COMBINING THE CULTURES AT DAIMLERCHRYSLER
Several initiatives have been in the works to combine the cultures of DaimlerChrysler. There are three main initiatives underway, of which we support:
Language
English has been selected as the common language for the new company.
Information technology
In order to facilitate the process of bridging the two cultures beyond top management, DaimlerChrysler has developed a highly resourceful communication technology. Two strategic "rooms" to facilitate communications among managers have been designed in Stuttgart and Auburn Hills headquarters. These conference and training rooms include video conferencing abilities.
Personal contact
Executives from both the US and Germany have spent 3 to 6 months with their counterparts in the other country. For more frequent meetings, top executives have as many as three videoconferences per week.
BRAND PORTFOLIO
In 1984 and 1987, Chrysler developed the minivan and Jeep brands respectively. These two brands placed the firm into a niche company, and it quickly became the leader in the minivan and sport utility vehicle markets with five brands – Chrysler, Jeep, Dodge, Plymouth and Eagle. This brand portfolio was sometimes confusing for consumers by having a wide array of product lines from inexpensive to expensive. In an attempt to strengthen Chrysler’s image of “great cars and great trucks," the firm dropped the Eagle line. We believe this was a smart strategic move and DaimlerChrysler should conduct additional market studies to consider dropping the Plymouth name also because Chrysler, Jeep and Dodge have been shown to have the most brand equity.
RESEARCH AND DEVELOPMENT
Prior to the merger, Chrysler was not an industry leader in research and development expenditures. The firm, however, was known as one of the industry leaders in introducing new models in a shorter period of time. This success was a result of two product development strategies implemented by the firm. First, they reorganized its Engineering Division into vehicle platform lines, each platform was dedicated to one vehicle and working in concurrent engineering. The platform team consisted of representatives from divisions such as engineering, design and marketing. Together, the team was responsible for the vehicles’ development. The major benefits of this approach were an increase in efficiency, shorter lead times and improved manufacturing performance. Second, Chrysler was the first automaker to adopt the most widely used design software in the automotive industry, CATIA. This implementation saved eight months in the development of the new Dodge Intrepid and Chrysler Concorde. Furthermore, Chrysler implemented a digital manufacturing process system (DMAPS) in 1995 to improve the manufacturing necessary to take the computer aided design models and turn them into actual products.
In the case of Daimler Benz, the firm emphasized “specialty engineering” in product development, an approach closer to the traditional approach. This type of specialty engineering fostered the design of high performance parts, which contributed to the production of high quality, high performance vehicles. The major disadvantage for Daimler Benz was that this approach did not facilitate communication among the team members and made it difficult to reduce the lead-time. Similar to Chrysler, Daimler Benz used CATIA for design and manufacturing.
Specialty engineering and Platform engineering reflected substantial differences in product development processes. Merging these different engineering philosophies represents a major challenge and needs to be carefully managed to obtain the best out of this merger. Using one approach would not be very practical for DaimlerChrysler because of the dissimilarities between the major products of the two brands. However, by conducting joint company research perhaps the best aspects of both engineering methods can be adapted into a system unique to DaimlerChrysler.
MANUFACTURING SYSTEM STRATEGY
Ninety-five percent of Chrysler’s production capacity was centralized in North America, while Daimler Benz had 94 percent assembly and component plants in Europe. Both Chrysler and Daimler Benz wanted to expand its manufacturing activities into Europe and the U.S. respectively. Another area with extreme differences between the two firms existed in assembly productivity.
In 1997, it took 46 labor hours for Chrysler to produce one vehicle, while it took 114 labor hours for Daimler Benz. One of the reasons for differing productivity was the degree of outsourcing. Chrysler purchased most of its components from outside suppliers whereas Daimler Benz manufactured them in-house.
In an effort to become the premier North American car and truck company, Chrysler developed a systematic operating system aimed to shorten the product development and launch cycle, improve overall productivity of assembly lines and increase awareness among employees. This system, Chrysler Operating System (COS) was based on the Toyota Production System and it was a key piece for improving quality and productivity within Chrysler. One example of quality initiatives was the UAW/Chrysler Product Quality Improvement Partnership, which was a joint effort by Chrysler and the United Auto Workers to improve products and processes through increased teamwork. As a result of these efforts, Chrysler achieved an impressive 17 percent improvement in 1997. Daimler Benz’s production approach was not as close to lean production as Chrysler’s.
The perception of Chrysler by Daimler Benz engineers was that Chrysler had quality problems and used platforms to make the same cars with only minor body changes. The perception of Daimler Benz by Chrysler engineers was that Daimler Benz was very ineffective in production and slow in product development. However, learning from each other and employing the best practices of each could lead the new corporation to be in a strong position in the longer run.
MARKETING STRATEGY AT DAMILERCHRYSLER
During the first week of the merger, DaimlerChrysler introduced a 12-page national advertisement and an elaborate 24-page booklet mailed to 130,000 "opinion leaders." The ads were intended to create an image of curiosity, courage, speed, energy, and passion. Taglines in the advertisement were from the CEO to employees of both Daimler and Chrysler. Chrysler spent $1.3 billion in 1997, up 17 percent from 1996 levels, while Daimler Benz spent $102.3 million up 58 percent for U.S. advertisement.
DaimlerChrysler should develop a similar type of booklet this time but expand our media outreach and marketing effort well beyond 130,000 opinion leaders. We see this umbrella concept as a long-term marketing plan, not something that is used one year and dropped.
As a combined company, DaimlerChrysler said it was working to establish a new corporate identity by maintaining the luxury, quality and technology savvy brand of Mercedes while improving Chrysler's. Despite Chrysler trying to establish a quality and innovative image from its vehicles, away from the Jeep brand. It has long been deemed the No. 3 automaker that produced boxy-cars, made by beer drinkers. Mercedes, on the other hand, has been perceived as a laboratory vehicle developed by scientists with white gloves and lab coats. One of the worse misconceptions Daimler Benz has to deal with is consumers thinking Mercedes vehicles will be made in the same plant as the Dodge Neon or that eventually one will see a Chrysler Cirrus selling next to a Mercedes C-230. From a brand management perspective, this merger has to be a one way street -- Chrysler riding on Mercedes' name.
