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Merger - Case Study Example

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Firstly, it would grant the car maker a base in Asia, where it has none. The second one would be that it would give the manufacturer a chance to deviate from the manufacturing of big cars. Small cars are in demand in Asia and Mitsubishi could cater to this demand.
2. i. DaimlerChrysler can find this alliance risky, because of the fact that it has to merge with a debt-ridden company. The market is novel for the company and lack fo knowledge of the ways of the Asian market could be risky. Mitsubishi was already in a state of collapsing, with the sales output being very low. This new merger could change fortunes, either ways and if support would be withdrawn, it would have to survive independently.
3 i. DaimlerChrysler had violated the fuel laws, pumping in increased carbon dioxide residue, from its high-end Mercedes cars. However, the European Law states that by 2008, the company will have to reduce the emission by 25%. By acquiring stakes in Mitsubishi, the high-end car maker could reduce the overall emission, since the latter produces only small cars which emit lesser pollutants.
4. i.
4. i. Export from US and Germany would certainly help Daimler initiate a more interactive approach, especially since it would exchange goods from the home country of Daimler. This would facilitate greater involvement and would also reduce duties levied. However, how this be adaptable to home conditions in Asia should be pondered over.

4.ii. Daimler wouldn't have to get into obtaining a separate license with the Government, since Mitsubishi's already strong position would enhance the ability of the former, in carrying out activities.

4.iii. The joint venture would help Daimler invest lesser, and still gain a strong foothold in Asia. It would help the company emerge from its slightly disadvantaged position and gain profitable stand. It would also bring about diversity in terms of the manufacturing of small cars. However, while Mitsubishi seems to be in an debt-ridden condition, it would be risky to go ahead.

4.iv. A wholly owned subsidiary that is already w ell-developed and established is certainly profitable. However, it would mean greater responsibility and higher risks, besides adaptability issues.

5.i. With Mitsubishi's performance going really low and the debts increasing, DaimlerChrysler withdrew its stakes from the Asian car-maker in April 2004. This was also in tune with the Japanese economic policy.

5.ii.This would certainly bring about a more hostile approach from the Japanese government towards the German-American car-maker. On the other hand, for Daimler, it would mean loss of base in Asia.

5.iii.Daimler could have waited longer and could have brought about global strategies with Mitsubishi, rather than concentrating on Japan or local activity. This would increase its activity on familiar home ground and would also help the Japanese company emerge debtless.

6.1. Mitsubishi has few options at hand. It could look at re-emerging and establishing a strong footh ...Show more


1. i. DaimlerChrysler was interested in Mitsubishi in 2000, because the latter was a leading brand in Asia and DaimlerChrysler was looking to expand through mergers. It would give the German American care maker a foothold in the Asian market…
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