Essay About Michaeldaimlerchrysler Post-Merger Integration And Daimler Benzpremium Profitability

Daimlerchrysler Post-Merger Integration
Daimlerchrysler Post-Merger Integration
[pic 1]Team D-Killers: Erika, Echo, Nurlan, Roman, MichaelDaimlerChrysler Post-Merger Integration  “A merger of equals made in heaven”. Given the background and the situation of both companies by late ‘90s, was such a target only a dream or really feasible? Do you find among the 2 a major potential beneficiary of the merger process? Chrysler:Best practice for the U.S. car industryCost reduction program SCORE cut suppliers by halfTarget costing allowed the company to significantly reduce R&D costs (500 USD vs 2000 USD Mercedes)Lowest vertical integration and highest platform sharing among its brandsMost productive carmakerLeast diversified and even within the vehicle segmentToo much focused on the North American market. Daimler Benzpremium profitability through restructuring efforts and a refocus on the automobile sectorHigh-quality luxury vehicles based on German engineering and technologyHuge global sales and dealership networkHighest costs in the industry resulting from inefficient production methods and processes and high labor costs. Very complementary on paper:Daimler BenzChryslerNAFTA salesO++Europe Sales++-Asia & LATAMCollaboration opportunity (JV)Passenger cars++++Minivans-++SUV-++Trucks-++Who is the major beneficiary?Both companies rushed into the merger given the pressure from globalization. The back-end merger is an unefficient way of merging in a production environment as it excludes all synergies resulting from economies of scope and scale. Fundamental different viewpoints on strategy (productivity versus technology leadership) Integration only among 300 top-leaders and through compensationTax-Benefits for both companiesLack of cultural due-diligence destroyed employee engagementShareholders did not understand the investor story – Shift from U.S. investors towards European investorsIn the end, both companies lost (market capitalization, investors, employee trust and credibility). This merger had the potential to become successful based on targets from shareholders of both companies. The fact that it did not happen demonstrate the existing inequality which did not allow overcoming the cultural and management mismatches. Which were the merger’s main challenges, and how did Eaton and Schrempp address them? The differences:CultureStructureProducts[pic 2]FormalTraditionalEngineeringBureaucraticLong-term High authorityStrong hierarchyLittle payment disparityHigh qualityHigh priceLuxuriousTechnologyBrand focused[pic 3]RelaxedInformalFlexibleRisk takingWilling to try new thingsTop down managementLean staffHighly centralizedTeam workCollaborative & nimbleManufacturing AttractiveVery competitive priceComfortable drivingChange/fit with needs of marketThe Challenges: