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Daimler Chrysler Case Analysis

In: Business and Management

Submitted By tm281
Words 733
Pages 3
Travis McPhail
MGMT 4390
Spring 2015
Dr. Jones
Case Analysis: DaimlerChrysler

In the case “DaimlerChrysler: Post-Merger News”, DaimlerChrysler is facing the strategic issue of figuring out how to bring together the two cultural differences between Daimler-Benz AG and the Chrysler Corporation that would create a positive and profitable synergy for DaimlerChrysler as a whole, while regaining stockholders trust. As the post-merger integration process accelerates, they need to identify opportunities to increase sales, reduce purchasing costs, and create new markets for DaimlerChrysler. DaimlerChrysler internal environment, the company went through many changes post-merger. Starting with the creation of the “Dream Team” in 1998, resignations of key members of the dream team led to a two-tiered board system: the supervisory board and the board of management. There was apparent unrest among top executives and a growing chasm between the Americans and Germans due to differences in management styles, processes, cultures and work styles. DaimlerChrysler implemented a variety of exchange programs designed to help the two companies meld an understanding of the cultural differences between the two and their respective countries. They created the Automotive Council, which allowed the sharing of innovation, knowledge, technologies and ideas between the two companies to drive future product integration. They also created the Executive Automotive Committee (EAC) which worked towards corporate integration and the analyzing of products, powertrains and components to find commonalities between Daimler-Benz and Chrysler. Finally, I believe the DaimlerChrysler organization has a sustainable competitive advantage in their utilization of the Graz facility which deflected the need to build new facilities, saving DaimlerChrysler millions of dollars. DaimlerChrysler external environment, there was a continued decline of North American automotive sales. The economy as a whole was in fallout, causing a continued decline in sales. The external environment provided a high barrier to entry, with such large economies of scale. During the year 2000, the power of rivalry was low. DaimlerChrysler’s main threat was General Motors with an EPS that was up 22%, while Ford lacked the ability to improve, mainly due to the Firestone tire recall. DaimlerChrysler’s partners Mitsubishi and Hyundai were having internal problems of their own as well, causing DaimlerChrysler share prices to fall. The power of buyers was high during this time, with dealers necessitating heavy incentives, this drove up marketing costs. DaimlerChrysler could decide to focus on creating or engineering a new type of vehicle that would allow for technology from both Mercedes and Chrysler to be blended together. This would save costs and time from a production point of view, while creating a new market for DaimlerChrysler. The downside to this is potentially damaging Mercedes’ luxury brand image and price sensitive Americans may be unwilling to pay for a higher priced Chrysler automobile with Mercedes parts. Another alternative is to keep Mercedes and Chrysler in their own stand-alone divisions. This would allow for each company to stay focused on what they are best at doing. Mercedes could continue to capture market share in Europe while Chrysler fights for market share in America.
Finally, an option for DaimlerChrysler is too spend more attention and time on further improving the bond between the German and American cultures. The pro to this alternative is further improving the synergies between Mercedes and Chrysler. Since DaimlerChrysler is a single team now, divisions within the company are never a good thing. A team of one needs to always be on the same page. The downside to this it that it will take time and cost money to further build on this bond. After comparing the alternatives, the best recommendation for DaimlerChrysler would be for the two companies to come together and engineer a new type of low cost, automotive vehicle that would allow for an integration of products, powertrains and components from both Mercedes and Chrysler to be used together without driving up costs. Americans can be price sensitive so the vehicle they engineer would have to be valuable enough to buy for the costs. This way, their technology sharing efforts could save time and money in production costs, while trying to recapture its share in the market. The opportunity costs of this is possibly damaging Mercedes’ luxury image from using its parts in Chrysler products. Combining the craftsmanship of Mercedes and the creativity of Chrysler into one vehicle is the best starting point to offer a premium product at a sustainable price.

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