The Impact of Rebate on the Business - Case Study Example

1. By firing all the top executives of Chrysler, Schrempp exacerbated the fears of the employees. They became fearful of losing their jobs and motivation plummeted.
2. Robert Eaton would be naïve if he expected that the unequal merger would put him in a better position. He should have predicted the oust from power even before they merged with Daimler. Robert Eaton could have protected himself by drafting a contract that would protect the rights of Chrysler employees and should have proceeded with the merger only after Daimler complied.
3. A firm can protect itself from cannibalization by accurately balancing the demand and supply of its product. They should ensure that inventory levels are such that an existing product is gradually sold out before a new one is introduced. However, investments in R&D would ensure that they introduce innovative products before the competition.
4. Cultural problems could be avoided by introducing a superior organizational culture that would supersede other cultural values. This can be accomplished by making employees feel as if they are a part of a family and the organization is their home. Once they are at the workplace they need to forget individual differences and embrace a common organizational culture.
5. Zetsche’s move to fire the head of sales and marketing immediately was wrong. Although Zetsche was advised to make a drastic change (Hartley 207) and indulge in cost-cutting, firing a person of this position would lower the morale and motivation of the other employees. Furthermore, there was no evidence that Sales and marketing were responsible for losses, on the contrary, losses were a result of the overstocking decision by Schrempp.
6. Rebates are a better choice than regular price reductions. In case of price reductions, the customer may perceive that the price is low because the product has lower quality or it will be replaced by a newer version. Furthermore, price reductions can hinder the ability of a manufacturer to take the price back to its original (Lamb et al. 235).
7. Yes, I agree that the use of parts of Mercedes in Chrysler cars would damage the perception of the Mercedes brand. Chrysler makes cars for people with varying purchasing power and quality expectation. Mercedes on the other hand was known for its prestige and class. By putting their parts in Chrysler they may reach the masses but the loyal Mercedes customers would perceive it as a loss of brand prestige.
8. Good times can be lasting in the auto industry if they invest significantly in R &D and keep on exceeding the customer expectation. For instance, presently a need for sustainable and alternate fuel has increased the demand for hybrid vehicles. The auto manufacturers like Toyota, who have seized the opportunity, continue to enjoy their status as market leaders.

Information Box:

A Rebate:

Rebate can have a negative impact on the business from the manufacturer’s perspective because it allows customers to pay lesser than the listed price of a product. So aside from the loss in revenue, rebates also have a delayed processing time which requires the customer to demand a refund after they have made a purchase as opposed to a price reduction.  This causes the customers to be less motivated as opposed to a price reduction which facilitates immediate response.