When the merger between Daimler and Chrysler was first conceived it was called “a merge made in heaven”. It was combining of forces that was supposed to take the automobile industry in storm and it would turn off work customers the best luxury and affordable cars under one company name. However, why is it that simple Google search of DaimlerChrysler produced such results that have the world failed merger and merger problems. Why is it that just eight short years after the merge became final that this match made in heaven resulted in a divorce made in hell. To understand the organizational culture clash the Daimler&Chrysler face to times the merger we must first step back and look how these two companies shape their cultures.

In 1886 the Gottlieb Daimler was faced with the unique challenge of revolutionizing the current form of transportation which at that time was horses and wagons. Daimler’s original focus was on the quality of the automobile as shown to German engineering. To prove this to weary customers he created the motto “The best or nothing”. By the mid 1990’s the Daimler midnames were synonymous with wealth, luxury, quality performance. Daimler was able to achieve this in part mainly because they are highly renowned research and development teams. In 1996 they spent a total of 8.8 billions of dollars on research and development alone.

Chrysler had a relative more humble upbringing the net of Daimler. From young age Walter Chrysler was fascinated machinery and engineering. While working at Buick (American automobile division of the American manufacturer General Motors) he designed a cost analysis which he documented the cost for every part of the core. However, during the 1920s Walter Chrysler saw an opportunity to take his talent elsewhere. On June 6, 1925 the motor company was born. Early on it was the Chrysler mission to find the American people with well-engineered, advanced and affordable cars. The 1970’s proved to be a turning point for Chrysler mainly because of the gas crisis, which led to a government bailout. Hope for Chrysler came in the form of the former president Lee Iacocca , who many say save the Chrysler motor company. Mr Iacocca first order of business included a massive layoffs and the selling of Chrysler underperforming European Division. He was trying to bring Chrysler back to a more simple structure. Iacocca instituted a cross-functional method of production rather than a traditional silo method which would allow him to produce more cars efficiently and with less human capital. This up-Chrysler cut costs reduce sickly and made Chrysler’s employees more valued and skilled. Changing market forces had strong effects on the direction Daimler and Chrysler needed to take in order to remain successful in the industry. In particular the movement or the maturity stage at the automotive industry is forcing automakers to consolidate. As a result the industry was being populated by fewer but larger automakers.

Porter five forces analysis is a framework to analyze level of competition within an industry and business strategy development.
Porter's Five Forces On Automobile Industry

Threats of new entrants:

There are absolute high barriers to entry in this industry, making the threat of new entrants low. Very few new players or entrepreneurs are capable of venturing into the automotive industry because it requires a high capital investment to set up manufacturing facilities and a distribution network. In addition, the fact that existing multi-national major competitors benefit from economies of scale and scope, makes it very difficult for a new entrant to offer competitive pricing. Finally, because the issues of safety, reliability and durability are so salient, and because buyers base their impressions of a model on the manufacturer’s previous performance on these issues, a new entrant will have extreme difficulty competing. It takes many years for a new entrant to build a strong enough reputation to be competitive. All of these factors make the threat of new entrants in this market very low.

Bargaining Power of Buyers Bargaining Power of buyers affects industry profitability by their ability to hold out for lower price, higher quality, and better service. In automobile industry the bargaining power of the buyers is moderately high. The factors that affect consumer to make a buying decision are the appearance, quality, price, and environmental effect. Based on a variety of the lifestyles; people choose to purchase a vehicle in a different way. There are various brands and models of the cars to choose from nowadays and the buyers have low switching cost due to the various brands with similar specs and price with competitive marketing
Entry into the automobile manufacturing market requires significant capital, technical and managerial expertise and the time needed to gain market acceptance that will generate sales and sufficient revenue for operations without the need of cash infusions from investors and finance activities. Even the entry of the Chinese manufacturers will require time. (Grant, 2008) This gives Ford the opportunity to gain market share before these new entrants gain popularity.

Bargaining Power of Suppliers

The power of suppliers is mitigated by a number of existing potential suppliers in this industry, but switching costs are high because establishing part designs and specification requires a fair initial investment. On the other hand, there is little threat that these suppliers will integrate forward. Auto manufacturers require inputs-labor, parts, raw materials and services. The cost of these inputs can have a significant effect on profitability. Ford was depended on different suppliers for various parts but soon it had the problem with the quality of equipments and compatibility of parts made by different manufacturers became too expensive as it was costing more comparing to buying from suppliers.

Threats of Substitute Product or Services
Products appear different but can satisfy the same need as another product. Product differentiation is more important. In the car industry typically there are many cars that are similar just look at any mid-range Toyota and you can easily find a very similar Nissan, Honda, or Mazda

Rivalry among Existing Firms
With the rise of foreign competitors in the 1970's and 80's, rivalry in the automotive industry has become much more intense as Firms compete on both prices and non-price dimensions. Serious competition began to emerge in the 1990's with a flood of new vehicles, designs and concepts (Adam, Brock 2005.)

Different companies are providing different incentives to attract customers to purchasing their own vehicles. Ford in the past was very successful due to their advantages relating to volume and scale and it was anticipated that they would become the biggest player in the industry taking the place of General Motors. However, due to the actions taken by their arch rival, General Motors, Ford continues to remain in second place (Taylor III, 2003) Ford experienced adverse publicity due to the tire scandal and also the poor marketing.

Find out more from UK Essays here: http://www.ukessays.com/essays/marketing/five-forces-of-the-automotive-industry-marketing-essay.php#ixzz3VPMgIt75