...Chrysler and Daimler merger case 1) in 1998 the worldwide car market is growing (from 46 million in 1993 to 52 million in 1997), but more and more competitor are present in this business market in a worlwide level. In the 90's the incumbent competitors are threatening by the emergence of Korean manufacturers ( Hyundai, Kia ), because the firm are offering cheap and good quality cars. the emerging firms in the 90's are from Asia, where the work force is cheaper than in westerners country, in this way these firms can offering a high quality product ( Lexus, Infinity, etc) for an affordable price. Thus High end firms as Mercedes, BMW, are threatened by those firms. In this way to face with the competition most of companies are shifting their production toward developing countries for reducing their cost and compete in a better way with these emerging firms. Moreover according to some analysts there would be a reduction from 39 current producers to 20 major companies. That would be because of the high competition that would be especially due to present in the market. Furthermore each year the plant capacity exceeded demand of cars by15 million vehicles, thus the profitability of the firms is reduced, and that affect on the long term financial health of the different firms. Finally the industry is stroke by several mergers and acquisitions, which reinforce the competition in the markets. 2) In my point of view the merger make sense, because in a competitive market firms face...
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...STUDY - “Daimler and Chrysler: lessons from a merger”. This case study is about the merger occurred in 1998 between two big companies in the auto industry: German company Daimler-Benz and American auto manufacturer Chrysler Group. At the end, this merger appeared to be a failure because of different types of problems. Chrysler benefited from Mercedes while benefits to Daimler were harder to find, so that Daimler decided to sell 80% of its stake in Chrysler for just 7.4 billion dollars. They were two companies from different countries with different languages and different styles that came together although there were no synergies. First of all, these firms operated in the same sector but they had different customers, goals and cultures so there was a lack of common vision and values. Daimler was a luxury brand based on excellence and superior engineering that wanted to enter new markets and develop new products, especially by raising its standing in the North American auto market. On the other hand, Chrysler addressed to “blue collars” purchasers and decided to look for a partner being aware of the overcapacity in the industry. Originally, the plan was for Chrysler to use Daimler parts, components and even vehicle architecture to sharply reduce the cost to produce future vehicles. The operation started with the intention to realize a “merger of equals” but it ended up being more like an acquisition as Daimler strove to impose its own position, even though Chrysler was financially...
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...Knowledge Management Tools and Techniques Practitioners and Experts Evaluate KM Solutions This page intentionally left blank Knowledge Management Tools and Techniques Practitioners and Experts Evaluate KM Solutions Edited by Madanmohan Rao AMSTERDAM • BOSTON • HEIDELBERG • LONDON NEW YORK • OXFORD • PARIS • SAN DIEGO SAN FRANCISCO • SINGAPORE • SYDNEY • TOKYO Butterworth-Heinemann is an imprint of Elsevier Elsevier Butterworth–Heinemann 200 Wheeler Road, Burlington, MA 01803, USA Linacre House, Jordan Hill, Oxford OX2 8DP, UK Copyright © 2005, Elsevier Inc. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Permissions may be sought directly from Elsevier’s Science & Technology Rights Department in Oxford, UK: phone: (+44) 1865 843830, fax: (+44) 1865 853333, e-mail: permissions@elsevier.com.uk. You may also complete your request on-line via the Elsevier homepage (http://elsevier.com), by selecting “Customer Support” and then “Obtaining Permissions.” Recognizing the importance of preserving what has been written, Elsevier prints its books on acid-free paper whenever possible. Library of Congress Cataloging-in-Publication Data Rao, Madanmohan. KM tools and techniques : practitioners and experts evaluate KM solutions / Madanmohan Rao. p. cm. Includes...
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...Strategic Management- DaimlerChysler Assignment WordCount: 2413 Taking into account the changing strategic and competitive environment of the automobile industry in the 1990s, identify and evaluate Daimler-Benz and Chrysler’s objectives in the merger. How well was the pre-acquisition planning handled? Daimler-Benz was a German car corporation founded by Gottlieb Daimler and Carl Benz, when both engaged in a merger in 1926. Daimler-Benz started off manufacturing automobiles, motor vehicles and internal combustion engines, agreeing that all factories would use the brand name ‘Mercedes Benz’. Daimler-Benz was later recognised for producing luxury cars. Chrysler on the other hand was the third largest US based car maker and was founded by Walter Chrysler in 1925. Chrysler manufactured cars, minivans, sport-utility vehicles and trucks. Daimler-Benz and Chrysler merged in 1998 forming DaimlerChrysler. This was the biggest merger in history. The Strategic environment is referred to the direction and scope of an organisation over the long-term: which achieves advantage for the organisation through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfil stakeholder expectations (Johnson and Scholes). Competitive environment is the immediate competitive context in which an organisation or enterprise operates in (www.palgrave.com). The automobile industry in the 1990’s had accelerated during the last half of the decade due to the...
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...The merger between Chrysler, the smallest yet most efficient US auto maker with Daimler’s legendary Mercedes-Benz was supposed to be a match made in Heaven. However, Chrysler’s management expectations were quickly erased as CEO Juergen Schrempp of Daimler never intended equality in running the new acquisition. Within the first year, it became apparent that Chrysler had become a division of Daimler - a point Schrempp verified in interviews with the media. Schrempp’s attempts at boosting Chrysler’s sales had flopped; the company experienced huge losses and Schrempp began to send his orders though his German assistant Deiter Zetsche, who was at least able to make some positive progress. However, with no input from Chrysler executives once again, Schrempp made another huge deal by acquiring 34% of Mistubishi Motors, which had been losing money as well. Schrempp also refused to meet with the 3rd largest holder of Daimler/Chrysler stock Kirk Kokorain to explain how he intended to turn the company around, most likely as a result of a clash of cultures, different nationalities, the German focus on hierarchy, or. order and planning. No turnarounds had been made and in 2006, Chrysler posted a 3rd quarter loss of $1.5 billion and it became apparent that Daimler would sell off Chrysler. The merger was over. The underlying intentions of Jurgen Schrempp to never accept the Chrysler merger as an equal should be considered unethical because of his attempts to take advantage of a smaller company...
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...Chrysler & DaimlerAcquisition-Merger Case Study | | Situation faced by company After facing some hardships and bad acquisitions in the 80s and 90s, Daimler-Benz led by Jurgen Schrempp began to see the light in the mid-90s. By focusing on the most profitable businesses within Daimler and reducing the number of businesses at Daimler from 35 to 23, Shrempp was able to post high profits in 1996 and 1997 despite the poor looking financials in the previous years. In order to remain profitable in this highly competitive market, Shrempp knew that the company had to continue to grow. They needed to reach customers down market without compromising their high-quality brand. To do this, they began selling vehicles to the market’s premium niches and were quite successful. Along with broadening their product offering, they were becoming more and more international with their production because of the high amount of revenues being generated internationally. Schrempp knew that these steps would only keep them competitive for so long though. With the nature and frequency of alliances and mergers in the automotive industry becoming more and more frequent, he knew that to keep up with the changing industry and increased time and cost pressures, he had to take another step in order to not fall behind the competition. SWOT analysis Daimler-Benz | Strengths * Attention to detail * Brand image * Engineering * Global distribution network | Weaknesses * High-cost & inefficient...
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...model The deal to a merger between two of the giants are remarkable achievement. There are no cultural differences. "Although the integration of the team spent after the merger of DaimlerChrysler, several million dollars has work on cultural sensitivity seminars for their staff on topics such as sexual harassment in the American and German restaurants etiquette, larger errors in business practice and management settings remain unchanged. So both brands could contain preserved different cultural class: • James Holden, the President of Chrysler from September 1999 to November 2000 described what he saw as "married up, marry down" phenomenon. "Mercedes, perceived as a fantasy, a particular brand, and Chrysler, Dodge, Plymouth and...
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...for Global Entrepreneurial Leadership DaimlerChrysler Merger: The Quest to Create “One Company” Tom Stallkamp, Chrysler president and executive in charge of accelerating integration of the recently merged Daimler and Chrysler companies, was feeling great frustration. Why couldn’t he move the integration process along more rapidly? He could see clearly the amazing potential for payoffs, but it just wasn’t happening. He wasn’t used to being unable to move the organization, and he hated the feeling of being able to visualize great things without being able to mobilize people to action. What else could he do? Maybe it was time to let the two cultures duke it out, and allow the stronger one to win. That would be one kind of integration, though not quite what he had been working for. Background At 4:00pm on November 12, 1998 as the final bell rang on the New York Stock Exchange, U.S. automaker Chrysler Corporation and German automaker Daimler-Benz ceased to exist. They emerged the next day as a new global conglomerate named DaimlerChrysler AG. With combined revenues of $130 billion and a market capitalization of $92 billion, DaimlerChrysler became the fifth largest automaker in the world in number of vehicles sold and third largest in sales. The $40 billion stock deal was the largest ever in the industrial world. Upon completion of the transaction Daimler stockholders owned 57 percent of the new DaimlerChrysler and Chrysler stockholders the remaining 43 percent. After ten months...
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...- Lessons in Post-Merger Integration - Jan Daniel Laufhütte 2304958 Individual Written Case Study Report in Strategic Management IHS-3-422 London South Bank University 17/12/2003 Table of Contents List of Figures................................................................................. i Introduction ................................................................................... 1 1. The changing world automobile industry .............................. 1 2. Reasons for mergers and acquisitions .................................. 3 2.1. 2.2. Daimler-Benzs’ motives..................................................................... 3 Chryslers’ motives ............................................................................. 5 3. The Post-Merger Integration Structure................................... 7 3.1. 3.2. 3.3. Preparations for the merger .............................................................. 7 Integration Structure of DaimlerChrysler......................................... 7 Expected Synergies ........................................................................... 8 4. Cultural Issues ......................................................................... 9 4.1. 4.2. 4.3. Daimler-Benz’s Culture...................................................................... 9 Chrysler’s Culture ............................................................................ 10 Key Integration Problems and Post-Merger Business Culture ....
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...Introduction In May, 1998, Daimler-Benz1 and Chrysler Corporation,2 two of the world's leading car manufacturers, agreed to combine their businesses in what they claimed to be a "merger of equals." The DaimlerChrysler (DCX) merger took approximately one year to finalize. The process began when Jurgen Schrempp3and Robert Eaton4 met to discuss the possible merger on January 18, 1998. After receiving approval from a number of groups, (Refer Exhibit I), the merger was completed on November 12, 1998. The merger resulted in a large automobile company, ranked third5 in the world in terms of revenues, market capitalization and earnings, and fifth6 in the number of units (passenger-cars and commercial vehicles combined) sold. DCX generated revenues of $155.3 billion and sold 4 million cars and trucks in 1998. Schrempp and Eaton jointly led the merged entity, as co-chairmen and co-CEOs. | | DCX sources were confident that the new company was well poised to exploit the growth opportunities offered by the global automotive market in terms of geographical and product segment coverage. (Refer Exhibit II for Daimler Benz and Chrysler's product ranges) | However, analysts felt that to make the merger a success, several important issues needed to be addressed. The most significant of these was organizational culture. German and American styles of management differed sharply. A cultural clash would be a major hurdle to the realization of the synergies identified before the merger. To minimize this...
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...differences such as countries, the cultural issues, the creative styling and product development and more. After the merger, appeared some major problem that hardly fixed by both of the company and yet there were some issues that occur after the integration until Tom Stallkamp wonder if the merger should be continue. 2.0 ISSUES The merger between the companies faced problems that mostly related to the cultural differences, the management of the companies, communications and misunderstanding in a lot of aspects. Besides that, is the merger between these two massive companies is the best strategies? 3.0 TOOL USED CAGE analysis is used in this problem solving. CULTURE Different personalities appeared because basically, after the recent aggressive change The Board of Management, Daimler can be said as a assertive and committed company where totally unlike Chrysler that tend to be little less rigid and sometimes can be flexible and go off on tangents. Their working lifestyle also showed obviously different for Daimler which they embraced formality and hierarchy while Chrysler favored open collars, and free-form discussion. There were also language barriers that happened between the affiliations when practically all the German executives spoke English while none of the Americans spoke German. In an effort to improve the chances of integration triumph, Chrysler invited employees to take culture training as they consider that culture training is more crucial than language...
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...DaimlerChrysler I. Vision and strategy of Jurgen Schrempp for conducting merger: a. To create a company that would combine the Mercedes’ engineering with Chrysler’s marketing and design savvy to develop a vehicle to be sold anywhere in the world b. Increase market share (diminished by competitors increase in quality, technology, and innovation): i. Daimler – felt pressure to merge, ranked 15th largest automaker (only above Volvo & Porsche) ii. Chrysler – lack management depth, new products, and has small oversee market penetration c. Avoid consolidation due to global overcapacity d. Cope with changing marketplace and technology, such as the Internet e. Remain competitively priced by reducing cost (implementing “platform” design across DaimlerChrysler) f. Was it really “a merger of equals”? What went wrong? (see table and reference #2 – Muller, 2001) Issues faced by DaimlerChrysler after 1998 merger: a. How to leverage “soft” assets, such as Intellectual Capital in the form of Knowledge Management? b. How to resolve cultural differences between Daimler and Chrysler c. How to convince executives, managers, and staff to be open and remain loyal d. How can knowledge management be used to smooth the merger process * See reference #4 (Robb, 2003) for similarities between related KM acquisitions and mergers e. Is there enough resources or reason to adopt Knowledge Management * See Table A for comparison of companies that adopted KM Transfer of resources and capabilities: a. Economies...
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...DaimlerChrysler/Nummi Case#4 Daimler-Benz considered one of the first manufacturing companies dedicated to the automobile industry in late 1920's, its line of production was luxury brands like Mercedes Benz, Smart & Daimler Trucks among others. Unfortunately the company was not having the acceptance expected in Europe; need of an evolution the way it did, business to be able to position itself in other markets like Asia and the United States. Chrysler Corporation is a vehicle manufacturer company with a base in the United States and is considered the third distributor of vehicles behind GM and Ford. Prior to the merge of General Motor, the company had many internal problems that wouldn't let it move forward in the industry; actually manufacture the following brands Chrysler, Dodge & Jeep among others. Prior to the merger both companies differentiate from each other specially the different management and operation styles. In 1995 Chrysler had many labor problems due to the reduction in quality, re-calls and consumers dissatisfaction over 220,000 employees were lay-off. On the other hand the Daimler-Benz had a highly skilled workforce, job satisfaction, good relationships with German labor unions and managers getting involved on daily problem solving. The strategy of the Daimler-Chrysler merger would create the fifth company in the world, in the industry by volume compared with GM, Ford, Toyota and Volkswagen. The company would take the name of Daimler-Chrysler and would be owned...
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...his brothers Marcel and Fernand, and his friends Thomas Evert and Julian Wyer founded it in 1899. Since the beginning they have been an industry leader in small car designs, combining functionality with style. In 1998 Renault was the world‟s ninth-largest car manufacturer with 4.3% of the market. During the 90‟s globalization was occurring in all industries including the automobile industry. Major manufactures were seeking strategic alliances and mergers as ways to increase market share, reduce costs, and improve productivity. Renault has been an established French automaker since it started producing cars in 1897. Like many other companies Renault has been looking to expand into the Asia for its large potential market. They felt that the best way to do this was through a strategic alliance. Renault has been looking for another automobile manufacturer to peruse a possible alliance with since the early 90‟s. From February 1990 to December 1993 Renault attempted a merger with Swedish car manufacturer, Volvo. It was expected that the merger would go through, than in December of 1993 Volvo shareholders voted against the agreement. This was a big loss for Renault, not only had they lost the opportunity to merge but they wasted time and money in the pursuit. Renault felt that it was now five years behind in the race to gain international stature. Renault‟s main objective in finding a strategic alliance partner was to increase their market share by selling cars in...
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...OVERVIEW OF DAIMLERCHRYSLER KNOWLEDGE MANAGEMNT STRATEGY Chrysler and Daimler has merged together in 1998 while both of these companies had different knowledge management structure they both used it in such a way to emerge. Chryslers Has faced financial troubles in the early of 1990’s, which made them aware of the knowledge management issues. In 1970’s and 1980’s experienced Layoffs, plants closing and budget cuts. To eliminate this problems company hired heavy teams with cross-functional responsibilities for building vehicles the heavy team performed outstandingly and completed in less then previous time 39 months vs. 50 months. But it started facing a troubles Chrysler was forgetting its own solution and procedures on how to build cars. Then company initiated a Three-step solution. First one was bucket; these buckets included databases, CAD/CAD systems and all relevant data. Second was Tech Clubs. These clubs initiated an interaction between engineers and designers working on similar problems in advanced and the final step was the Engineering book of knowledge (EBOK) to capture and gain the knowledge which was generated in Tech clubs. After at then end of the decade Chrysler was successful in implementing the change and brings the innovation. Daimler had a different Knowledge management strategy. They had vocational training for workers, technicians and engineers. Mercedes felt the emerging need for C-E-S class and in 1997 head of Mercedes discovered the team of learning...
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