DAIMLER-CHRYSLER MERGER

Analysis of the Daimler-Chrysler Merger

Analysis of the Daimler-Chrysler Merger

Introduction

At present, the economy happens to be more and more influenced by the incessantly growing globalization. Because of the internationalization of the markets, companies experience severe rivalry, increasing cost strains and the inevitability to acclimatize business procedures at an international level. On these bases, more and more cross border acquisitions and mergers can be viewed. One such merger was between the German car manufacturer Daimler Benz and the American car maker Chrysler Corporation in 1998. The merger was done in response to the challenges that the car industry started to face in the late 1990s (Hollman et.al, 2010, pp.432).

After the approval of merger in 1998, The DaimlerChrysler AG was established. It turned out to be the world's third leading car maker. The merged company was only overwhelmed by Ford and General Motors in regards of annual proceeds and market share.

The merger of Daimler and Chrysler was regarded as a 'merger of equals'. Since, not any of the two companies sought to invade the other one. They sought to take advantage of the strengths of the two companies engaged and to be strong as one (Hollman et.al, 2010, pp.434).

Question 01: Objectives behind DaimlerChrysler merger and premerger planning

In the face of the success of Daimler in Germany and Europe, the corporation never happened to be successful in reaching the lead of the competition on the huge and significant American market for automobile. Previous to the merger with the Chrysler car manufacturers, market share of Daimler Benz in the US American market was not more than 1 percent. The soaring work intensity all the way through its production procedures with the purpose of assuring the best quality benchmarks did not permit Daimler Benz to happen to be competitive on the hard-fought automobile market of America (Hollman et.al, 2010, pp.433).

The Chrysler Corporation, in contrast, was a well-recognized and strongly positioned automobile manufacturer in the US American market. In the 1990s, times turned out to be harder for the automobile industry, and Chrysler had to come across a strategy to get itself ready for the hard period in advance so as to keep away from encountering bankruptcy another time. At that moment, Daimler Benz had to confront the exactly similar challenges as Chrysler in the international market for traveller cars. Surrounded by other concerns, the two companies had to deal with the challenges forced because of over capacities, a fortified position of the customers and increasing ecological awareness (Hollman et.al, 2010, pp.433).

Other than prevailing over the stated problems, the German car maker Daimler Benz anticipated to reinforce its position in the US market too. Consequently, from the viewpoint of Daimler Benz, the merger with Chrysler appeared to be extremely promising and the corporation expected for realizing a crucial competitive edge for the future. Chrysler was believed to be the ideal matching part for such a deal. The annual profits, the soaring efficiency, the low costs in designing and development of product and a well-established distribution system in ...