DaimlerChrysler

DaimlerChrysler: Wunderkind or Problem Child?

In 1998 the international automobile industry changed forever - Daimler-Benz and Chrysler merged together. The new company was called DaimlerChrysler. There were two kinds of suppositions - the new union would be a strong leader or they fail because of the different historical backgrounds.

History of the Automobile Industry
Why the automobile industry has made the revolution of world markets? That is because the automobile gives people the freedom and mobility to do as they please. The article and the history can't give us the answer who was the person that invented the automobile. The roots of the automobile are from Europe, but the car first became a popular mode of transportation in the United States. It eas a big step of the US economy, because the invention made the states economy boom. The automobile industry was jolted by the two World Wars that the industry had survived. In 1900 Germany became one of the top three car-making countries in the world,next to US and France.

Chrysler
Walter Chrysler played a large role in the formation of Chrysler Corporation. In 1926, Chrysler became the fifth largest American automaker. Still, Chrysler’s history has not always been that bright - in late 1970s there was a downturn in the economy, an increase in gas prices, and in interest rates. The company survived the hard time thanks to one person - Lee Iacocca who had invested his entire life at Ford.

Daimler-Benz
Daimler Motor Company and Benz & Company decided to merge together in 1926, forming Daimler-Benz. The company has always been known for its great quality, quantity has never been an issue. But there is something that still haunts Daimler-Benz - the firm used slave labor in the early 1940s. The quotation from a book review written by Alfred Mierzejewski: “…Daimler-Benz used slave labor only to survive in the short-term. It could rid itself of these laborers easily after the war, and it could use them to produce military aircraft engines and other war related products while conserving its skilled German workforce, concentrated in its plants in western Germany, for the resumption of peacetime production.”

The merger
In 1998 Daimler-Benz and Chrysler merged to DaimlerChrysler. Entering the unification, the German automaker had a very profitable year, Chrysler was just the opposite. So, why these two automakers decided to unite? The merger gave Chrysler its initial entry into the European market and Daimler-Benz greater expansion into the United States. Also, Chrysler wanted the quality that Mercedes portrays and Daimler-Benz wanted the cost-reducing programs that Chrysler possesses. Daimler-Benz admitted the need for more suppliers in its development process to reduce costs. It seemed to be a perfect fit.

A Theoretical Perspective
England’s Mercer Management Consulting formulated nine factors in the failure of most fusions:
1. Too much attention is given to short-term issues, such as “sealing the deal,” to the detriment of long-term corporate identity.
2. Leadership issues are not properly recognized. Management structures are more important than a clash of management personalities.
3. Typically there is a failure to obtain the goodwill of a range of stakeholder groups common to both companies.
4. Dangers in seeking new brand names take place, resulting in the loss of brand equity.
5. Communications departments have difficulty because they are unable to unite until the merger is complete.
6. Dominant players pay little attention to cultural issues, therefore leaving others to fear losing their distinct corporate identity.
7. Recognition is not given to the conflict between individual and corporate goals, meaning it is hard for employees to focus if they are worried about the security of their positions.
8. Communications consultants are brought in too late in the process
9. Reputations can be damaged – organizations and/or key individuals.

They also give four main solutions to solve the merger problems:
1. Identify the key stakeholder groups and track their reactions throughout the entire merger process.
2. Build on the strengths of each company.
3. Install effective corporate communication by monitoring reactions and identifying potentially damaging situations.
4. Evaluate the financial benefits and drawbacks of the merger.

Advantages and Disadvantages
Advantages:
- DaimlerChrysler executives didn't change brand names or logos in the automobiles it produces. - DaimlerChrysler sought the goodwill of a range of stakeholder groups. The stockholders of each individual company overwhelmingly approved the fusion. There was only one stakeholder in particular that was not content.
- The open culture gives Chrysler a creative spirit and very fast decision-making (inversely to Germany)
- Daimler-Benz’s primary asset is the quality, safety, and nameplate of Mercedes - Chrysler is identified with low development costs
- Daimler-Benz reaps the benefit of large cost savings as a result of the merger
- Chrysler has the Five Star Program

Disadvantages:
- DaimlerChrysler didn't inform all stakeholders accurately about the terms of the merger.
- DaimlerChrysler also ran into problems with corporate structure
- Dissonance arose with the variance in corporate and national cultures
- Chrysler executives receive larger salaries and bonuses than do Daimler-Benz executives
- With Chrysler being “taken over” by Daimler-Benz, many Americans have a feeling of betrayal towards the company

Current Plans and Strategies
The company intends to have all brands share commodity parts, such as engine blocks and batteries. By doing this, quality will be maximized in all cars and engineering costs will be cut by using more effective and efficient parts. A minor strategy DaimlerChrysler employs inside the company is the Innovation Awards. These honors are designed to spur technological innovation. They reward the engineers for all the work they do.

Long term assessment

Unification affected several groups:

• especially it affected DaimlerChrysler and its stakeholders. One of the largest impacts was on DaimlerChrysler’s stock price. Stockholders were voting to turn in their shares for stock in the new company, DaimlerChrysler. While doing so Daimler-Benz shareholders obtained 1.005, while Chrysler stockholders only received 0.6235 shares for every one share they owned. Rates were different because of the value of each company after the analysis of assets. But merger wasn't only bad for stockholders - the unification allowed thousands of people to globalize themselves by taking part of foreign stock exchanges.
• Consumers where affected by the products. That they could get the best products Daimler-Benz and Chrysler must share each other’s best practices, which might bring about better products than ever.
  
• Suppliers benefit - Chrysler’s suppliers are able to enter a new supply chain, as Daimler-Benz’s close-knit family will now welcome the new vendors.
• Employees were affected in a different way - Chrysler employees and executives were left a bit shocked and in fear of a complete German takeover, so maybe some of them don't work as hard anymore.
  

Future Challenges

The future challenges which are facing the organization are large-scale.
In the estimation of the author of the article, there are three primary obstacles for DaimlerChrysler:

1. allowing Mercedes to share its premium parts with Chrysler, while maintaining brand differentiation to protect the quality-oriented name;
   
2. changing the focus of advertising to reflect pride in the company, while decreasing the amount of discounting on cars;
   
3. developing a competitive car to fit in the mass-market niche.
   

Future plans:

• Schroer changed the schema of DaimlerChrysler advertisements.
• DaimlerChrysler needs to decrease its dependence on discounting.
• DaimlerChrysler needs to heighten its attempts at uniting its own people.
  

No-one know what would have happened today without the unification. Maybe Chrysler would have been bankrupted today. And what about Daimler-Benz? They also benefited from the deal as well by decreasing its high costs, increasing its production innovation, and improving its creative styling.

A move to uptown

Recent merger and old current building was forcing Daimler-Chrysler to look for the new workplace. “Our new workplace was key to meeting our organizational goals. We needed more than just nice offices – much more.” said John Mann, Director of Engineering and Regulatory Affairs.

They had very specific requirements:
* new building must support their current and future needs
* create a highly-effective workplace that improves operational efficiencies and productivity
* create a flexible technology infrastructure that can respond to changes inexpensively and quickly
* create a highly-flexible environment, using existing furniture standards, that can be easily and inexpensively reconfigured
* improve employee satisfaction by creating a comfortable and inspiring workplace

To achieve the objectives they:
* organized meetings with senior executives from all parts of the company
* used an integrated solution, that would address furniture requirements, as well as architectural and technological needs
* organized meetings every week to update each other and report outstanding issues - that helped them to address problems in the early phases and also deal with them.
* held a strong teamwork

After eight months work they could move into the new building and enjoy the job done - everybody where happy. And if workers are happy they put more energy into achieving the goals of the company.

Knowledge Management and e-Human Resource Management

DaimlerChrysler AG Plant Wörth decided to replace their current host-based human resource (HR) system with new web based solution. The new system which was internally called as e-People was offering to manage employees from the beginning of candidature till the withdrawal. Something what DaimlerChrysler was looking for - to get a consistent concept for their knowledge management.

Knowledge management is a collection of different techniques which are used to acquire knowledge, to organize knowledge and to make it transparent. One of these techniques is Knowledge Discovery in Databases (KDD) respective Data Mining (one step of KDD process).

eHRM (e Human Resource Management) offers opportunity to automate administrative HR-work and to optmize value creating HR-activities. Three levels of development:

1. web-presence, HR - part of the eHRM solution are present
2. web-enabled HR - all parts of the eHRM solution are present and can be access online
3. web-energized HR - fully implemented, can be accessed online and used by employees

DaimlerChrysler eHRM level is two at the moment, but is to reach to level three.

The benefit for DaimlerChrysler with ePeople was the strong emphasis of self-service concept which was generally devided sections for executives and section for employees. All the employees could access their personal data (print attestations, salary data or see personal information) and executives can initiate workflows, have an overview of the structure of the skills, view administrative activities (who is ill, who changed department and etc.) or interact with other users.

Enhancements for eHRM with Knowledge Discovery in Databases (Data Mining)

Skill-extraction
A central module of ePeople is the functionality about the skill management. Employees or applicants can document their skills and executives can see those skills easily from the system. And according to the skills executives can decide the training measures or recruit new people.

When person is applying for the job one needs to fill in the socalled competency tree, which is categorized (IT-knowledges, Social knowledges and etc..). You can select among more than 500 skills by selecting the level of the skill (expert, average, ..). But problem is in the fact that this tree can be outdated very quickly. One possible solution is Text Mining, which enable users to extract and analyze information out of the documents. The challenge for Text Mining is to make the information understandable for machines. Every time user inserts the skill which is not in the database, then this skill will be added to the competency tree.

Recruitment decision support
It is possible to teach the system (classificator) to decide if candidate is suitable for the job or not. First classificator needs to be trained how to recognize if candidate is suitable. For this company needs the data about the candidates who have been accepted and candidates who were declined in the past. After one have the information the testing part can begin. If tests end up good, classificator can be used to make recruitment decisions, but not only as a standalone solutions because fo the error-rate classification approach.

Strategic personnel evolution
As workplace planning aims to have right people in the right place at the right time - all the time, it is good to have the overview of the current staff skills to get an impression which groups of similarly skilled people are presented in some speficic department. Thanks to the ePeople Skill management part company can make decisions about recruiting new employees, redeploy some people, organize trainings or see whose skills are not likely to meet the future needs.

Holistic view
Most of the proposed use cases make sense if they are combined with the processes that exists in the daily HR-work. And these cases have to be integrated to the system in a way that users acceptance would be as high as possible. A central component of the holistic view is the competency tree which is proposed to design the tree as an ontology for a more flexible use in the future. With an ontology we get a common understanding about the structure of the saved information (in addition we get interoperability, machine-readable data and reuse of domain knowledge that is saved in the tree.

A diploma thesis was planned for the third quarter of 2003 which dealed with the problem to transfer the competency tree into an ontology.