1. Ishpreet Singh – 12P139 Karan Jaidka – 12P141
Kshitij Agrawal – 12P142 Kshitij Ahuja – 12P143
Manav Gupta – 12P146 Vikas Jain – 12P178
Group 1 – Strategic Management – II
PGPM 2012-14

3.  May 1998: Daimler-Benz and Chrysler
announced that they would merge to create
DaimlerChrysler
 Opportunities were identified to increase
sales, create new markets, reduce
costs, realize economies of scale for the new
entity
 Short term synergies of about USD 1.4 billion
were seen
 Challenge foreseen: To integrate two
dynamic companies into one

4.  Formation of the “DreamTeam”
 Two-tiered board system
 Supervisory Board: responsible for appointments and
approval of major decisions
 Board of Management: responsible for executing
company strategy
 However, integration efforts were marred by
bickering between the Americans and the
Germans
 Differences in management
styles, processes, cultures and working styles caused
problems

5.  DaimlerChrysler claimed to have successfully
completed the merger within 10 months itself
 Restructuring activities
 Board of Management reduced from 17 to 14
members (Two Chrysler executives removed)
 Creation of a separate Sales and Marketing Council
 Automotive business broken into 3 distinct brand
divisions
 Automotive Council formed to drive innovation and
sharing of knowledge and technologies
 The new structure sort of recreated the old
Chrysler corporation

6.  No synergies through platform amalgamation
 Industry volumes falling, introduction of fewer
products
 Initial increases in numbers were attributed to merger
synergies
 However, by 2000, stock prices were on the decline
 No more disclosure of information of merger
synergies (received badly by analysts)
 Financial problems
 Q3FY00 operating loss at USD 512 million
 EPS down by 75%, while GM’s EPS was up by 22%
 Expecting dwindling sales, 7 plants were made idle
 Share price hit an all-time low

7.  Phase 2 technology sharing efforts were
problematic
 Cultural issues were prevalent
 By the end of Q1FY01, losses touched USD
2.7 billion
 Cost cutting strategies were adopted
 19,500 employees and 1,000 contractual workers
fired in 2001
 Non-product spending cut by over 58%

8.  Easy part of the deal: Negotiations and signing
 Putting the deal together and making it work is
the hard part (Integration)
 Adequate due diligence of target companies is
of paramount importance
 Bringing together two different companies from
two different countries, different cultures
(corporate and real) is a humungous task
 Clear and specific post-merger strategy should
be in place even at the pre-merger stage
 Leadership effectiveness for better integration
is a must