Management Mistakes and Successes, Tenth Edition

Chapter 19. DaimlerChrysler—Blatant Misrepresentation

It was supposed to be so right, almost a merger made in heaven, some said at the beginning. Chrysler was the smallest but since 1994 the most efficient U.S. auto producer, with the highest profit margin. Now its productivity and innovative strength would be blended with the prestige of Daimler's legendary Mercedes-Benz. Furthermore, during one of its periodic crises Chrysler had sold off its international operations to help raise needed money, and this merger would increase international exposure in a big way and mate it with a rich partner. The instigator, Juergen Schrempp of Daimler, was lauded for his intentions of building a new car company that would have global economies of scale.

Of course, there were two cultures involved, German and American. But in the executive offices, decision making would be shared, with Chrysler's CEO, Robert Eaton, being a co-chairman with Schrempp.

Chrysler management's expectations of equality with its prestigious merger partner were soon dashed. Schrempp, as it turned out, never intended equality. He had flagrantly misrepresented the merger package, and quickly got rid of Chrysler's top managers. Was this deception unacceptable ethical conduct, or was it rather a hard-nosed negotiating ploy that Chrysler's management should have recognized?

In any case, in November 1998 this merger of "equals" was finalized. And these hit the fan.

CHRYSLER BEFORE THE MERGER

During the last several decades, Chrysler ...