Daimler Crysler Merger Failure

Table of Contents

Acknowledgement 3

Introduction 4

Automotive Industry (Europe and U.S.A) 4

Threat of New Entrants 4

Bargaining Power of Suppliers 4

Bargaining Power of Buyers 5

Threat of Substitute products 5

Intensity of Rivalry among competitors 5

Trends in the Automotive Industry (Europe and U.S.A) 6

Daimler before Merger 6

Chrysler before Merger 8

The reasons for the Merger 8

Daimler’s Perspective 8

Chrysler’s Perspective 9

The Combined Perspective- Our Analysis 10

Whether to Ally or to Acquire/ Merge 10

Analysis of the Merger Contract 11

Inferences 11

Knowledge Management after the merger 12

Insights into the KM capabilities of Daimler and Chrysler 12

A probable Solution 12

A Comparative Study 13

Analysis of core competencies 14

Motivations for Chrysler 14

Motivations for Daimler 14

Why Daimler's entry into the European Vans market failed 15

Conclusion 15

Exhibits 17

Appendix 20

Risks for the Merger as analyzed by the companies during the Merger 20

Acknowledgement

We extend our sincere gratitude to our dear Professor Rajesh who made this course such an interesting one. The concepts that we have learnt I have helped us greatly analyzing this contract and writing this report. We hope to carry these learnings with us always and wish we make better decisions when time warrants it.

Thanking you sincerely,

Group 3

Introduction

Two major giants in the automotive industry plan to enter into a merger in 1997. A company which invented the car and had been in the market for than a century based in Europe and other who adopted car manufacturing in the USA. This had been hyped in the industry as a “Merger of Equals” and touted to be one of the major mergers in recent history.

Major news articles quoted “This merger would totally change the industry structure and how it operated. This merger would take the new company to the top in the automotive industry.”

The merger took place in 1997, and in spite of having all this...