Daimler-Chrysler case study

Résumé du document

In the 1990s, competition in the car business industry increased dramatically. Companies tried to merge or acquire their competitors in order to remain competitive and strong enough not to be absorbed by other companies. This process is still prevalent today, and takes place in most of the businesses. Globalization has become the new framework of the business realm. Chrysler and Daimler-Benz have always been well aware of these issues. Their merger resulted in the formation of the world's third biggest car manufacturer. This report will analyze Daimler-Benz and Chrysler's objectives in the merger after a study of the changing strategic and competitive environment of the industry in the 1990s.

Extraits

[...] The Daimler-Chrysler TV (DCTV) was launched to encourage the formation of a new common culture. The new paradigm reflects the ambitions of Daimler-Chrysler and shows how well the two previous companies could go well with each other. III. The major problems of the post-merger integration Very Fast Negotiations at the beginning: - After 4 months of negotiations, Project Gamma became a reality on May Technically, the integration process achieved impressive short term results. - After 6 months, the process slowed down: Schrempp stayed away from Chrysler for fear of encroaching on Eaton's turf. [...]

[...] ‘Schrempp was much aware of these issues'. He had 2 priorities: - Tough decision making / Digital decisions - Speed Critics argue that this model was not the more pertinent and appropriated. Financial issues See appendix 2.C Immediately after the merger, shareholders were enthusiastic. They were optimistic about the profits that would result from it. However, because the results announced were not those expected, shareholders understood that the dividends would not be so high. Therefore, since 1999, the stock has been decreasing dramatically before remaining stagnant until today. [...]

[...] - Auto boom in the US. least for the past three decades, sales rise early in the decade, peak in the middle and then fall off again.' 2004, PRIMEDIA Business Magazines & Media Inc. - Gulf War in the early 1990s: oil crisis. Technological - Higher pressure from customers to innovate, - Safety expectations through new major technological proceedings, - Therefore, increase of research and development costs. The macro-environment analysis is especially pertinent when it is coupled with M. Porter's five forces analysis M. [...]

[...] Concerning the power structure, at the beginning, equilibrium had been found in the Management board with a ‘Merger of Equals' philosophy: 18 members Daimler-Benz non automotive business. But, it was evident that a management board would not be efficient with 18 members and 2 co- chairmen. Thus, gradually, the dominance of Daimler-Benz became high. The Management Board room had been reduced to 12 members. The departure of Eaton accentuated this supremacy. The control system was very disparate. Americans earned sometimes up to four times more than their German counterpart. [...]

[...] For Chrysler, the ‘lone star' strategy which resulted from the failure of a previous agreement with Chrysler to expand their position in Asia could be rethought. The objective of this merger was to realise synergy gains. Indeed, synergies were forecasted to reach $ 1.4 billion in the first year following the merger and billion in 2001. Economy of scales was one of the major objectives of the merger. It had to allow them to reduce their production costs in favour of the maximisation of the shareholders wealth. [...]