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Global enterprise - Essay Example
Pages 6 (1506 words)
In 2000 it has been announced that Daimler Chrysler Company is interested in buying the stake of Mitsubishi Motors. This merge was following the BMW selling Rover to an English company for the symbolic sum of 10 pounds, and thus getting rid of the production which had not brought the expected benefits anymore.
The best way out was supposed to be the buying of the Asian car manufacturer, among which Mitsubishi and Nissan were considered. But as financial indices of Nissan didn't make Daimler company optimistic about it, the decision of buying 34% of Mitsubishi Company has been taken.
The problems and risks of Daimler Chrysler after having bought 34% stake of Mitsubishi laid in the necessity to lock together the separate pieces of this consortium. There should have been solved the problem of cost savings and technology cross pollination between Chrysler and Mitsubishi.
The benefits of the joint venture for both companies lied in sharing engines, transmissions, and other major components, which will finally reduce the costs of both participants, as well as will lead to the sharing of entire platforms which are the most expensive parts in car manufacturing.
The main risks for Daimler were first of all, cultural difficulties in making the two companies work together. As one of the Daimler's managers has noted, 'when it is an Asian company and a European-American company, it is even tougher'. Another risks lied in the fact, that any investments (and buying Mitsubishi was the direct investing of Daimler) carry certain risks.
Mitsubishi was the only car manufacturer in Japan, working with financial losses and getting no benefits. ...