Case Study Description of DaimlerChrysler: Organizing the Post-Merger Integration
Provides an inside view of how the former Daimler-Benz and Chrysler companies organized their integration efforts following their May 1998 merger, the first truly transatlantic merger in history and, at the time, the largest ever. As such, this merger presents an unusually broad array of management issues that were both unprecedented in scope and rather unique, ranging from cross-cultural management and global strategy and implementation to international M&A alliances and change management. Describes how DaimlerChrysler actually organized and moved to implement the post-merger integration process, raising a set of issues around structural risks, cultural aspects, and execution skills in a high-stakes, global context of a major post-merger integration effort.
Swot Analysis of "DaimlerChrysler: Organizing the Post-Merger Integration" written by Piero Morosini, George Radler includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Merger Integration facing as an external strategic factors. Some of the topics covered in DaimlerChrysler: Organizing the Post-Merger Integration case study are - Strategic Management Strategies, Cross-cultural management, Globalization, Mergers & acquisitions, Strategy execution and Organizational Development.
Some of the macro environment factors that can be used to understand the DaimlerChrysler: Organizing the Post-Merger Integration casestudy better are - – cloud computing is disrupting traditional business models, wage bills are increasing, increasing transportation and logistics costs, competitive advantages are harder to sustain because of technology dispersion, increasing energy prices, there is increasing trade war between United States & China, increasing inequality as vast percentage of new income is going to the top 1%,
supply chains are disrupted by pandemic , there is backlash against globalization, etc
Introduction to SWOT Analysis of DaimlerChrysler: Organizing the Post-Merger Integration
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in DaimlerChrysler: Organizing the Post-Merger Integration case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Merger Integration, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Merger Integration operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of DaimlerChrysler: Organizing the Post-Merger Integration can be done for the following purposes –
1. Strategic planning using facts provided in DaimlerChrysler: Organizing the Post-Merger Integration case study
2. Improving business portfolio management of Merger Integration
3. Assessing feasibility of the new initiative in Organizational Development field.
4. Making a Organizational Development topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Merger Integration
Strengths DaimlerChrysler: Organizing the Post-Merger Integration | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Merger Integration in DaimlerChrysler: Organizing the Post-Merger Integration Harvard Business Review case study are -
Ability to recruit top talent
– Merger Integration is one of the leading recruiters in the industry. Managers in the DaimlerChrysler: Organizing the Post-Merger Integration are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Low bargaining power of suppliers
– Suppliers of Merger Integration in the sector have low bargaining power. DaimlerChrysler: Organizing the Post-Merger Integration has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Merger Integration to manage not only supply disruptions but also source products at highly competitive prices.
Strong track record of project management
– Merger Integration is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Sustainable margins compare to other players in Organizational Development industry
– DaimlerChrysler: Organizing the Post-Merger Integration firm has clearly differentiated products in the market place. This has enabled Merger Integration to fetch slight price premium compare to the competitors in the Organizational Development industry. The sustainable margins have also helped Merger Integration to invest into research and development (R&D) and innovation.
Operational resilience
– The operational resilience strategy in the DaimlerChrysler: Organizing the Post-Merger Integration Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
High switching costs
– The high switching costs that Merger Integration has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Cross disciplinary teams
– Horizontal connected teams at the Merger Integration are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Innovation driven organization
– Merger Integration is one of the most innovative firm in sector. Manager in DaimlerChrysler: Organizing the Post-Merger Integration Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Successful track record of launching new products
– Merger Integration has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Merger Integration has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Digital Transformation in Organizational Development segment
- digital transformation varies from industry to industry. For Merger Integration digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Merger Integration has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Superior customer experience
– The customer experience strategy of Merger Integration in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Ability to lead change in Organizational Development field
– Merger Integration is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Merger Integration in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Weaknesses DaimlerChrysler: Organizing the Post-Merger Integration | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of DaimlerChrysler: Organizing the Post-Merger Integration are -
No frontier risks strategy
– After analyzing the HBR case study DaimlerChrysler: Organizing the Post-Merger Integration, it seems that company is thinking about the frontier risks that can impact Organizational Development strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Skills based hiring
– The stress on hiring functional specialists at Merger Integration has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Low market penetration in new markets
– Outside its home market of Merger Integration, firm in the HBR case study DaimlerChrysler: Organizing the Post-Merger Integration needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Capital Spending Reduction
– Even during the low interest decade, Merger Integration has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study DaimlerChrysler: Organizing the Post-Merger Integration, in the dynamic environment Merger Integration has struggled to respond to the nimble upstart competition. Merger Integration has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Merger Integration is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study DaimlerChrysler: Organizing the Post-Merger Integration can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study DaimlerChrysler: Organizing the Post-Merger Integration, is just above the industry average. Merger Integration needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Interest costs
– Compare to the competition, Merger Integration has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Merger Integration supply chain. Even after few cautionary changes mentioned in the HBR case study - DaimlerChrysler: Organizing the Post-Merger Integration, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Merger Integration vulnerable to further global disruptions in South East Asia.
High cash cycle compare to competitors
Merger Integration has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Increasing silos among functional specialists
– The organizational structure of Merger Integration is dominated by functional specialists. It is not different from other players in the Organizational Development segment. Merger Integration needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Merger Integration to focus more on services rather than just following the product oriented approach.
Opportunities DaimlerChrysler: Organizing the Post-Merger Integration | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study DaimlerChrysler: Organizing the Post-Merger Integration are -
Building a culture of innovation
– managers at Merger Integration can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Organizational Development segment.
Developing new processes and practices
– Merger Integration can develop new processes and procedures in Organizational Development industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Merger Integration can use these opportunities to build new business models that can help the communities that Merger Integration operates in. Secondly it can use opportunities from government spending in Organizational Development sector.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Merger Integration can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Better consumer reach
– The expansion of the 5G network will help Merger Integration to increase its market reach. Merger Integration will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Merger Integration to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Merger Integration to hire the very best people irrespective of their geographical location.
Creating value in data economy
– The success of analytics program of Merger Integration has opened avenues for new revenue streams for the organization in the industry. This can help Merger Integration to build a more holistic ecosystem as suggested in the DaimlerChrysler: Organizing the Post-Merger Integration case study. Merger Integration can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Manufacturing automation
– Merger Integration can use the latest technology developments to improve its manufacturing and designing process in Organizational Development segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Merger Integration is facing challenges because of the dominance of functional experts in the organization. DaimlerChrysler: Organizing the Post-Merger Integration case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Merger Integration to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Low interest rates
– Even though inflation is raising its head in most developed economies, Merger Integration can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Merger Integration in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Organizational Development segment, and it will provide faster access to the consumers.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Merger Integration in the consumer business. Now Merger Integration can target international markets with far fewer capital restrictions requirements than the existing system.
Threats DaimlerChrysler: Organizing the Post-Merger Integration External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study DaimlerChrysler: Organizing the Post-Merger Integration are -
Easy access to finance
– Easy access to finance in Organizational Development field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Merger Integration can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
High dependence on third party suppliers
– Merger Integration high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Regulatory challenges
– Merger Integration needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Organizational Development industry regulations.
Technology acceleration in Forth Industrial Revolution
– Merger Integration has witnessed rapid integration of technology during Covid-19 in the Organizational Development industry. As one of the leading players in the industry, Merger Integration needs to keep up with the evolution of technology in the Organizational Development sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Merger Integration.
Consumer confidence and its impact on Merger Integration demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Merger Integration business can come under increasing regulations regarding data privacy, data security, etc.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Merger Integration with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Merger Integration will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Environmental challenges
– Merger Integration needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Merger Integration can take advantage of this fund but it will also bring new competitors in the Organizational Development industry.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Merger Integration in the Organizational Development sector and impact the bottomline of the organization.
Shortening product life cycle
– it is one of the major threat that Merger Integration is facing in Organizational Development sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Weighted SWOT Analysis of DaimlerChrysler: Organizing the Post-Merger Integration Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study DaimlerChrysler: Organizing the Post-Merger Integration needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study DaimlerChrysler: Organizing the Post-Merger Integration is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study DaimlerChrysler: Organizing the Post-Merger Integration is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of DaimlerChrysler: Organizing the Post-Merger Integration is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Merger Integration needs to make to build a sustainable competitive advantage.