Submitted by:

Rohit Pl (231122)
John S. Manavalan
(231178)
Srijit Nair (231156)
Vivek Chavan (231173)
Heena Aggarwal
(231153)
Syed Sazzad Rehman

Introduction:
Integration can be defined in general terms as the process in which two
companies get combined into a single one at all levels. Specifically,
integration involves the synthesis of people into one corporate culture.
The new culture may simply be the culture of the acquiring company that
is superimposed on the acquired company or some new entity that is a
combination of the best aspects of both corporate cultures.
The combination of two companies systems into a single set is
integration; these may range from information systems like company email and intranets to, human systems like HR/marketing/finance
departments and their accompanying policies and procedures. Lastly,
integration is the merger of the two companies production processes into
a uniform system.
The companies which have a plan of acquiring another company are
realizing that the real challenge isnt about how to go on with the
acquisition, instead it is when the deal closes and more attention needs to
be given on how to best derive value from the acquisition. Usually the
existing business and the targeted business operate either in the same
field or in the complementary fields and the acquirer desires to integrate
the two businesses in order to save costs, develop synergies and generate
value for its shareholders. This integration usually poses substantial
challenges and if the businesses of the acquirer and the target are
multinational then scale and the number of challenges increases
significantly.
The lack of a strong cultural integration plan is the main reason why
mergers/acquisitions fail to deliver long term value. Just like people,
acquired organizations also go through a change curve immediately after
a deal is made, and the systems, processes, and programs that underpin
the acquired companys culture are under scrutiny. All too often, these are
quickly replaced. Thats because the acquiring company spends little time
planning and leading through this critical change curve. One thing the

leaders fail to understand is that cultural integration is a long term task

and wouldnt happen early. Rather, it takes time to understand what the
newly formed entity will look like and then put a management team in
place that is both persistent and aligned as it guides the organizations,
practices, and people toward the established vision.
The following chapters focus on a common situation where there has been
an acquisition/merger and the factors which made the acquisition a
success or a failure story.

The DaimlerChrysler Merger

Introduction
On November 12, 1998, U.S. automaker Chrysler Corporation and German
automaker Daimler-Benz merged at a cost of $37 billion, to become a new
global conglomerate named DaimlerChrysler AG. With combined
revenues of $130 billion and a market capitalization of $92
billion, the merger was hailed as a merger of Equals and
DaimlerChrysler became the fifth largest automaker in the world in
number of vehicles sold and third largest in sales. Chrysler CEO Bob
Eaton predicted, within five years, they would be among the Big Three
automotive companies in the world. Three years later DaimlerChrysler's
market capitalization stood at $44 billion, roughly equal to the value of
Daimler-Benz before the merger and Chrysler Group's share value has
declined by one-third relative to pre-merger values. 9 years down the
line, Daimler finally dumped 80% of its stake on Cerberus Capital
Management for just $7.4 billion.
Rationale for the Merger
For Chrysler and Daimler-Benz there were high hopes about a number of
gains to be achieved through their merger. Daimler-Benz was stronger in
Europe; Chrysler, in North America. 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 DaimlerBenz become a pacesetter in bringing modern concepts of corporate
governance and shareholder value to the German economy. 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.
Reasons for the Failure of the Merger
Lack of Due Diligence: Daimler-Benz underestimated the competitive
forces that would invade the North American car market and take market
share from the domestic carmakers. Daimler-Benz never did due diligence
before it bought Chrysler and never looked into the future to see whether
Chrysler could afford to be competitive with the others in the industry.
Marrying up, Marrying down" Phenomenon: Mercedes was
universally perceived as the fancy, special brand, while Chrysler and its
sub brands Dodge, Plymouth and Jeep were the poorer and seemingly had
blue collar relations. This fuelled an undercurrent of tension, which was
amplified by the fact that American workers earned appreciably more than
their German counterparts, sometimes four times as much.
Different philosophies of organizational structure: Chrysler had
matrix management and platform teams and operated in essence as a
single strategic business unit. Daimler-Benz had a more traditional
structure with direct lines of authority and business unit autonomy for
each of its 23 business units. Daimler-Benz managers were rewarded
based primarily on the profit and loss results of their unit. Chrysler
managers were rewarded based on the success of their team and

Chrysler. Further, Chrysler executives had rich termination contracts,

(golden parachutes), a practice not used in Germany.
Culture Clash: Chrysler and Daimler-Benz's brand images were founded
upon diametrically opposite premises. Chrysler's image was one of
American excess, and its brand value lay in its assertiveness and risktaking cowboy aura, all produced within a cost-controlled atmosphere.
Mercedes-Benz, in contrast, exuded disciplined German engineering
coupled with uncompromising quality.
Separate Distribution and retail sales systems: Mercedes-Benz
dealers, in particular, had proven averse to including Chrysler vehicles in
their retail product offerings. The logic had been to protect the sanctity of
the Mercedes brand as a hallmark of uncompromising quality. This had
certainly hindered the Chrysler Group's market penetration in Europe,
where market share remained stagnant at 2%. Potentially profitable
vehicles such as the Dodge Neon and the Jeep Grand Cherokee been sidelined in favour of the less-cost-effective and troubled Mercedes A-Class
compact and M-Class SUV, respectively.
Different product development philosophies: Daimler-Benz remained
committed to its founding credo of "quality at any cost", while Chrysler
aimed to produce price-targeted vehicles. This resulted in a fundamental
disconnect in supply-procurement tactics and factory staffing
requirements.
Mismanagement: The Merger of Equals statement was necessary in
order to earn the support of Chrysler's workers and the American public,
but the real intention was for Chrysler Group to be a mere subsidiary of
DaimlerChrysler. The relationship lacked vision and leadership to make it
work. Employees didnt know what the relationship was supposed to look
like in the end. Leadership didnt draw the picture, nor did they encourage
the two companies to mesh. It could have worked if leadership had sold
the employees on why the marriage was necessary and demonstrating

how both would be better off as a result of their union. A compelling joint
project would have helped as well.

Ford and Jaguar Land Rover

Introduction
The Ford Motor Company (commonly referred to as simply Ford) is
an American multinational automaker headquartered in Dearborn,
Michigan, a suburb of Detroit. It was founded by Henry Ford and
incorporated on June 16, 1903.
Ford originally paid $2.5 billion for Jaguar, in 1989, and $3.3 billion for
Land Rover, in
1999. It sold both to Tata in 2008 for $2.3 billion. From this information, we
are able to see that buying Jaguar wasnt a great deal for Ford. Jaguar and
Land Rover added up to one of the costliest chapters in Ford Motor Co.s
long history, having very likely drained away between $35 billion and $50
billion based on the best estimates taken from the carmakers financial
records.
Rationale for the Merger
Originally, Ford bought Jaguar to enter the luxury car market, which was
expanding heavily at the time. Also, it wanted to expand even further in
the European market, being already the largest US manufacturer in
Europe. Ford was tempted to use Jaguars high profile image to challenge
Mercedes and BMW, and thus started launching some lower priced cars in
order to increase the number of units sold. They had an ambitious target
to quadruple the sale from the time of acquisition. An example is the
Jaguar X-Type, which was based on the Mondeo. It had front wheel drive, a
wide choice of diesel engines and a station wagon version. But the plan
backfired as it ruined Jaguars image.
Reasons for the Failure of the Merger

Failure to translate the strategy by Top Management

Ford wanted to increase the sales of Jaguar in Europe. But it faced many
problems in doing so as there were high manufacturing costs in the UK. To
overcome this, Jaguar made the decision to reduce costs by sharing parts
across brands, so that Jaguars were built using platforms on which other
Ford vehicles were being built. The practice is common in the auto
industry, but in this case it may have hurt Jaguars image and quality. For
example, they launched the new X-Type basing it on the Mondeo, and this
disappointed most of the costumers. That car in particular was selling at
$299 leases, and traditional Jaguar owners were upset because also their
maid could afford one.
Jaguar was in a complete identity crisis. Management was stubbornly
convinced that Jaguars problems was not in the cars. However, they
completely lost track of what the company should be, and this was further
shown by the fact that they were considering the launch of an SUV. Clearly
this was the failure of Ford management in translating strategic ambition
into action as this was completely different from the traditional Jaguar that
the people had grown used to over the years and resulted in ruining the
Jaguar image even among the faithful.

Failure to adapt to rapidly changing conditions

Another reason for Jaguars fall from grace was styling. Ford had been
criticized for letting the look of Jaguars age. The best example was
Jaguars flagship model, the XJ, which had kept its classic look from the
50s and 60s. That look might have appealed to Jaguar aficionados, but
not necessarily to a broader group of consumers. Jaguar didnt keep up
with the times, and research showed that Jaguar buyers were older than
the average luxury car owner. Jaguar suffered from an aging audience.
Jaguar was not able to adapt to changing consumer taste and preferences.
Jaguar was viewed as the retiring directors car, which isnt a bad thing,
however the market wasnt very large.

Culture at Jaguar under Ford

Role culture isnt necessarily negative, but it works better in stable
environments. Since changes require lots of approval, its very badly
suited for periods of crisis, where fast reactions and flexibility are very
important. Inside the company, competition for promotion was very high,
and depended more on ties and acquaintances, rather than actual
performance. Managers focused too much on their career and too little on
customers. This meant that there was very little information sharing
between departments, and problems were often hidden, since looking
good was the most important thing.
During meetings, managers usually attacked each other, looking for ways
to gain an advantage on them. The objectives of these meetings was selfpreservation, and nothing was usually solved. These characteristics also
permeated to Jaguar, where there was also a robust role culture.
Ultimately, Ford decided to sell JLR to TATA in 2008. Ford made a loss of
$12.7 billion and $ 2.7 billion in 2006 and 2007 respectively. They were
also hit by the global financial crisis in 2008 and went close to bankruptcy.
The also sold Volvo in 2010 in order to recover from the losses. Eventually,
Ford started showing a profit in the year 2009.

The TATAs acquisition of JLR

Introduction
The automotive industry crisis of 20082010 closely was related to the
global financial downturn. The crisis was mainly affected by the US car

manufacturers as the business was based on SUVs and other big cars
which were not performing well in terms of sales due to the bad
environmental conditions. One such company was FORD who which
needed a bailout deal very badly to survive the downturn in the industry.
JLR acquisition by TATA was one of the iconic and most talked about
acquisition in automobile industry. TATA offered to buy the JLR (Jaguar and
Land Rover) brands for $2.3 billion in the year 2008. Ford sold the two
brands to to focus on their core business also JLR had always been a dog,
in the sense it never provided any profits to the parent company.
The Rationale Behind The Acquisition
There were numerous reasons behind this acquisition:
There was Strategic dimension to this move as this wouldve abled
TATA to launch globally, by giving it better technology and broadening
the product range. It gave TATA easy access to international markets.
Furthermore, the acquisition could also be a cost-effective way of
gaining competitive advantages such as technology, brand names
valued in the target market and logistical and distribution advantages,
while simultaneously eliminating a local competitor.
Finally, the acquisition of JLR could enable the company to enhance its
financial position in the market. Recent financial results show that Tata
has profited from the acquisition of Jaguar and Land Rover. JLR posted a
record sales of $ billion in the year 2012-2013.
Gains for TATA
M&A seek to develop long term profitability by expanding companys
operations. In this case both JLR and TATA managed to obtain benefits. On
one hand TATA gained easy access to the international markets and on the
other hand JLR got the required investments by TATA which enhanced
their R&D which gave JLR a well defined brand image.

Furthermore JLRs technology gave TATA the cost advantage also

thanks to the synergies with the other business. The design centres of
Jaguar were used by TATA for all its products designs. This acquisition not
only gave TATA the design centres but also distribution channels of Jaguar.
Reasons for the Success of the Acquisition:
Change in Branding
Jaguar was just an appendix of a much larger organization under Ford.
Tata decided to bring it back as a central and independent brand. Earlier,
Ford ruined Jaguars image by trying to massify luxury, removing its
exclusivity. For example, it took its own parts and put them in Jaguar cars,
something that was viewed by traditional owners as unacceptable. This
type of behavior may be justifiable in ventures between different car
companies, but not with Jaguar.
Investment in the right areas
Numerous new engineers were hired, and the objective was to improve
the research and development areas. The new focal area of business was
now innovation and renovation, not just cost control
Cultural factors:
Firstly, TATA decided to leave the existing management structure intact
and leave the national British managers. There wasnt any attempt to
impose Indian managers on JLR. All the key personnel retained their
positions.
Secondly, TATA didnt just leave the current managers on their own. TATA
managed to motivate them through constantly challenging them and
working with them. In other words, help was offered only when it was
needed and existing practices remained in place, but at the same time
managers couldnt afford to be idle because they had goals to reach and
plans to implement.

Thirdly TATA managed to inspire trust in JLR. First of all, the fact that most
of JLRs personnel were left on their positions showed that TATA trusts JLR,
and believed that it is capable of solving their problems. Moreover, more
than once in interviews the Managing Director made clear statements of
loyalty which contributed positively on the cooperation between the
companies.
Finally, TATA kept an open-mind and never hesitated to listen to feedback
from subordinates. TATAs top level officials often make trips to their
factories and dealerships outside India and collect feedback from local
employees. These opinions are being used in the developing companys
strategy.
Cash management
As JLR didnt have a cash management system of its own, Tata Motors
turned to consultants KPMG to develop a cash management model. A
three-tier model was developed. First, a short-term goal to manage
liquidity with the assistance of KPMG was put in place. Then came a midterm target to contain costs at various levels and the formation of 10-11
cross-functional teams. Finally, a long-term goal that runs until 2014 was
drawn up, focusing on new models and refreshing the existing ones. The
key aimscash management and checking costs.

Conclusion:
The early identification of primary strategic and business objectives of the
acquisition/merger and subsequent integration is the key to overcoming
the challenges in implementing the post-acquisition/merger integration
plan. Provided that these business objectives are realistic and well
understood and supported by the management and sufficient amount of
attention is given to planning and implementation phase of the
integration, the likelihood of obtaining pre-desired benefits out of the
acquisition/merger will be increased.
Before a successful integration can begin, proper planning for that success
needs to take place. Unfortunately, many integration initiatives fail from
the start because the integration begins before any thought is given to
the course that the integration will take. Planning for integration revolves
around vision and communication.
The Daimler-Chrysler merger failed because Chrysler and Daimler-Benz's
brand images were founded upon diametrically opposite premises.
Chrysler's image was one of American excess, and its brand value lay in
its assertiveness and risk-taking cowboy aura, all produced within a costcontrolled atmosphere. Mercedes-Benz, in contrast, exuded disciplined
German engineering coupled with uncompromising quality. Also, preacquisition due diligence wasnt given to competitive forces before the
merger.
The acquisition of JLR by TATA shows to us how successful integration led
to the obtainment of desired benefits from the acquisition. TATA didnt
attempt to impose Indian managers on JLR and managed to inspire trust in
JLR and gave a new focus to the business after the acquisition and didnt
just concentrate on cost control.
Companies that are committed to complete a successful merger will
enhance, not detract from, employee welfare. One way to ensure that
employee welfare is enhanced is to emphasize proper pre-acquisition
planning, thoughtful and consistent communication and training, and,

above all, listening. Equally important is to acknowledge the role of

flexibility in the process.