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Submitted by:
Rohit Pl (231122)
John S. Manavalan(231178)
Srijit air (2311!")
#ive$ %havan (231173)
&eena 'aral(2311!3)
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Introduction:
+nteration ,an be de-ned in eneral term a the /ro,e in hi,h to
,om/anie et ,ombined into a inle one at all level. S/e,i-,ally0
interation involve the ynthei o /eo/le into one ,or/orate ,ulture.
he ne ,ulture may im/ly be the ,ulture o the a,uirin ,om/any that
i u/erim/oed on the a,uired ,om/any or ome ne entity that i a
,ombination o the bet a/e,t o both ,or/orate ,ulture.
he ,ombination o to ,om/anie4 ytem into a inle et i
interation5 thee may rane rom inormation ytem li$e ,om/any e6
mail and intranet to0 human ytem li$e &Rmar$etin-nan,e
de/artment and their a,,om/anyin /oli,ie and /ro,edure. atly0
interation i the merer o the to ,om/anie4 /rodu,tion /ro,ee into
a uniorm ytem.
he ,om/anie hi,h have a /lan o a,uirin another ,om/any are
reali*in that the real ,hallene in4t about ho to o on ith the
a,uiition0 intead it i hen the deal ,loe and more attention need to
be iven on ho to bet derive value rom the a,uiition. 9ually the
eitin buine and the tareted buine o/erate either in the ame
-eld or in the ,om/lementary -eld and the a,uirer deire to interate
the to buinee in order to ave ,ot0 develo/ ynerie and enerate
value or it hareholder. hi interation uually /oe ubtantial
,hallene and i the buinee o the a,uirer and the taret are
multinational then ,ale and the number o ,hallene in,reae
ini-,antly.
he la,$ o a tron ,ultural interation /lan i the main reaon hy
merera,uiition ail to deliver lon term value. Jut li$e /eo/le0
a,uired orani*ation alo o throuh a ,hane ,urve immediately ater
a deal i made0 and the ytem0 /ro,ee0 and /roram that under/in
the a,uired ,om/any4 ,ulture are under ,rutiny. 'll too oten0 thee are
ui,$ly re/la,ed. hat4 be,aue the a,uirin ,om/any /end little time
/lannin and leadin throuh thi ,riti,al ,hane ,urve. ;ne thin the
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leader ail to undertand i that ,ultural interation i a lon term ta$
and ouldn4t ha//en early. Rather0 it ta$e time to undertand hat the
nely ormed entity ill loo$ li$e and then /ut a manaement team in
/la,e that i both /eritent and alined a it uide the orani*ation0/ra,ti,e0 and /eo/le toard the etablihed viion.
he olloin ,ha/ter o,u on a ,ommon ituation here there ha been
an a,uiitionmerer and the a,tor hi,h made the a,uiition a
u,,e or a ailure tory.
The DaimlerChrysler Merger
Introduction
;n ovember 120 1aimler%hryler '=. Aith ,ombined
revenue o @13B billion and a mar$et ,a/itali*ation o @aimler%hryler be,ame the -th laret automa$er in the orld in
number o vehi,le old and third laret in ale. %hryler %D; ?ob
Daton /redi,ted0 ithin -ve year0 they ould be amon the ?i hree
automotive ,om/anie in the orld. hree year later >aimler%hrylerE
mar$et ,a/itali*ation tood at @FF billion0 rouhly eual to the value o
>aimler6?en* beore the merer and %hryler =rou/E hare value ha
de,lined by one6third relative to /re6merer value. < year don theline0 >aimler -nally dum/ed 8BG o it ta$e on %erberu %a/ital
Manaement or jut @7.F billion.
Rationale for the Merger
Hor %hryler and >aimler6?en* there ere hih ho/e about a number o
ain to be a,hieved throuh their merer. >aimler6?en* a troner in
Duro/e5 %hryler0 in orth 'meri,a. >aimler6?en* had a lobal ditribution
netor$. >aimler6?en*4 re/utation or enineerin ,om/lemented
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%hryler4 re/utation or ,reative tylin and /rodu,t develo/ment.
%hryler4 e/erien,e in dealin ith 9S invetor ould hel/ >aimler6
?en* be,ome a /a,eetter in brinin modern ,on,e/t o ,or/orate
overnan,e and hareholder value to the =erman e,onomy. %hryler4reeheelin method o vehi,le develo/ment ould $i,$6tart the more
bureau,rati, Mer,ede6?en*. he ,ombination ith %hryler hel/ed
redu,e the ri$ ao,iated ith >aimler6?en*4 de/enden,e on the
/remium ement o the automobile mar$et by introdu,in brand
diverity. >aimler6?en*4 -nan,ial ,lout and te,hni,al /roe ould
bolter %hryler in the auto ar. Moreover0 the ,ombined ,om/any had
reater -nan,ial trenth ith hi,h to enter ne mar$et.
Reasons for the Failure of the Merger
Lack of Due Diligence: >aimler6?en* underetimated the ,om/etitive
or,e that ould invade the orth 'meri,an ,ar mar$et and ta$e mar$et
hare rom the dometi, ,arma$er. >aimler6?en* never did due dilien,e
beore it bouht %hryler and never loo$ed into the uture to ee hether
%hryler ,ould aIord to be ,om/etitive ith the other in the indutry.
“Marrying up, Marrying don! "henomenon: Mer,ede a
univerally /er,eived a the an,y0 /e,ial brand0 hile %hryler and it
ub brand >ode0 Plymouth and Jee/ ere the /oorer and eeminly had
blue ,ollar relation. hi uelled an under,urrent o tenion0 hi,h a
am/li-ed by the a,t that 'meri,an or$er earned a//re,iably more than
their =erman ,ounter/art0 ometime our time a mu,h.
Di#erent philosophies of organi$ational structure: %hryler had
matri manaement and /latorm team and o/erated in een,e a a
inle tratei, buine unit. >aimler6?en* had a more traditional
tru,ture ith dire,t line o authority and buine unit autonomy or
ea,h o it 23 buine unit. >aimler6?en* manaer ere rearded
baed /rimarily on the /ro-t and lo reult o their unit. %hryler
manaer ere rearded baed on the u,,e o their team and
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%hryler. Hurther0 %hryler ee,utive had ri,h termination ,ontra,t0
(olden /ara,huteK)0 a /ra,ti,e not ued in =ermany.
Culture Clash: %hryler and >aimler6?en*E brand imae ere ounded
u/on diametri,ally o//oite /remie. %hrylerE imae a one o
'meri,an e,e0 and it brand value lay in it aertivene and ri$6
ta$in ,oboy aura0 all /rodu,ed ithin a ,ot6,ontrolled atmo/here.
Mer,ede6?en*0 in ,ontrat0 euded di,i/lined =erman enineerin
,ou/led ith un,om/romiin uality.
%eparate Distri&ution and retail sales systems: Mer,ede6?en*
dealer0 in /arti,ular0 had /roven avere to in,ludin %hryler vehi,le in
their retail /rodu,t oIerin. he loi, had been to /rote,t the an,tity o
the Mer,ede brand a a hallmar$ o un,om/romiin uality. hi had
,ertainly hindered the %hryler =rou/E mar$et /enetration in Duro/e0
here mar$et hare remained tanant at 2G. Potentially /ro-table
vehi,le u,h a the >ode eon and the Jee/ =rand %hero$ee been ide6
lined in avour o the le6,ot6eIe,tive and troubled Mer,ede '6%la
,om/a,t and M6%la S9#0 re/e,tively.
Di#erent product de'elopment philosophies: >aimler6?en* remained
,ommitted to it oundin ,redo o Luality at any ,otL0 hile %hryler
aimed to /rodu,e /ri,e6tareted vehi,le. hi reulted in a undamental
di,onne,t in u//ly6/ro,urement ta,ti, and a,tory tan
reuirement.
Mismanagement: he CMerer o Dual4 tatement a ne,eary in
order to earn the u//ort o %hrylerE or$er and the 'meri,an /ubli,0
but the real intention a or %hryler =rou/ to be a mere ubidiary o
>aimler%hryler. he relationhi/ la,$ed viion and leaderhi/ to ma$e it
or$. Dm/loyee didn4t $no hat the relationhi/ a u//oed to loo$
li$e in the end. eaderhi/ didn4t dra the /i,ture0 nor did they en,ourae
the to ,om/anie to meh. +t ,ould have or$ed i leaderhi/ had old
the em/loyee on hy the marriae a ne,eary and demontratin
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ho both ould be better oI a a reult o their union. ' ,om/ellin joint
/roje,t ould have hel/ed a ell.
Ford and (aguar Land Ro'er
Introduction
he Hord Motor %om/any (,ommonly reerred to a im/ly Hord) i
an 'meri,an multinational automa$er headuartered in >earborn0
Mi,hian0 a uburb o >etroit. +t a ounded by &enry Hord and
in,or/orated on June 1"0 1
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Failure to translate the strategy &y Top Management
Hord anted to in,reae the ale o Jauar in Duro/e. ?ut it a,ed many
/roblem in doin o a there ere hih manua,turin ,ot in the 9O. o
over,ome thi0 Jauar made the de,iion to redu,e ,ot by harin /art
a,ro brand0 o that Jauar ere built uin /latorm on hi,h other
Hord vehi,le ere bein built. he /ra,ti,e i ,ommon in the auto
indutry0 but in thi ,ae it may have hurt Jauar4 imae and uality. Hor
eam/le0 they laun,hed the ne N6y/e bain it on the Mondeo0 and thi
dia//ointed mot o the ,otumer. hat ,ar in /arti,ular a ellin at
@2
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Culture at (aguar under Ford
Role ,ulture in4t ne,earily neative0 but it or$ better in tableenvironment. Sin,e ,hane reuire lot o a//roval0 it4 very badly
uited or /eriod o ,rii0 here at rea,tion and eibility are very
im/ortant. +nide the ,om/any0 ,om/etition or /romotion a very hih0
and de/ended more on tie and a,uaintan,e0 rather than a,tual
/erorman,e. Manaer o,ued too mu,h on their ,areer and too little on
,utomer. hi meant that there a very little inormation harin
beteen de/artment0 and /roblem ere oten hidden0 in,e loo$in
ood a the mot im/ortant thin.
>urin meetin0 manaer uually atta,$ed ea,h other0 loo$in or ay
to ain an advantae on them. he obje,tive o thee meetin a el6
/reervation0 and nothin a uually olved. hee ,hara,teriti, alo
/ermeated to Jauar0 here there a alo a robut role ,ulture.
9ltimately0 Hord de,ided to ell JR to '' in 2BB8. Hord made a lo o
@12.7 billion and @ 2.7 billion in 2BB" and 2BB7 re/e,tively. hey ere
alo hit by the lobal -nan,ial ,rii in 2BB8 and ent ,loe to ban$ru/t,y.
he alo old #olvo in 2B1B in order to re,over rom the loe. Dventually0
Hord tarted hoin a /ro-t in the year 2BB
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manua,turer a the buine a baed on S9# and other bi ,ar
hi,h ere not /erormin ell in term o ale due to the bad
environmental ,ondition. ;ne u,h ,om/any a H;R> ho hi,h
needed a bailout deal very badly to urvive the donturn in the indutry. JR a,uiition by '' a one o the i,oni, and mot tal$ed about
a,uiition in automobile indutry. '' oIered to buy the JR (Jauar and
and Rover) brand or @2.3 billion in the year 2BB8. Hord old the to
brand to to o,u on their ,ore buine alo JR had alay been a do0
in the ene it never /rovided any /ro-t to the /arent ,om/any.
The Rationale ehind The )c+uisition
here ere numerou reaon behind thi a,uiition:
here a %trategic dimension to thi move a thi ould4ve abled
T)T) to launch glo&ally, by ivin it better te,hnoloy and broadenin
the /rodu,t rane. +t ave '' easy access to international markets-
Hurthermore0 the a,uiition ,ould alo be a cost.e#ecti'e ay of
gaining competiti'e ad'antages u,h a te,hnoloy0 brand name
valued in the taret mar$et and loiti,al and ditribution advantae0
hile imultaneouly eliminatin a lo,al ,om/etitor.
Hinally0 the a,uiition o JR ,ould enable the ,om/any to enhance its
/nancial position in the mar$et. Re,ent -nan,ial reult ho that ata
ha /ro-ted rom the a,uiition o Jauar and and Rover. JR /oted a
re,ord ale o @ billion in the year 2B1262B13.
0ains for T)T)
M' ee$ to develo/ lon term /ro-tability by e/andin ,om/any4
o/eration. +n thi ,ae both JR and '' manaed to obtain bene-t. ;n
one hand '' ained eay a,,e to the international mar$et and on the
other hand JR ot the reuired invetment by '' hi,h enhan,ed
their R> hi,h ave (LR a ell de/ned &rand image.
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Hurthermore (LR*s technology ga'e T)T) the cost ad'antage alo
than$ to the ynerie ith the other buine. he dein ,entre o
Jauar ere ued by '' or all it /rodu,t dein. hi a,uiition not
only ave '' the dein ,entre but alo ditribution ,hannel o Jauar.
Reasons for the %uccess of the )c+uisition:
Change in randing
Jauar a jut an a//endi o a mu,h larer orani*ation under Hord.
ata de,ided to brin it ba,$ a a ,entral and inde/endent brand. Darlier0
Hord ruined Jauar4 imae by tryin to maiyK luury0 removin it4
e,luivity. Hor eam/le0 it too$ it on /art and /ut them in Jauar ,ar0
omethin that a vieed by traditional oner a una,,e/table. hi
ty/e o behavior may be juti-able in venture beteen diIerent ,ar
,om/anie0 but not ith Jauar.
In'estment in the right areas
umerou ne enineer ere hired0 and the obje,tive a to im/rove
the reear,h and develo/ment area. he ne o,al area o buine ano innovation and renovation0 not jut ,ot ,ontrol
Cultural factors:
Hirtly0 '' de,ided to leave the eitin manaement tru,ture inta,t
and leave the national ?ritih manaer. here an4t any attem/t to
im/oe +ndian manaer on JR. 'll the $ey /eronnel retained their
/oition.
Se,ondly0 '' didn4t jut leave the ,urrent manaer on their on. ''
manaed to motivate them throuh ,ontantly ,hallenin them and
or$in ith them. +n other ord0 hel/ a oIered only hen it a
needed and eitin /ra,ti,e remained in /la,e0 but at the ame time
manaer ,ouldn4t aIord to be idle be,aue they had oal to rea,h and
/lan to im/lement.
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hirdly '' manaed to in/ire trut in JR. Hirt o all0 the a,t that mot
o JR4 /eronnel ere let on their /oition hoed that '' trut JR0
and believed that it i ,a/able o olvin their /roblem. Moreover0 more
than on,e in intervie the Manain >ire,tor made ,lear tatement oloyalty hi,h ,ontributed /oitively on the ,oo/eration beteen the
,om/anie.
Hinally0 '' $e/t an o/en6mind and never heitated to liten to eedba,$
rom ubordinate. ''4 to/ level o,ial oten ma$e tri/ to their
a,torie and dealerhi/ outide +ndia and ,olle,t eedba,$ rom lo,al
em/loyee. hee o/inion are bein ued in the develo/in ,om/any4
tratey.
Cash management
' JR didn4t have a ,ah manaement ytem o it on0 ata Motor
turned to ,onultant OPM= to develo/ a ,ah manaement model. '
three6tier model a develo/ed. Hirt0 a hort6term oal to manae
liuidity ith the aitan,e o OPM= a /ut in /la,e. hen ,ame a mid6
term taret to ,ontain ,ot at variou level and the ormation o 1B611
,ro6un,tional team. Hinally0 a lon6term oal that run until 2B1F a
dran u/0 o,uin on ne model and rerehin the eitin one. he
$ey aim,ah manaement and ,he,$in ,ot.
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Conclusion:
he early identi-,ation o /rimary tratei, and buine obje,tive o the
a,uiitionmerer and ubeuent interation i the $ey to over,omin
the ,hallene in im/lementin the /ot6a,uiitionmerer interation
/lan. Provided that thee buine obje,tive are realiti, and ell
undertood and u//orted by the manaement and u,ient amount o
attention i iven to /lannin and im/lementation /hae o the
interation0 the li$elihood o obtainin /re6deired bene-t out o the
a,uiitionmerer ill be in,reaed.
?eore a u,,eul interation ,an bein0 /ro/er /lannin or that u,,eneed to ta$e /la,e. 9nortunately0 many interation initiative ail rom
the tart be,aue the interation bein beore any thouht i iven to
the ,oure that the interation ill ta$e. Plannin or interation revolve
around viion and ,ommuni,ation.
he >aimler6%hryler merer ailed be,aue %hryler and >aimler6?en*E
brand imae ere ounded u/on diametri,ally o//oite /remie.
%hrylerE imae a one o 'meri,an e,e0 and it brand value lay in
it aertivene and ri$6ta$in ,oboy aura0 all /rodu,ed ithin a ,ot6
,ontrolled atmo/here. Mer,ede6?en*0 in ,ontrat0 euded di,i/lined
=erman enineerin ,ou/led ith un,om/romiin uality. 'lo0 /re6
a,uiition due dilien,e an4t iven to ,om/etitive or,e beore the
merer.
he a,uiition o JR by '' ho to u ho u,,eul interation led
to the obtainment o deired bene-t rom the a,uiition. '' didn4t
attem/t to im/oe +ndian manaer on JR and manaed to in/ire trut in
JR and ave a ne o,u to the buine ater the a,uiition and didn4t
jut ,on,entrate on ,ot ,ontrol.
%om/anie that are ,ommitted to ,om/lete a u,,eul merer ill
enhan,e0 not detra,t rom0 em/loyee elare. ;ne ay to enure that
em/loyee elare i enhan,ed i to em/hai*e /ro/er /re6a,uiition
/lannin0 thouhtul and ,onitent ,ommuni,ation and trainin0 and0
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above all0 litenin. Dually im/ortant i to a,$nolede the role o
eibility in the /ro,e.