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. Thus for Mitsubishi it was a huge chance to restore its position on the market and enter other foreign markets. At the same time, Daimler Chrysler, with Mercedes-Benz being the best-selling foreign car in Japan, took only 0.8% share of Japanese market and needed to find an effective solution for expanding its activity to West Asia. In addition, in six months after the historical merge had been accomplished, Mitsubishi admitted, that it illegally concealed the customer's complaints in relation to vehicle defects on systematic basis.
3.Explain how the acquisition of 34 % and then 37 % stake of Mitsubishi cou1d help DaimlerChrysler to meet the fuel pact
The purchase of 34% (and later 37%) of Mitsubishi stake by Daimler Chrysler led to the possibility for Daimler to meet the fuel pact. According to the Kyoto protocol of 1997, the main car manufacturing companies had to turn to the fuel cell production, and all Japanese companies have already had their own prototypes of ecological engines, among which Mitsubishi held strong position. Thus Daimler was able to turn to the ecologically-effective production with minimum costs.
4.Analyse, in the context of DaimlerChrysler global strategy, the following options for DaimlerChrysler regarding the objectives followed with Mitsubishi with their advantages and disadvantages:
4.1 export from the US and Germany;
4.4 wholly-owned subsidiary.
From the viewpoint of the global strategies of both companies, it should be said that of course, it was becoming easier for Mitsubishi to export car details from the US and Europe, but at the same time, this was another possibility for Daimler to strengthen its positions in selling car platforms in Asia.