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Similarly, Mercedes used the same strategy in South America. It built a new plant in Brazil. This plant decreased the prices of the cars and made the purchase of a Mercedes more affordable for the South American region (Motor Trend, p. 123, 1997).

In the past five years the demand for 4x4 vehicles has been increasing. Two years ago, Mercedes came up with a new M-class jeep model. The price of the is jeep is around $34,000, which is competitive with the American-made Chevy Blazer, Ford Explorer, and Grand Jeep Cherokee. By making a jeep, Mercedes is keeping up with its competitors for this share of the market. The new jeep is a success because it was named the 4x4 truck of the year for 1998.

Company ownership: European, U.S. and other international investors own DaimlerChrysler; there are approximately one billion shares outstanding. 65% is made up of European investors.

Global Stock: DCX ordinary shares are traded on the New York and Frankfurt stock exchanges as well as nineteen other major stock exchanges worldwide.

Group Headquarters: Stuttgart, Deutschland, and Auburn Hills, Michigan, USA.

Chairmen: Robert J. Eaton and Jurgen E. Schrempp

Management Board: Consists of fourteen members, including the two chairmen and the heads of the operation and functional divisions.

Supervisory Board: Consists of ten shareholders’ representatives and ten employees’ representatives. The Supervisory Board appoints the Board of Management and approves major company decisions.

Market Capitalization: Currently about EUR 80 billion (March 1999)

Investments: 1999-2001: EUR 46 billion to be invested in the future of DaimlerChrysler

Automotive Sales: 4.5 million units in 1998 (Passenger Cars and Commercial Vehicles)

Employees: 466,900 at the end of 1999

Manufacturing Facilities: in 34 countries.

Global Brands: Mercedes-Benz, Chrysler, Plymouth, Jeep, Dodge, Smart, Freightliner, Sterling, Setra, Airbus, Eurocopter, Ariane, Debis and others.

Product sold: More than 200 countries

Financial Reporting: US-GAAP accounting with earnings reported quarterly.

Reasons for merging and new opportunities.

In 1998, at the Detroit Auto Show, the idea of cooperation of Daimler-Benz and Chrysler Corporation was born. Schrempp, Chairman of Daimler-Benz and Eaton, chairman of Chrysler Corporation, began negotiations about possible combination of two large automobile manufacturers. “We are leading a new trend we believe will change the future, the face of the industry,” Eaton said five months later when the deal was announced.

The two chairmen acknowledged that the merger would not be easy. Their own study of transnational mergers suggested that 70 percent failed to achieve the kind of success that had been anticipated.

As a result of the long series of negotiations, a new company named Daimler-Chrysler was established. The company would manufacture not only cars, but commercial trucks, trains and rockets as well.

The goal of the merger was to create a company that would be able to stand better against other world leading car producers like General Motors, Ford, Nissan, Volkswagen, Toyota and so forth.

With the creation of a new company, both of the old components were going to benefit from the following:

Decreased R&D expenses per production unitConfluence of technologies of both firmsDouble strength in totalOpportunities in new marketsDecrease in price of materials bought from suppliers

Opportunities in new markets

Both Chrysler Corporation and Daimler-Benz operate in quite saturated markets (in terms of their current products). In order for them to grow, they will have to carry on those overseas markets, which means development of products in accordance with preferences of the new markets.

Developing new products for a different market segment or establishing an additional brand might have implications for the positioning of the existing product range. Penetration into completely new market segments for both companies would involve both high costs (new offices, stores, and advertisement programs) and substantial risks for the companies.

Another method for successful penetration and establishment in new markets is co-operation with another manufacturer who already has a successful brand and products in place in the segments where it is represented. In this way, the existing product portfolio could be broadened without any risk to each company’s brand identity and its associations of exclusiveness.

Daimler-Benz is well-known and recognized in Europe and USA for its high-quality cars

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