Strategy Implementation Report: DaimlerChrysler Merger Analysis

This report examines the strategy implementation process in the DaimlerChrysler merger, focusing on the challenges and outcomes of the integration. The analysis covers the initial motivations behind the merger, including cost reduction and market expansion, and explores the differing cultural and structural challenges faced by both companies. It delves into specific issues such as product differences, management styles, and the inefficiencies of a back-end merger. The report also highlights the role of globalization pressures and tax benefits in driving the merger, while also discussing the negative impacts of the merger including loss of shareholder trust, employee credibility, and market capitalization. Furthermore, the report discusses the back-end merger strategy, its advantages, and its hard and soft issues. The report concludes with a discussion of the challenges and factors involved in the integration of such a merger, providing valuable insights into the complexities of mergers and acquisitions. The provided solution is available on Desklib, a platform that provides students with past papers and solved assignments.

Running head: STRATEGY IMPLEMENTATION
Mergers and Acquisitions
Name of the University:
Name of the Student:
Author Note:

1STRATEGY IMPLEMENTATION
Answer 1
Chrysler considered merging as the best practice for the automobile industry of US. It
helped in reducing the cost of suppliers. Moreover, target costing allowed the companies to
reduce significantly the research and development costs. In addition to this, the merging
procedure benefitted by increasing the number of productive car makers, decreasing vertical
integration and increasing the platform sharing amongst brands. However, the company was
too much focused on the market of North America, which resulted in less number of
diversified workers, within the segment of automobiles. In the case of Daimler’s, merging
helped in increasing profitability through restructuring the efforts and refocusing on the
sector of automobiles (Bouchikhi and Kimberly 2012).
Attributes Daimler Benz Chrysler
Europe Sales Positive Negative
NAFTA Sales 0 Positive
Passenger Cars Positive Positive
SUV Negative Positive
Minivans Negative Positive
Trucks Negative Positive
Asia and LATAM Collaboration opportunity Collaboration opportunity
Both the companies rushed into merging, due to the pressure of globalization. In
addition to this, both of the companies had tax benefits. However, the shareholders did not
understand the overall story of the investor, a shift from the investors of U.S. towards the
European investors. In the end, both the companies lost due to investors, employee credibility
and trust as well as market capitalization (Yamanoi and Sayama 2013).

2STRATEGY IMPLEMENTATION
Answer 2
The challenges are mainly their differences, which are listed as follows;
Challenges
Cultural Structure Products
Formal, Bureaucratic,
Traditional and long term.
Higher authority, Little
disparity in the payment
segment and strong hierarchy.
Highly priced, high quality,
technology, luxurious and
focused on the brand.
Relaxed and informal, willing
to try new methods, risk taking
and flexible.
Lean staff members, Highly
centralized, strong bonding
among the team members,
manufacturing, collaborative,
nimble and top-down
management.
Attractive, comfortable driving,
highly competitive price,
changes with the market needs.
However, both the company merged after the pressure of globalization emerged. The
back end merger is considered to be an inefficient method in the production environment as
because it excludes all the synergies, resulting from the economies of scale and scope. It led
to different viewpoints of strategies, that is, productivity versus technological leadership.
Moreover, integration was possible only among the three hundred top leaders and that too,
through compensation. Furthermore, lack of cultural forces led to the destruction of the
employee engagement. In addition to this, the stakeholders did not understand the story of the
investors, as there was a shift from the investors of U.S. towards the investors of Europe. The
overall factors caused an inequality among the management structure (Gill 2012).

3STRATEGY IMPLEMENTATION
Answer 3
Adopting a back end merger helped them in removing the minority shareholders,
which forced them to sell their shares. This method is generally adopted when the minority
shareholders stands n between the way of transaction. The procedure of back end merger
allows majority shareholder to buy the shares of minority shareholders. Unless and until the
minority shareholders meet all the statutory requirements for a short form merger, the back
end mergers have to fill a particular proxy statement. Overall, this procedure helped the
company to exchange their shareholders’ rights. It is considered as a type of anti acquisition
strategy (Schroeder 2012).
On discussing the hard and soft issues in the integration of back end merger, several
factors are taken into consideration. Firstly, the hard issues include the amalgamation of
Information Technology and other systems. Secondly, the overall distribution led to
extension and in turn, conflicts. Thirdly, it eliminated the duplicated costs and activities.
Fourthly, the financial responsibilities and reporting led to the transfer of contracts. The soft
issues included; change in the structure of organization, management appointments,
managing different cultures and ineffective communication (Bouchikhi and Kimberly 2012).

4STRATEGY IMPLEMENTATION
References
Bouchikhi, H. and Kimberly, J.R., 2012. Making mergers work. MiT Sloan management
review, 54(1), p.63.
Gill, C., 2012. The role of leadership in successful international mergers and acquisitions:
Why Renault‐Nissan succeeded and DaimlerChrysler‐Mitsubishi failed. Human Resource
Management, 51(3), pp.433-456.
Schroeder, H., 2012. Post-merger integration the art and science way. Strategic HR
Review, 11(5), pp.272-277.
Yamanoi, J. and Sayama, H., 2013. Post-merger cultural integration from a social network
perspective: a computational modeling approach. Computational and Mathematical
Organization Theory, 19(4), pp.516-537.