PRESENTED BY:AMIT JAIN(036)MANPREET KAUR(037)NEHA GOYAL (043)PRIYANKA (053)

BACKGROUND OF DAIMLER

Daimler–Benz was a German manufacturer of automobiles, motor vehicles, and engines.

1926 - Formed with the merger of two german automobile manufacturers.

CEO – Jurgen Schrempp .

BACKGROUND OF CHRYSLER

Founded by Walter P. Chrysler on June 6, 1925

1924 – Launched Chrysler Six, designed to provide an advanced, well-engineered car, at an affordable price

1928 – Acquisition of the Dodge Brothers firm made Chrysler the third of Detroit’s “Big Three” (GM, Ford, Chrysler) automakers overnight

CEO - Robert Eaton.

The MergerHow it all happened…

CHRONOLOGY OF EVENTS IN DCX MERGER

May 6, 1998 - Merger agreement was signed in London

May 7, 1998- Merger agreement made public.

May 14, 1998 - Daimler-Benz Supervisory Board agreed to the merger

July 23, 1998 - European Commission approved the merger

July 31, 1998 - Federal Trade Commission approved the merger

August 6, 1998- Daimler Chrysler announced that their shares would trade as “global stock” instead of ADRs

September 18, 1998 - 97% of Chrysler shareholders and 80% of Daimler-Benz shareholders approved the merger

November 12, 1998 - Merger completed

DAIMLER –CHRYSLER (DCX) MERGER

The merger resulted in a large automobile company ranked 3rd in the world in terms of revenues, market capitalization and earnings.

5th in the number of units (passanger-car and commercial vehicles combined) sold.

DXC generated revenues of $ 155.3 billion and sold 4 million cars and truks in 1998.

Schrempp and Eaton jointly led the merger entity as co-chairmen and CEO’s.

MOTIVES FOR THE MERGER

Daimler’s Motives Their goal to become a global player with interests

outside its traditional West European base, led to its merger with the Chrysler Corporation.

Chrysler’s Motives To gain competence in product technology and

quality To expand beyond the North American market

In combining the two companies, the potential of gaining high volumes, participation in all segments, innovation, adaptability, and technology and quality excellence.

CONT.

The new company was well poised to exploit the growth opportunites offered by the globle automotive market in terms of geographical and product segment coverage (product ranges)Daimler benz- S-class , E-class, C-class, M-class, G-class, smart Chrysler- Cars, minivans, jeepChrysler group was given the autonomy to manufacture mass-market cars and trucks while German continued to built luxury merceedes.

CHASH ON CULTURE

Mismatching the work methodology In this Daimler Benz was characterized by methodical decision making but Chrysler encouraged creativity. Chrysler was the very symbol of American adaptability and resilience whereas Daimler Benz seemed to value respect for authority, bureaucratic precision and centralized decision making.Differences in pay structure Germans disliked huge pay disparities and unlikely to accept any steep revision of top management salaries.

CONT..

But Americans would believe in pay high basic structure.Different working style Germans were used to lengthy reports and extended discussions but Americans performed little paperwork and believe in taking quick decisions.Different thinking German style of planning i.e. went a meeting and search out in journals and they adopt old style in very decision making process but Americans believed in new ideas and achieve these impossible goals to possible goals.

BRIDGE THE GAP IN CHASM

DCX were adopted several ways to bring two culture closer.In this Germans were taking classes on cultural awareness.Americans were encouraged to more specific plans.But analysts felt that Americans and Germans might come closer. Americans were impressed by their German counterparts skill with English language.

Reasons for Failure

“How do you pronounce the name

of a German-American

automaker?” Daimler.

Chrysler is silent.

--DC headquarters joke Auburn Hills, MI

2000

2-years after merger, DaimlerChrysler's US arm stumble.

Chrysler US loss for 3rd Q at $530M-$550M

Problems: US exec flight due to German “intervention“, abandon of Jeep/Dodge Ram up styling, failure to deliver on cost savings

2001-2002

Late 2000: Dr. Z, then head of Chrysler, proposed a massive reorganization of the US subsidiary: the closure of six plants and the loss of 26,000 jobs .

A poor performance in 2001 DaimlerChrysler's revenues for 2002 ($148.15

billion) decreased 6% from 2000 Chrysler cars generated a decreasing revenue,

down 7% from 2000 and Chrysler accounts for 41.5% of company revenue

On the opposite, Mercedes Benz generated an increasing revenue of 9%, only accounted for 31% of the total revenue.

1. Stock Price shrank…

Overall results

Stock Price 1998-2002

2. Mismanagemen

t Failure to inform all stakeholders

accurately about the terms of the mergers.

Oct 2000, Schrempp, Daimler CEO, confessed that it was never meant to be merger of equal – Chrysler was to be a subsidiary of Daimler-Benz.

This caused “Deep Mutual Distrust”.

“Deep Mutual Distrust” Con.

Were the Germans at point of dominating? Schrempp’s public announcement in Germany

--This rather be an acquisition, not a merger. Employees’ and US buyers’ felt they were betrayed.

Unequal representation at the executive board Closing out of Plymouth brand Later on, almost all of Chrysler key executives

and upper management personals were either left, resigned, or replaced by the German ones.

Late 2000, an American president of the Chrysler Group, Jim Holden, was replaced by a German appointee, Dieter Zetsche during the time when Chrysler experienced difficulty in the marketplace

Other American executives were either replace or left as well-- Now the German was solely in charge of Chrysler.

“Deep Mutual Distrust”

SWOT ANALYSIS

SWOT Analysis

Strengths Merger combined two strong companies. Savings resulting from economies of scale. Company does more than just autos. Daimler has outstanding reputation. Chrysler was a very cost-effective company. A leader in innovation. Record revenues and increasing market share. Lack of capital constraints. Strong existing product brands. $47 billion allocated for research and development. A wide array of corporate holdings. Leader in Fortune Global 500.

Weaknesses Merger combined two different company cultures

(European and American). Harder to inspire vision and direction for this large

global company. Employees have been leaving at a high rate. DaimlerChrysler brand is unknown and difficult to

define. Image campaign could distract from strong product

brands. DaimlerChrysler products do not bear the company

name. Company’s broad holdings are still seen as separate

entities, not as parts of DaimlerChrysler.

SWOT Analysis

Opportunities Merged company should be able to expand markets,

particularly into Asia. Safety failures at Ford should open door for

DaimlerChrysler. Innovation will lead to new products on the market. A hybrid car, which is very environmentally friendly, will

be launched soon. Creating a DaimlerChrysler corporate brand identity. Over 68 percent of the company's profits come from

automotive brands. Can reach opinion leaders and existing customers with

similar communication plans. Innovative car ideas.

SWOT Analysis

Threats Has been an extended period of time without corporate

communications. Globally, the general population knows little about this

corporate merger. DaimlerChrysler does not yet have a corporate brand

identity. Over 68 percent of the company's profits come from

automotive brands; this is a threat if the market takes a downturn.

Behind in the research and marketing of hybrid autos. Size of company will demand a varied marketing program;

a cookie-cutter approach will not work.

SWOT Analysis

Daimler Emphasis on engineering, design, quality, and

after-sales service

Chrysler High volume, low cost manufacturing, and

distribution

1.5 Values

Communication challenges

No clear message and communication about answer to current problems and who is going to run the entity. The German? Will facilities of Chrysler have to close down?

DaimlerChrysler’s communication strategy was not effective enough to meet this challenge.

Less than 2 years, it had lost the confidence of the media and credibility it had with US management staff and shareholders.

Soon DaimlerChrysler was referred to as acquisition rather than merger.

3. Changes in US Auto Industry Rapidly changing world market…large

amounts of cash would be needed to keep product lines up to date as well as to take products to emerging and profitable new markets.

In US, the challenges from Japanese brands during 1998-2000 which Chrysler responded with little innovation and competitive price reduction.

The Divorce May 2007, a private equity firm Cerberus

Capital Management LP is buying 80.1 percent of Chrysler, for 7.4 billion.

Far from the $38 billion Daimler spent to acquire Chrysler back in 1998.

Not all money goes to DaimlerChrysler, the money actually goes to paying off Chrysler's outstanding loans, ensuring the new Chrysler Holding company begins life debt-free.

Just A Plain Daimler -- Back to Daimler

AG

Chrysler LLC

Thank You For Your Attention