1. DAIMLER-CHRYSLER MERGER: A cultural mismatch???
“Merger of equal”
or “marriage made in heaven”
By, Prayash Neupane

2. What’s in this presentation ???
Introduction ( History of both companies)
Merger Process
Merger motives
Success and failure
Cultural differences
Analysis after merger
Conclusion
My Opinion on merger

3. Daimler-benz ( )
 In 1885, Daimler together with Maybach began work on the first engines that were designed specifically for use in motor vehicles.
This German firm, initially operating at Cannstatt near Stuttgart, was the origin of the business variously known as Daimler Motoren Gesellschaft from 1890 to 1926, and then Daimler-Benz from to 1998.
Daimler Benz was founded in An Agreement of Mutual Interest - was signed on 1 May 1924 between Karl Benzs Benz & Cie., and Daimler Motoren Gesellschaft.

4. Chrysler corporation (1925-98)
The company was founded by Walter Chrysler (1875–1940) on June 6, 1925.
The Chrysler was a 6-cylinder automobile, designed to provide customers with an advanced, well-engineered car, but at a more affordable price than they might expect.
The advanced engineering and testing that went into Chrysler Corporation cars helped to push the company to the second- place position in U.S. sales by 1936.

5. Merger Process
 In May, 1998, Daimler-Benz and Chrysler Corporation, two of the worlds leading car manufacturers, agreed to combine their businesses in what they claimed to be a ―merger of equals.
The process began when Jurgen Schrempp and Robert Eaton met to discuss the possible merger on January 18, 1998.
The merger was completed on November 12, 1998.
The merger resulted in a large automobile company, ranked third in the world in terms of revenues, market capitalization and earnings, and fifth in the number of units sold.
German and American styles of management differed sharply.
To minimize this clash of cultures, Schrempp decided to allow both groups to maintain their existing cultures.

6. Merger motives Daimler’s motives Chrysler’s motives
Access to US market
Reduce cost of production
Fear of loosing their competitiveness
Wish to reach more middle class buyers
Access to Europe market
Avoiding another crisis
Improve R&D department
Overcome the challenge of excess capacity and overproduction

7. Success of merger The largest merger, before 1998
Increasing market power
Flexible ways of integration of two different countries

8. Swot Analysis Strength Weakness Merger/ combined two strong companies.
A leader of motivation
Strong existing product brand
Record revenue & increasing market share
Combined two different culture
Employee have been leaving at high rate
Harder to inspire vision

9. Swot Analysis Opportunities Threats Quality & engineering skills
Distribution into the key markets
New distribution of networks
Does not have corporate brand identity
Competitors
Behind in the research & marketing of hybrid autos
Cultural differences

10. After merger share price
Fig, Daimler-Chrysler’s share prices between 1998 and 2002

11. Cultural Differences Daimler-Benz Chrysler Corporate Structure
Corporate Culture
Customer Proposition
Value Chain
Hierarchical structure
Management process of planning, organizing & controlling. More conservative, efficient & safe
The driving image & experience associated with highest quality available in market
Emphasis on engineering, design, quality and after sales service
Team-oriented structure
Setting goals, directing & monitoring implementation. known as risk taking underdogs. (Daring, diverse & creating)
Attractive eye-catching design at very competitive price
High volume, low cost manufacturing & distribution

12. conclusion
 Employees in firms that are acquired or merged report lower overall job satisfaction, lower trust in management, and diminished sense of job security. (Gantz-Wiley Research, 2004)
A successful merger would required the two companies to abandon their own business culture and create a new distinct one. ( Thomus Stallkamp Former president of Chrysler)
Usally, it is extermly difficult to pin point exactly what role culture played in a success or failure. However in the case of Daimler- Chrysler, it would be a safe assumption to say that cultural factor was among the crucial factor which determine the downfall of company.

13. My Opinion to solve the problem
Should have identified vast cultural differences in the corporate culture of both companies.
The leaders of both Daimler-Chrysler should have exhibit cultural sensitivity and emotional intelligence to facilitate the growth of cohesive culture thorough the collaboration of shared meaning and values.

14. Any Questions ???