Chapter19 Daimler-Chrysler

Chapter19 Daimler-Chrysler Name Grade Course Tutor`s Name (09, July, 2011) Broad Problem Area This case illustrates how merging a prestigious company (Mercedes) with a company that had its downfalls prior to the hiring of Lee Iacocca (Chrysler) can become disastrous. At first it was thought that the merger would increase international exposure. When Schrempp first spoke about the merger he stated that there was going to be two cultures "the American and the German". Schrempp also stated that the decision making will be shared by both cultures. Trying to mesh both cultures was not successful because the German tends to want / need power and order. While the Americans (Chrysler) were more laid back and did the innovative thinking. The merger of DaimlerChrysler also took place when the car industry and the economy were going down. Problem Statement: "Can merger of equals result in positive outcomes?" 1 Do you think Schrempp was wise to replace the top Chrysler executives? Why or why not? Schremp was not wise to replace the top Chrysler executives. Schrempp should have kept a few of the Chrysler executives and a few of the German executives. Having both cultures involved from an executive level will promote the rest of the personnel to work together towards a common goal and not feel divided. Chrysler`s organizational culture which focused on innovation together with Benz hierarchy tendencies working as one would have made it a more successful approach. The German company executives joined Chrysler and implemented new policies which caused Chrysler to have a large inventory, making them sell their cars at cheaper prices. Schrempp didn`t take into account that he was getting rid of talented executives that had a lot of knowledge in the American market which he lacked. Shrempp also caused the other employees to feel that they are not important which caused them to not give their all. 2 How could Chrysler boss Robert Eaton have been so naïve as to permit himself to be ousted from power in a negotiation that he actively campaigned for and accepted? Do you see any way he might have protected his position in the merger? Chrysler boss Robert Eaton was misled by Shrempp. All along Eaton believed that there was going to be some type of equality between the two companies / culture. Robert Eaton was naïve in thinking that Shrempp did not have intentions of wanting to run the merger being that German`s are known for their hierarchies. Robert Eaton focused on the positives of the merger. For example, he knew that Chrysler was good in the innovative aspect therefore they will do the same for Mercedes. Were as Mercedes is known to be prestigious and he hoped they could have rubbed that off on Chrysler. Robert Eaton could have tried to explain to Shrempp what he envisioned and the good things that can come out of both cultures working together. It is best to have everything in writing, especially agreements. Eaton should have specified in the agreement that both cultures must stay in place and that if one Chrysler employee was fired that a Mercedes employee would be next, to maintain equality. 3 How specifically can a firm protect itself from the extreme risks of cannibal...