CASE STUDY ON MERCEDES AND CHRYSLER

Prior to the merger, there were further gaps between the corporate models of Mercedes and Chrysler. This was evident in the pre-merger preparations, where the main issues of the Daimler and Chrysler teams revolved around their respective traditions of engineering, distribution, supply chain, and business management (Hitt, 2016, p. 108). Every team was to protect its traditions of doing its own things; however, the pressure mounted due to merger policies to appreciate and allow the two traditional forces to operate as one. This was portrayed in the structure and activities of each company; it outlined their heritage to be so different from each other.

The first difference was evidenced in the styles of communication in the business deals. For instance, In Germany, the most important rationale of giving a speech is to provide and obtain information. While Americans are similarly factual, however, uses speech categorically to offer opinions but are more credible than Germans. In such respect, they frequently apply hype, which Germans impulsively responds against it. On the hand, Americans always tend to demonstrate sanguinity and put forward the most excellent scenarios. However, Germans are at all times more contented with a cautious, fairly pessimistic vision which visualizes the most horrible scenarios (Hitt, Carnes & Xu, 2016, p. 109). They demand numerous perspectives before reaching any significant decision. On the other hand, Americans are concerned in illustrating the magnificent approach and details mop up later. They seek out simplification of matters to simplify their action routes. However, Germans have a trend to cause difficulties in any kind of discussion.

The formality of German is evident in their communication style. For instance, at the time meeting, Germans as a rule always enter a room with a grim look on their face, contrary to the extensive Hollywood Americans smiles. Additionally, charming Americans discover Germans lack charisma and perhaps they are always dull. In fact, Germans distrust both charisma and instantaneous smiles.

In the factors of communication diversity styles that would likely lead to early misunderstandings of the merger, but later structural and procedural differences would increase their heads (Shelley & Gilson, 2017, p. 605). This is because; the American corporations, as a rule, have a strict centralized reporting while most Large German corporations always operate in a compartmentalization and decentralization style since every unit reports vertically to its head of the department. Thus horizontal communication in German across departments at diverse levels is basically taboo. On the other hand, when compared with those in U.S., the departmental contention is more of acuter; thus, in this section, managers of German seem to be tremendously touchy. To add on, offices of German are strongholds of confidentiality, generally with doors close up; whereas, managers in American pursue their staff members around building to exchange ideas.

Other differences are that, Germans are classic conscious. This is because senior managers are generally intellectuals. Whilst intellectuals of America are often egg-heads as often referred and U.S managers at all times speak out loud as compared to Germans’ senior who commands always in a very low voice. Americans award is flexible, spontaneity, and adaptable in attaining their set goals. While for Germans, they give conceit of a setting to well-tested process and procedures.

In conclusion, Germans are more classically aware in terms of changing in vehicle industry; senior German executives are generally intellectuals while America intellects speak always out louder than what Americans do. Senior Germans’ knowledge is in a low-slung opinion while Americans are flagship; elasticity and flexible that help them in attaining all they need in their areas of operations (Shelley & Gilson, 2017, p. 610). On the other hand, Germans always gave the pride of the place to the well-tested measures and processes, but for such, American does not do so.

Responses to question two

The main differences of production processes between the Mercedes and Chrysler plus their configuration of supply chains, and the way such differences influence the strategic results of merger

There are various major differences between the Mercedes and Chrysler production process before the major in which every firm used in the quality production of its products to compete favorably on the market. To start with Mercedes-Benz, this company is one of oldest automotive best known and established brands globally and exists before the merger. In the whole of 1930s, the firm produced 770 models, an automobile that was trendy during Nazi period of Germany. The company used a specific production standardization called Mercedes Production system (MPS) before the merger (Harvey, Heineke & Lewis, 2016, p. 8). This production system (MPS) of Mercedes-Benz was its specific solution in the introduction and development of production standard systems. Consequently, Mercedes Production system (MPS) has five subsystems and principles components that are strictly followed by Mercedes-Benz production process. For example, the Group works structures. This is where the production process was divided into groups for efficient workflow. The production process was under Standardized processes and methods that saw the company produces the most quality products on the market before the merger. Additionally, the production process of Mercedes-Benz before the merger was one of the qualities and robust processes. For such, the management was rapidly identifying the way to eliminate all form of production faults.

While for supply chains before merger, the firm of Mercedes used total cost reduction strategies in which it increased its production in the oversee markets than in the home market, German. While in the case of Chrysler, the market concentration before the merger was concentrated more within the U.S. market than its global market.

While before the merger, Chrysler used flexible standardize production process; the process incorporates a model for future upgrade plants. This process of Flexible System of Manufacturing (FMS) depends partly on a standardized bill and notably, a typical body-shop design that relies greatly on contemporary robotics. While for supply chains before merger, the firm of Chrysler had its market concentrated more within the U.S. market than in its global market.

However, due to these differences in supply chains and production processes, after the merger of the two companies, the production process took its new roots. The culture of Chrysler was trashed by the production processes of Mercedes system. Therefore, the production process of Mercedes-Benz after the merger used due to its qualities and robust processes that the management was rapidly eliminating all possible production faults and increasing production of the merged corporation.

Responses to Question Three

The major differences in labor politics at Chrysler and Mercedes and how it affects their process design

For the automaker’s Mercedes-Benz in Alabama, stands alone among other firm of German plant around the earth with no union workers representative. But the remaining world branches had a flexible type of labor politics for the best working environment of their respective workers. Unlike in the case of Chrysler where labor politics were represented by interested individuals in the labor unions to protect the interests of all human resources of the entire company. Also, by playing company labor politics, Mercedes-Benz was found on a wrong side where it was caught when exploiting the fuss of Jones. This brought a number of issues that affected the company operations and labor segmentation both in the local markets and global markets for its products. Therefore, labor political flexibility was the order of the day in the political alignment at Mercedes-Benz in German in all of its market operations.

For such kind of differences in labor politics, by the mid-1990, Chrysler survived a near bankruptcy; this was a divisive style within the labor market by the moment. Thus this affected the process design since the two firms had different approaches. Like for, Mercedes-Benz it had long working hours on the markets of the United States of America but Chrysler had a short working hours that never affect labor political alignment of the union.

However, the recent agreement after the merger that applies to all human resources of the two companies such as their performance-based compensation scheme; it was connected to the achievement of certain profitability targets and competence. This adversely affected their tradition labor designs of the two companies.

Differences in labor and political structures affected the merger in several ways. The first effect was seen in the new operational strategy of the merge. Each company was to accommodate other before they could operate as a single unit. But dilemma was due to different nations having different political platforms and structures with different labor laws.

Responses to Question Four

Assessing strengths and weaknesses of Fiat’s takeover of Chrysler by both operation strategy and market strategy

Strengths of Operational strategy:

After of Fiat’s takeover of Chrysler, the company changes its operational strategy by adopting attacking option where it brought significant changes in the Group’s working model. Thus this contributed the firm to occupy significant markets, by working in all potential countries hence increasing profitability.

Also, after of Fiat’s takeover of Chrysler, it increased the opportunities of re-structuring its operational strategy, products making, and the markets (Harvey, Heineke &Lewis, 2016, p. 80). The new Fiat and Chrysler entity assimilated varied and wider orientation markets in the accumulation of North American, whole of Europe and Southern American markets. Furthermore, most of the directors from Fiat were linked to the team of Chrysler to assist the processes of integration and share their capabilities.

In addition, the strength of Fiat-Chrysler contract was seen by its ability for distribution of low-consumption locomotive technologies. This was to improve the power train situation in the Northern American markets (Spring et al. 2016, p. 19). It as well led to the focus on the World Manufacturing Class philosophy that was then extended to entire Fiat Industrial and Fiat-Chrysler plants by producing substantial investments; product reliability and quality.

The weakness of Operational strategy:

Due to poor operational strategy, Fiat has experienced a number of operational management. The first one is the insufficient production. The new management immediately after taking over, the firm’s production volume decreased drastically and this was seen in the Brazilian market.

Also, the firm experienced a problem of finance. For a better company operation, it should have sufficient funds in which all its production strategies, marketing strategies, and management strategies will be sufficiently funded. But, Fiat in 2008 was a difficult year where it was under the financial crisis that contributes immensely to its poor operational strategies. In addition, the key Italian production firms were underutilized since there was poor strategic management orientation on such kind of market segment (Bruner et al. 2017, p. 45). Thus this contributed immensely the firm to experience difficult financial and operational management. Similarly, the condition of Fiat in the year 2009 would be viewed as a severe stalemate; since the progression momentum was driven by the group reversal which was then stifled by the global crisis. This brought difficult moments in the overall operational management of the entire company.

The strength of the Marketing strategy:

It changes marketing strategy from two-way concentration to a more diverse market where the company spread to all continents under its marketing operations. This has drastically reduced risks but instead increased its sales volume and profitability. Also, high level of promotional strategies has increased both local and global markets, making the firm to meet its set daily sales volume.

Weakness in the Marketing strategy:

As a weakness, Fiat Lacked geographical diversification of market. This is because, about 90% of its international auto Group sales had only three major markets. These markets were Alfa, Romeo and Lance, and the company was only concentrated in Europe and Brazil markets making 60% and 32% of sales of 2008 respectively (Innerbichler, 2016, p. 234). Fiat to attain much of its markets, it have to expand its marketing strategies by increasing its market segmentation to more local and international market. However, such level of geographical concentration has high-risk level of business cycle.

Finally, another market weakness is that, Fiat‘s Market coverage is small, with low-cost market segments. For instance, approximately 70% of Fiat’s sales volumes are obtained from low and small cost market segments in sales of 500 Panda, with Pinto on Europe market and Siena in the market of Brazil (Spekman et al 2017, p. 20). The same market is characterized by low pricing hence reducing the firm’s anticipated profit margin. Thus this as well reduces the moral of shareholder’s increment ratio of investments.

List of References

Babbar, S., Bechara, R.S., Koufteros, X.A. and Huo, B., 2017. The emergence of Asia and Australasia in operations management research and leadership. International Journal of Production Economics, 184, pp.80-94.

Bruner, R.F., Bruner, R.F., Spekman, R.E., Spekman, R.E., Christmann, P., Christmann, P., Kannry, B., Kannry, B., Davies, M. and Davies, M., 2017. Daimler-Benz AG: Negotiations between Daimler and Chrysler. Darden Business Publishing Cases, pp.1-45.

Harvey, J., Heineke, J., and Lewis, M., 2016. Editorial for Journal of Operations Management special issue on“ Professional Service Operations Management (PSOM)”. Journal of Operations Management, 42, pp.4-8.

Hitt, M.A., Carnes, C.M. and Xu, K., 2016. A current view of resource-based theory in operations management: A response to Brimley and Rau. Journal of Operations Management, 41(10), pp.107-109.

Innerbichler, R., 2016. A multidimensional valuation model of M&A transactions: the daimler-chrysler and the fiat-chrysler cases.

Shelley, C.E. and Gilson, L.L., 2017. Creativity and the management of technology: Balancing creativity and standardization. Production and Operations Management, 26(4), pp.605-616.

Spekman, R.E., Spekman, R.E., Fritz, J., Fritz, J., Spekman, R.E. and Spekman, R.E., 2017. Fiat and Chrysler: Gaining on Global Automakers?. Darden Business Publishing Cases, pp.1-20.

Spring, M., Hughes, A., Mason, K., and McCaffrey, P., 2017. Creating the competitive edge: A new relationship between operations management and industrial policy. Journal of Operations Management, 49, pp.6-19.