A Decade of Global Strategic Challenges Leads to Divorce in 2007
The DaimlerChrysler merger of 1998 was accepted with anticipation of greatness by analysts, stockholders, and the auto industry. Both companies had a global presence and combined heralded a revenue of 154 billion and 5.6 billion in profit, combined. However, this merger ended up in divorce due to cross-cultural problems, production and manufacturing glitches, competition, lack of demand, , and incompatible brand portfolios.
On the Hofstede dimension, Germans rank very high on individualism. They are conservative and value privacy, politeness and formality. Individualism is not conducive to a combined effort. This need for individualism as a culture affected the overall efforts to combine knowledge and skills. Daimler employees were competitive and resented the Chrysler division. Efforts and goals were not combined and there was a lack of synergy. One of the reasons for the merger was to combine their operations, share R&D know-how and joint sales. As a result of the lack of cooperation there were production manufacturing glitches. Manufacturing was not properly streamlined. Both companies had very different methods of manufacturing and production. There was no learning from one another or implementation of each other’s best practices.
Competition in the auto industry is always tense. Toyota, for instance was the most efficient manufacturer and quality and consumer satisfaction. DaimlerChrysler’s goal was to become a major global player. These goals were not realized duet other challenges Daimler branded vehicles faced in maintaining their position as a luxury and quality tradition and Chrysler facing issues of safety. Chapter 7 lists the guidelines for a successful alliance. The number one factor is choosing a partner with compatible strategic goals and objectives with whom the alliance will result in synergies through the...