Transcript
Daimler-Chrysler Merger Portrayal 1
A Study of the DailmlerChrysler Merger Portrayal in U.S. and European Media
Research paper
Sergei Golitsinski
48C:291 Project in Communication Studies
Dr. Dean Kruckeberg, APR, Fellow PRSA
December 17, 2000
Daimler-Chrysler Merger Portrayal 2
Introduction: Globalization and Public Relations
Today the business world is becoming a smaller place. One of the main trends in
corporate business is going global: forming transnational businesses, which are spanning
boundaries between nations and even continents.
“The most significant change that our companies face is globalization of our
business,” argues Wooland (1996, p. 6). “As late as the 1980s it was possible for a major
industrial company to limit its market presence to one or two major regions of the world,
and to know with some confidence who it was competing against in those areas. That is
no longer possible if a company hopes to succeed. Now we must be global, and our
competitors are the old ones we have always known, but also new ones, who are just
getting started” (Wooland, 1996, p. 6).
Globalization magnifies the value of a business considerably. “But greater value is
not a given. “This is because the trend towards globalization can often be a source of
confusion or uncertainty,” argues Drobis (1998, p. 34).
Transnational companies face the challenge of building relationships that do not
currently exist and maintain them in an environment of different nations, cultures,
languages and traditions. Culbertson (1996) notes, that such organizations “have
limitations, suggesting a great need for guidance in relationship building and maintenance”
(p. 1). Referring to Grunig, he concludes, “truly effective public relations practitioners
provide exactly that guidance” (Culbertson, 1996, p. 1).
Wakefield (1996) observes, that the concept of international public relations, that
is, practicing PR in an international or cross-cultural context, is “rapidly attracting the
attention of practitioners and scholars” (p. 17). Ho notes, that “since 1990, Public Relations
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Journal, Communication World, Public Relations Review, and other publications have
published dozens of articles about public relations in a global context” (p. 17). Besides, an
increasing number of articles can be found on various Web sites, related to public
relations research. Professional organizations, such as the International Association of
Business Communicators (IABC) and the Public Relations Society of America (PRSA)
have established sections for members, specializing in this area (Wakefield, 1996, p. 17).
Finally, the last PRSA national conference in October 2000 was co-sponsored by the
International Public Relations Association (IPRA); its focus on international public
relations was emphasized by its name: “The World Congress.”
For international public relations practitioners, the global economy is not new,
but is a well-established fact of life. Indeed, a growing international capital flow,
facilitated by new communication technologies, has created tremendous opportunities for
public relations.
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Challenges of global public relations
Globalization creates both opportunities and challenges for public relations.
Taylor (2000) suggests, “opportunities include the potential for public relations
practitioners to lead their organizations during times of transition” (p. 278). Indeed, the
public relations function creates and maintains relationships with a company’s publics;
therefore, it can help an organization build new relationships in international or
multicultural environments (Taylor, 2000).
However, there are challenges as well. “The ways in which organizations can
effectively communicate with international publics are dependent on a variety of cultural
and societal forces. These cultural and societal variations will affect the communication
between international organizations and the publics in the host nations” (Taylor, 2000, p.
278).
Practitioners argue, “borderless credibility requires a seamless network of
communications professionals who share a company’s vision, who understand a
company’s core messages, and who know how to work cooperatively to deliver those
messages consistently across different cultures, races and religions” (Drobis, 1998, p. 34).
Drobis (1998) emphasizes, that they don’t have to be identical – just consistent. “A company
like Heinz, for example, is perceived as a British company by British consumers and an
American company by Americans. Yet in both countries, the brand is held in equal
esteem, and the management vision is clearly understood” (p. 33).
However, there are other opinions. Some scholars and practitioners believe that
the main value of international public relations is the possibility to centralize
communication efforts, which will cut down costs. Smith (2000) suggests, that each
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country developing from scratch its own core materials, such as slide kits, press packs,
and product visuals, does not make financial sense. Smith (2000) concludes, that in terms
of an international public relations program, it is not just the money, which is being
saved, but also the cost of people’s time, which is equally important.
Still, most scholars and practitioners agree, that the challenge of different cultures,
dictates the necessity of developing different communications approaches to different
publics. Seltzer (2000) mentions, that 72% of respondents to an internal survey at Ogilvy
Public Relations Worldwide among mid-level managers from Ogilvy officers from
around the world, stated that the biggest difficulty faced was lack of cultural knowledge.
Seltzer (2000) argues, that a corporate or product strategy can easily be global;
however, it is necessary to take into consideration the numerous public relations tactics
that work well in one culture, but have no value in others. Seltzer suggests, that “in
developing cultural appreciation and knowledge, it is essential to understand what works,
what doesn’t, and why.” Seltzer (2000) concludes, “Communications strategy must be
consistent across borders, but tactically respect and capitalize on local market differences.”
Corporate Communications During a Merger
A company is especially vulnerable to the judgment of stakeholders during a
merger. In this case, communications is especially crucial. According to most scholars,
post-merger public relations is one of the most important, least understood disciplines
that impacts the success or failure of a deal.
Scholars and practitioners agree, that historically, companies considering mergers,
have planned every detail except the most important: compatibility. “Their leaders have
thought thru the economies of scale, the operational synergies, the joint marketing
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opportunities, but they have paid only lip service to cultural issues. Organizational
culture, after all, is a “soft” issue, difficult to define and even more difficult to measure. For
that reason it makes even seasoned executives uncomfortable” (“Unhappily married,” 1999).
Underestimating cultural issues is especially dangerous in international mergers.
Wolf suggests, “There has always been a tendency to underestimate the impact of cultural
issues and to focus instead on organizational or structural issues. It is dangerous to
underestimate culture issues in any merger, but when the merger involves two companies
from different national cultures, those issues are exacerbated and unless a company is
prepared they can be debilitating” (“Unhappily married,” 1999).
Audiences for the typical merger include employees, both active and retired,
investors, journalists, suppliers, customers and regulators. Messages must be developed
for each group that are consistent, yet address individual concerns.
Scholars agree, that the employee audience often receives minor attention in
mega-mergers, deals that focus on lawyers, investment bankers, senior management and
shareholders. Drobis (1998) emphasizes, “Communications must be inclusive, reaching all
audiences, both internal and external. Too often, the discussion of values centers on
convincing investors and the media about the virtues of a company. But the true place to
start is within the company itself. If the employees are loyal to the company’s vision, and
if they are actively involved in creating value every day, the company will succeed”
(Drobis, 1998, p. 33).
Four phases of post-merger communications
Bloomgarden suggests, that there are four distinct phases of post-merger
communications (“Unhappily married,” 1999).
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The first phase is the announcement of the merger. Bloomgarden warns, that this
is the only chance a company will get to make a first impression, “so it’s important that the
company presents the deal in the best possible light.” It is also important, according to
Bloomgarden, that as many stakeholders as possible learn of the deal first from the
company itself. “It’s one of the clichés of employee communication that people should not
learn of developments that affect their lives through the media” (“Unhappily married,”
1999). That’s true for all the company’s publics.
The second phase, according to Bloomgarden, is the period between the
announcement and the final approval. Bloomgarden argues, that “in many ways this period
is the most difficult because companies are generally not able to answer even the most
basic of questions. Wolf mentions, that companies in this stage “are not able to talk about
how the merger will impact human resource policies, or the ways in which individual
plants may be affected, even those issues are of tremendous concern to employees.” “It’s the
inability to provide specific information that makes post-merger communications such a
challenge,” concludes Wolf (“Unhappily married,” 1999).
Bloomgarden argues, that during this period the most important thing is honesty.
“A lot of companies are afraid to talk about the consequences of a merger. They are afraid
to let people know that there will be job losses, that there will be changes. But it pays to
be frank with people, and it pays to make the process as transparent as possible. People
will forgive management for making difficult decisions, but they won’t forgive it if they
think they’ve been lied to or mislead” (“Unhappily married,” 1999).
The third phase, according to Bloomgarden, begins when the deal closes.
Practitioners agree, that the most important challenge during this period is “staying ahead
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of the rumor mill.” There is always speculation; usually centered around potential job
losses, and that, according to Taufield, can have a tremendous impact on employee
morale. “The rumors start immediately, and if the company doesn’t step in and provide
employees with factual information the rumors get worse and worse. People tend to
exaggerate and assume the worst” (“Unhappily married,” 1999).
The final stage, according to Bloomgarden, starts when the organizational
changes brought on by the merger are completed. After this point, Wall street, employees
and other constituencies will want to know if a merger delivered on its promised benefits
(“Unhappily married,” 1999). That means continually reinforcing the understanding, why a
merger made sense and how it’s improving the lot of all key audiences of the new entity.
A conclusion can be made, that scholars and practitioners agree, that major
mergers offer significant communication challenges and require massive corporate
communication efforts to live up to their anticipated benefits. Communications can make
a deal successful or not.
This paper will examine the communication challenges of the 1998
DaimlerChrysler merger. To evaluate how well the new company managed these
challenges, the author will analyze the portrayal of the merger in US and European
media.
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The Daimler Chrysler Merger
The DaimlerChrysler merger was announced on May 7, 1998. It produced a shock
in the business media. The Wall Street Journal named it “the biggest industrial merger of
all time.” Other media in a similar manner, as well as scholars, journalists and financial
analysists applauded the announcement. The merger was considered to be “a merger of
equals, ” and was supposed to be very successful. In less than two years it became
apparent, that it was an n acquisition, rather than a merger of equals, and Chrysler, as an
American car manufacturer no longer existed.
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
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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 and was
no longer growing.
To ensure stable growth and stability in the near future, Daimler-Benz needed to
extend its reach into other market segments. However, diversifying, or “stretching” the
Mercedes brand would result in destroying its brand identity. Therefore, Daimler needed
an outside partner to enter the new markets.
Besides individual reasons of each partner, there was a common reason for the
merger to be a success. The companies were almost meant to be partners: their product
lines almost did not overlap; with German quality and attention to details and American
low cost efficiency and innovativeness complementing each other.
The merger was considered to be birth of a new type of corporation, which would
become a leading automotive, transportation and services company. Forbes (1998)
reported, “No, this merger isn't about savings. It isn't about blending German caution with
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Yankee freewheeling…It is about taking two splendid companies and transforming them
into a real world-scale, truly multinational business.” Business Week (1998), emphasized,
“The merger of Daimler Benz and Chrysler Corp. will clearly rock the global auto
industry. But the creation of this new powerhouse is more than an industrial mega deal.
It's perhaps the first sign that the forces of globalization have succeeded in reshaping
Europe Inc. Companies such as Daimler Benz now seem to be strong and confident
enough to deal on an equal footing with their American counterparts.”
Communication Challenges of the Merger
However, there were significant challenges facing the merger. Daimler has been
run as a conglomerate with 21 separate businesses; while Chrysler was a highly
centralized car and truck manufacturer. The two companies were separated by geography,
tradition and national culture.
Both companies had their own historical heritage. Chrysler, founded in 1924 by
Walter P. Chrysler, was an American legend, an independent automaker that survived
major crisis, was on the edge of bankruptcy several times, and still managed to grow into
a manufacturing giant and become a member of the “big three” American car automakers.
Mercedes-Benz, which later, in 1924 grew into Daimler-Benz, was a German legend,
famous through the world for its luxurious cars, as well as for creating the first car in the
world in 1834. Both companies were deeply respected in their nations, both had their own
museums, and both were fiercely protective of their corporate identity.
The companies had very different corporate cultures, which were based on
different national cultures. Keller (1998) states, “when it comes to the cultures of these
two companies, they’re oil and water” (“Unhappily married,” 1999).
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In Germany, for example, Mercedes-Benz workers are used to taking several
company-sanctioned beer-brakes a day. In the US, the practice would raise the specter of
alcohol-related accidents and legal liability. However, DaimlerChrysler chairman Jurgen
Schrempp, to the amazement of his American colleagues, had a bar installed and the fire
alarm shut off in his new office, so that he could enjoy his cigars and European work
environment.
If Chrysler was considered to be innovative, then Daimler-Benz was its complete
opposite. The Germans embraced formality and hierarchy, from a well-structured
decision-making process to the suit and tie dress code and respect for titles and proper
names. Chrysler broke barriers and promoted cross-functional teams that favored open-
collars, free-form discussions and casual names.
However, in relation to sexual harassment issues, the Americans proved to be
much more conservative than the Germans. Jurgen Schrempp never made a secret of his
intimate relationship with his personal assistant. In general, many issues, that could
become flashpoints of discord in the US, from workforce diversity to smoking on the
factory floor, were barely discussed in Germany.
“We were not trying to bring two worlds together to create a new one. The ideal
merged company will still have noticeable differences, like a choir that needs different
voices to achieve the perfect sound,” according Dirk Simmons, a corporate strategist from
Daimler-Benz who served on the DaimlerChrysler integration team. Simmons said, that
the companies’ research suggested that more than 70 percent of cross-border mergers fail
within three years because of cultural differences. DaimlerChrysler’s post-merger
integration team, which has 100 members, has studied more than 50 failed cross-border
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deals to identify all the things that might go wrong and try to avoid making the same
mistakes (“Unhappily married,” 1999).
Still, some cultural differences were more complicated, if not impossible to solve.
The lifestyles of the German and American managers turned out to be very different.
Americans enjoyed much higher salaries, while the Germans enjoyed larger expense
budgets. However, that caused difficulties in persuading Americans to relocate to
Germany, while many German managers embraced the possibility to move to spacious
homes in America.
“From the outset, the German obsession with planning has kept everyone on edge,”
said one of Chrysler’s executives. “We Germans look for big reports, and then we have
long meetings with long discussions,” said Hubbert from Daimler-Benz. “We are getting
the message that meetings can last one hour with few papers.” That was a complete
opposite of the Chrysler culture, which was shaped by “a creative collection of industry
renegades” (“Unhappily married,” 1999).
Among other things, these cultural differences caused problems for the two
companies’ respective PR departments. “The Chrysler team, led by Steve Harris, and the
Daimler-Benz team, led by Christoph Walther, clashed from the start” (How the
DaimlerChrysler merger flunked cultural test, 2000). The initial argument was about the
release date of the news release, announcing the merger. The release was scheduled for a
time, suitable for the European media; however that meant 2 a.m. in the Eastern United
States.
According to Vlasic and Stertz (2000), the Chrysler team, spontaneous and
theatrical, found the Germans demanding to the point of domineering. The PR staff
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clashed over press kits: the Germans wanted to replace the highly distinctive, creative,
attention-grabbing kits designed by the Chrysler staff (including the award-winning
Dodge Durango press kit designed like a Wheaties cereal box) with stark white folders.
The German staff designed a commemorative watch with the names of the two
companies on the strap. However, when the strap was fastened, the Daimler name
overlapped Chrysler’s. Company news releases were written in German and then
translated into English, and went out in the morning, German time.
Very soon the impression became that the Germans had the top. The media started
reporting stories of American ideas being shunted aside as German managers began
imposing the Daimler way of doing business.
As the cultural differences became more obvious, more communication
challenges were raised by other cultural issues. Was the entity really going to be run by
the Germans? Would jobs be lost and facilities closed? In Germany, some shareholders
questioned whether Chrysler’s mass-market products would tarnish the upscale image of
the Mercedes brand. Others were stunned by the massive payouts made to American
executives. In the US some shareholders – Jewish in particular – were upset that an
American automaker was being taken over by a company that played such an active part
in the German was effort half a century earlier” (How the DaimlerChrysler merger flunked
cultural test, 2000).
These issues represented a major communication challenge. Research proves, that
the company’s communication strategy was not sufficient enough to meet this challenge.
In less than two years DaimlerChrysler had lost the confidence of the media and whatever
credibility it had with its US management staff and shareholders.
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To analyze the results of DaimlerChrysler’s corporate communications, the author
will examine the portrayal of the merger in U.S. and European media.
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Methodology
Samples of media coverage were chosen from two publications: Business Week
(U.S.) and The Economist (U.K.). These publications were chosen to represent the U.S.
and European media. In the framework of this course project the author found it
impossible to recruit native speakers, representing at least the major European nations.
Therefore, the author decided to focus on European publications in English.
The choice of these particular editions is explained by their similarity in format.
Business Week, according to its description on the LEXIS-NEXIS online database, is the
leading U.S. business newsweekly covering all areas of business. The Economist,
according to its description on the LEXIS-NEXIS online database, is Britain's leading
weekly news magazine with a worldwide readership. Its economic coverage begins with
a summary and expands to in-depth analyses of international economic conditions.
Initially, the author considered the possibility of analyzing the main daily
publications, such as The Wall Street Journal and The Financial Times. However, The
Wall Street Journal was not available on LEXIS-NEXIS online database in full-text;
whereas the time constraints of the project did not allow the possibility of manually
analyzing a daily newspaper for the time period of more than two years.
The author used the LEXIS-NEXIS online database to search the publications for
relevant articles. The following combination of key words together with the time period
from 1/12/98 till 12/31/00, was used: “daimler chrysler OR daimlerchrysler OR daimler
AND chrysler AND merger OR acquisition.” The complete names of both publishing
companies were added as an additional search condition.
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After excluding articles not related to the DC merger, as well as accidentally
selected repetitive results, the final sample of articles, related to the Daimler-Chrysler
merger for the period from its official announcement till December, 2000 totaled to 6
articles from The Economist and 20 articles from Business Week.
The coding was made according to the general tone of the article: non-favorable,
neutral, and favorable. It’s necessary to mention, that the author considered the tone
related to the merger, but not to its financial results. For example, if an article
acknowledged the poor financial results of the merger, but emphasized its potential
success, or portrayed the company’s management or employees from the positive point of
view, it was considered to be “favorable.”
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Results
May-December, 1998
The Economist published one article in this period – on May 9, 1998. The story
emphasizes that the Germans, like once Japanese are going to “turn the world’s car industry
upside down.” It is notable, that DaimlerChrysler is not referred to as “the Americans and
the Germans.” The article makes a prediction that “the days of the rest of Europe’s regional
car groups are numbered.” Chrysler is referred to as highly profitable and well-managed,
lacking, however, the international clout of Mercedes.
The article, however, mentions that the question is, if the merger will work.
Differences between corporate cultures are emphasized. A prediction is made, that
Daimler will be tempted to impose its methods on Chrysler. However, the article
emphasizes, that Daimler has much to learn from Chrysler’s manufacturing skills. In
general, the article is favorable.
Business Week had 4 articles: 3 favorable and one neutral. The positive articles
emphasize the same themes that the one in The Economist. In particular, it is said, that the
merger will “clearly rock the global car industry,” and “a new class of Euro-American
corporation may spring on the scene.” Vlasik, the future author of “Taken for a Ride,”
characterizes the merger as a “marriage made in automotive heaven.” He says, “In one bold
stroke, the pending merger … dramatically changes the landscape of the global auto
industry.” The new company, according to Vlasic, will transform the way the auto industry
operates worldwide.”
Positive notes are made regarding the relations between the company’s CEOs.
“There are signs that Eaton and Schrempp are bonding,” reports Peterson. Analyzing
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Schrempp’s predisposition not to share a top job, he characterizes Eaton as an executive
who can ally with the German manager.
In general, all articles make positive forecasts for the merger. However, the
significant cultural differences between the companies’ cultures are still emphasized.
January-December, 1999
The Economist published one article in 1999. It starts by emphasizing, that the
merger “is now looking like a no-premium takeover, with trouble ahead.” The "merger"
was, according to the article, “a takeover of America's third car company by Europe's
biggest industrial concern.” Most of the article deals with the process of German managers
taking control over the company. It also acknowledges the challenges of the merger,
“Although merging the two companies was never going to be easy, nobody expected it to
be quite this hard.”
However, the article can be considered neutral, because it still emphasizes the
merger’s potential.
Business Week publishes 8 articles, 7 of which are neutral and 1 was non-
favorable. The common theme of the articles is the decreasing morale of Chrysler’s
employees and “fears, rising that Stuttgart leadership will destroy the creative spirit at
Chrysler.” Several articles focus on key Chrysler executives leaving the company, due to
the growing German dominance.
Another common theme is doubt in the merger to succeed. “'These companies
always underestimate the level of cultural difficulties,'' says David E. Cole, director of the
University of Michigan's Center for the Study of Automotive Transportation. ''They
Daimler-Chrysler Merger Portrayal 20
always say we'll deal with it up front, but they never do.” Business Week concludes, that
“DaimlerChrysler is not living up to its promise.”
January-December, 2000
The Economist published 4 articles: 1 favorable, 1 neutral and 2 non-favorable.
The favorable articles mentions that the Germans are satisfied with the progress of the
merger, emphasizing the point, that “even at this early stage, however, the merger offers
some powerful lessons in the problems of combining firms in different countries.”
The problems of the merger are downplayed, compared to the U.S. media:
“Difficulties were aggravated by a justifiable feeling among those on the American side
that this was no merger of equals, but rather a deal in which Daimler was calling the
principal shots.” The articles confirm, “Rumblings of discontent within the firm can still be
heard.” The discontent is portrayed as an exception: “Viewed from outside Detroit, the
merger seems to have caused relatively few arguments.”
The tone of the coverage changes after the November article in The Financial
Times, where Schrempp confirmed, that he never intended this to be a merger of equals:
“the mood at the company is fast switching from concern to panic.” However, Schrempp’s
confession is called “a candid interview,” where “the chess-playing German admitted that
the image of a merger was merely a feint.”
However, the tone changes dramatically a week after. The Economist states, that
“the merger has so far failed disastrously.” It acknowledges, that a big lesson of the merger
is that “Truth is always the best tool of management. Daimler's dealing with its American
acquisition has been a tale of deception… There was much talk of "one company, two head
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offices"--all of it nonsense.” The Economist concludes, “It is time for Mr. Schrempp to pay
heed to the value he has destroyed.
Business Week published 8 articles: 3 non-favorable and 5 neutral. One of the
themes of the neutral articles emphasized the idea that before the merger “Chrysler was at
the top of its game.” Articles questioned Chrysler’s responsibility for “dragging down the
German auto maker's profits.”
The main theme of the non-favorable articles was the consequences of Shrempp’s
remark to The Financial Times in November. One article starts with acknowledging that
the German CEO lied about his intentions from the very start, “Employees at
DaimlerChrysler's Chrysler Group were still reeling from their first quarterly loss since
the early 1990s when they found out that DaimlerChrysler Chairman Jurgen E. Schrempp
had lied to them all… Schrempp recently told the Financial Times that he had never really
intended for the combined auto giant to be ''a merger of equals,'' as he said at the time. He
added that he chose to be ''misleading'' for ''psychological'' reasons. If he had been honest,
there would have been no deal, and he couldn't have made Chrysler into just another
Daimler operating unit.” Business Week suggests, that “Chrysler's biggest loss may well be
the little goodwill left between management and the troops.”
Conclusion
During the first period, May-December, 1998, according to the findings of this
research, The Economist published 1 article, which was favorable. Business Week
published 4 articles: 3 favorable and 1 neutral.
Daimler-Chrysler Merger Portrayal 22
During the second period, January-December, 1999, according to the findings of
this research, The Economist published 1 neutral article. Business Week published 8
articles: 7 neutral and 1 non-favorable.
During the third period, January-December, 2000, according to the findings of
this research, The Economist published 4 articles: 1 favorable, 1 neutral and 2 non-
favorable. Business Week published 8 articles: 3 non-favorable and 5 neutral.
The total period included 6 articles from The Economist: 2 favorable, 2 neutral,
and 2 non-favorable; and 20 articles from Business Week: 3 favorable, 13 neutral, and 4
non-favorable.
The total number of articles, according to the findings of this research, was 5
favorable, 15 neutral, and 6 non-favorable.
Daimler-Chrysler Merger Portrayal 23
Discussion
According to the findings of this research, the media coverage of the Daimler-
Chrysler merger in the U.S. and in European media was different from the very start. It is
necessary to mention, that the U.S. media coverage more than tripled the European
coverage in quantity. However, more significant differences were found in the quality of
the coverage.
In 1998, when the merger was announced to the public, the media coverage of the
deal was extremely favorable. In both cases, predictions were made that the merger
would change the entire global auto industry. However, even at this point an important
difference in portrayal should be mentioned. European media attributed its optimistic
forecasts to the Germans: “The Germans, like once Japanese are going to “turn the world’s
car industry upside down.” The role of the American side was downplayed to sharing its
manufacturing skills.
In 1999 and the first half of 2000, the merger is portrayed more or less in the same
manner by both, the U.S. and European media. Differences in corporate cultures are
emphasized. However, were the U.S. media emphasizes the concerns of the Chrysler
side, the European media, almost neglects them: “Viewed from outside Detroit, the merger
seems to have caused relatively few arguments.”
The situation changes dramatically after Schrempp, the German DaimlerChrysler
CEO, mentions in an interview to The Financial Times, that “He had never really intended
for the combined auto giant to be ''a merger of equals,'' as he said at the time. He added
that he chose to be ''misleading'' for ''psychological'' reasons.” Both, the U.S. and European
Daimler-Chrysler Merger Portrayal 24
media, acknowledge, that this remark caused even more disappointment among Chrysler
employees.
But still, the European media refers to Schrempp as to a chess-player who made
this remark in “a candid interview.” The US media, on the contrary, states, that the German
CEO “lied about his intentions from the very start.” The difference in tone is astonishing. In
the European article, Schrempp is a strategically thinking manager, whose decisions are
psychologically justified. The U.S. article refers to the German as to a liar, who destroys
“the little goodwill left between management and the troops.”
However, at the end of 2000, the European media “catches up” with the U.S. media
in portraying the merger as a “disastrous failure.” It also acknowledges the damage caused
by Schrempp and suggests his soon-to-come resignation: “It is time for Mr. Schrempp to
pay heed to the value he has destroyed. If he cannot get Chrysler working and revive the
share price soon, he should go.”
Daimler-Chrysler Merger Portrayal 25
Conclusion
This research has proved, that the Daimler-Chrysler merger was first portrayed as
a great deal, which was supposed to change the entire global auto industry; however,
soon it was referred to as an acquisition of Chrysler by Daimler-Benz, which turned out
to be disastrous. A comparative analysis of the U.S. and European media coverage
indicated, that European media portrayed the merger more favorably, than the U.S.
media. The tone of the media coverage appeared to be the same only in mid-December,
2000, after the German CEO acknowledged that he never intended the deal to be “a
merger of equals.”
A conclusion can be made, that communication mistakes, probably, started on the
day the deal was officially announced. Of course, public relations cannot be the entire
reason for a merger to be successful or not. However, this particular merger has been
subject to a campaign of PR misinformation.
The legendary German efficiency machine has neglected and “bulldozered” every
Chrysler stakeholder in the process, with the PR department being used as a propaganda
machine (“Daimler/Chrysler: a new direction,” 2000).
Scholars conclude, that the Daimler-Benz takeover of Chrysler represents an
extreme in merger communication – “An instance in which the company delivered
messages to employees and investors but failed to back them up with action. Employees
and investors felt betrayed and showed their disdain by leaving the company or dumping
its stock. Although the company put a lot of effort into communicating with its
stakeholders, the messages it was sending out weren’t realistic” (“Managing mergers,” 2000).
Daimler-Chrysler Merger Portrayal 26
A conclusion is obvious: in a merger, regular communications is not the only
requirement to keep the process moving smoothly. Another requirement is honesty of the
communication, which has proved to be vital. “Because using your PR staff to pull the
wool over the eyes of staff, investors and customers is ultimately a fruitless task”
(“Managing mergers,” 2000).
Further research might explore the underlying communication reasons, for which
the European media portrayal of the merger was significantly different from that of the
U.S. media.
Daimler-Chrysler Merger Portrayal 27
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