Daimler Chrysler Merger

‘Without Daimler, Chrysler would be in liquidation; and without Chrysler, Mercedes would be confined to a limited future of narrowing horizons, as rivals encroached on the luxury market.’ However, the highly spoken merger did not work as they expected.Their structures and mechanisms were quite different.

German approach was following a hierarchical and organized mechanism and Chrysler being quite relaxed in their approach. So, their basics were quite strange to each other and that fact has been found to be a quite hindrance to reach their planned goal in the merging. By the time Zetsche took became the CEO of DaimlerChrysler it was facing huge problems such as law suits accounting for billions from investors, recalling of Benz cars on quality issues, slowed down sales etc.First of all, Zetsche announced tough production redevelopment measures and the cutting of 8,500 jobs.

The second wave of attack followed in February and targeted office workers. Every fifth administration employee and every third manager was going to lose their job. By the end of 2008, a total of 22,000 administrative jobs were supposed to be slated to go. Overall costs should sink by ₤1 billion ($1.18 billion) annually over the next three years – keeping in mind though that the scaling down program will swallow up some ₤2 billion ($2.3 billion). “We have to do our job more efficiently and with fewer resources than in the past,” Zetsche said. In order to achieve that goal he used different strategies.

Dieter Zetsche’s StrategiesDaimlerChrysler chief Dieter Zetsche spoke of his plan to head back to the roots from the get-go: “We don’t want to announce lofty plans,” said Zetsche. He wants to set short-term goals and “meet them.” He wanted to achieve this goal by ….

* Building a more cooperative and younger leading group to reach culture integration. * Making the company more competitive by saving money and using different ways to meet different customers’ needs.

* Changing the Pricing Strategy to make DaimlerChrysler profitable again To achieve his very proactive goal was not that easy. He needed reorganizing and restructuring the whole operation. However, he was faced with four vital challenges which he had to find answers for. They were namely, * Brand image of Mercedes; it’s a known brand for comfort and luxury nature as oppose to Chrysler

* Dealing with labour unions;Not all the unions were that cooperative with his new radical changes * Fixing its Asian Strategy;Reselling of the shares of Mitsubishi Fuso had a negative impact on the company and new strategies had to be found to approach the Asian market again. DaimlerChrysler and Beijing Automotive Industry Holding Company Ltd announced the production of Mercedes Benz C-Class and E-Class cars in Beijing, China.The project’s annual Capacity was to be 25000cars per year * Realigning the merger and getting tangible results and synergies

Products Classification AnalysisLack of Integration* Brand incompatibility* At the time of the merger, Daimler Benz and Chrysler had a ‘major plan to combine their brand portfolios, but it never really happened because of this mismatch of the brand portfolios. Daimler-Benz targeted the upscale market while Chrysler mostly perused law-end/sub compact markets in North America. Although both companies cooperated in product development and supplier network, tangible benefits were seemed to be limited in the post-merger period. * Elite vs. Inferior Images

* Manufacturing Integration* The major reason for the merger was to save money by eliminating corporate duplication and using the same manufacturing platforms worldwide. Logistical problems and mismatch in manufacturing and production methods and cost issues were hard to contain.

* Culture Clash* Products & EmployeesLanguage problems were cited as another hurdle in the assimilation process. On the other hand, the German managers balked at the much higher salaries of Chrysler’s managers. Americans were reluctant to come to Stuttgart as they had to uproot their families and that involved a lot of hassle. The cultural mismatch eventually created problems in the areas of future planning, supervisory board, research and development, expatriate management, executive salaries and. labour relations.

Given below table depicts the range of cars and vehicles, and financial services which DaimlerChrysler tried to stream line. Boxes A and B show each Mercedes and Chrysler’s known products.

A. Mercedes Car Group:|. Maybach. Mercedes-Benz. C-Smart|B. Chrysler Group:|. Dodge. Chrysler.. Jeep|C. DaimlerChrysler Truck Group|:. Mercedes-Benz. Freightliner. Fuso. Sterling Trucks. Western Star Trucks. Thomas Built Buses| D. Commercial Vehicles:|. Mercedes-Benz. Freightliner. Fuso. Sterling trucks. Western Star Trucks. Thomas Built Buses. Setra. Orion| E. Components:|. Detroit Diesel. Mercedes-Benz|F. Financial Services: |. DaimlerChrysler FinancialServices. DaimlerChrysler Bank|

Given below table explains in figures impact of the merging.

A. Financial Data (1997) |Daimler Benz Chrysler | Revenues $71.5 billion $61.1 billion | Profit 4.62.8| Assets: 76.1 60.4| Stockholders’ Equity: 19.5 11.3| Market Capitalization: 86.8 35.9 Employees: 300,000 121,000 | Unit Sales: 1.1 million 2.9 million | Fortune Global 500 Rank in 1998: 17 25|

B. Financial Data (2006) DaimlerChrysler| Revenues:’$190.00 billion|Profit: 4.70 billion|Current Assets:142.22billion|Market Capitalization; 59.04 billion|Fortune Global 500 Rank in 2006: 7|Fortune’s Most Admired Company Rank: Not included among the first 50 companies| Total Employees: 365,451|

Figure 2.1.. A basic product type is determined by a list of eight codes from the before mentioned categories whereas supplementary equipment codes specify modifications to this basic product type. For historical reasons there also exist symbols called patterns summarizing model class, design line, engine type, engine capacity and steering wheel position.

F.g 2.1Source: fkaiser, [email protected]: Annual Report of DaimlerChrysler,2006