The M&A of Daimler-Benz And Chrysler

M&A is of relevance as it creates values and sometimes destroys values. The mergers are effective when the arrangements are made based upon economical and financial traits. Change, transformation and transition is possible based upon the aspects of M&A. The global economic world was shocked in the year 1998 when Daimler Benz and Chryslers announced the mergers which was the largest and a major cross border transaction. The intention of the merger was to safeguard the industry and competitiveness. This merger was stated to be one of the most strategic and prepared mergers impacting the world of business. The two are big and famous representing domination, class, style along with personality. The two brands have their own unique identity and market domination but the merger impacted the economy. World is changing and to take advantage of the situation business needs to increase intercommunication and change the present scenario through mergers and acquisition.  The rationale for the merger is to augment the market share and attain competitive edge leading to booming economy. The company merger was equally important for the growth and determining the strength in the automobile industry across the world. The merger that was announced in the year 1998 failed because instead of leveraging the uniqueness of the Chryslers for attaining competition Daimler’s mindset of consolidation destroyed the company potential.

The factors that negatively influenced the merger were due to betrayal of expectations which stated that the merger of equals was considered to be an acquisition by Daimler. The cultural flashpoint is another reason that impacted the business and its success. However, it is worthy to state that for the effectiveness of M&A it is important to create value by initiating book value method for the going concern. Liquidation value methods along with German mergers impacts the business in creating value for affecting the market share, stock and short term volatility. The merger is unique as the management of both the companies are sound and have strong ability to predict the market.

In my opinion, Daimler Chrysler merger was a mismatch in terms of cultural aspects as both the organisation cultures were different and the merger led to cultural clash. The main intension of Daimler Benz and Chrysler was to strengthen its position in the global market economically when the crisis was faced in the automobile industry.  This was not a successful event and even today after years Daimler Benz sold the shares of Chrysler division with the intention to become the biggest producer of vehicles.  The merger was a failure as it did not help the company to overcome recession but on the other hand it created deeper crisis.

In the 90s the world of car industry was facing challenges and to mitigate the situation market slogan what we do not accomplish alone, we will then accomplish together was initiated by Daimler Benz and Chryslers for greater synergy. The failure was due to the unequal size of the business that leads to higher risk. The main aspect for the clash was cultural mismatch and style of management that is impacting the process of decision making. In the USA the management style and experiences of employees are different from other countries thus impacting the organisational performances. The expectations of the management and cross cultural factors impacted the business thus affecting the power to influence employees and obey the rules. The German business principles and American were different thus creating cultural issues. German valued the business equality and made decisions by considering the opinions of stakeholders. The value of decision making is based upon rigorous analysis that is different from the American freedom and business.  The case of M&A was that the company was run by a German bit the communication amid the management was done by the American creating cultural barriers.  

Another vital factor that has been determined is about employee’s behaviour of two countries affecting the business growth. The attitude towards rewards and recognition by both employees of countries are different leading to mismanagement in the style of leadership. The cultural mismatch and the attitude was the main factor that impacted the understanding.      

Both the companies are technologically sound and have strong development team but the cultural flashpoints affected the situation of the business. The inability of the companies to retain their talent impacted the performance and M&A leading to failure.

When the M&A was announced Daimler Benz anticipated the business with $8billion affecting the brand and anticipated costs. Chrysler on the other hand had a strong market presence in the US by 23% through effective leadership. The case of Daimler and Chrysler faced deadlock due to lack of integration along with operational issues. Delays, ineffectiveness of leadership along with ambiguity created issues leading to loss of transactions. Structural mismatch and lack of cultural knowledge led to the failure creating undercurrent tension and labour management issues. Thus M&A requires proper evaluation of the market and cultural factors. Even though companies have strong market presence, technological knowhow for market orientation and growth it is vital to have cultural mix so that the business is successful. The failure of the vehicles giants were due to cultural clash even though the intention of the business was to make a differences. M&A needs to be competitive in nature by analysing the portfolio so that long term competitiveness is attained through initiating strategic models.