2. WHAT’S IN THIS PRESENTATION ???
Introduction ( History of both companies)
Merger Process
Merger motives
Success and failure
Cultural differences
Analysis after merger
Conclusion
My Opinion on merger
3. DAIMLER-BENZ (1926-98)
In 1885, Daimler together with Maybach began work on the first
engines that were designed specifically for use in motor vehicles.
This German firm, initially operating at Cannstatt near Stuttgart,
was the origin of the business variously known as Daimler Motoren
Gesellschaft from 1890 to 1926, and then Daimler-Benz from 1926
to 1998.
Daimler Benz was founded in 1926. An Agreement of Mutual
Interest - was signed on 1 May 1924 between Karl Benzs Benz &
Cie., and Daimler Motoren Gesellschaft.
4. CHRYSLER CORPORATION (1925-98)
The company was founded by Walter Chrysler (1875–1940) on
June 6, 1925.
The Chrysler was a 6-cylinder automobile, designed to provide
customers with an advanced, well-engineered car, but at a
more affordable price than they might expect.
The advanced engineering and testing that went into Chrysler
Corporation cars helped to push the company to the second-
place position in U.S. sales by 1936.
5. MERGER PROCESS
In May, 1998, Daimler-Benz and Chrysler Corporation, two of the
worlds leading car manufacturers, agreed to combine their
businesses in what they claimed to be a ―merger of equals.
The process began when Jurgen Schrempp and Robert Eaton met
to discuss the possible merger on January 18, 1998.
The merger was completed on November 12, 1998.
The merger resulted in a large automobile company, ranked third in
the world in terms of revenues, market capitalization and earnings,
and fifth in the number of units sold.
German and American styles of management differed sharply.
To minimize this clash of cultures, Schrempp decided to allow both
groups to maintain their existing cultures.
6. MERGER MOTIVES
Daimler’s motives
Access to US market
Reduce cost of production
Fear of loosing their competitiveness
Wish to reach more middle class
buyers
Chrysler’s motives
Access to Europe market
Avoiding another crisis
Improve R&D department
Overcome the challenge of excess
capacity and overproduction
7. SUCCESS OF MERGER
The largest merger, before 1998
Increasing market power
Flexible ways of integration of two different countries
8. SWOT ANALYSIS
Strength
Merger/ combined two strong
companies.
A leader of motivation
Strong existing product brand
Record revenue & increasing
market share
Weakness
Combined two different culture
Employee have been leaving at
high rate
Harder to inspire vision
9. SWOT ANALYSIS
Opportunities
Quality & engineering skills
Distribution into the key markets
New distribution of networks
Threats
Does not have corporate brand
identity
Competitors
Behind in the research & marketing
of hybrid autos
Cultural differences
10. AFTER MERGER SHARE PRICE
96
78
40.8 41.5 42
0
20
40
60
80
100
120
1998 1999 2000 2001 2002
Price History US:DCX (1/1/1998 - 1/28/2002)
Price History US:DCX (1/1/1998 - 1/28/2002)
Fig, Daimler-Chrysler’s share prices between 1998 and 2002
11. CULTURAL DIFFERENCES
Daimler-Benz
Hierarchical structure
Management process of planning,
organizing & controlling. More
conservative, efficient & safe
The driving image & experience
associated with highest quality
available in market
Emphasis on engineering, design,
quality and after sales service
Chrysler
Team-oriented structure
Setting goals, directing &
monitoring implementation.
known as risk taking underdogs.
(Daring, diverse & creating)
Attractive eye-catching design
at very competitive price
High volume, low cost
manufacturing & distribution
1) Corporate
Structure
2) Corporate
Culture
3) Customer
Proposition
4) Value Chain
12. CONCLUSION
Employees in firms that are acquired or merged report lower
overall job satisfaction, lower trust in management, and
diminished sense of job security. (Gantz-Wiley Research, 2004)
A successful merger would required the two companies to
abandon their own business culture and create a new distinct
one. ( Thomus Stallkamp Former president of Chrysler)
Usally, it is extermly difficult to pin point exactly what role culture
played in a success or failure. However in the case of Daimler-
Chrysler, it would be a safe assumption to say that cultural factor
was among the crucial factor which determine the downfall of
company.
13. MY OPINION TO SOLVE THE PROBLEM
Should have identified vast cultural differences in the corporate
culture of both companies.
The leaders of both Daimler-Chrysler should have exhibit cultural
sensitivity and emotional intelligence to facilitate the growth of
cohesive culture thorough the collaboration of shared meaning
and values.
