Daimler Chrysler Cars – A Cross-Border Merge
The ever demanding innovation in automobile market with increase in global trade and the competition from home and overseas market are identified as major elements in improving their global distribution systems which forces many automobile giants for location decision and merger which provides them the platform to operate efficiently in the global market. With such mergers and acquisitions the automobile giants can position themselves with better ranks in the global auto market which comes with an advantage package of overseas facilities and establishing themselves as the multinational giant automobile company with export growth expanding leaps and bounds. Daimler and Chrysler are two such auto giants who signed a merger to become the 3rd largest automobile giant in the world. Daimler with its all premium and luxury vehicles in Europe merged with world #25 North American low end cars and trucks manufacturing company Chrysler. With this merger the companies aimed at huge savings resulting due to the combined purchase and other operations and also reduced research and development costs. They aimed to create the greatest synergy possible and compliment each other posing big survival risks to their competitors but the merger ended with a sour note in 2007 with Chrysler being acquired by Cerberus capital management. This essay is an effort to show how cultural and working differences can create turmoil of events for the merger companies pushing the company’s future at stake.
Analysis – Issues with Merging
The Daimler Chrysler was considered as a costly mistake for both the American-German companies. Daimler was completely anguished with its loss of €12 million. The major reason for the downfall was due to the cultural differences between two nations which the companies failed to cope up with. In simple Daimler was operating DaimlerChrysler as it was doing with German Company and Chrysler wanted it to work like an American company. They were travelling in tangent lines and found no point to converge.
Cultural differences cropped up, when Daimler failed to understand the price-conscious Chrysler’s concern with the US markets. Daimler feared that this might underestimate its brand and affect its affluent customers. (Time, 2012) Some problems were difficult to cope up with. During pre-merger the American employees had better pay packets than the German employees. To continue with the merger, the American employees took home two or three times more than that of their German colleagues. But at the same time, the Americans were not able to come to terms with the expenses done by the Germans as Chrysler was a leader of manufacturing small cars with competitive prices whereas Daimler concentrated on the high-end luxury cars, which required huge expenditures to give the driving experience for the customers (The economist, 2000) this frustration continued with the employees exchanging unpleasant...