Organizational Leadership - Ldr 531 - Chrysler Llc’s Business Failure

Chrysler LLC’s Business Failure

Ramanda Hostler

Organizational Leadership/LDR 531

January 17, 2001

Scott Smith

Chrysler LLC’s Business Failure

The company I chose to research is Chrysler LLC. I personally spent three years at Chrysler LLC. , and I must say that this organization was the worst company that I ever worked for. Chrysler lacked leadership and organizational skills to empower their associates in making the company a success. For this assignment, I will describe specific organizational behavior theories that could have predicted the company’s failure. I will compare and contrast contributions of leadership, management, and organizational structures to the failure.

Chrysler LLC was founded by Walter Chrysler on June 6, 1925. There are critical mistakes that should be considered when evaluating a business failure. These mistakes are caused by several factors that can lead to a company’s downfall such as poor planning, economic downturn, and failure to implement new changes to the organization should be considered when discussing the failure of Chrysler LLC.  One of the biggest mistakes Chrysler LLC made was not obtaining a permit in order to secure its own financing, like GMAC. Chrysler LLC had the opportunity to have its own financing, but didn’t deem the importance of it until it was too late. Another mistake of Chrysler LLC was the merger of Daimler-Benz in 1998. The merge changed the name to DaimlerChrysler AG.

According to Automotive News, “As it was before the DaimlerChrysler merger, the new Chrysler Financial was almost entirely dependent on the ups and downs of the North American auto market. The divorce also made the new Daimler Financial Services more dependent on Europe. But Daimler Financial is more diversified, including heavy-truck finance, and more nonautomotive business.”  

The business relationship between Chrysler and Mercedes were strained for several reasons such as employees having detailed knowledge of the products offered, customer service was horrible, and poor leadership. In my location, employees handled telephone calls for Mercedes and Chrysler customers. The sales floor was a complete disaster. The training for both products was poor because classes only lasted for three days and employees were put on the sales floor to learn the rest. Management had little guidance for employees other than to get the sales up to reach their goals.  There was never any clear communication provided to employees. Employees received knowledge of the Chapter 11 bankruptcy on the news, and afterwards a meeting was held the next day to inform us not to worry that we still had a job.

The merge of Chrysler and Mercedes-Benz cost the company $36 billion dollars.   Chrysler sold Mercedes-Benz for 7.4 billion dollars which put the organization into a negative status. Chrysler was guilty of purchasing bad loans, which meant they knew customers couldn’t afford the vehicle. In order to increase profits, Chrysler would falsely report the customer’s had jobs, more salary, and other scams to put the customer into the vehicle. Management had no direction and would change our focus daily.