Business Case Study of Daimler-Chrysler

As any business case study on Daimler-Chrysler will recognize, Daimler-Chrysler has seen a number of significant changes in the past decade. Mergers, new products, as well as divested interests have changed the company and caused it to shift its focus. In addition to the many alterations, as this business case study notes, Daimler-Chrysler has had to make in the past several years to remain competitive and sustainable, it has also had to learn how to manage a new paradigm in business relations. At Daimler-Chrysler issues of corporate governance have received an increasing amount of scrutiny in the wake of the Enron scandal and the delicate situation of a global business environment has made matters even more complex. However, by focusing on its core set of goods and services and eradicating some of the extraneous elements of its past ventures, Daimler-Chrysler is again competitive and has a relatively secure position in the worldwide automobile industry.

From a business case study standpoint, the main capabilities of Daimler-Chrysler are, and have always been in the automobile manufacturing sector. Although they did not initially, the Daimler-Chrysler developed core competence by divesting some of its outside projects and non-core elements such as trains, telecommunications, airlines, and even space-related manufacturing. When Daimler-Chrysler decided to sell off these portions of their holdings and have a much more focus set of core products and services, they began to see a rise in their earnings and potential for new acquisitions. Although they are still diverse in terms of their global holdings and shares, Daimler-Chrysler is far more focused in terms of core competence and can now focus their energies specifically in the automotive sector. This allows Daimler-Chrysler to manage their budget for one set of core products and services and to manage these more effectively. Furthermore, as this business case study on Daimler-Chrysler proves, Daimler-Chrysler can expend more energy and resources on the development of new products and this, in turn, should (and has in the past) yield better results.

By diversifying its holdings, particularly in the Asian market through its 10 percent equity stake in Hyundai and 34 percent in Mitsubishi, Daimler-Chrysler was able to gain a competitive as well as strategic advantage in the world auto industry. Furthermore, Daimler-Chrysler have given themselves a better position in the global automobile industry by making decisions that involved cutting the budget and making way for new models such as the company did during their record profit streak in 2002 and introduction of the Crossfire. The reason why they have a competitive advantage thus, is not only because of their increased focus and general core competence, but also because they have managed to make strategic acquisitions, particularly in the global automotive marketplace.

The business-level strategy of Daimler-Chrysler is to keep as focused as possible on their core products and services, namely those related to automobile manufacturing. Although they have taken on different projects and have made a number of significant mergers, acquisitions, and holdings, after learning the hard way, they have seen that it is most important that they focus on their core goods and services. It is also important for this company Daimler-Chrysler to make sure they maintain good relations globally and this has been an issue for them in the past. This is one of the keys to the future success of Daimler-Chrysler because keeping a more narrow focus on core goods and services will allow them to invest in new makes and models and keep tighter and more organized control of the budget. As many business case studies on Daimler-Chrysler note, the reasons for the Daimler-Chrysler merger were, in the first placed, aimed at maintaining organization and control and this initial reason (along with others suggested by the diagram in 7.1) should be kept in mind as leaders meet and discuss future acquisitions.

There are a number of significant issues to contend with in terms of corporate governance, particularly when there are different requirements, standards, and norms across the world. In the context of Daimler-Chrysler, they had to contend with the differences, legal, social, cultural, and otherwise, between the United States and Germany. At the beginning, there were a great number of problems facing the company and its merger because here were no solutions to the differences in corporate management between Germany and the United States. Furthermore, while the merger was occurring, the face of corporate governance in general was changing as a result of contemporary cases of corporate malfeasance such as the issues with Enron. Some of the problems that faced Daimler-Chrysler were a difference in terms of stock markets and geographical location as well as differences in corporate governance codes between the two counties. Other issues, such as who maintained the lion's share of the power when a company was effectively split between two countries was an issue. With measures such as the corporate governance code (Cromme Code) some, although not all, of these issues were resolved. Since there are big differences between the marketplaces, cultures, and business governance styles globally, it is important for Daimler-Chrysler to keep abreast of changes and to keep lines of communication as open as possible. Although there are a number of regulatory measures in place to prevent legal and other errors and misunderstandings, it is absolutely vital that DC make issues pertaining to corporate governance at the forefront.