Daimler-Chrysler: Post Merger News Analysis

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  • Topic: Germany, Daimler AG, Chrysler
  • Pages : 5 (1763 words )
  • Download(s) : 190
  • Published : April 22, 2013
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1.The merger was expected to result in synergy from which attributes of each organization?

With the merger, both profitable automobile companies, will have the opportunity to benefit from the potential of each other. They had both identified opportunities to increase sales, to create new markets for both while being able to expand their markets in new countries, to reduce purchasing costs and to realize enconomies of scale. The synergy would drive to product integration and ensure sharing of innovation, knowledge, technologies and ideas. At the time of the merger, Daimler Benz had close to 1% of the American Market, which Chrysler could aid them with this problem. Chrysler also wanted to enter into the European market, which Daimler Benz could help sell Chrysler products at their distribution centers in Europe. Mutually, the two companies expected to exploit on retail sales, purchasing, distribution, product design and research and development. And last but not least, Chrysler’s Dream Team was an attribute that could be beneficial to the merger. It could work as an innovative addition to Daimler Benz to help them find ways to expand a limited Daimler Benz market.

2. What were the issues/problems encountered after the merger.

One of the main problems with the merger was the cultural clash between management and work styles. Even thou they had fairly equal number of members of the board of management, the integration efforts lacked between the Americans and the Germans. They clearly had differences in management styles, processes, cultures and work styles, which resulted in an abyss between the two. Other issue encountered was the mocking and thought from Daimler Benz that Chrysler was low quality and poor in technology. This rejection reflected in a tangible manifestation of the growing separation when Daimler refused to offer Chrysler vehicles at their distribution centers for fear of ruining their image. This had been an essential key in planning for Chrysler to enter into the Europe market. Although they were clear that strict guidelines segregated the Daimler and Chrysler brands, synergies were expected from joint administrative functions, market research, vehicle and spare parts logistics, and wholesale operations. With this rejection, this wasn’t happening. They needed to work upon effective communication and overcome their cultural differences.

3. What went well with the merger?

Although this companies underestimated the level of cultural difficulties they had to face in order to be successful, and in 2001 the merger resulted in the biggest lost in German business history, the beginning of the merger was well received by the public. Over the first years, the share price from DaimlerChrysler rose significantly, indicating that the public speculated that this merger could be good for all parties and the new company would be considered to have the potential to revolutionize the automobile industry. Also, management at the top level agreed and was on board to making the merger be successful. Management starting sharing plants and parts as to saving huge amounts of money. Furthermore, management agreed on cutting expenses such as fixed manufacturing cost and material costs. By the nine-month period, net income and revenues had increased 12 per cent. Operating profit had improved by 15 per cent. Clearly, the results are attained were higher than expected, therefore, this were some beneficial aspects of the merger. 1. Discuss the historical background that has most influenced Germany.

It is said that countries, much like individuals, are influenced by their experiences. Therefore, one could say that the most influential historical events that have affected Germany and transformed the country to what it is today are: 1) its role in the first and second World Wars, 2) related periods of extreme inflation, and 3) the “economic miracle” phenomenon of the post-WWII reconstruction of what was then...
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