Managing Across Cultures: A Case Study of DaimlerChrysler Merger

Running head: MANAGING ACROSS CULTURES
Managing Across Cultures
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1MANAGING ACROSS CULTURES
Question 1:
Globalisation has completely changed the appearance of today’s economy. Particularly the
firms of 1990 have now expanded into new markets in order to operate more on the global
world as well as to develop their businesses. For this reason, most of the companies choose to
expand by means of corporations with the other companies in order to make the entry in the
market much easier and simpler for strengthening their position in the market. In this world
of globalisation, merger and acquisition has become one of the widely used tools for the
development. Some of the merger in between several successful and well-known firms has
always caused a sensation in the market. However, there are certain mergers too, that have
failed because of several inherent reasons. One of the example of such merger is the Daimler
and Chrysler merger. Daimler was founded in the year 1886 by Carl Benz and Gottlieb.
After 125 years of its emergence, it was declared as one of the most successful automotive
companies in the world. It is one of the biggest producers of the premium and luxury cars in
the world and is also the biggest manufacturers of the commercial vehicles with global reach.
The financial services of Daimler offers its customers with full range of automotive financial
services comprising of leasing, fleet management, financing and insurance.
On the other hand, Chrysler was established in the year 1925 by Walter P. Chrysler. This
group produces Ram, Jeep, Mopar, Fiat and Dodge. Some of its products are considered to be
the most recognisable vehicles in the world and they include- Dodge Challenger, Jeep
Wrangler, Chrysler 300 and Ram 1500. On 7th of May, 1998, the Daimler-Benz AG, the
German company and the Chrysler, the American company had announced a “merger of
equals” in between the two. Due to the worldwide development of industries, the internal
problems and the cultural differenced on the sides of the Americans turned out not to be as
successful as they expected.

2MANAGING ACROSS CULTURES
As per the provided case study, there are several reasons behind the merger of these two
companies. The Daimler-Benz deal with the situation due to the fact that they used to think
most of the automobile companies that manufactures such luxury cars for the market have
done the merger and acquisition so as to expand their market share outside of the market
share of theirs at their time. The manufacturing of the luxury cars were experiencing
overcapacity due to the fact that the demand was smaller. This was the perception of
Daimler-Benz. Despite its notable success in Europe and Germany, Daimler-Benz never
experienced success in getting ahead of the competition on the then U.S market (Smeets,
Ierulli and Gibbs, 2003). Before the merger, the market share of this company in the
American market was significantly less than 1 %. With the same, the high working intensity
all through its process of production for guaranteeing the high quality of standards did not let
this company to attain competitive advantage on the American market. It wanted to access to
the market of United States and reduce their cost of production. With the same, they were
also in the fear of losing their competitiveness in the market.
On the other side, Chrysler had then developed an image of being a skipjack and also had
proven their ability to bounce-back several times. However, towards the end of Second
World War, this company has faced insolvency a total of four times but finally it managed to
acquire success from defending itself from the ever increasing competition as well as to stand
its ground all against the prevailing competitors each time. But this was in the nineties when
the times became harder than ever before for the automobile industry and it compelled
Chrysler to look for a new strategy in order to prepare itself for the hard times coming ahead
so as to avoid the issue of bankruptcy to occur one more time. During this time, Daimler-
Benz too had to undergo the exact same problem on global market for the passenger cars.
These two companies need to manage these challenges that are been imposed because of
overcapacities, the rising environmental consciousness among the customers and the