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Why Not a GM/Ford Merger Instead?

Can a General Motors-Renault-Nissan alliance restore the beleaguered U.S. automaker to profitability? Kirk Kerkorian, GM's largest shareholder, thinks it's an idea worth exploring. Kerkorian proposed the idea to GM chief Richard Wagoner last week, and both parties have promised to mull it over. But if GM were looking for a life-giving merger, its board would do better looking across town, rather than across the pond.

Merging corporate cultures is always difficult. But history suggests it's especially hard to combine automotive organizations from different countries. A good example is the 1998 partnership of Daimler-Benz and Chrysler Corp. The merger failed to produce many anticipated synergies and sent workers on both sides of the Atlantic into a "deep valley of disappointment and misunderstanding," according to DaimlerChrysler chair Dieter Zetsche. Quoted in the Wall Street Journal, the man affectionately called Dr. Z in the company's new television advertising, said, "It is pretty tough getting an organization to go in a direction it doesn't want to go in voluntarily." GM should already understand that: the company recently paid $2 billion to end its failed five-year partnership with Italy's Fiat.

If Kerkorian simply hopes to give GM's stock a temporary price nudge, or if he is looking for yet another way to annoy his nemesis Wagoner, his proposal might work. But the challenge of blending international corporate cultures ensures failure. He might as well suggest a merger of Motor City rivals.
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