Business and Management
Submitted By allabella5990
Companies’ background and the situation by the late ’90s are described in the table 1 below; Table 1 | Chrysler | DaimblerBenz AG | Country of origin | US | Germany | Corporate structure | Flat | Hierarchical | Corporate culture | Creative, informal, team-oriented | Methodical and centralized decision-making, respect for authority, bureaucratic precision. | Approaches to functional activities | Little paperwork and short meetings, high CEO’s rewards, risk taking. | Long reports and discussions, no huge salary differences, detailed planning. | Customer proposition | Attractive design at a very competitive price. | Luxury vehicles with highest quality for high price. | Value chain | High volume, low cost manufacturing and distribution. High productivity (cost effectiveness, narrow supplier base, share platforms across brands and models) | Emphasis on engineering, design, quality. High costs (not share platforms, exchange rates, inefficient production methods and high labor costs. | Diversification | Least diversified and less vertically integrated. | “Integrated technology group”. Five divisions: passenger cars, commercial vehicles, aerospace, services, directly managed businesses. | Global sales | Dependence on North America market- outside sales only 8% of total. | Huge global sales network, but 63% sales come from European dealers |
Merger of such companies was urgent due to the trends of consolidation and globalization in automobile industry (refer to exhibit 1) and difficulties faced by the companies to address them. Despite a roughly similar size, both companies were significantly different from each other in crucial moments, which made the success of the merger doubtful.
However, each company had strong capabilities that could complement each other in order to achieve the major benefit of the merger, which is the growth – for...