M-Class as the Prototype for Daimlerchrysler

M-CLASS AS THE PROTOTYPE FOR DAIMLERCHRYSLER

(Case Study)

I. CASE SUMMARY

In 1998, Daimler-Benz AG, the largest industrial company in Europe, specifically in Germany and one of the biggest American automobile manufacturers, Chrysler Corporation merged in an exchange of shares as Daimler-Benz AG bought 92% of Chrysler and 8% of Chrysler remained independent and form DaimlerChrysler AG. The combination was the largest industrial merger in history and the biggest-ever acquisition of an American company by an overseas concern. The merged company, called DaimlerChrysler, was the fifth largest auto maker in terms of the number of vehicles produced, ranking after GM, Ford, Toyota and Volkswagen. In terms of the value of the vehicles, DaimlerChrysler ranked third. If DaimlerChrysler was a country, it would rank 37th in the world in terms of Gross Domestic Product.

Before the merger, Chrysler and Daimler-Benz were essentially regional producers—Chrysler with the third-largest market share in North America, Daimler-Benz controlling the luxury market in Europe. The driving force behind the combination was the necessity to create ever larger globally-based enterprises which can compete in all major markets of the world, and especially in the three main centers of world capitalism: North America, Europe, and Asia.

10 years before the merger, Mercedenz-Benz decided in 1989 that it must do something to avoid becoming irrelevant in the twenty-first century. In 1991, Mercedenz-Benz gave Andreas Renschler the task of initiating a new auto project. He put together a team of people who were initially from Germany to represent development, production, marketing, and finance. By 1992, the team had decided to produce sport-utility vehicle in the United States and site was chosen in Alabama. By late 1993, Renschler had hired a diverse managerial team to start and manage the new operations: three Germans, one Canadian, and two Americans.

They...