Daimler-Chrysler Post-Merger Essay

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. What were the motives for Daimler-Benz and Chrysler in merging? - Overcapacity: “Daimler-Chrysler started as a merger of equals in an industry the two companies' analysis revealed to have staggering overcapacity” . Daimler-Benz AG’s traditional markets were mature and merger with Chrysler was a solution for its restricted expansion. The two companies were considered to fit together perfectly and the merger gave the opportunity to utilizing each company’s strengths in production, markets, etc and therefore exploits new markets while optimizing production. - Increased market power: “Chrysler makes moderately priced cars and light trucks. Daimler makes Mercedes luxury cars and heavy trucks. Chrysler is strong in North America and weak in Western Europe; Daimler just the reverse. Chrysler is very capable in terms of design and product development; Daimler holds the upper hands in engineering and technology” . The integration between the two companies was supposed to “change the face of the automotive industry” and create “a pre-eminent position in the global marketplace” 2 - Cost synergy: The top managers of the two companies were seeking for substantial cost synergies in the merger (in purchasing, research and technology, distribution infrastructure and financial services). Thanks to the strengths of each company in different divisions (design and product development vs. engineering and technology), they can complement each other and save cost. - Reshaping the firm’s competitive scope: The integration between the two helped Daimler-Benz reduce its dependence on North America market and expand to Western Europe as well as helped Chrysler approach to foreign markets. - Learning and developing new capabilities: the two companies could learn from each others’ manufacturing operations (product design and development; engineering and

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