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Daimler & Chrysler

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by

Seán Ó Ciardha

on 9 October 2013

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Transcript of Daimler & Chrysler

Daimler & Chrysler
A match made in Hell?
1885 - Daimler & Maybach join
1926 - Daimler - Benz
Ranked #17 Globally

Founded 1925
Founded on high-tech with low price
Ranked #25 global by 1998
1998 Daimler-Mercedes SWOT
Strengths
One of world's strongest
Luxury leader - quality, engineering, comfort
Presence >200 Countries
Weaknesses
Low volume = supplier exchange innovation
R&D cost on turnover





Opportunity
Broader market scope then comp.
Transport Company, not just cars
Chrysler purchase = savings?

Threat
Smart car VS japanese competition
Traditional rivalries, VW and others expanding
Rishabh Joshi
Anand Jodh
Sean O Ciardha



Target
Luxury Market
Need for performance
Core Competencies
High-tech
Performance Engines
Core Competency
Advanced R&D
Desirable but affordable cars
Target
Mass market
Families
Daimler - Mercedes SWOT Cont.
Opportunity
Broader market scope then comp.
Transport Company, not just cars
Chrysler purchase = savings?

Threat
Smart car VS japanese competition
Traditional rivalries, VW and others expanding
Daimler - Mercedes SWOT Cont.
Chrysler 1998 SWOT
Strengths
Strong brand position & design
Cost Effective - buy tech from suppliers
Design to market time industry leader
Weakness
Smallest of "Big 3"
Twice close to bankruptcy
Position weakening in market
Chrysler SWOT Cont.
Opportunity
Quick adaptability - cars/trucks only
Fast follower in technology


Threat
New distribution systems - ecommerce, mega dealer
Decline of US Economy, "Big 3" & Japanese in better position to weather the storm
The Merger
1998 DB & Chrysler agree to combine
"merger of equals"
DB-Chrysler became:
3rd in rev, market cap & earnings
5th in Sales
Why Merge?
Chrysler's Reasons to merge:
Reduce purchasing/R&D costs (1.4bill)
Gain international market share

DB Reasons to merge:
Improve efficiency (Lexus)
Chrysler cheap/quick R&D
Chrysler US dealership reach (DB <1% US share)
"Disastrous Failure"
Chrysler
• Flat structure
Creativity
• Egalitarian relation between staff
• Performed little paperwork and liked to keep their meetings short
• Favored fast paced trial and error
• American CEOs rewarded handsomely
Employees uneasy with each other
Schrempp claims DB aqcuired Chrysler
Dec2000: DaimlerChrysler shares lower than Daimler's pre merger
Chrysler 500mill loss in Q3 2000
Chrysler execs resign/replaced with German counterparts
"Stepchild" not partner
Daimler
• Hierarchical
• Methodical
• Centralized decisions
• Lengthy reports
• Concise, detailed planning
• Disliked huge pay parities

Culture
Clash
"Equals"? NO
Product Clash
Product Clash
Daimler
Disciplined engineering
Uncompromising quality
Chrysler
Masculine, risk taker
Cost effective
Results
Failure to truly merge beyond admin level
Cultural imbalance
Difficulty defining the Daimler-Chrysler Brand
Recommendations
Communication channels must be always open
Use of a common language
Training of employees to understand the cross-cultural differences
To recognise the differences in the corporate structure and management styles
Development of Cultural Intelligence
Equal representation of both the companies in the board
Never stereotype
Conclusions
International M&A require cultural intelligence
Empty cup - you can learn from each other!
Consider the difficulties BEFORE you try to M&A
Develop communication strategy
Poor cultural intelligence harms everybody, so be nice!
Thank You!
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