Mergers, Acquisitions, Alliances and Synergies Case Study

Case Title:

DaimlerChrysler: Time for a Spin-off?

Abstract:

The case study is about the US based operations of the auto company DaimlerChrysler.

DaimlerChrysler group is one of the largest vehicle manufacturers in the world. It is a leading supplier of passenger cars, sport-utility vehicles (SUVs), minivans and pick-ups and commercial vehicles. The company came into existence with the merger of Germany based Daimler-Benz and the US based Chrysler Corporation (in 1998) was finding it difficult to integrate German and American cultures and to leverage each other’s strengths fully and go-to-market as a cohesive unit.

In 2006, the Chrysler Group division of DaimlerChrysler was facing a difficult market environment in the United States with excess inventory, non-competitive costs for employees and retirees, continuing high fuel prices and a stronger shift in demand toward smaller vehicles. It recorded a loss of $1.4 billion for the third quarter of 2006.

The case discusses reasons behind DaimlerChrysler’s problems in the US and the turnaround initiatives launched by its parent company in 2006.

Pedagogical Objectives:

• The case focuses on the DaimlerChrysler Company, a merged entity of Germany based Daimler-Benz and the US based Chrysler Corporation
• It evaluates the difficulties faced by the parent company in integrating the two companies
• The case also evaluates the strategies and the new business models adopted by company.

Keywords : Mergers,Acquisitions,Alliances Case Study;Auto cos.Daimler and Chrysler's mergerin 1998; synergies in the merger; problems faced by the company after merger; US auti industry; US big three:GM Ford Daimler Chrysler; japanese competiton in US; recession in US economy and auto industry; turnaround initiative by chairman Dieter Zetsche; reduction in inventorie; chrysler group optimization programme; new environmentally friendly vehicle launches by the company