ANSWER 1.

Daimler Benz motives behind the merger:

1. Access of markets in the United States: As the statement given by Fortune magazine,

”... Remember that Mercedes has a 1 % market share in the U.S., and Chrysler has a 1 % share
in Europe. Chrysler has great products to sell in Europe, and we have tremendous
infrastructure. I’m not referring to putting the two brands together in a showroom, but on the
back-office side, we help Chrysler in Europe, and Chrysler can help us in the U.S.”

2. Reduction of production cost: Chrysler was very capable in terms of design and product
development which was favourable for Daimler in terms of cost cutting.

3. Fear of losing their competitive : Freed from corporate bureaucracy they could produce
imaginative designs quicker and much more efficiently. Synergies were forecast to reach
US$ 1.4 billion in the first year after the merger and US$ 3 billion in 2001.

Chrysler’s Motives behind the merger:

1. Avoiding another Crisis: Chrysler found that it was excessively short staffed to send
the chiefs required far and wide to accelerate sales. Simultaneously, Chrysler was
lacking cutting edge innovation.

2. Improve R&D department: Research and development cost Chrysler more than its
U.S. contenders since it made less vehicles over which to spread the expense.

3. Access to Europe Market: Again, this was a mutual benefit for both parties to share
the overseas market of each other’s domains. Daimler Ben’z had a very good
presence in the European market.
ANSWER 2.

At the time of the merger there was a wide gap between the business nature of
the two companies which created a lot of management issues like compensation
schemes, working style and organisational structures. The debate about
corporate culture seemed to centre around ‘German engineering versus cowboy
independence’.

1. There was a high difference between American and German office wotking
cultures, like the Germans were very used to sharing and ordering food and
beer in the office whereas the Americas were only focused on the job,

2. The Hierarchal structure of the organisations differed as top level managers

were given high priority in decision making in the German environment,
whereas The Americans gave good freedom to middle level subordinates in
decision making.

3. Daimler-Benz was managed as a conglomerate with 21 separate businesses

whereas Chrysler was run as a highly centralized car and truck
manufacturer.

4. Chrysler's managers were portrayed as inventive, nimble and adaptable. Be

that as it may, they didn't have similar solid mutual encounters and rich
legacy nor the all-encompassing record of achievement contrasted with
Daimler-Benz.

5. Compensation structure introduced a significant concern. Chrysler's

previous manager Bob Eaton brought home in any event US$ 70 million
during the takeover and was accustomed to procuring some US$ 6 million a
year contrasted with his substantially more unobtrusively remunerated Co-
Chairman Jürgen Schrempp. On the other authoritative levels Americans
procured two, three, and now and again multiple times, as much as their
German partners.