Organizational Culture Of The M & A

In the hyper competitive world of today’s mega corporations controlled by the sway of the stock market, giant old industrial era companies rule over the automobile market in the United States as well as large parts of the global automobile market. Companies such as General Motors, Chrysler, and Ford were at the center of it until the economic crisis now known as the Great Recession of the late 2000s. The whole market was declining in sales with General Motors and Chrysler taking the biggest hits while Ford only suffered decline comparable to foreign automakers’, Honda and Toyota, levels due to restructuring in prior years. However, the tipping point was edging closer to bankruptcy with General Motors and Chrysler that ultimately

Think of it this way, all of the debt, problems, and poor choices made by the notoriously distinguished old GM were put on a boat (Motors Liquidation, Inc.) and given a viking burial (code 363 liquidated (sold in parts for as much profit as possible)) while every asset went to a new company convolutedly called General Motors. Basically, New GM made out like a bandit.

General Motors, at one point the largest car manufacturer in the world, needed a bailout in 2009 to stay in business. One of the main reason the auto giant filed for bankruptcy was seen on the balance sheet where assets were $82.2 billion and a vast amount of liabilities that equated to a whopping $172 billion. With this massive amount of debt hanging over the company, General Motors according to the Economist, “the chief financial officer sought to raise $3 billion through a sale of bonds or shares,”(Economist Editor). After Lehman Brothers had fallen GM knew that they would not be able to get the funds, so they tried to sell non-core assets,(Economist Editor). At this point, the stock price for General Motors fell to $3, (Economist Editor).

During 2006, the economy was expanding and GDP was growing. Ford enjoyed high sales volume, but still experienced losses. A vast amount of these losses were due to Ford reorganizing their company structure and shrinking. In 2007, GDP growth reached its peak, while interest rates and inflation remained stable. Although these indicators normally demonstrate a strong economy, the automobile industry was actually struggling due to the spike in gas price. The big three US automakers (General Motors, Ford, and Chrysler) were in the brink of bankruptcy and had petitioned

The Great Recession in 2007-2008 really hurt some companies and Chrysler was one of them. In order to return to profitability rather than breaking even Mr. Sergio Marchionne the Chief Executive for Chrysler Group LLC felt that there need to be a culture change after his analysis of the company, thus he did just that.

Although a big one, the recession int the only thing that caused GM to go downhill from a financial aspect. According to Moneycrashers.com, GMs bankruptcy debackle was attributed to unsuccessful lines of vehicles, payment to retired workers, competition, and emphasis on less fuel efficient models. All of these factors were detrimental to the financial success of GM. Going forward, it is suggested that GM discontinue less profitable vehicle models, change retirement benefits, and changes in management. These changes have been made by GM and it has made a tremendous effect on the profits of the company

The year was 2008 and the daily news for Americans could make us choke on our morning coffee. The financial crisis was something out of a movie that could be titled The Horrors from Wall Street. The nasty mortgage mess was having a negative impact on other areas of the economy. The U.S. auto industry was taking a sizeable hit. It became hard to conceive that a legacy industry like 100 year old General Motors could be in deep trouble. But indeed they were and by June, 2009, General Motors filed for bankruptcy. We held a collective sigh as we heard the word “bailout” for this iconic company. The government bailout came with a carload of stipulations and it was made clear to General Motors that they would have to make extensive changes in order to comply with all requirements. The government car czar, Steve Ratner, and the Obama administration expected executive leadership at General Motors to turn the company around and as soon as possible. With the passage of time, there is detailed analysis available for researching the complexities surrounding the bankruptcy and government bailout of General Motors.

Fiat bringing their CEO (Marchionne) to America to directly handle the merger will make the transition a lot soother for the company. When first appointed to Fiat CEO he laid off 10% of white collard employees and 20,000 labor employees, restructuring with fresh new talent, he will follow do the same plan with Chrysler. But bringing in his own people proven to be valuable.

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 &

General motors, or GM as some people refer to the company as, is an automotive manufacturing company. According to the about section on the GM website there are 10 distinctive automotive brands under the General Motors corporate umbrella, they serve 6 continents, have 215,000 employees, and the global headquarters are in Detroit, Michigan. (General Motors). Until 2008, when it was overtaken by Toyota, GM was the world 's biggest carmaker, producing well over 9m cars and trucks a year in 34 different countries. (The Economist, 2009). The late 2000s were tough years on families and companies because everyone was struggling. We saw people getting pay cuts, people losing jobs, companies closing, and a skyrocket in the price of fuel. “The Great Recession—which officially lasted from December 2007 to June 2009—began with the bursting of an 8 trillion dollar housing bubble. The resulting loss of wealth led to sharp cutbacks in consumer spending.” (The State of Working America).

The Daimler-Benz and Chrysler merger was set to fail as both companies were at complete opposite ends of the spectrum in regards to how they do business. Daimler was a German company with strict rules and policies. Chrysler, an American company, favoured a team orientated approach. Two opposite leadership styles, Autocratic and Participative. Daimler and Chrysler had different approaches to clients which resulted in departments going in opposite directions instead of working together. Trust had a major part to play. Employees on both sides were reluctant to trust each other. This was primarily due to Chrysler’s executives either resigning or being replaced. As a result share prices

General motors in on the of the biggest auto makers in the United States. It holds about one percent of the United States employment. The company which sold over 219,000 vehicles in November of last year only was able to sell 155,000 cars and truck to the American Public declining 41 percent compared to last year. GM car sales of 58,786 were off 44 percent and truck sales of 96,091 were down 39 percent. The steep decline in vehicle sales was largely due to a significant drop in the market’s retail demand compared with last year, and continuing economic uncertainty that has affected consumer confidence. The market shares for General Motors have always been low, but recently it has plunged to a 20 percent starting from 1980. I have

In 2009, Chrysler and General Motors have filed for bankruptcy protection. As part of the reconstruction process the automobile company Fiat merged with Chrysler. Because of the restructuring proceeding, almost 800 dealerships had to be closed, employees’ wages were slashed and pensions for new hires were cut. The reorganization of the two failing companies resulted in lower variable and fixed costs at a disadvantage to its creditors, employees, dealers, and management. The new management set out to improve the culture of the companies by bringing about better business processes Which produced higher quality cars. During the first quarter after the reconstruction in 2010, Chrysler posted a profit. This proved that the reconstruction was successful and

The merger between American car manufacturer Chrysler and its foreign counterpart, Fiat, was clearly born out of a mutual need for growth as well as to recover financially from various setbacks and failures both had experienced.

Under the leadership of Lee Iacocca and with the support of federal loan guarantees, Chrysler managed to turn itself around one more time, returning to profitability in 1982. While the late 1980s proved tough for the industry as a whole, the introduction and meteoric rise of the family minivan (a market controlled 47% by Chrysler as of 1996), coupled with the 1987 acquisition and subsequent exploitation of the Jeep brand name, left Chrysler the envy of the U.S. auto market by the mid-1990s. As Fortune magazine stated in late 1996, “If a vehicle is in demand and generates high profit margins, you can bet Chrysler’s making it.”4 While Chrysler’s success and relatively conservative management style attracted praise from industry observers, it also attracted the attention of Las Vegas billionaire Kirk Kerkorian, who with the help of retired Lee Iacocca, mounted a hostile bid for Chrysler in 1995. The (U.S. dollar) $55 per share ($27.50 today following a 2-for-1 stock split in 1996) not only failed to win the approval of Chrysler’s board, but also turned out to be largely unfinanced, leaving Chrysler to continue under its current management. Chrysler products Chrysler focused heavily on trucks in its product offering. In 1997, trucks, including minivans, accounted for about two-thirds of Chrysler’s vehicle sales in the United States and cars accounted for about one-third. Chrysler’s trucks