Operations Management On The Case Study Of Mercedes And Chrysler

Operations Management 1

Operations Management on the Case Study of Mercedes and Chrysler

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Operations Management 2

CASE STUDY ON MERCEDES AND CHRYSLER

Responses to Question One

The main differences between models of Mercedes and Chrysler business before the merger

Before the merger, there was a wider range of differences in the business model between

Mercedes and Chrysler business. This was seen in the pre-merger plans where the major

concerns by the Daimler team and the Chrysler team were surrounding within their distinctive

traditions in terms of manufacturing, marketing, supply chain and company management (Hitt,

2016, p. 108). Every team was to protect its traditions of doing its own things; however, the

pressure mounted due to merger policies to appreciate and allow the two tradition forces to

operate as one. This was portrayed in the structure and activities of each company; it outlined

their heritage to be so different from each other.

The first difference was evidenced in the styles of communication in the business deals.

For instance, In Germany, the most important rationale of giving a speech is to provide and

obtain information. While Americans are similarly factual, however, uses speech categorically to

offer opinions but are more credible than Germans. In such respect, they frequently apply hype,

which Germans impulsively responds against it. On the hand, Americans always tend to

demonstrate sanguinity and put forward the most excellent scenarios. However, Germans are at

all times more contented with a cautious, fairly pessimistic vision which visualizes the most

horrible scenarios (Hitt, Carnes & Xu, 2016, p. 109). They demand numerous perspectives

before reaching any significant decision. On the other hand, Americans are concerned in

illustrating the magnificent approach and details mop up later. They seek out simplification of

matters to simplify their action routes. However, Germans have a trend to cause difficulties in

any kind of discussion.

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The formality of German is evident in their communication style. For instance, at the

time meeting, Germans as a rule always enter a room with a grim look on their face, contrary to

the extensive Hollywood Americans smiles. Additionally, charming Americans discover

Germans lack charisma and perhaps they are always dull. In fact, Germans distrust both charisma

and instantaneous smiles.

In the factors of communication diversity styles that would likely lead to early

misunderstandings of the merger, but later structural and procedural differences would increase

their heads (Shelley & Gilson, 2017, p. 605). This is because; the American corporations, as a

rule, have a strict centralized reporting while most Large German corporations always operate in

a compartmentalization and decentralization style since every unit reports vertically to its head of

the department. Thus horizontal communication in German across departments at diverse levels

is basically taboo. On the other hand, when compared with those in U.S., the departmental

contention is more of acuter; thus, in this section, managers of German seem to be tremendously

touchy. To add on, offices of German are strongholds of confidentiality, generally with doors

close up; whereas, managers in American pursue their staff members around building to

exchange ideas.

Other differences are that, Germans are classic conscious. This is because senior

managers are generally intellectuals. Whilst intellectuals of America are often egg-heads as often

referred and U.S managers at all times speak out loud as compared to Germans’ senior who

commands always in a very low voice. Americans award is flexible, spontaneity, and adaptable

in attaining their set goals. While for Germans, they give conceit of a setting to well-tested

process and procedures.

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In conclusion, Germans are more classically aware in terms of changing in vehicle

industry; senior German executives are generally intellectuals while America intellects speak

always out louder than what Americans do. Senior Germans’ knowledge is in a low-slung

opinion while Americans are flagship; elasticity and flexible that help them in attaining all they

need in their areas of operations (Shelley & Gilson, 2017, p. 610). On the other hand, Germans

always gave the pride of the place to the well-tested measures and processes, but for such,

American does not do so.

Responses to question two

The main differences of production processes between the Mercedes and Chrysler plus their

configuration of supply chains, and the way such differences influence the strategic results of

merger

There are various major differences between the Mercedes and Chrysler production

process before the major in which every firm used in the quality production of its products to

compete favorably on the market. To start with Mercedes-Benz, this company is one of oldest

automotive best known and established brands globally and exists before the merger. In the

whole of 1930s, the firm produced 770 models, an automobile that was trendy during Nazi

period of Germany. The company used a specific production standardization called Mercedes

Production system (MPS) before the merger (Harvey, Heineke & Lewis, 2016, p. 8). This

production system (MPS) of Mercedes-Benz was its specific solution in the introduction and

development of production standard systems. Consequently, Mercedes Production system

(MPS) has five subsystems and principles components that are strictly followed by Mercedes-

Benz production process. For example, the Group works structures. This is where the production

process was divided into groups for efficient workflow. The production process was under

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Standardized processes and methods that saw the company produces the most quality products

on the market before the merger. Additionally, the production process of Mercedes-Benz before

the merger was one of the qualities and robust processes. For such, the management was rapidly

identifying the way to eliminate all form of production faults.

While for supply chains before merger, the firm of Mercedes used total cost reduction

strategies in which it increased its production in the oversee markets than in the home market,

German. While in the case of Chrysler, the market concentration before the merger was

concentrated more within the U.S. market than its global market.

While before the merger, Chrysler used flexible standardize production process; the

process incorporates a model for future upgrade plants. This process of Flexible System of

Manufacturing (FMS) depends partly on a standardized bill and notably, a typical body-shop

design that relies greatly on contemporary robotics. While for supply chains before merger, the

firm of Chrysler had its market concentrated more within the U.S. market than in its global

market.

However, due to these differences in supply chains and production processes, after the

merger of the two companies, the production process took its new roots. The culture of Chrysler

was trashed by the production processes of Mercedes system. Therefore, the production process

of Mercedes-Benz after the merger used due to its qualities and robust processes that the

management was rapidly eliminating all possible production faults and increasing production of

the merged corporation.

Responses to Question Three

The major differences in labor politics at Chrysler and Mercedes and how it affects their process

design

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For the automaker's Mercedes-Benz in Alabama, stands alone among other firm of

German plant around the earth with no union workers representative. But the remaining world

branches had a flexible type of labor politics for the best working environment of their respective

workers. Unlike in the case of Chrysler where labor politics were represented by interested

individuals in the labor unions to protect the interests of all human resources of the entire

company. Also, by playing company labor politics, Mercedes-Benz was found on a wrong side

where it was caught when exploiting the fuss of Jones. This brought a number of issues that

affected the company operations and labor segmentation both in the local markets and global

markets for its products. Therefore, labor political flexibility was the order of the day in the

political alignment at Mercedes-Benz in German in all of its market operations.

For such kind of differences in labor politics, by the mid-1990, Chrysler survived a near

bankruptcy; this was a divisive style within the labor market by the moment. Thus this affected

the process design since the two firms had different approaches. Like for, Mercedes-Benz it had

long working hours on the markets of the United States of America but Chrysler had a short

working hours that never affect labor political alignment of the union.

However, the recent agreement after the merger that applies to all human resources of the two

companies such as their performance-based compensation scheme; it was connected to the

achievement of certain profitability targets and competence. This adversely affected their

tradition labor designs of the two companies.

Differences in labor and political structures affected the merger in several ways. The first

effect was seen in the new operational strategy of the merge. Each company was to

accommodate other before they could operate as a single unit. But dilemma was due to different

nations having different political platforms and structures with different labor laws.

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Responses to Question Four

Assessing strengths and weaknesses of Fiat’s takeover of Chrysler by both operation strategy and

market strategy

Strengths of Operational strategy:

After of Fiat’s takeover of Chrysler, the company changes its operational strategy by

adopting attacking option where it brought significant changes in the Group’s working model.

Thus this contributed the firm to occupy significant markets, by working in all potential

countries hence increasing profitability.

Also, after of Fiat’s takeover of Chrysler, it increased the opportunities of re-structuring

its operational strategy, products making, and the markets (Harvey, Heineke &Lewis, 2016, p.

80). The new Fiat and Chrysler entity assimilated varied and wider orientation markets in the

accumulation of North American, whole of Europe and Southern American markets.

Furthermore, most of the directors from Fiat were linked to the team of Chrysler to assist the

processes of integration and share their capabilities.

In addition, the strength of Fiat-Chrysler contract was seen by its ability for distribution

of low-consumption locomotive technologies. This was to improve the power train situation in

the Northern American markets (Spring et al. 2016, p. 19). It as well led to the focus on the

World Manufacturing Class philosophy that was then extended to entire Fiat Industrial and Fiat-

Chrysler plants by producing substantial investments; product reliability and quality.

The weakness of Operational strategy:

Due to poor operational strategy, Fiat has experienced a number of operational

management. The first one is the insufficient production. The new management immediately

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after taking over, the firm’s production volume decreased drastically and this was seen in the

Brazilian market.

Also, the firm experienced a problem of finance. For a better company operation, it

should have sufficient funds in which all its production strategies, marketing strategies, and

management strategies will be sufficiently funded. But, Fiat in 2008 was a difficult year where it

was under the financial crisis that contributes immensely to its poor operational strategies. In

addition, the key Italian production firms were underutilized since there was poor strategic

management orientation on such kind of market segment (Bruner et al. 2017, p. 45). Thus this

contributed immensely the firm to experience difficult financial and operational management.

Similarly, the condition of Fiat in the year 2009 would be viewed as a severe stalemate; since the

progression momentum was driven by the group reversal which was then stifled by the global

crisis. This brought difficult moments in the overall operational management of the entire

company.

The strength of the Marketing strategy:

It changes marketing strategy from two-way concentration to a more diverse market

where the company spread to all continents under its marketing operations. This has drastically

reduced risks but instead increased its sales volume and profitability. Also, high level of

promotional strategies has increased both local and global markets, making the firm to meet its

set daily sales volume.

Weakness in the Marketing strategy:

As a weakness, Fiat Lacked geographical diversification of market. This is because,

about 90% of its international auto Group sales had only three major markets. These markets

were Alfa, Romeo and Lance, and the company was only concentrated in Europe and Brazil

Operations Management 9

markets making 60% and 32% of sales of 2008 respectively (Innerbichler, 2016, p. 234). Fiat to

attain much of its markets, it have to expand its marketing strategies by increasing its market

segmentation to more local and international market. However, such level of geographical

concentration has high-risk level of business cycle.

Finally, another market weakness is that, Fiat‘s Market coverage is small, with low-cost

market segments. For instance, approximately 70% of Fiat’s sales volumes are obtained from

low and small cost market segments in sales of 500 Panda, with Pinto on Europe market and

Siena in the market of Brazil (Spekman et al 2017, p. 20). The same market is characterized by

low pricing hence reducing the firm’s anticipated profit margin. Thus this as well reduces the

moral of shareholder’s increment ratio of investments.

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List of References

Babbar, S., Bechara, R.S., Koufteros, X.A. and Huo, B., 2017. The emergence of Asia and

Australasia in operations management research and leadership. International Journal of

Production Economics, 184, pp.80-94.

Bruner, R.F., Bruner, R.F., Spekman, R.E., Spekman, R.E., Christmann, P., Christmann, P.,

Kannry, B., Kannry, B., Davies, M. and Davies, M., 2017. Daimler-Benz AG:

Negotiations between Daimler and Chrysler. Darden Business Publishing Cases, pp.1-45.

Harvey, J., Heineke, J., and Lewis, M., 2016. Editorial for Journal of Operations Management

special issue on" Professional Service Operations Management (PSOM)". Journal of

Operations Management, 42, pp.4-8.

Hitt, M.A., Carnes, C.M. and Xu, K., 2016. A current view of resource-based theory in

operations management: A response to Brimley and Rau. Journal of Operations

Management, 41(10), pp.107-109.

Innerbichler, R., 2016. A multidimensional valuation model of M&A transactions: the daimler-

chrysler and the fiat-chrysler cases.

Shelley, C.E. and Gilson, L.L., 2017. Creativity and the management of technology: Balancing

creativity and standardization. Production and Operations Management, 26(4), pp.605-

616.

Spekman, R.E., Spekman, R.E., Fritz, J., Fritz, J., Spekman, R.E. and Spekman, R.E., 2017. Fiat

and Chrysler: Gaining on Global Automakers?. Darden Business Publishing Cases, pp.1-

20.

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Spring, M., Hughes, A., Mason, K., and McCaffrey, P., 2017. Creating the competitive edge: A

new relationship between operations management and industrial policy. Journal of

Operations Management, 49, pp.6-19.

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