Taking into account the changing strategic and competitive environmental of the automobile industry in the 1990`s, identify and evaluate Daimler-Benz and Chrysler objectives in the merger. How well was the pre-acquisition planning handled? It has been suggested that problems in managing the post-merger integration of two companies are a common cause of corporate merger failure. In relation to DaimlerChrysler, what were the main successes and problems encountered in its post-merger integration?.
Abstract: The merger of Daimler-Benz with Chrysler Corporation created one of the largest company in the world. The case explores a number of issues in the post-merger integration process between Daimler-Benz and Chrysler and, to a lesser extent, also Mitsubishi. Nine years later Daimler decided to divest its Chrysler operations and sell 80% of Chrysler's stock to the private equity firm Cerberus.
The DaimlerChryler case gives an overview of the merger between DaimlerBenz AG and Chrysler Corporation. The case focuses on the post-merger integration and the various problems faced by both the companies. It also explores the enormous cultural differences and the management style and the problem that have been found to achieve the synergies required. The merger ,the biggest industrial merger in history before 1998, created the world's third largest automative company in terms of sales. DaimlerChrysler A.G. came to life as a corporation after the merger of daimler-Benz
DaimlerChrysler A.G. (DC) came to life as a corporation after the merger of Daimler-Benz and Chrysler in 1998. Since then it has continued producing largely the same products and services the two companies separately produced before. Although the merger was hailed as a breakthrough achievement at first, and the stocks rose high immediately afterwards, the corporation has seen some serious troubles since. Many segments are doing quite well, but there are also areas of serious concern, and the current under-performance of the Chrysler Group is a main irritant for the corporation as a whole. By early December 2000, the time of our investigation of DC, the stock-prices had been falling more or less steadily since January 1999.
AN OVERVIEW OF THE CORPORATION
DaimlerChrysler was the world’s fiftht largest car manufacturer. It produces a broad range of transportation products such as cars, commercial vehicles, aircraft for civil and military purposes, railway systems, as well as services in finance and information technology. On business segments, the breakdown is the following: Mercedes-Benz passenger cars and ‘smart’ cars, Chrysler Group, Commercial Vehicles, Services, Aerospace and others. DC had revenues of 150 billion euros for 1999, compared with 131.8 billion for 1998 with a net income of Euro 4.8 billion and 434,000 employees. Annual production reached approximately 4.8 million vehicles included Maybach, Mercedes-Benz, Chrysler, Jeep, Dodge and Smart. DaimlerChrysler also become the world's largest truck producer, with its commercial vehicle brands which consist of Mercedes-Benz, Freightliner, Sterling, Western Star and Setra. In 1999, 52 percent of DC’s revenues were generated in the US, 19 percent from Germany, and 14 percent from other European Union countries. Daimler-Benz
This segment’s strength lies in a high level of quality, safety, comfort, as well as innovative design. An example of the latter is the very small ‘smart’ car, introduced in 1998 as an answer to new demands in urban mobility and environmental friendliness. This segment contributed about 24 percent of DC’s revenues for 1999. Audi, BMW, as well as Ford, Lincoln, Volvo and others compete in this segment. The core competence of the company are focused on development of car engines, high-valued and technically advanced cars. The target market is an up-market brand, with high-end users that focus on the luxurious trait...