DaimlerChrysler History
...turer of electrical products, and into aerospace by buying control of Dornier, a manufacturer of space systems and commuter planes. In 1992 the company gained control of Fokker, a Dutch airplane manufacturer. This diversification strategy resulted in losses of $1.3 billion in 1993. the company started cutting cost and eliminating jobs, particularly in the aerospace sector. In 1995 the struggling Daimler again lost $3.9 billion. However its automobile division regained profitability. In the early 1990s Mercedes opened car plants in the United States, India, and China in an effort to cut labor costs and open markets. History Of Chrysler: In 1920s Walter P. Chrysler, resigned as an executive at General Motors Corporation because of differences with the company’s president, William C Durant. After restoring Willy’s-Overland to financial health in 1920, Chrysler joined the struggling Maxwell Motor Corporation. In 1924, with the help of three engineers he designed the Chrysler Six automobile, which was big success with 32,000 sold in its first year. Maxwell Motor became the Chrysler Corporation in 1925, with Chrysler as president. In 1928 Chrysler acquired Dodge Brothers Motor Car Co. The acquisition significantly increased Chrysler’s size and allowed it to spend $75 million to build its own manufacturing plants. In 1933 Chrysler surpassed Ford in sales for the first time. Walter Chrysler retired from the company in 1935 and died in 1940. After United States entered World War II in 1941, Chrysler also started producing tanks, army trucks, engines for B-29 bomber airplanes, antiaircraft guns, and many other different equipment. Chrysler slowed down its innovation of new designs for cars. In 1950s Chrysler was shifted to the third place among United States automakers. In the 1960’s the National Aeronautics and Space Administration (NASA) gave Chrysler the opportunity to produce the Saturn 1 and Saturn 1B booster rockets. One the biggest problem Chrysler had was its misjudgment of consumer tastes and needs. In 1950s when other manufacturers were producing sleek-looking cars Chrysler introduced the boxy types. In 1960s it launched small cars where as the consumers were demanding more of power and luxury type of cars. Even in 1970s when the oil price was sky rocketing Chrysler was producing very inefficient cars. Chrysler’s share of U.S automobile market dropped from 21% in 1951 to 9% in 1979. The company suffered severe financial losses throughout the 1970’s. In 1978 the company hired former Ford president Lee Iacocca as its president and chief executive officer. In 1980, as Chrysler faced bankruptcy, the federal government agreed to guarantee $1.5 billion in loans to keep the company afloat. The bailout was unpopular among many Americans, but Iacocca appeared on television and made speeches to explain Chrysler’s position. His efforts helped win support for the company, which paid back the loans in 1983, seven years early. In the early 1980s Chrysler closed several plants and laid off thousands of workers. At the same time, it introduced a successful line of new vehicles, including Chrysler K-cars, the Dodge Aries, the Plymouth Reliant, and the LeBaron convertible. In 1984, the year it introduced the best-selling Dodge Caravan and Plymouth Voyager minivans, Chrysler earned record profits of $2.4 billion. In 1987 DAIMLERCHRYSLER CASE ANALYSIS Chrysler acquired American Motors Company, maker of Eagle cars and four-wheel drive Jeeps. The company diversified by buying aerospace and rental-car businesses, but it sold these and other noncore businesses in the 1990s. In 1991 the company lost $795 million due to poor sales during an economic recession. But from 1992 to 1995, the company increased its revenues based on the strong sales of its minivans and Jeep Grand Cherokee. In 1997 a month-long strike by 1,800 workers at a key engine plant in Detroit caused the company to lose $450 million. The strike was the longest at a Chrysler plant in 30 years. The Merger and Issues: In 1998 Daimler-Benz acquired Chrysler Corporation for $36 billion, representing one of the largest industrial mergers in history. Which added to the $48 billion value of its Benz’s existing stock making DaimlerChrysler worth $84 billion. This merger didn’t result for the big picture that was expected after this merge. It was thought that this merger would create a global economy not only between the two of the world greatest economy but also capturing the market in various part of the world. Whereas, underneath this view there were many issues, which were involved in this merger of totally two different culture. Daimler-Benz was an aggressive firm, which believed in hustling every possible way to make its company the number through out the world. But Chrysler was on the other hand a easy going and slow progress firm which believed in the production and flexibility of operation even bearing the various expense it might had to face. This merger turned into a disaster so quick that it seemed like in a short term view that this companies would be in great trouble of surviving in such hostile condition. By December 2000 just two years after the merger a collapsing DaimlerChrysler stock had a market value of only $39 billion. The 2000 The Germans decided to get ride of many executives of Chrysler (DaimlerChrysler). A replacement was done. A German Daimler executive Dieter Zetsche, was assigned to DaimlerChrysler. With him came Wolfgang Bernhard who was assigned the position for cost cutting, as chief operating officer. This resulted in a big misunderstanding between the Germans and the Americans who worked for Chrysler for years. Due the already growing tension between this two countries, it was hard for the Americans to except the German executives to give them orders. Eaton and the rest of the Chrysler hierarchy had found that this merger was not of equals, in reality Chrysler had become only a division of Daimler. Jurgen Schrempp was the assigned Chairman of DaimlerChrysler, his whole career was evolved from the Mercedes brand. He was confident that he would be able to bring DaimlerChrysler back into its status within a short period of time. He forced or encouraged many key people of Chrysler to leave the firm. He gave more emphasis on the factories then on the people. To cut back cost and to increase improvement he fired many old associates of DaimlerChrysler. During t...