The Daimler-Chrysler Collision

May 15 1998 3:30 AM

The Daimler-Chrysler Collision

Another merger in search of that elusive synergy

(Continued from Page 1)

DaimlerChrysler will probably be big enough to run harder bargains with suppliers, although there's no real evidence that Ford or GM has enjoyed huge cost savings on parts because of their size. The new company may also benefit from merging warehousing and inventory management, and ideally there will be joint production of components that both companies use. But size brings disadvantages as well as benefits, and never more so than when it's the result of cross-national mergers. If being the biggest company was a guarantee of success, we'd all be using IBM computers and driving GM cars. Daimler-Benz and Chrysler were great companies on their own, productive and profitable, making quality cars that people wanted to buy. Now they're risking that present for an Ozymandian future, at the cost of billions of dollars. Size matters, but sometimes for all the wrong reasons.

James Surowiecki writes for the Motley Fool. He can be e-mailed at surowiecki@aol.com.

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