Daimler-Chrysler Merger Portrayal 1

A Study of the DailmlerChrysler Merger Portrayal in U.S. and European Media Research paper Sergei Golitsinski 48C:291 Project in Communication Studies Dr. Dean Kruckeberg, APR, Fellow PRSA December 17, 2000

Daimler-Chrysler Merger Portrayal 2 Introduction: Globalization and Public Relations Today the business world is becoming a smaller place. One of the main trends in corporate business is going global: forming transnational businesses, which are spanning boundaries between nations and even continents. The most significant change that our companies face is globalization of our business, argues Wooland (1996, p. 6). As late as the 1980s it was possible for a major industrial company to limit its market presence to one or two major regions of the world, and to know with some confidence who it was competing against in those areas. That is no longer possible if a company hopes to succeed. Now we must be global, and our competitors are the old ones we have always known, but also new ones, who are just getting started (Wooland, 1996, p. 6). Globalization magnifies the value of a business considerably. But greater value is not a given. This is because the trend towards globalization can often be a source of confusion or uncertainty, argues Drobis (1998, p. 34). Transnational companies face the challenge of building relationships that do not currently exist and maintain them in an environment of different nations, cultures, languages and traditions. Culbertson (1996) notes, that such organizations have limitations, suggesting a great need for guidance in relationship building and maintenance (p. 1). Referring to Grunig, he concludes, truly effective public relations practitioners provide exactly that guidance (Culbertson, 1996, p. 1). Wakefield (1996) observes, that the concept of international public relations, that is, practicing PR in an international or cross-cultural context, is rapidly attracting the attention of practitioners and scholars (p. 17). Ho notes, that since 1990, Public Relations

Daimler-Chrysler Merger Portrayal 3 Journal, Communication World, Public Relations Review, and other publications have published dozens of articles about public relations in a global context (p. 17). Besides, an increasing number of articles can be found on various Web sites, related to public relations research. Professional organizations, such as the International Association of Business Communicators (IABC) and the Public Relations Society of America (PRSA) have established sections for members, specializing in this area (Wakefield, 1996, p. 17). Finally, the last PRSA national conference in October 2000 was co-sponsored by the International Public Relations Association (IPRA); its focus on international public relations was emphasized by its name: The World Congress. For international public relations practitioners, the global economy is not new, but is a well-established fact of life. Indeed, a growing international capital flow, facilitated by new communication technologies, has created tremendous opportunities for public relations.

Daimler-Chrysler Merger Portrayal 4 Challenges of global public relations Globalization creates both opportunities and challenges for public relations. Taylor (2000) suggests, opportunities include the potential for public relations practitioners to lead their organizations during times of transition (p. 278). Indeed, the public relations function creates and maintains relationships with a companys publics; therefore, it can help an organization build new relationships in international or multicultural environments (Taylor, 2000). However, there are challenges as well. The ways in which organizations can effectively communicate with international publics are dependent on a variety of cultural and societal forces. These cultural and societal variations will affect the communication between international organizations and the publics in the host nations (Taylor, 2000, p. 278). Practitioners argue, borderless credibility requires a seamless network of communications professionals who share a companys vision, who understand a companys core messages, and who know how to work cooperatively to deliver those messages consistently across different cultures, races and religions (Drobis, 1998, p. 34). Drobis (1998) emphasizes, that they dont have to be identical just consistent. A company like Heinz, for example, is perceived as a British company by British consumers and an American company by Americans. Yet in both countries, the brand is held in equal esteem, and the management vision is clearly understood (p. 33). However, there are other opinions. Some scholars and practitioners believe that the main value of international public relations is the possibility to centralize communication efforts, which will cut down costs. Smith (2000) suggests, that each

Daimler-Chrysler Merger Portrayal 5 country developing from scratch its own core materials, such as slide kits, press packs, and product visuals, does not make financial sense. Smith (2000) concludes, that in terms of an international public relations program, it is not just the money, which is being saved, but also the cost of peoples time, which is equally important. Still, most scholars and practitioners agree, that the challenge of different cultures, dictates the necessity of developing different communications approaches to different publics. Seltzer (2000) mentions, that 72% of respondents to an internal survey at Ogilvy Public Relations Worldwide among mid-level managers from Ogilvy officers from around the world, stated that the biggest difficulty faced was lack of cultural knowledge. Seltzer (2000) argues, that a corporate or product strategy can easily be global; however, it is necessary to take into consideration the numerous public relations tactics that work well in one culture, but have no value in others. Seltzer suggests, that in developing cultural appreciation and knowledge, it is essential to understand what works, what doesnt, and why. Seltzer (2000) concludes, Communications strategy must be consistent across borders, but tactically respect and capitalize on local market differences. Corporate Communications During a Merger A company is especially vulnerable to the judgment of stakeholders during a merger. In this case, communications is especially crucial. According to most scholars, post-merger public relations is one of the most important, least understood disciplines that impacts the success or failure of a deal. Scholars and practitioners agree, that historically, companies considering mergers, have planned every detail except the most important: compatibility. Their leaders have thought thru the economies of scale, the operational synergies, the joint marketing

Daimler-Chrysler Merger Portrayal 6 opportunities, but they have paid only lip service to cultural issues. Organizational culture, after all, is a soft issue, difficult to define and even more difficult to measure. For that reason it makes even seasoned executives uncomfortable (Unhappily married, 1999). Underestimating cultural issues is especially dangerous in international mergers. Wolf suggests, There has always been a tendency to underestimate the impact of cultural issues and to focus instead on organizational or structural issues. It is dangerous to underestimate culture issues in any merger, but when the merger involves two companies from different national cultures, those issues are exacerbated and unless a company is prepared they can be debilitating (Unhappily married, 1999). Audiences for the typical merger include employees, both active and retired, investors, journalists, suppliers, customers and regulators. Messages must be developed for each group that are consistent, yet address individual concerns. Scholars agree, that the employee audience often receives minor attention in mega-mergers, deals that focus on lawyers, investment bankers, senior management and shareholders. Drobis (1998) emphasizes, Communications must be inclusive, reaching all audiences, both internal and external. Too often, the discussion of values centers on convincing investors and the media about the virtues of a company. But the true place to start is within the company itself. If the employees are loyal to the companys vision, and if they are actively involved in creating value every day, the company will succeed (Drobis, 1998, p. 33). Four phases of post-merger communications Bloomgarden suggests, that there are four distinct phases of post-merger communications (Unhappily married, 1999).

Daimler-Chrysler Merger Portrayal 7 The first phase is the announcement of the merger. Bloomgarden warns, that this is the only chance a company will get to make a first impression, so its important that the company presents the deal in the best possible light. It is also important, according to Bloomgarden, that as many stakeholders as possible learn of the deal first from the company itself. Its one of the clichs of employee communication that people should not learn of developments that affect their lives through the media (Unhappily married, 1999). Thats true for all the companys publics. The second phase, according to Bloomgarden, is the period between the announcement and the final approval. Bloomgarden argues, that in many ways this period is the most difficult because companies are generally not able to answer even the most basic of questions. Wolf mentions, that companies in this stage are not able to talk about how the merger will impact human resource policies, or the ways in which individual plants may be affected, even those issues are of tremendous concern to employees. Its the inability to provide specific information that makes post-merger communications such a challenge, concludes Wolf (Unhappily married, 1999). Bloomgarden argues, that during this period the most important thing is honesty. A lot of companies are afraid to talk about the consequences of a merger. They are afraid to let people know that there will be job losses, that there will be changes. But it pays to be frank with people, and it pays to make the process as transparent as possible. People will forgive management for making difficult decisions, but they wont forgive it if they think theyve been lied to or mislead (Unhappily married, 1999). The third phase, according to Bloomgarden, begins when the deal closes. Practitioners agree, that the most important challenge during this period is staying ahead

Daimler-Chrysler Merger Portrayal 8 of the rumor mill. There is always speculation; usually centered around potential job losses, and that, according to Taufield, can have a tremendous impact on employee morale. The rumors start immediately, and if the company doesnt step in and provide employees with factual information the rumors get worse and worse. People tend to exaggerate and assume the worst (Unhappily married, 1999). The final stage, according to Bloomgarden, starts when the organizational changes brought on by the merger are completed. After this point, Wall street, employees and other constituencies will want to know if a merger delivered on its promised benefits (Unhappily married, 1999). That means continually reinforcing the understanding, why a merger made sense and how its improving the lot of all key audiences of the new entity. A conclusion can be made, that scholars and practitioners agree, that major mergers offer significant communication challenges and require massive corporate communication efforts to live up to their anticipated benefits. Communications can make a deal successful or not. This paper will examine the communication challenges of the 1998 DaimlerChrysler merger. To evaluate how well the new company managed these challenges, the author will analyze the portrayal of the merger in US and European media.

Daimler-Chrysler Merger Portrayal 9 The Daimler Chrysler Merger The DaimlerChrysler merger was announced on May 7, 1998. It produced a shock in the business media. The Wall Street Journal named it the biggest industrial merger of all time. Other media in a similar manner, as well as scholars, journalists and financial analysists applauded the announcement. The merger was considered to be a merger of equals, and was supposed to be very successful. In less than two years it became apparent, that it was an n acquisition, rather than a merger of equals, and Chrysler, as an American car manufacturer no longer existed. Reasons for the Merger Initially the deal seemed to make sense for both companies. Both CEOs, Robert Eaton of Chrysler and Jurgen Schrempp of Daimler-Benz, independently concluded, that their companies needed a partner to survive in the future on the car market. Even though there is wide spread opinion, that both companies could have survived independently, the logical reasoning behind the merger makes a lot of sense. Chrysler, having been close to bankruptcy almost once in every decade, was extremely vulnerable financially. That was proved by the hostile takeover attempt, carried out by its largest shareholder, Kirk Kirkorian together with its former legendary chairman of the board, Lee Iacocca, who wanted to regain control over the corporation after his board almost had to force him to resign. Chrysler survived the crisis, however, that was a clear indication, that the corporation needed a change, which would bring stability and financial security. The change would have to involve expansion to other markets. Chrysler was a strong player on the US market only, besides its strength was guaranteed by its pickup

Daimler-Chrysler Merger Portrayal 10 truck, SUV and minivan divisions. Chrysler passenger cars were not a success on the market. Increasing Chryslers share on the international market required major investments: neither did the corporation have plants abroad, nor did it have a sufficient dealer network. To conclude, Chrysler needed a financially strong partner, with a significant international presence. Daimler-Benz was financially stable; it was one of the largest German companies, which was a conglomerate of over 20 different businesses. However, 95% of its profit came from one division Mercedes-Bens. That made the corporation less secure. The Mercedes division had a rather small share of the entire automotive market; besides, it was clear, that the market segment for luxury cars had reached its peek capacity and was no longer growing. To ensure stable growth and stability in the near future, Daimler-Benz needed to extend its reach into other market segments. However, diversifying, or stretching the Mercedes brand would result in destroying its brand identity. Therefore, Daimler needed an outside partner to enter the new markets. Besides individual reasons of each partner, there was a common reason for the merger to be a success. The companies were almost meant to be partners: their product lines almost did not overlap; with German quality and attention to details and American low cost efficiency and innovativeness complementing each other. The merger was considered to be birth of a new type of corporation, which would become a leading automotive, transportation and services company. Forbes (1998) reported, No, this merger isn't about savings. It isn't about blending German caution with

Daimler-Chrysler Merger Portrayal 11 Yankee freewheelingIt is about taking two splendid companies and transforming them into a real world-scale, truly multinational business. Business Week (1998), emphasized, The merger of Daimler Benz and Chrysler Corp. will clearly rock the global auto industry. But the creation of this new powerhouse is more than an industrial mega deal. It's perhaps the first sign that the forces of globalization have succeeded in reshaping Europe Inc. Companies such as Daimler Benz now seem to be strong and confident enough to deal on an equal footing with their American counterparts. Communication Challenges of the Merger However, there were significant challenges facing the merger. Daimler has been run as a conglomerate with 21 separate businesses; while Chrysler was a highly centralized car and truck manufacturer. The two companies were separated by geography, tradition and national culture. Both companies had their own historical heritage. Chrysler, founded in 1924 by Walter P. Chrysler, was an American legend, an independent automaker that survived major crisis, was on the edge of bankruptcy several times, and still managed to grow into a manufacturing giant and become a member of the big three American car automakers. Mercedes-Benz, which later, in 1924 grew into Daimler-Benz, was a German legend, famous through the world for its luxurious cars, as well as for creating the first car in the world in 1834. Both companies were deeply respected in their nations, both had their own museums, and both were fiercely protective of their corporate identity. The companies had very different corporate cultures, which were based on different national cultures. Keller (1998) states, when it comes to the cultures of these two companies, theyre oil and water (Unhappily married, 1999).

Daimler-Chrysler Merger Portrayal 12 In Germany, for example, Mercedes-Benz workers are used to taking several company-sanctioned beer-brakes a day. In the US, the practice would raise the specter of alcohol-related accidents and legal liability. However, DaimlerChrysler chairman Jurgen Schrempp, to the amazement of his American colleagues, had a bar installed and the fire alarm shut off in his new office, so that he could enjoy his cigars and European work environment. If Chrysler was considered to be innovative, then Daimler-Benz was its complete opposite. The Germans embraced formality and hierarchy, from a well-structured decision-making process to the suit and tie dress code and respect for titles and proper names. Chrysler broke barriers and promoted cross-functional teams that favored opencollars, free-form discussions and casual names. However, in relation to sexual harassment issues, the Americans proved to be much more conservative than the Germans. Jurgen Schrempp never made a secret of his intimate relationship with his personal assistant. In general, many issues, that could become flashpoints of discord in the US, from workforce diversity to smoking on the factory floor, were barely discussed in Germany. We were not trying to bring two worlds together to create a new one. The ideal merged company will still have noticeable differences, like a choir that needs different voices to achieve the perfect sound, according Dirk Simmons, a corporate strategist from Daimler-Benz who served on the DaimlerChrysler integration team. Simmons said, that the companies research suggested that more than 70 percent of cross-border mergers fail within three years because of cultural differences. DaimlerChryslers post-merger integration team, which has 100 members, has studied more than 50 failed cross-border

Daimler-Chrysler Merger Portrayal 13 deals to identify all the things that might go wrong and try to avoid making the same mistakes (Unhappily married, 1999). Still, some cultural differences were more complicated, if not impossible to solve. The lifestyles of the German and American managers turned out to be very different. Americans enjoyed much higher salaries, while the Germans enjoyed larger expense budgets. However, that caused difficulties in persuading Americans to relocate to Germany, while many German managers embraced the possibility to move to spacious homes in America. From the outset, the German obsession with planning has kept everyone on edge, said one of Chryslers executives. We Germans look for big reports, and then we have long meetings with long discussions, said Hubbert from Daimler-Benz. We are getting the message that meetings can last one hour with few papers. That was a complete opposite of the Chrysler culture, which was shaped by a creative collection of industry renegades (Unhappily married, 1999). Among other things, these cultural differences caused problems for the two companies respective PR departments. The Chrysler team, led by Steve Harris, and the Daimler-Benz team, led by Christoph Walther, clashed from the start (How the DaimlerChrysler merger flunked cultural test, 2000). The initial argument was about the release date of the news release, announcing the merger. The release was scheduled for a time, suitable for the European media; however that meant 2 a.m. in the Eastern United States. According to Vlasic and Stertz (2000), the Chrysler team, spontaneous and theatrical, found the Germans demanding to the point of domineering. The PR staff

Daimler-Chrysler Merger Portrayal 14 clashed over press kits: the Germans wanted to replace the highly distinctive, creative, attention-grabbing kits designed by the Chrysler staff (including the award-winning Dodge Durango press kit designed like a Wheaties cereal box) with stark white folders. The German staff designed a commemorative watch with the names of the two companies on the strap. However, when the strap was fastened, the Daimler name overlapped Chryslers. Company news releases were written in German and then translated into English, and went out in the morning, German time. Very soon the impression became that the Germans had the top. The media started reporting stories of American ideas being shunted aside as German managers began imposing the Daimler way of doing business. As the cultural differences became more obvious, more communication challenges were raised by other cultural issues. Was the entity really going to be run by the Germans? Would jobs be lost and facilities closed? In Germany, some shareholders questioned whether Chryslers mass-market products would tarnish the upscale image of the Mercedes brand. Others were stunned by the massive payouts made to American executives. In the US some shareholders Jewish in particular were upset that an American automaker was being taken over by a company that played such an active part in the German was effort half a century earlier (How the DaimlerChrysler merger flunked cultural test, 2000). These issues represented a major communication challenge. Research proves, that the companys communication strategy was not sufficient enough to meet this challenge. In less than two years DaimlerChrysler had lost the confidence of the media and whatever credibility it had with its US management staff and shareholders.

Daimler-Chrysler Merger Portrayal 15 To analyze the results of DaimlerChryslers corporate communications, the author will examine the portrayal of the merger in U.S. and European media.

Daimler-Chrysler Merger Portrayal 16 Methodology Samples of media coverage were chosen from two publications: Business Week (U.S.) and The Economist (U.K.). These publications were chosen to represent the U.S. and European media. In the framework of this course project the author found it impossible to recruit native speakers, representing at least the major European nations. Therefore, the author decided to focus on European publications in English. The choice of these particular editions is explained by their similarity in format. Business Week, according to its description on the LEXIS-NEXIS online database, is the leading U.S. business newsweekly covering all areas of business. The Economist, according to its description on the LEXIS-NEXIS online database, is Britain's leading weekly news magazine with a worldwide readership. Its economic coverage begins with a summary and expands to in-depth analyses of international economic conditions. Initially, the author considered the possibility of analyzing the main daily publications, such as The Wall Street Journal and The Financial Times. However, The Wall Street Journal was not available on LEXIS-NEXIS online database in full-text; whereas the time constraints of the project did not allow the possibility of manually analyzing a daily newspaper for the time period of more than two years. The author used the LEXIS-NEXIS online database to search the publications for relevant articles. The following combination of key words together with the time period from 1/12/98 till 12/31/00, was used: daimler chrysler OR daimlerchrysler OR daimler AND chrysler AND merger OR acquisition. The complete names of both publishing companies were added as an additional search condition.

Daimler-Chrysler Merger Portrayal 17 After excluding articles not related to the DC merger, as well as accidentally selected repetitive results, the final sample of articles, related to the Daimler-Chrysler merger for the period from its official announcement till December, 2000 totaled to 6 articles from The Economist and 20 articles from Business Week. The coding was made according to the general tone of the article: non-favorable, neutral, and favorable. Its necessary to mention, that the author considered the tone related to the merger, but not to its financial results. For example, if an article acknowledged the poor financial results of the merger, but emphasized its potential success, or portrayed the companys management or employees from the positive point of view, it was considered to be favorable.

Daimler-Chrysler Merger Portrayal 18 Results May-December, 1998 The Economist published one article in this period on May 9, 1998. The story emphasizes that the Germans, like once Japanese are going to turn the worlds car industry upside down. It is notable, that DaimlerChrysler is not referred to as the Americans and the Germans. The article makes a prediction that the days of the rest of Europes regional car groups are numbered. Chrysler is referred to as highly profitable and well-managed, lacking, however, the international clout of Mercedes. The article, however, mentions that the question is, if the merger will work. Differences between corporate cultures are emphasized. A prediction is made, that Daimler will be tempted to impose its methods on Chrysler. However, the article emphasizes, that Daimler has much to learn from Chryslers manufacturing skills. In general, the article is favorable. Business Week had 4 articles: 3 favorable and one neutral. The positive articles emphasize the same themes that the one in The Economist. In particular, it is said, that the merger will clearly rock the global car industry, and a new class of Euro-American corporation may spring on the scene. Vlasik, the future author of Taken for a Ride, characterizes the merger as a marriage made in automotive heaven. He says, In one bold stroke, the pending merger dramatically changes the landscape of the global auto industry. The new company, according to Vlasic, will transform the way the auto industry operates worldwide. Positive notes are made regarding the relations between the companys CEOs. There are signs that Eaton and Schrempp are bonding, reports Peterson. Analyzing

Daimler-Chrysler Merger Portrayal 19 Schrempps predisposition not to share a top job, he characterizes Eaton as an executive who can ally with the German manager. In general, all articles make positive forecasts for the merger. However, the significant cultural differences between the companies cultures are still emphasized. January-December, 1999 The Economist published one article in 1999. It starts by emphasizing, that the merger is now looking like a no-premium takeover, with trouble ahead. The "merger" was, according to the article, a takeover of America's third car company by Europe's biggest industrial concern. Most of the article deals with the process of German managers taking control over the company. It also acknowledges the challenges of the merger, Although merging the two companies was never going to be easy, nobody expected it to be quite this hard. However, the article can be considered neutral, because it still emphasizes the mergers potential. Business Week publishes 8 articles, 7 of which are neutral and 1 was nonfavorable. The common theme of the articles is the decreasing morale of Chryslers employees and fears, rising that Stuttgart leadership will destroy the creative spirit at Chrysler. Several articles focus on key Chrysler executives leaving the company, due to the growing German dominance. Another common theme is doubt in the merger to succeed. 'These companies always underestimate the level of cultural difficulties,'' says David E. Cole, director of the University of Michigan's Center for the Study of Automotive Transportation. ''They

Daimler-Chrysler Merger Portrayal 20 always say we'll deal with it up front, but they never do. Business Week concludes, that DaimlerChrysler is not living up to its promise. January-December, 2000 The Economist published 4 articles: 1 favorable, 1 neutral and 2 non-favorable. The favorable articles mentions that the Germans are satisfied with the progress of the merger, emphasizing the point, that even at this early stage, however, the merger offers some powerful lessons in the problems of combining firms in different countries. The problems of the merger are downplayed, compared to the U.S. media: Difficulties were aggravated by a justifiable feeling among those on the American side that this was no merger of equals, but rather a deal in which Daimler was calling the principal shots. The articles confirm, Rumblings of discontent within the firm can still be heard. The discontent is portrayed as an exception: Viewed from outside Detroit, the merger seems to have caused relatively few arguments. The tone of the coverage changes after the November article in The Financial Times, where Schrempp confirmed, that he never intended this to be a merger of equals: the mood at the company is fast switching from concern to panic. However, Schrempps confession is called a candid interview, where the chess-playing German admitted that the image of a merger was merely a feint. However, the tone changes dramatically a week after. The Economist states, that the merger has so far failed disastrously. It acknowledges, that a big lesson of the merger is that Truth is always the best tool of management. Daimler's dealing with its American acquisition has been a tale of deception There was much talk of "one company, two head

Daimler-Chrysler Merger Portrayal 21 offices"--all of it nonsense. The Economist concludes, It is time for Mr. Schrempp to pay heed to the value he has destroyed. Business Week published 8 articles: 3 non-favorable and 5 neutral. One of the themes of the neutral articles emphasized the idea that before the merger Chrysler was at the top of its game. Articles questioned Chryslers responsibility for dragging down the German auto maker's profits. The main theme of the non-favorable articles was the consequences of Shrempps remark to The Financial Times in November. One article starts with acknowledging that the German CEO lied about his intentions from the very start, Employees at DaimlerChrysler's Chrysler Group were still reeling from their first quarterly loss since the early 1990s when they found out that DaimlerChrysler Chairman Jurgen E. Schrempp had lied to them all Schrempp recently told the Financial Times that he had never really intended for the combined auto giant to be ''a merger of equals,'' as he said at the time. He added that he chose to be ''misleading'' for ''psychological'' reasons. If he had been honest, there would have been no deal, and he couldn't have made Chrysler into just another Daimler operating unit. Business Week suggests, that Chrysler's biggest loss may well be the little goodwill left between management and the troops. Conclusion During the first period, May-December, 1998, according to the findings of this research, The Economist published 1 article, which was favorable. Business Week published 4 articles: 3 favorable and 1 neutral.

Daimler-Chrysler Merger Portrayal 22 During the second period, January-December, 1999, according to the findings of this research, The Economist published 1 neutral article. Business Week published 8 articles: 7 neutral and 1 non-favorable. During the third period, January-December, 2000, according to the findings of this research, The Economist published 4 articles: 1 favorable, 1 neutral and 2 nonfavorable. Business Week published 8 articles: 3 non-favorable and 5 neutral. The total period included 6 articles from The Economist: 2 favorable, 2 neutral, and 2 non-favorable; and 20 articles from Business Week: 3 favorable, 13 neutral, and 4 non-favorable. The total number of articles, according to the findings of this research, was 5 favorable, 15 neutral, and 6 non-favorable.

Daimler-Chrysler Merger Portrayal 23 Discussion According to the findings of this research, the media coverage of the DaimlerChrysler merger in the U.S. and in European media was different from the very start. It is necessary to mention, that the U.S. media coverage more than tripled the European coverage in quantity. However, more significant differences were found in the quality of the coverage. In 1998, when the merger was announced to the public, the media coverage of the deal was extremely favorable. In both cases, predictions were made that the merger would change the entire global auto industry. However, even at this point an important difference in portrayal should be mentioned. European media attributed its optimistic forecasts to the Germans: The Germans, like once Japanese are going to turn the worlds car industry upside down. The role of the American side was downplayed to sharing its manufacturing skills. In 1999 and the first half of 2000, the merger is portrayed more or less in the same manner by both, the U.S. and European media. Differences in corporate cultures are emphasized. However, were the U.S. media emphasizes the concerns of the Chrysler side, the European media, almost neglects them: Viewed from outside Detroit, the merger seems to have caused relatively few arguments. The situation changes dramatically after Schrempp, the German DaimlerChrysler CEO, mentions in an interview to The Financial Times, that He had never really intended for the combined auto giant to be ''a merger of equals,'' as he said at the time. He added that he chose to be ''misleading'' for ''psychological'' reasons. Both, the U.S. and European

Daimler-Chrysler Merger Portrayal 24 media, acknowledge, that this remark caused even more disappointment among Chrysler employees. But still, the European media refers to Schrempp as to a chess-player who made this remark in a candid interview. The US media, on the contrary, states, that the German CEO lied about his intentions from the very start. The difference in tone is astonishing. In the European article, Schrempp is a strategically thinking manager, whose decisions are psychologically justified. The U.S. article refers to the German as to a liar, who destroys the little goodwill left between management and the troops. However, at the end of 2000, the European media catches up with the U.S. media in portraying the merger as a disastrous failure. It also acknowledges the damage caused by Schrempp and suggests his soon-to-come resignation: It is time for Mr. Schrempp to pay heed to the value he has destroyed. If he cannot get Chrysler working and revive the share price soon, he should go.

Daimler-Chrysler Merger Portrayal 25 Conclusion This research has proved, that the Daimler-Chrysler merger was first portrayed as a great deal, which was supposed to change the entire global auto industry; however, soon it was referred to as an acquisition of Chrysler by Daimler-Benz, which turned out to be disastrous. A comparative analysis of the U.S. and European media coverage indicated, that European media portrayed the merger more favorably, than the U.S. media. The tone of the media coverage appeared to be the same only in mid-December, 2000, after the German CEO acknowledged that he never intended the deal to be a merger of equals. A conclusion can be made, that communication mistakes, probably, started on the day the deal was officially announced. Of course, public relations cannot be the entire reason for a merger to be successful or not. However, this particular merger has been subject to a campaign of PR misinformation. The legendary German efficiency machine has neglected and bulldozered every Chrysler stakeholder in the process, with the PR department being used as a propaganda machine (Daimler/Chrysler: a new direction, 2000). Scholars conclude, that the Daimler-Benz takeover of Chrysler represents an extreme in merger communication An instance in which the company delivered messages to employees and investors but failed to back them up with action. Employees and investors felt betrayed and showed their disdain by leaving the company or dumping its stock. Although the company put a lot of effort into communicating with its stakeholders, the messages it was sending out werent realistic (Managing mergers, 2000).

Daimler-Chrysler Merger Portrayal 26 A conclusion is obvious: in a merger, regular communications is not the only requirement to keep the process moving smoothly. Another requirement is honesty of the communication, which has proved to be vital. Because using your PR staff to pull the wool over the eyes of staff, investors and customers is ultimately a fruitless task (Managing mergers, 2000). Further research might explore the underlying communication reasons, for which the European media portrayal of the merger was significantly different from that of the U.S. media.

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