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Synopsis
In May 1998, Daimler-Benz, the biggest industrial firm in Europe and Chrysler, the third largest carmaker in the US merged. Chrysler lower-priced cars, light trucks,minivans appeared to complement Daimler s luxury cars.commercial vans. The merger followed a trend of other consolidations.
The Daimler-Chrysler cross-cultural merger has the advantage of both CEO s having international experience and knowledge. Chrysler s Robert Eaton had experience in restyling Opel cars in GM s European operations. Daimler s CEO Juergen Schrempp worked in the US with Euclid Inc. and has experience in South Africa.
Chrysler show an opportunity to overcom some of the European trade barriers. Main reason for this merger was technology nad overcapacity. Companies with economies of scale can survive. Merger became more of a competitive necessity than a competitive advantage.
Post Merger
In the early 1990 s Japan made great strides in the auto industry. Post merger, Daimler-Chrysler new care company became fifth largest in the world and could be the volume producer in the whole product line range.
Yet, he faced many challenges. Mercedes faced tough competition from Japan s Lexus,Infinity and Acura as well as BMW and Ford s jaguar. Schrempp forced to cut costs and improve productivity in order to survive. In 1999, co. announced to invest $48 billion to introduce 64 new models in the next five years.
Strategic Implementation
Formulation of the merger was carefully planned. Global perspective of Schrempp and Eaton as well as the product line indicate a fit. Instead of two headquarters, the top managers prdicted to have only one headquarter anf that will be in Germany.
Questions
Evaluate the formulation of the merger between Daimler nad Chrysler. Discuss the strategic fir and the different product lines.
What are the difficulties in merging the organizational cultures of the two companies?
What is the probability of success or failure of the merger? What other mergers do you forsee in the car industry?
Thank you .