DAIMLER`S CASE STUDY

Daimler`s Case Study



Daimler`s Case Study

Introdcution

Marketplace demands for cutting-edge technology and technologydriven strategies force organizational strategists to seek competitive advantage through technological innovation. At the identical time, growing technological complexity, expanding costs, growing pressures for faster time-to-market, and the shifting sands of competitive benefit battle strategists with staggering risks. Contrary to a selfcontained, citadel mentality, alliances are often seen as a pathway toward state-of-the-art technological innovation while ameliorating the risks associated with technology-driven strategies if organizational defenses can be overcome. The basic appeal of alliances emerges from the integration of shared competencies, which can potentially enhance technology development and delivery while reducing each ally's risk exposure (Werther, 16). Of course, these perfect attributes of technological alliances assume that the right alliance structure is chosen and that the degree of necessary organizational integration is achieved. For these assumptions to be valid in perform requires consideration of the alliance continuum (to double-check that the right alliance structure is identified) and the multi-layered decision-making filters (to screen for the key variables that form the achievement of the joint venture integration).

Case Study

In case of Daimler- Benz and the Chrysler Corporation found themselves at different crossroads. Separately, both were “small” firms, compared to General Motors, Ford, and Toyota. Chrysler had the competency of being the “low cost producer” among United States manufacturers—a feat achieved by applying make-or-buy analysis to virtually every aspect of its car production and then outsourcing 45 percent of total car content. But, small market share, low quality, and limited capital made rejuvenation difficult without the great risks of extraordinary financial leverage. Daimler-Benz, however, had a reputation for stellar quality and ready access to capital markets—even with its relatively low market share and total unit sales. Combined as a partnership of “equals,” joint purchasing/production/design planning and rationalization offered the attractive possibility of greater economies of scale to both parties. Chrysler gained access to capital, quality know-how, and engineering talent; Daimler-Benz gained wider distribution in the world's largest automobile market and insights to lower-cost methodologies (Porter, 112). A successful partnership (via merger) promised benefits to both parties and did so with little apparent financial risks.

However, a merger—such as Chrysler and Daimler-Benz—represents such a large commitment of resources that financial, legal, and strategic criteria are separate hurdles that must all be evaluated and approved by decision makers. The final benchmark to appear throughout the 1990s is cultural fit. It suffers fro ma lack of precision in both definition and evaluation. Essentially, cultural fit suggests that the values, management decision-making processes, evaluation approaches, time frames for action, and a host of related criteria need to be considered. An analogy suggests insights: A joint venture is somewhat like a modern day marriage. There are considerations of financial, legal, and even (strategic) goals. However, the success of the marriage—even assuming agreement on these other criteria—depends heavily on how well the personalities mesh (Badaracco, 232).

The organizational equivalent to personality is “corporate culture.” To the degree that the cultural similarities—compensation, discipline, expectations, values, and ...