Merger Between Daimler And Chrysler

Introduction Automobile usage has increased in America and elsewhere in the world. In a research done by Sutherland, J., et al. (2004) “The US has a contributed to 200 million passengers in cars and light truck over the past few years. Further in 1990, studies showed that US cars increased six times faster than human population. The leaders in the automotive industry must adopt some key elements to ensure success in this fast-moving environment. They must invest in knowing their markets, building brands, adapting product strategies and taking long-term view on their goals and objectives. This paper outlines some of the key factors which should be considered. Environmental factors automotive designers and engineers have always said the main threats in the American Automotive industry are the environmental factors such as fuel economy and the clean air regulations. Automotive Emission posed different problems than manufacturing discharges such as coal smoke. Increased fossil-fuel emission has resulted from the million car increase. Irritation smog, which is comprised of carbon monoxide, hydrocarbons, sulfur oxide and other various chemical mixtures are cited in major cities such as Los Angeles. These auto emissions are also said to cause headaches, visual pollutions, contribute to lung cancers and other respiratory disease. In the end, the engineers have designed cars that are better environmental performers, cost effective and fuel efficient to reduce the environmental

The Fiat Auto acquisition of Chrysler occurred in 2014, which turned Chrysler into an Italian automobile manufacturer (Abrams, 2014, para. 1). By combining these two firms one automaker now have strong ties to the American and Italian auto industry. By Fiat gaining Chrysler’s reputable name it can easily penetrate the American market. This why the acquisition between Fiat Auto and Chrysler can be seen as a growth strategy. Fiat now competes in a large global market, which subjects the firm to many different external environments. The General Enviornment consist of factors that affect every industry, for example taxation. A firm that operates in the auto industry and one that operates in healthcare industry are both going to be subject to government taxation and affect by it. In order to work efficiently and eliminate the threat of general enviornment risk the firm must use a strategy of including these risks in their work process. For example, if Fiat operations in the United States (U.S.) have to follow the U.S. Department of Labor regulations and pay any employee that works over forty hours in a workweek, overtime pay (2015, para.1). In order to reduce the cost associated with paying overtime and keep the budget in line, Fiat might consider hiring in part-time help during its anticipated high volume periods. This will keep production costs low and allow for a larger margin of profit.

Prior to Sergio Marchionne’s arrival, it appeared Chrysler Group LLC, organizational culture consisted of reacting “to falling sales by slashing prices” (Kreitner and Kinicki, 2013). Due to reduced sales volume, Chrysler had experienced major financial issues, including bankruptcy reorganization. The observable artifacts that I would suspect prior to Marchionne’s arrival would be massive advertisements endorsing Chrysler rebates, vehicle discounts, and slashed prices. After Marchionne got upset about the sales team “giving away margin”, he had to shake up the organization culture and transform the company’s way of thinking. Chrysler had to do something if it was ever going to get back to a profitable state.

The Chrysler Group LLC initial public offering (IPO) was initiated by a trust known as the United Auto Workers (UAW) Retiree Medical Benefits Trust to cover medical benefits for retired workers who owned 41.5% of the company. The trust was created in 2007 as a way of reducing Chrysler's financial liability of paying existing workers and former employees’ health care costs and retirements. Initially, the trust was not supposed to have a large share of its assets in the form of stock, but with Chrysler running out of cash the following year, and falling into bankruptcy in 2009, the only asset it could offer was its own stock.

Innovation and quality was accentuated over the concept of mass production of cars. New methods of production were developed in order to facilitate automotive designs and innovation. In order to meet the demands of different the market segments, Ford Motors Company followed a brilliant business strategy by marketing its vehicles under three distinct brands: Ford, Lincoln and Motorcraft. It is a relevant example of an economy of scale as well as economy of scope. It became a leading manufacturer, producing automobiles of all genre: commercial vehicles, luxury cars and miscellaneous automotive parts. The affordable family cars are sold under the ‘Ford’ brand, while the luxury cars and limousines are manufactured and sold under the ‘Lincoln’ brand. The firm is divided into two departments: automotive and financial services. A range of services is provided by the company, which includes automotive finance, vehicle leasing and post-sale

Unfortunately for Chrysler, a company that started with debt, by the late 1980s the company would again find itself in financial turmoil forcing a second company restructuring that would lead to the production of more “fuel-efficient vehicles like the Dodge Shadow and Plymouth Sundance (Wheelen & Hunger, 2012, p. 17-2). In 1998, the company would enter into a merger with Daimler-Benz. That merger would last until 2007 when Chrysler was sold to Cerbus Capital Management, which would produce “an 8% growth in sales” in 2007, but eventually fell back into a loss in profit (Wheelen &

The case is intended to have students look at the 2009 Chrysler-Fiat strategic alliance, its current issues, and future viability in the global auto industry. The new landscape of the American auto industry and the role of Fiat is analyzed in the cross-border tie-up. After de-merging with Daimler in 2007, Chrysler did not do well because of the 2008-2009 global financial crisis and its bankruptcy filing. Chrysler’s other problems included its financial constraints and heightened competition in North America. The company had no choice but to look for a partner. During this process, Chrysler explored the possibility of a tie-up

The world of technology is ever changing and advancing. With the automotive industry in play technology is constantly surpassing what is available today with what can be done for tomorrow. Technology and the automotive industry go hand in hand with constant improvement to components of cars. Due to technology advancement there is competition within the car industry, especially between American car companies and European car companies. European car companies provide their buyers with innovative variety and revolutionary luxuries. European car technology is superior to American car technology due to their safety, entertainment, and luxury features.

Not so long ago there was the landmark merger of the German conglomerate Daimler Benz and Chrysler

In order to save itself, Chrysler was attempting to seek restructure opportunities. In August and October 2008, Chrysler negotiated with Nissan and General Motors respectively. However, as the poor performance of General Motors in the crisis, the negotiation didn’t proceed then. At the end of 2008, Fiat and Chrysler began to discuss the merger.

The constant involvement to the workshops hampered its profitability level as the cost of operations increased. The company’s expansion strategy depends on its ability to increase the awareness process and ensure that it commands the global market. Chrysler performances have been affected by the cross-cultural focus and the need to implement strategies that will change the management’s sentiment and the understanding of the cultural perspectives in the economy (Business Week New York, 2007). The level of competition in the automotive industry has also increased, and without effective policies and strategies, the entity’s success will be hampered. The workshops that were conducted after the merger had failed did not yield the results as expected and it was an additional cost to the operations of the entity (Isidore, 2007).

As a result of the increased demand of cars, the competition among car companies is becoming intense. Although the market of car is the biggest growing market in the world, there are still some companies who make cars failing year after year. However, there are some outstanding car companies such as The BMW Group performing distinctly.

            The economic crisis and other factors, affect different companies in the global market and automotive industries are not exempted. In order to cope with economic problems within the industry, different companies try to find the most efficient ways to save the company and one of these is through the consideration of merging or going into alliance. In alliance, both companies pursue strategic fit to compliment organisational approaches setting the stage for potential strategic synergy (De Kluyver, 2000). However, it is inopportune that there is no clear evidence that supports the value of strategic fit in mergers Case

Deiter Becker in his presentation “Trends and Challenges in Automotive Industry”[8] touches upon the brand management only indirectly. Nevertheless, his presentation in some way unites the point of views of the previous articles, since he mentioned the importance of brand specific customer service and the design.

However, due to its unique targeting strategy, it has not win compatible brand recognition among the public. Although Audi enter much earlier than BMW and Benz in the luxury car market, its marketing strategy limited increase of public brand recognition even Audi has over 100 years’ history. Besides, although its styles are highly accepted by the targeting customers, there are a growing number of people who can afford luxury cars for family use in China. Lack of vitality is limit of its further market expansion. On the contrary, its major competitor in China, BMW, has launched a series of marketing strategies to promote its high-performance, manoeuvrability, as well as stylish design to attract young people (BMW, 2009) in order to expand its market share. Therefore, although Audi has achieved success in the targeting market, it may consider further development through diversification in product line and advertising campaign.