Restructuring / Turnaround Strategies Case Study

Case Title:

Daimler-Chrysler to DaimlerChrysler: Dieter Zetsche's (The New CEO) Restructuring Strategies

Abstract:
Daimler-Benz and Chrysler Corporation merged to form DaimlerChrysler in May 1998. The merger was considered an historical merger of mass with class. However, soon after the merger, the Chrysler division of the company began to incur losses and this in turn had an adverse effect on the Mercedes division, which meanwhile had begun to witness quality problems. DaimlerChrysler's other initiatives of acquiring a stake in Japanese automaker Mitsubishi and the two car units Smart and Maybach, failed to deliver profits. This led to increasing discontentment towards the leadership of Jurgen Schrempp, the former CEO and the prime architect of the merger. On January 1st 2006, Dieter Zetsche, former CEO of the Chrysler Division, who had successfully turned Chrysler's American operation around, replaced Schrempp as the new CEO of the company. Zetsche announced a restructuring plan on January 24th 2006 that mainly focuses on integrating the Mercedes and Chrysler divisions to increase the profitability of DaimlerChrysler.

Pedagogical Objectives:

• To highlight the reasons behind the merger of Daimler-Benz and Chrysler
• To focus on the reasons behind the poor performance of DaimlerChrysler after the merger
• To provide a scope to discuss the restructuring plan of Zetsche and whether it would be able to turn DaimlerChrysler around
• To debate whether the new CEO can integrate two opposing cultures.

Keywords :  Mergers in global automobile industry; Cross cultural mergers; Mercedes-Benz; Chrysler's financial downturn; Restructuring strategies; Restructuring / Turnaround Strategies Case Study; Leadership issues at DaimlerChrysler; Culture change at DaimlerChrysler; Turning around Chrysler; New management model at DaimlerChrysler; Synergies of mergers in the automobile industry