Automobile analysts were expecting that only 10 out of the 30 car makers could survive in the increasing competitive global market and that companies either had to seek for a merger partner or would become an acquisition target in the long run. According to analysts, sales of at least 4 million cars would be necessary to become one of the future top players in the automobile business.
Top-managers of both companies expected huge savings by combining purchasing and other operations, like distribution. Daimler-Benz saw the opportunity to share the costs of new technologies with a larger base and to reduce total research and development costs by joint developments of mid-sized cars. T W Tobias Wolf Author. Add to cart. Table of content 1. Chrysler was characterized by automobile analysts as daring, diverse and creative. Daimler-Benz was described by automobile analysts as conservative, efficient and safe. The culture clash: One company, two cultures 2. Sign in to write a comment.
In Ford pitched a merger plan of its own to Daimler-Benz, unaware of the already ongoing talks between the German automaker and Chrysler. Ford Chairman Alex Trotman acknowledged the talks but then suggested the talks had not become very serious. But the Ford Chairman reportedly briefed both his board of directors and the Ford family, which controlled 40 percent of the automakers voting stock.
It was the familys unwillingness to give up control that apparently ended the discussions, a key reason why merger talks between Ford and Fiat a few years prior also collapsed. Schrempp and Eaton believed the potential benefits from joint product design, development of new technology to meet emissions and fuel economy requirements, efficient manufacturing, combined purchasing, other economies of scale and brand expansion anddiversification would position the combined entity as a powerful global player. In discussing the possibility of a business combination between Daimler-Benz and Chrysler, they considered it essential that their respective companies play a leading role in the process of expected industry consolidation and in choosing a partner with optimal strategic fit.
In this respect, both the timing of the proposed business combination and the selection of the parties were considered highly appropriate in order to secure and strengthen their respective market positions. Furthermore, since the companies had virtually no product overlap there was little threat to immediate rationalization of product offerings. Before DaimlerChrysler could hope to unseat GM or Ford, however, it had to create a single company, keeping the best of both former companies in the areas of innovation, cost savings, supplier relationships, quality and brands.
The integration of the two 2 DaimlerChrysler Merger. It required a blending of corporate and national cultures and operations. Former Chrysler President Robert Lutz commented, I do think that managing the cultural issues will indeed be the toughest part of making this marriage work. And the challenge, as always, will be getting the cultures to really meld below the level of senior-most management.
The task of integrating the two car companies fell to Chrysler President Tom Stallkamp. Stallkamp had become Chrysler president effective January 1, ju st days before Schrempp visited Eaton to plant the seeds for the historic merger.
Despite the powerful company the merger created on paper, Stallkamp knew the track record for such large mergers, particularly cross border ones, was not good. A global report by KPMG at the time indicated 83 percent of mergers were unsuccessful in producing any business benefit with regard to shareholder value.
Daimler- Benz had conducted its own study of previous mergers and found that 70 percent had failed.
Merger Between Daimler And Chrysler
The world auto industry had already experienced culture clashes that ended various mergers and joint ventures. Autolatina, the Ford Motor Co.
A proposed merger of Renault S. Merging two large successful companies, incorporated in different countries, w ith geographically dispersed operations, and with different business cultures and compensation structures created challenges that were quite different from absorbing a smaller acquired company into an existing structure. The attention the merger garnered from the media, industry experts and Wall Street created an environment of speculation. Everyone had an opinion about the merger and its chances for success. Autoline Detroit, a weekly industry news show hosted a special onehour panel discussion on the merger.
Csaba Csere, editor of Car and Driver magazine observed, If they really want to integrate they need to figure out how their two different systems can [blend]. Paul Ballew, chief economist at J. Power asserted, The greatest challenge of any major merger is the culture. It probably will or should be the number one topic on their agenda for the next years. Stallkamp thought that, The way you can make the merger work is to get people excited about finding something new, rather than going back to defending their own turf.
Its human nature to fall back on whats familiar. We have to take away the fear of the unknown by making it fun and exciting.
Daimler-Chrysler: A Cultural Mismatch Paper
Both companies had a history of strong turnarounds and recent market success see Exhibit 1 for company histories , but all eyes were on DaimlerChrysler, as the price of failure for the largest industrial merger in history would be immense. Potential Benefits of the Merger For Chrysler and Daimler-Benz there were high hopes about a number of gains to be achieved through their merger. Daimler-Benz had a global distribution network.
Daimler-Benzs reputation for engineering complemented Chryslers reputation for creative styling and product development. Chryslers experience in dealing with US investors would help Daimler-Benz become a pacesetter in bringing modern concepts of corporate governance and shareholder value to the German economy.
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Chryslers freewheeling methods of vehicle development would kick-start the more bureaucratic Mercedes-Benz. The combination with Chrysler helped reduce the risk associated with Daimler-Benzs dependence on the premium segment of the automobile market by introducing brand diversity. Daimler-Benzs financial clout and technical prowess would bolster Chrysler in the auto wars.
Moreover, the combined company had greater financial strength with which to enter new markets. Exhibit 2 summarizes the potential advantages of the merger to both. Of particular importance was the need to improve Daimlers development time and reduce development costs and the need to improve Chryslers quality and engineering. As an engineering company Daimler-Benz had high development costs. Commenting on the areas for integration and savings Stallkamp explained, Some things will be integrated right away, like global purchasing.
Sales and marketing will be among the first, though the brands will remain separate.
Table of content
You wont sell Chrysler products at Mercedes dealerships or Mercedes products through Chrysler. The integration will occur behind the scenes. The next area is engineering. This was the area I was most concerned about. But our technical people have come in and said lets find new ways of doing things. The last area will be manufacturing, and thats driven by product. We need more common product. Well never share the same platforms between Chrysler and Mercedes , never the same vehicles, but maybe common components, like side impact protection devices.
This could save enormous amounts of money. Exhibit 4 indicates the areas where synergies were expected. Achieving these synergies required a focused effort to quickly integrate the necessary functions.
Stallkamp knew they had to deliver on the promised synergies but the big savings would come from the combination of back office functions and the streamlining of systems and processes. He envisioned separate marketing and sales to ensure brand integrity. On the operational side he saw numerous opportunities for significant savings. Chrysler would keep DaimlerChrysler at the forefront of innovation, a single manufacturing organization with separate plants would provide for the transfer of key manufacturing process technologies and systems. DaimlerChrysler could leverage its unit volume to achieve additional savings and streamline its systems.
The DaimlerChrysler merger: One company, two cultures - Tobias Wolf - Google книги
Bringing this vision to reality however was a formidable challenge. Chrysler and Daimler -Benz had very different ways of operating. Getting both sides to see the benefit of operating in a new way was critical to the success of integration. Chrysler garnered this praise following companywide restructuring. Beginning in , Chryslers management had bulldozed its traditional functional organizational structure.
It created platform teams for the whole organization, assigning all functional employees to one of five teams, large car, small car, minivan, truck or Jeep see Exhibit 5 for platform team structure. Corporate staff was all but eliminated. The executive vice presidents were co-located on one floor and were forced to work through issues together. Chrysler established a matrix management structure for these senior managers.
Many of the traditional vice presidents were replaced with people who not only had functional expertise but who were able to work together.
Each vice president under the new structure had two jobs, creating mutual dependence among them. In order for Tom Stallkamp, then vice president of Procurement and Supply and general manager of Minivan Operations, to obtain good designs for his minivans from Tom Gale, head of design, he needed to provide supply chain support to Gale. Likewise for Gale to receive quality parts from procurement and supply he needed to provide good designs for the platforms. This teamwork ethic applied to the highest levels within Chrysler.
CEO Bob Eaton was considered to be one of the more modest chief executives in the world, a mild mannered and even- tempered man who believed in the power of teams. Eaton and former Chrysler President Bob Lutz, a dynamic and outspoken man, had formed a balanced partnership in running the company. When Tom Stallkamp replaced Lutz as Chrysler president, it was believed his self-effacing manner and ability to generate consensus would enable Chrysler to continue on its successful path.
With the introduction of the platform teams, management focused on determining the what -- the specific goals, objectives, constraints, and resources -- but the team would determine the how. Teams were empowered to find the best way to deliver the results, providing periodic progress reports to senior management.
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Chrysler soon began to reap the benefits of its platform team concept and new structure; Chrysler became one of the most profitable automakers in the world.