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Merger Chrysler And Daimler Essay

1002 words - 5 pages

Chrysler and Daimler merger case

1) in 1998 the worldwide car market is growing (from 46 million in 1993 to 52 million in 1997), but more and more competitor are present in this business market in a worlwide level. In the 90's the incumbent competitors are threatening by the emergence of Korean manufacturers ( Hyundai, Kia ), because the firm are offering cheap and good quality cars. the emerging firms in the 90's are from Asia, where the work force is cheaper than in westerners country, in this way these firms can offering a high quality product ( Lexus, Infinity, etc) for an affordable price. Thus High end firms as Mercedes, BMW, are threatened by those firms. In this way to face with ...view middle of the document...

In the same time the company is threatened by some takeover because of its profitability. Thus the 2 firms are facing problems on the long term, that a merger could resolve.
The potential benefits of this merger are potential saving link to the sharing facilities, technologies knowledge, distribution system between each other. Thanks to this synergy the firm would saves around 1.4 billion dollars on the first year. Moreover by merging the two firm will access to complementary assets and resources, and thus will able each brand to develop itself in a better way. For example by merging with Daimler, Chrysler will be able to reinforce its presence in Europe which is an important market for standard car.
In my point of view the strategic rational was strong enough to risk failure of a merger, because without a potential merger the two firms are facing huge future risk. For Chrysler the major risk is link to its non existence position in Europe, because Europe is one of the biggest car market, so if the firm want to grow and doesn't die because of the competition it has to develop its brand in Europe. Thanks to the merger with Daimler, it would be able to has a manufacturing base over there. For Daimler this merger will able it to consolidate its treasury which is in the red for the huge loss of 1995, and in the same time reduce its cost of R&D which represent 8% of its sales each year. So even if this merger can be a failure the two firm faced with too hug future risk for avoiding it.

3) In my point of view there is a great chance that this merger would be a success. First if you stick to the different performance of the last merger between international firms and German firms there is more probability that this merger will succeed ( this explanation is very subjective). Moreover the two firms are using the same type of management ("American...

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