Daimler & Chrysler Case

Thèmes abordés

Daimler Case - Chrysler Case - Daimler-Benz - Cerberus Capital Management

Résumé du document

In the year 1998, two giants of the car industry announced their merger: there was on the one hand the German one, Daimler-Benz and on the other hand the American one Chrysler. At the beginning this merger was supposed to become successful and create a lot of profits. But we are going to see in what it has been a failure and the reasons of this incredible mess.

What is a M&A?

Definition: this is a general term used to refer to the consolidation of companies. A merger is a combination of two companies to form a new company, while an acquisition is the purchase of one company by another in which no new company is formed.

Extraits

[...] Why has been this merger so fast? The main problem is that normally when two firms are merging there are totally equal from a general point of view: many departments are merged. If we take the example of the research and development department searchers were supposed to share their ideas in order to create synergy but it was not the case at all. Another example which is an interesting one concerned the production capacity: if you are developing car models with the same basis (it was the case of the roadster Mercedes SLK and Chrysler Crossfire), you are able to save money because you are producing more and the development's cost was less important. [...]

[...] Daimler Case The name “Daimler” has been especially created for the merger between Chrysler and Daimler Benz. Now the firm is present in different sectors, of course the primary one is the automobile industry with the brand Mercedes. There is another sector which is less known where the company has activities: aeronautics because it has more than thirty percent of EADS (European Aeronautic Defence and Space Company). The reason why Daimler is able to continue its activities is the wealthy organization of the whole group. [...]

[...] The second problem this merger has to face that in reality the objective of the Daimler group was to absorb the totality of Chrysler. Personal reflection In my opinion, the problem of this merger is that it has too much problems to face simultaneously. One of the most important is the difference between the American continent and Germany. This difference could take different aspects as we have seen before (the finance, the organization and human factor). I would say that the human factor can't be controlled at all: you can't force person to have good relationships and it is difficult to create a profitable partnership in this case. [...]

[...] I have found in many different articles that merger of acquisition are successful in less than fifty percent of cases. This is a really low rate. In my opinion, merger and acquisition have to be prepared long years ago. Of course I can imagine that when two firms take this kind of decision they have already thought about it. Maybe should they analyze the situation deeper and take in consideration many of the failure or merger and acquisition in the past and try to control and reduce this risk to a minimum. [...]

[...] What is a Definition: this is a general term used to refer to the consolidation of companies. A merger is a combination of two companies to form a new company, while an acquisition is the purchase of one company by another in which no new company is formed[1] Global analysis of the case Because we have to develop this pre assignment in less than three pages, I would describe each situation shortly. What we have to consider is that as in every business relation, a merger & acquisition could cause many different problems. [...]