The limitations of 100 case histories of industrial mergers (DaimlerChrysler)

In May 1998 the German concern, Daimler, merged with Chrysler, America’s third biggest automobile manufacturer. In September 1999, The Economists reported on the state of the marriage. Noting that the deal was ‘hailed as an inspiration, because of the neat fit of the firms’ products and markets’ and that the logic behind the merger was ‘as impeccable as ever’, the newspaper highlighted some Post-merger setbacks, including:
– The defection of a stream of talented designers and managers’ to Ford and General Motors’ down the road in Detroit’
– The issue of selecting one location for corporate headquarters; sooner or later the company will have to choose between Stuttgart and Detroit
– Clashes of management style at board level; German managers preferred reading 50 page documents before key meetings, whereas their American counterparts did more talking and wanted less documentation before the meetings (it appears that the American style has prevailed)
– Different styles at lower levels of management about the presentation of reports (German managers are inclined to accept the reports researched by subordinates, whereas the American style is ‘look at’ them later)

* No involvement for American designers in Mercedes cars
It is, however, remarkable to read that Daimler instigated a strategic analysis to ensure that the project was well planned and executed. This analysis reviewed 100 past mergers, noted that around 70% fail to achieve their goals, and concluded that the key to success lay less in price and more in strategic fit and post-merger integration. As The Economist reported: ‘The result has been a post-merger plan devised with great attention to detail, a dozen teams of managers from the two sides focusing on every aspect of the merged team; a specially designed database to monitor daily progress; and an attempt to ensure the backing of the board at every stage.’ In some respects the integration is running ahead of targets and in September 1999 it was anticipated that costs of around $1.4 billion would be saved by the end of the year. But, as The Economist said: ‘Although merging the two companies was never going to be easy, nobody expected it to be this hard.’

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