The document summarizes the merger between Daimler-Benz and Chrysler, including their backgrounds, motives for the merger, successes and failures, and cultural issues. It analyzes Porter's 5 forces model regarding the merger. While there were initial successes, cultural differences between the German and American companies eventually led to conflicts in management approaches and an inability to integrate the cultures, resulting in the demerger of Chrysler.

1. Daniyar Meiremgaliyev SP20906
Shahab Ravanparast SP20689
Ng Jing Xing (Jason) SP20952
Yap Chiou Wen (Thomas) SP20996
Yadgar Taha SB20876
Harvir Singh SB21008

2. Agenda
•Industry
•Company backgrounds
•Motives of merger and acquisition
•Success and failures of the merger
•Cultural Problems
•Analysis of post-merger
•Conclusion

3. Daimler-Benz
Gottlieb Daimler, 1834-1900
1889 – Developed engines with
Wilhelm Maybach
1891 – Fredrick Simms Bought UK
patent rights to Daimler’s engine
1893 – Formed a company called ‘The
Daimler Motor Syndicate Ltd.’
1924 – Merged with Karl Benz’s Benz &
Cie to form Daimler-Benz. Built cars
under the name Mercedes-Benz.

4. Chrysler
Gottlieb Daimler, 1834-1900
1889 – Developed engines with Wilhelm Maybach
1891 – Fredrick Simms Bought UK patent rights to
Daimler’s engine
1893 – Formed a company called ‘The Daimler
Motor Syndicate Ltd.’
1924 – Merged with Karl Benz’s Benz & Cie to form
Daimler-Benz. Built cars under the name Mercedes-
Benz.

5. Porter’s 5 Model
Figure 1. Porter’s 5 model, conducted to DC merger

6. Figure 2. Porter’s 5 model, conducted to DC merger
January 12, 1998 Schrempp and Eaton met to discuss the possible merger
May 6, 1998 Merger agreement was signed in London
May 7, 1998 Merger agreement made public. Surprised the business community, including
the employees of Daimler Benz and Chrysler. Only 20 -30 managers were in
the “loop”
May 14, 1998 Daimler-Benz Supervisory Board OKs the merger
July 23, 1998 European Commission approved the merger
July 31, 1998 Federal Trade Commission approved the merger
August 6, 1998 DaimlerChrysler announced that their shares would trade as “global stock”
instead of ADRs
September 18, 1998 97% of Chrysler shareholders and 80% of Daimler-Benz shareholders
approved the merger
November 12, 1998 Merger completed

7. Reasons for mergers and acquisition:
Daimler-Benz’s motives:
 Access to U.S market
 Reduce cost of production
 Fear of loosing their competitive
Chrysler’s motives:
 Avoiding another crisis
 Improve R&D department
 Access to Europe market

8. Successes of DaimlerChrysler
• The largest Industrial Merger, Before 1998
• Increasing market Power
• Flexible Ways of Integration over two different
countries

9. SWOT analysis of DaimlerChrysler
Strengths
•Merger Combined two strong Companies
•A leader of innovation
•Strong Existing Products Brands
•Record Revenue and Increasing Market Shares
Weaknesses
•Combined two different Cultures
•Employees have been leaving at a high rate
•Harder to inspire Vision

10. Opportunities
•Quality and engineering Skills
•Distributions into key markets
•New distributions of networks
Threats
•Does not have corporate brand identity
•Competitors
•Behind in the research and marketing of hybrid
autos.

11. Opposite management thinking
•Millions spent on post-merger cultural sensitivity
workshops
•Rifts in business practice remained intact
•Workshops didn’t help in changing management
sentiment
•Authoritative Germans vs. Creative Americans
•German replaces an American as Chrysler’s president
DaimlerChrysler Failures

12. "The Merger of Equals statement was necessary
in order to earn the support of Chrysler's
workers and the American public, but it was
never reality”
-JuergenSchrempp
(DaimlerChrysler CEO )

13. Lack of governance
•Juergen Schrempp and Bob Eaton did not follow coordinated
course of action during transition phase
•Low level contact between the two top level management
guys
•The American dynamism faded under subtle German
pressure
•Chrysler started drifting into no man’s land
•It bled cash for almost an year, owing to mismanagement

14. Daimler-Benz’s Culture
Daimler saw itself as the foremost innovator of the automobile industry with a rich
engineering and quality heritage (see Figure 3).

15. Chrysler’s Culture
Chrysler was a trendsetter for new designs, short development times referring to its
organizational flexibility and a sense for market opportunities (see Figure 4)
Figure 2: Chrysler’s Cultural Web

16. The comparison of cultures
The major differences, that we have elaborated comparing these two companies are in
the below table 1.

17. Inability to Manage Cross-Culturally
•A potential issue that should not have been ignored was the strong
cultures and language barriers between the U.S. and Germany
•American business practices are very informal.
•In Germany they employ a rigid hierarchical corporate structure.
•Perceived benefits were never realized due to a lack of coordination,
and inability to manage across the two cultures with a central authority

18. Attempt to pick a middle spot
The Germans and the Americans
had been out of sync from the
start
Resistance to work together
DaimlerChrysler de-merger
MANAGING CULTURAL ISSUES

19. Daimler’s Strategic Position
•Focus on original strategic position
•Cars
•Trucks
Note : Sales increased by 12%
•Mercedes C class sold successfully
•Good strategic position after demerger
2006 2007 2008
Net Profit For
Mercerdes
3.8 4 1.4
0
1
2
3
4
5
EuroBillion Net Profit For Mercerdes

20. Was the Chrysler demerger
inevitable?
DaimlerChrysler’s view
•Chrysler loss US$ 1.8 billion in 2nd 2000 and will loss
US$2 billion in 2001
• Up-front costs for new models and offer discount to
clear stocks.
•Chrysler loss half Daimler Chrysler Group net profit
for 2001.
•Chrysler had loss of Euro 1 billion in 2003
•Takeover bid

21. Chrysler’s view
•Chrysler’s engineering functions.
•The key for surviving
-develop a new range of mid-size sedans,
develop hybrid and electric vehicles.
•Lacks resources and capabilities to operate as an
independent company
• Now rebuild the company.
•Cut cost and return to profitability quickly

22. Mercedes Marketing Strategy
Safety, Luxury, & Precision
Engineering
Life Style Oriented
Fun Loving
Approachable
Energetic

23. Mercedes Future Strategy
Blind spot detection
Lane Keeping
Assistance
 Night View
Attention Assistance
Monitor Road
Assistance
Mercedes Benz S400 hybrid
Features

24. Our recommendations
``a successful merger would require the two
companies to abandon their own business
cultures and create a new distinct one.”
Thomas Stallkamp
Former President of Chrysler

25. THANK YOU!