#24 DaimlerChryslerFiat
With the automotive industry in turmoil, it’s natural that the cards are being reshuffled. However, based on the mega-merger of the past decade between Daimler and Chrysler which ended in a mega-break up, what makes Fiat of Italy think that they would be able to integrate better with the American-based culture of Chrysler. They better start thinking about the compatibility of their corporate cultures quickly before I have more bad news to report in this blog 
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April 17, 2014 @ 8:51 pm
After five years, above blog was written, the case became real and Chrysler was taken over completely by Fiat. Nevertheless, risks for a big merger to fail, are similar to those when Daimler and Chrysler fused and failed.
It will be important for Fiat, but also Chrysler, to learn out of the mistakes which have been made in the past.
The former Daimler CEO, Jürgen Schrempp, called the acquisition of Chrysler “The Merger of Equals”. Fact is, that they have never been equal. It was just a marketing slogan to get Chrysler people into the boat. Both companies had completely different business practices. While Daimler was focusing on quality and engineering capabilities, Chrysler applied the “can do cowboy” culture for nicely designed mass products, at highest volumes and lowest costs.
Daimler employees considered themselves as something better and on the other hand, Chrysler workers earned significantly more than their German colleagues. The German CEO and his US Co CEO were completely unaligned in strategy and the level of communication was poor. That crated tensions from top down in the entire organisation. Different retails and distribution systems have never been synchronized which culminated in the reluctance of Daimler sales folks to sell Chrysler cars. Both companies were entirely diverse in their values, hierarchies and business practices. Mistrust and enviousness were fostered by two CEOs, who barley spoke to each other. Expected synergies and positive evolution never took place.
What does Fiat Chrysler now have to do better? In the case of Fiat-Chrysler, the key customer base is not as different as at Daimler Chrysler. Both, Fiat and Chrysler, look for mass products, low costs and platform synergies. The luxury labels (Ferrari and Maserati) are not endangering the overall product strategy, since both play in a completely different league. All Fiat and Chrysler employees need to buy into the merger, in specific sales folks have to be introduced and convinced of the new enterprise strategy. Sales people own the direct customer relation and they have significant influence how expected benefits will be communicated to end customers. Both, company,- and product readiness have to be by far better developed than it was the case in the DaimlerChrysler merger.
The provenience of Fiat CEO Marchionne from Canada and Italy might give him a better understanding of American culture. Arrogance and presumptuousness should not find their way into the Fiat Chrysler group.
The fundamental question will be, how the now organisation will be set up and where key players will be installed. It is advisable to apply a balanced mix of Fiat and Chrysler managers in key positions and treat internal and external communication with utmost care. Sales, marketing and distribution are key stakeholders in the car industry and need to have consensus on strategy. A proper product strategy and market positioning of their various brands will be of paramount importance. The planned headquarter move from Turin to The Netherlands, could be a smart strategic step, since it would be on neutral ground, neither in Italy nor in US. The avoidance of perceived inequalities and the creation of company equilibrium will be mission critical. A year from now it will be interesting to make a new assessment.