Reasons for the Merger
Initially the deal seemed to make sense for both companies. Both CEOs, Robert
Eaton of Chrysler and Jurgen Schrempp of Daimler-Benz, independently concluded, that their companies needed a partner to survive in the future on the car market. Even though there is wide spread opinion, that both companies could have survived independently, the logical reasoning behind the merger makes a lot of sense.
Chrysler, having been close to bankruptcy almost once in every decade, was extremely vulnerable financially. That was proved by the hostile takeover attempt, carried out by its largest shareholder, Kirk Kirkorian together with its former legendary chairman of the board, Lee Iacocca, who wanted to regain control over the corporation after his board almost had to force him to resign. Chrysler survived the crisis, however, that was a clear indication, that the corporation needed a change, which would bring stability and financial security.
The change would have to involve expansion to other markets. Chrysler was a strong player on the US market only, besides its strength was guaranteed by its pickup Daimler-Chrysler Merger Portrayal 10 truck, SUV and minivan divisions. Chrysler passenger cars were not a success on the market. Increasing Chrysler’s share on the international market required major investments: neither did the corporation have plants abroad, nor did it have a sufficient dealer network.
To conclude, Chrysler needed a financially strong partner, with a significant international presence.
Daimler-Benz was financially stable; it was one of the largest German companies, which was a conglomerate of over 20 different businesses. However, 95% of its profit came from one division – Mercedes-Bens. That made the corporation less secure. The
Mercedes division had a rather small share of the entire automotive market; besides, it was clear, that the market segment for luxury cars had reached its peek capacity