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Daimler Chrysler: Merger Of Equals Or Global Fender Bender?

1111 words - 4 pages

What prevented Daimler-Chrysler from achieving the promised synergies?Daimler-Chrysler had two different people with two different management philosophies operating the same company. The fundamental differences in management, operational and decision making styles caused a significant discord between the Germans and the Americans. As with any merging of companies, there were going to be different corporate cultures, and in particular different national cultures, into the new corporation. The national culture of a company is an integral part of a company's overall corporate culture.The corporate culture clash prevented Daimler-Chrysler from achieving the promised synergies. Cultural differences created great tension; 1. The Germans wanted to put unpopular issues on the table from the beginning; thereby expediting the integration of the two companies. The Americans wanted to ease into changes, 2. Differences in pay scales, and travel and expense policies added fuel to the situation, 3. Differences in management, financial, operational and decision making styles and staffing soon became apparent.Distance and different time zones added to the unease between the entities because the Germans always seemed to be functioning at a higher, more efficient level due to their early time zone advantage each business day. Furthermore, synergy can only occurs when two companies together can make and market products more efficiently than they were able to do apart.Why would Eaton and Schrempp agree to share the top position of the merged entity?Schrempp and Eaton agreed to share the top positions in order to ensure that both companies' interests were represented. Also the merger of these two corporations both had two different cultures and business techniques; in order to make a smoother transition, it made sense to keep two the two top executives who had the know how and the knowledge to see these companies through the merger. With the two companies in different nations, it also made good business sense for two people to function in the top position during the merger for the time it would take to totally integrate the companies."To keep things equal both Daimler's chairman Jurgen Schrempp and Chrysler's chairman Robert Eaton agreed to share the power for three years - until Eaton retired." (Mescon, Bovee, & Thill (2002.) This shared position and power was supposed to help preserve the idea that the new company was a merger of equals. However it soon became apparent that Daimler was running the show; the management board's structure was changed to 8 Germans and 5 Americans, with a total of 4 less members.Which of these stakeholders benefited the most from the merger: the original Chrysler shareholders or the new Daimler-Chrysler shareholders? Explain your answer.Who benefited most? Those who sold their Chrysler stock at the highest price offered before the merger. Why? The value of the Daimler-Chrysler stock plummeted following the merger when profits became...

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