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equals was taking on a distinctive German flavor, and in November 2000 the last remaining Chrysler
executive, James Holden, the company‟s U.S. president, was fired.
Rather than deal with these issues head-on, Daimler CEO Jürgen Schrempp took a hands-off
approach as Chrysler‟s operations slowly spiraled downward. The company lost several top designers,
delaying new product introductions and leaving Chrysler with an aging line of cars at a time when its
competitors were firing on all cylinders. The delay in merging operations meant cost savings were
smaller than anticipated, as were the benefits from sharing technology. Finally, analysts suggested that
Daimler paid top dollar for Chrysler at a time when the U.S. automobile industry was riding a wave of
unprecedented economic prosperity. As car sales began to sag at the end of 2000, all three U.S.
manufacturers were facing excess capacity and offering huge incentives to move vehicles. This was
not the ideal environment for quickly restructuring Chrysler‟s troubled operations, and Daimler was
facing a 35% drop in projected operating profit between 1998 and 2001. Several shared-platform
vehicles were introduced in 2004, including the Crossfire, which combined German engineering with
American design. However, too much damage had already occurred and a single car was not going to
fix it. DaimlerChrysler continued to lose money until 2007, when Daimler had finally had enough and
sold 80% of Chrysler to Cerberus Capital Management. Cerberus could not turn Chrysler around, and
in early 2009, the once-proud company filed for bankruptcy protection.
What doomed the Quaker/Snapple deal? One factor was haste. Quaker was so worried about
becoming a takeover target in the rapidly consolidating food industry that it ignored evidence of
slowing growth and decreasing profitability at Snapple. The market‟s concern was reflected in
Quaker‟s stock price drop of 10% on the acquisition announcement. In spite of this, Quaker‟s
managers proceeded, pushing the deal through on the promise that Snapple would be the beverage
industry‟s next Gatorade. This claim unfortunately ignored the realities on the ground: Snapple had
onerous contracts with its bottlers, fading marketing programs, and a distribution system that could not
support a national brand. There was also a major difference between Snapple‟s quirky, offbeat
corporate culture and the more structured environment at Quaker.
Most important, Quaker failed to account for the possible entrance of Coca-Cola and Pepsi into the
ready-to-drink tea segment—and there were few barriers to entry—which ultimately increased
competition and killed margins. In this case, Quaker‟s management was guilty of two mistakes: failure
to analyze Snapple‟s products, markets, and competition correctly and overconfidence in their ability
to deal with the problems. Either way, their lapses cost Quaker‟s shareholders billions.
Analysts believe that the merger between AT&T and NCR failed due to managerial hubris,
overpayment, and a poor understanding of NCR‟s products and markets. A clash of culture between
the two firms proved to be the final nail in the coffin. In 1990 AT&T‟s research division, Bell Labs,
was one of the world‟s premier laboratories. With seven Nobel Prizes and countless patents to its
name, it was where the transistor and the UNIX operating system had been invented. AT&T‟s
executives mistakenly believed that this research prowess and $20 billion of annual long-distance
telephone revenues, along with the NCR acquisition, would guarantee the company‟s success in the
PC business. They were confident enough to increase their original offer price by $1.4 billion. The
problem was that by this time, PCs had become a commodity and were being assembled at low cost
around the world using off-the-shelf components. Unlike the microprocessor and software innovations
of Intel and Microsoft, AT&T‟s research skills held little profit potential for the PC business.
AT&T hoped to use NCR‟s global operations to expand its core telecom business. But NCR‟s
strengths were in developed countries, while the fastest-growing markets for communications