity in the industry. Originally, the plan was for Chrysler to use Daimler parts, components and even vehicle architecture to sharply reduce the cost to produce future vehicles. The operation started with the intention to realize a “merger of equals” but it ended up being more like an acquisition as Daimler strove to impose its own position, even though Chrysler was financially stronger at that moment.

In addition, they had different structures, reporting systems, travel polices, dress codes, level of salaries, decision making processes and working hours. Specifically, Daimler had a tall structure, with high power distance, formal dress code and meetings, annual reporting system, lower salaries of executives and fixed schedule; Chrysler instead had a flat structure, with lower power distance, informal dress code, quarterly reporting system,...
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