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Daimlerchrysler Merger the Quest to Create “One Company”

By cosmonaut21 | October 2012

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In order to understand and be critical on Daimler’s choice of partner, apart from the motives presented in the case, one also needs to consider the enterprise environment trends during the time. 90’s was a wave of mergers and acquisitions characterized by Cross-border ventures (Lipton M., 2006). According to Lipton it was an era where size mattered and mergers were considered the one-way to internationalization and market expansion. Furthermore, nine of the ten largest deals in history all took place in the three-year period 1998-2000. Having established that, one can understand that Daimler was under market and investor pressure to go large. In such an environment, a European company would think of an integrative expansion to the vast US market as the best strategy (Japanese market too cultural different). So, from the choices of either founding a new subsidiary (high risk) or seeking for a JV, or an acquisition or a merger Daimler went for the merger. It was an effort to meet the environmental trend by increasing market share and to make a big impact to the larger competitors. Comparing the three great American car companies, GM was too large (in 1997 GM had $178b revenues compared to Daimler’s $71b) and difficult to control, Ford had investor issues (Ford family), but Chrysler, a similar size company, would seem the best partner. Chrysler was also ideal partner for Daimler because it had a good knowledge of the local market, which lowers the venture risk (Bartlett & Beamish, 2011), and it would offer R&D synergies and broaden the offered product range (Glavin W. F., 2004). Considering all those factors I believe that Chrysler was the best choice of a partner. However, during those early stages of

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