The Failure Of Daimlerchrysler

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The Failure Behind DaimlerChrysler XXX. X. XXXX LDR531 July 18, 2011 Kevin Harris The failure behind DaimlerChrysler In 1998, Chrysler Corporation and German owned Daimler-Benz, made a business decision to merge. The two entities believed the deal to be a “merger of equals,” thus creating DaimlerChrysler. The merger proved to be nothing more than a failed marriage. Often referred to as a German takeover, Daimler-Benz needed an American partner to help capture American market sales. Chrysler was turning huge American profits at the time but was looking for an increase in European sales, so the merger seemed like a good fit for both organizations. After closing the deal though, the organizational structure suddenly became unsteady, proving that DaimlerChrysler was not prepared to manage the change. Hence, the second reason for the unsuccessful marriage, DaimlerChrysler’s failure to manage the organizational cross-cultural issues that resulted because of the merger. Prior to the merger, both companies held individual visions of what their brands would bring to the auto industry. Chrysler's image was one of American excess, and its brand value existed within in its assertiveness and risk-taking cowboy aura, all produced within a cost-controlled atmosphere. Mercedes-Benz, in contrast, exuded disciplined German engineering coupled with uncompromising quality (Tuck School of Business, 2002, p.5). When two organizations such as these come together, the typical reason is synergy, or potentially higher profits that can result from a merger. The partnership strategically planned to obtain growth and global presence in the auto industry. In theory, this concept was an immense sell to the shareholders, but sharing of automotive platforms meant the companies would loose their brands fundamental value. Initial failure occurred because the partnership was
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