Daimler Chrysler Merger

Daimler Chrysler Merger

  • Submitted By: Gauravvv
  • Date Submitted: 01/19/2009 2:15 PM
  • Category: Business
  • Words: 1809
  • Page: 8
  • Views: 1

Case Study Chrysler In the late 1970s, Chrysler Corporation had almost abandoned the European car market, primarily due to financial problems. The company was making successive losses and was hard-pressed to meet even the payroll obligations. Finally, the US government came to the company’s rescue by providing federal loan guarantees of USD 1.5 billion. Buoyed by these funds, Chrysler upgraded its Jeep and minivan product lines at the cost of billions of dollars. This proved to be an excellent move by the company as it was in sync with the shift in car purchase preferences of the American consumers. By the mid-1990s, Chrysler became one of the most profitable automobile manufacturers in the world. The company was witnessing record sales in its van, light truck and large sedan product lines. Products such as the Jeep Grand Cherokee, the LH Sedan and the Dodge Ram had a mass appeal for the American consumers, helping Chrysler’s market share reach as high as 23 percent in 1997. An added advantage to the company was its efficient product development division. The product development costs were about 2.8 percent of revenues as compared to nearly 8 percent for GM and 6 percent for Ford. The reason for these low costs for Chrysler was the use of integrated design teams and the company’s excellent relationships with suppliers. Chrysler had earned a reputation of being a bold and risk-taking underdog by recovering from the edge of bankruptcy four times post-Second World War. In 1997, the company held almost USD 7.5 billion in cash. Daimler-Benz Late 1980s onwards, Mercedes-Benz had been facing a lot of competition in the European automobile market from companies like Toyota-Lexus. The company was forced to reduce prices and enhance its emphasis on consumer needs. The vehicle production process at the company was remarkably labour-intensive, requiring nearly twice the number of workers per unit as compared to Toyota. Schrempp’s vision for the new company involved...

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