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Daimler-Chrysler case study

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  1. What were Daimler-Benz and Chrysler's objectives in the merger, taking into account the changing strategic and competitive environment of the industry in the 1990's?
    1. Pestel analysis
    2. M. Porter's five forces analysis
    3. The objectives of the DaimlerChrysler's merger
  2. What were the major problems of post-merger integration which DaimlerChrysler faced (including cultural problems)? How well were these issues addressed?
    1. Haspelagh & Jemison(1991) - integration models
    2. The cultural web
    3. The major problems of the post-merger integration

In the 1990s, competition in the car business industry increased dramatically. Companies tried to merge or acquire their competitors in order to remain competitive and strong enough not to be absorbed by other companies. This process is still prevalent today, and takes place in most of the businesses. Globalization has become the new framework of the business realm. Chrysler and Daimler-Benz have always been well aware of these issues. Their merger resulted in the formation of the world's third biggest car manufacturer. This report will analyze Daimler-Benz and Chrysler's objectives in the merger after a study of the changing strategic and competitive environment of the industry in the 1990s.

[...] The objectives of the Daimler-Chrysler merger Their intentions were essentially to extend their size and scope as well as to combine their strengths. One of the main objectives of this merger was the conquest of new markets (World/Welt AG). In fact, these two companies complement each other perfectly in terms of product lines, geographic markets and capabilities. Chrysler was good in designing & product development, whereas Daimler was good in engineering & technology. Their products do not target the same customers. [...]

[...] The Daimler-Chrysler TV (DCTV) was launched to encourage the formation of a new common culture. The new paradigm reflects the ambitions of Daimler-Chrysler and shows how well the two previous companies could go well with each other. III. The major problems of the post-merger integration Very Fast Negotiations at the beginning: - After 4 months of negotiations, Project Gamma became a reality on May Technically, the integration process achieved impressive short term results. - After 6 months, the process slowed down: Schrempp stayed away from Chrysler for fear of encroaching on Eaton's turf. [...]

[...] all, the PESTEL framework seems appropriate to analyse the macro- environmental influences that led Daimler-Benz and Chrysler to consider a merger. Political/Legal - At the start of the1990s, automotive lobbies were active and the US government was not truly preoccupied by the environmental issue[1]. - Many American states increased maximum allowable speed limits beyond 55 mph. Therefore, the US market for ?muscles cars' remained dynamic and constituted a very profitable niche. (Dodge Viper, Chrysler Crossfire, Mercedes AMG ) - However, to reduce congestion in cities and to limit peak pollution levels, governments promoted public transports. [...]

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