As I mentioned last week in class in relation to the SMA Module and the question about Kodak/Olympus in the study assignment problems, more companies are operating in a global environment than ever before.  Even companies that don’t know they are operating in a global environment probably are just by the nature of their supply chain operating at least partially overseas.  The biggest example of globalization, perhaps, is when large multi-national companies form alliances or merge such as Anheuser-Busch and InBev last year or the current Fiat-Chrysler-Opel union that is trying to form now.

Today the Economist posted a lengthy piece on their website (I’m not sure if it will appear in print as well)  about this latter merger and it is worth reading for the insight it gives into the issues faced by Fiat trying to pull this off and the input/impact of the German and American governments on the process.

THE bold attempt by Sergio Marchionne, chief executive of the Fiat Group, to use the crisis that has overwhelmed Detroit to forge a three-way merger between Fiat Auto, Chrysler and General Motors’ European arm, Opel, has been greeted both with admiration (for his chutzpah) and scepticism (about his ability to pull it off). The sceptics say cross-border mergers in the car industry have a poor record and that Mr Marchionne is biting off much more than he can chew.

Marriages made in hell. May 19th 2009. From Economist.com

For a look at the downside risk of such a merger, one needs to look only at the situation a couple years ago that also involved Chrysler and one-time merger partner Daimler-Benz.

It was billed as a “merger of equals”, but in the end the participants could not make a go of it and their marriage failed. The break-up announced this week of DaimlerChrysler, a transatlantic carmaker created by the union of Daimler-Benz and Chrysler in 1998, involves the sale of 80.1% of Chrysler to Cerberus Capital Management, a private-equity group, for $7.4 billion–though once everything is accounted for, Cerberus is actually being paid to take the troubled American carmaker off the hands of the German company, which will be renamed Daimler.

Divorced. Economist; 5/19/2007, Vol. 383 Issue 8529, p67-68, 2p