dailmlerChrysler_2

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


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


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.


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


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


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).


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


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.


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


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


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).


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


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


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.


To analyze the results of DaimlerChrysler’s corporate communications, the author

will examine the portrayal of the merger in U.S. and European media.


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.


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.”


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


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


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


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.


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.


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


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.”


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).


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.


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