Daimler Chrysler Post Merger Integration

Daimler Chrysler Post Merger Integration

1. What went wrong in D/C's PMI?

   • Cultural dispersion US / GE
     • Daimler:titles, hierarchy, formal processes
     • Chrysler: informal, flat, direct approachable, can do,
   • Distrust @ Chrysler
     • "Daimler colleagues will be privileged"
     • "Daimler will impose its culture on us"
   • Daimler's financial managament
     • Daimler's US GAAP accounting not ready for US shareholders
     • D/C not listed on S&P500
     • vulnerability of currency fluctuations
   • Daimler's HR management
     • no dual headquarters, just one in GE
     • different position of labor unions > unequal treatment in case of layoffs
     • Different compensation policies for executives as well as for workers
     • unsufficient encouragment and support for face2face meetings
   • Daimler's Governance
     • Chaiman's Integration Council (CIC ): uncapable, stopped too early
     • no replacement of CIC
     • "Schrempp's Kitchen Kabinet": too small, too limited
     • PMI team caught up in competition
   • Daimler's Leadership
     • CEO Schremp makes presumptuous statements towards Chrysler
       • "We always saw Chrysler as a division, but we kept that silent silent"
       • "I will not bother trying to please immature MBA analysts"
     • No common corporate identity, no proper brand management : "stick to old brands"
     • Quickly start bidding on asian car firms

2. What science says re. PMI

   • ingredients of good PMI
     • Cultural differences associated with 90% of all acquisitions that fail their objectives [Norburn]
     • 7 rules for successful PMI: vision, leadership, growth, early wins, culture, communication, risk management [Habeck]
     • Quickly build a new "social tissue" [Morosini]
   • impact of PMI on merger
     • PMI has greatest impact on sustainable long term value creation [Hromatka]
     • x
     • 53% of CEOs: PMI bears the greatest failure risk for mergers [Kearney]
     • Mega mergers more prone to integrative problems due to a more complex integration process [Hromatka]

3. What seemed to be right in D/C's PMI

   • Integration program set-up
     • Chairman's Integration Council
     • PMI team
   • intention: NO closing down of plants or redundancies

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