Deal of The Century

A Merger of Equal


England¶s oldest marquee


Founded by Gottlieb Daimler & Carl Benz in 1886 1889 ± Developed engines with Wilhelm Maybach 1891 ± Fredrick Simms Bought UK patent rights to Daimler¶s engine 1893 ± Formed a company called µThe Daimler Motor Syndicate Ltd.¶ 1924 ± Merged with Karl Benz¶s Benz & Cie to form Daimler-Benz. Built cars under the name Mercedes-Benz.    

Gottlieb Daimler

Setra. Orion . Sterling. Daimler Financial Services. Thomas Built Buses.4 billion Total Sales : 2.1 million units Brands: Mercedes-Benz. Mercedes-Benz Vans Total Revenues: EUR 99. Western Star. AMG. Daimler Buses.    Current Chairman: Dr. Maybach. Daimler Trucks. Smart. Dieter Zetsche Business Divisions: Mercedes-Benz Cars. Detroit Diesel. Freightliner.

. Core Competencies  high-valued. and focuses on development of car engines.  Target Market  Daimler is an up-market brand.  The company targets a market niche with high-end users. technically advanced cars. and customer-relevant technologies. that focus on the luxurious trait of Daimler.  Strategic Intent The company aims to achieve sustainable profitable growth through the development superior products.

All American .

Chrysler on June 6. 1925 1924 ± Launched Chrysler Six. at an affordable price 1928 ± Acquisition of the Dodge Brothers firm made Chrysler the third of Detroit¶s ³Big Three´ (GM. well-engineered car. Ford.BACKGROUND    Founded by Walter P. designed to provide an advanced. Chrysler) automakers overnight .

1 million units produced annually Chrysler is considered today as the most successful automaker . Jeep.  Current Chairman and CEO: Robert Nardeli Business Divisions: Chrysler. Dodge.    Main Market: North America 2. Global Electric Motorcars (GEMCAR). Chrysler Financial.

process design. marketing Target Market  Mass market .Core Competencies  Well known for its product designs.

The Merger .

3 billion .  Ranked 5th  Revenues -number of units sold. of $155.  Ranked 3rd -revenues. market capitalization and earnings.INTRODUCTION  DaimlerChrysler (DCX) in 1998 biggest merger in the history.

 To expand beyond the North American market.  Chrysler¶s Motives  To gain competence in product technology and quality. and technology and quality excellence. innovation.The goal of the merger  Daimler¶s Motives  Their goal to become a global player with interests outside its traditional West European base. . adaptability.  In combining the two companies. had the potential of gaining high volumes. led to its merger with the Chrysler Corporation. participation in all segments.


Daimler has outstanding reputation. Chrysler was a very cost-effective company. A wide array of corporate holdings. Strong existing product brands. $47 billion allocated for research and development.Strengths          Merger combined two strong companies. Lack of capital constraints. Leader in Fortune Global 500. Record revenues and increasing market share. .

.Weaknesses   Merger combined two different company cultures (European and American). Harder to inspire vision and direction for this large global company.    DaimlerChrysler brand is unknown and difficult to define. Company¶s broad holdings are still seen as separate entities. Image campaign could distract from strong product brands. not as parts of DaimlerChrysler.  Employees have been leaving at a high rate.

will lead to new products on the market.  Innovative . a DaimlerChrysler corporate brand identity.  Safety failures  Innovation  Creating  Can at Ford should open door for DaimlerChrysler. car ideas. particularly into Asia. reach new customers with similar communication plans.Opportunities  Merged company should be able to expand markets.

Threats  DaimlerChrysler¶s decision to put all its eggs into the hydrogen fuel basket.  Striving to become the number one automobile manufacturer in the world.  Formed various partnerships to enhance access to various global markets. .  Premium priced product.

DAIMLERCHRYSLER Following the alliance« .

Alliance Design .

000 commercial vehicles . Dodge."  "The .also a record.  They also sold more than a million MercedesBenz passenger cars. Plymouth.more than any other year history. and 550.2 million Chrysler.  Their sales revenues for 1999 are up about 12 %.1999 first full year of DaimlerChrysler has been a great one. and Jeep products . We sold 3 .

 American president James P Holden was replaced by Dieter Zetsche  Chrysler US loss for 3rd Q at $530M-$550M  (unwelcome by US execs) Investments in Mitsubishi and Hyundai for "global" market projects. DaimlerChrysler's US arm stumble. .2000  2-years after merger.

5% of company revenue. then head of Chrysler.  A poor performance in 2001.  . down 7% from 2000 and Chrysler accounts for 41.  Chrysler cars generated a decreasing revenue. only accounted for 31% of the total revenue.15 billion) decreased 6% from 2000.000 jobs. Mercedes Benz generated an increasing revenue of 9%.20012001-2002 Late 2000: Dr.  On the opposite. Z. proposed a massive reorganization of the US subsidiary: the closure of six plants and the loss of 26.  DaimlerChrysler's revenues for 2002 ($148.

 Late .000 jobs in the future. 2005: shareholders forced Jurgen Schrempp to step down as the chairman.5 billion loss for 2006  DaimlerChrysler's operating profit in 2006 rose .  However. took over.  Dr.  $1.3 billion Euros from the previous year. Chrysler division suffered a large financial loss of 1. Dieter Zetsche.. Z.After that.5 billion Euros and has plans to lay off over 13.. After the Chrysler unit of DaimlerChrysler made a big loss in 3Q of 2005.

Chrysler is silent.REASONS FOR FAILURE ³How do you pronounce the name of a German-American automaker?´ Daimler. .

level employees to make decision  Relatively informal  High salary and bonus . Corporate & Culture Structure Daimler -.  Disciplined  Lesser salary but high expense budget Chrysler -.A conglomerate with 21 different business  Methodical decision making  respect for authority.Highly centralized car and truck manufacturer  Creativity  Fast and lean decision making allow mid.1. bureaucratic precision. and centralized decisionmaking.

efficient and safe -Detailed discussions and lengthy reports -Epitome of german -painstakingly detailed plans and implemented them precisely --perceived the Americans as ³chaotic´ Chrysler -The risk takers -Little paperwork with small meetings -Leanest and nimblest -favored fast-paced trialand-error experimentation -.Germans were stubborn "militarists .Corporate & Culture Structure Daimler -More conservative.

Schrempp. confessed that it was never meant to be merger of equal ± Chrysler was to be a subsidiary of DaimlerBenz.  Failure to .2. Mismanagement inform all stakeholders accurately about the terms of the mergers. Daimler CEO.  This caused ³Deep Mutual Distrust´.  Oct 2000.

or replaced by the German ones. Unequal representation at the executive board almost all of Chrysler key executives and upper management personals were either left. resigned.³Deep Mutual Distrust´ Schrempp¶s public announcement in Germany --This rather be an acquisition. Employees¶ and US buyers¶ felt they were betrayed. . not a merger.

. an American president of the Chrysler Group.Contd. was replaced by a German appointee.Now the German was solely in charge of Chrysler.. Dieter Zetsche during the time when Chrysler experienced difficulty in the marketplace Other American executives were either replace or left as well -. Jim Holden. Late 2000.

Changes in US Auto Industry changing world market«large amounts of cash would be needed to keep product lines up to date as well as to take products to emerging and profitable new markets. the challenges from Japanese brands during 1998-2000 which Chrysler responded with little innovation and competitive price reduction.  In US.  Rapidly .3.


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Chrysler LLC .