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Merger

Result of an agreement between two companies

to join their operations together.

Some key issues in mergers follow.

Communication:Grapevine

Power and

conflict:

win-win situation.

Culture:

Cultural fit.

Operations:

Processes


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Founded in the year 1886 by Gottlieb Daimler and Carl Benz.

125 years later, in anniversary year 2011, Daimler AG is one of

the worldsmost successful automotive companies.

With its divisions Mercedes-Benz Cars, Daimler

Trucks, Mercedes-Benz Vans, Daimler Busesand Daimler Financial Services.

The Daimler Group is one of the biggest

producers of premium cars and the worlds

biggest manufacturer of commercial vehicleswith a global reach.

Daimler Financial Services provides its

customers with a full range of automotive

financial services including financing, leasing,

insurance and fleet management.


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With the resources, technology and worldwide distribution networkrequired to compete on a global scale, the alliance builds on ChryslerGroupsculture of innovation, first established by Walter P. Chrysler in1925, and Fiats complementary technology that dates back to itsfounding in 1899.

Chrysler Group produces Chrysler, Jeep, Dodge, Ram, SRT, Fiat andMopar. Chrysler Groups product lineup

features some of the world's mostrecognizable vehicles, including theChrysler 300, Jeep Wrangler, Dodge

Challenger and Ram 1500. Fiat contributes world-classtechnology, platforms andpowertrains for small- and medium-size cars, allowing Chrysler Group tooffer an expanded product line

including environmentally friendlyvehicles.


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On Nov. 12, 1998, Co.completed a businesscombination agreement withChrysler Corporation.

The $75 billion industrial mergercreates Daimler-Chrysler AG, aninternational transportation andservices company that ranks asthe world's third largestautomobile company based on1997 revenues.

The enterprise will have

operational headquarters inStuttgart (Germany) and AuburnHills, MI (USA).

The Deal of the CenturyAutomotive Industries, June1998


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The Merger Was Welcomed by Auto

Analysts and Consumers

The worlds third largest automanufacturer (GM 1st, Ford 2nd)

Over $154 billion revenue, over $5.6profit.

Mercedes-Benz ranked as the mostvisible luxury brand.

Chryslers success in low-end/sub-compact cars and trucks .


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Daimler-Benz

Mercedes is the most popular luxury brand

A strong dealer network

Ranked #17 globally

Chrysler Corporation

Low-end/sub-compact cars and trucks Big auto manufacturer in North America

Mini-vans, Jeep and Dodge trucks

Ranked #25 globally


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Chrysler's primary reason for teaming with

Daimler-Benz is to extend its international

reach

The goal of the merger :

Expected huge savings by combining purchasing

and other operations

Reduce total research and development costs


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DaimlerManagement processes ofplanning, organizing andcontrolling. More conservative,efficient and safe.

ChryslerSetting goals, directing andmonitoring implementation.Known as the risk-takingunderdog

Cultural challenges

Differences in working styles, leadershipapproach

National culture differences

Behavioural differences


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Daimler

The driving image andexperience associated with

the highest quality availablein the market

Chrysler

Attractive, eye-catchingdesign at a very competitiveprice


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DaimlerEmphasis onengineering, design,

quality and aftersales service

Chrysler

High volume, low costmanufacturing anddistribution


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Key members ofmanagement teamleaving

Employee moral andmotivation

Retention of key staff

Consultation with staff

and representativebodies


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Others issues Daimler controlling 57%, in what was perceived to be a merger of

equals.

Though strategically, the merger made good business sense. Butcontrasting cultures and management styles hindered the realizationof the synergies.

Daimler-Benz attempted to run Chrysler USA operations in the sameway as it would run its German operations.

Daimler-Benz was characterized by methodical decision-making. Onthe other hand, the US based Chrysler encouraged creativity.

While Chrysler represented American adaptability and valued

efficiency and equal empowerment Daimler-Benz valued a moretraditional respect for hierarchy and centralized decision-making.

Three years later DaimlerChrysler's market capitalization stood at$44 billion, roughly equal to the value of Daimler-Benz before themerger13. Chrysler Group's share value has declined by one-thirdrelative to pre-merger values.


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Importance of company culture integration.

Importance of a clear and correct target.

Importance of customers and demands.

Importance of the association between theories andpractice

Importance of corporation especially the topexecutives

Importance of knowing the market and the partner


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Compelling business reasons need to drive mergers and acquisitions Peoplesconcerns matter, addressing them is as important as other factors

in M & A activity Meaningful involvement in the execution of the change has the most impact

on employee cooperation and commitment Continually clarify direction, and communicate extensively, candidly, and on

ongoing basis Treat people fairly, and design systems and processes that can flex with the

needs of the organization OB practitioners have a clear role in guiding and supporting change

processes and change leaders in M & A activitiesThese pitfalls of mergers and acquisitions challenge today's leaders to a new

standard of managing change. The strategy is clear - accelerate, concentrate,adapt, and in the case of international M&As, consider cultural differences. Thehuman and cultural issues that separate the 17% from the 83% are not aboutsome abstract values or the "soft stuff", but the concrete reality of productivity,economic value and sustained growth.

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