Daimler Chrysler

Saidi Isaac Ron Sparks Candace Stocker Jeron Wright

Daimler Chryslers Position

Daimler Chrysler is committed to achieve consumer satisfaction among all global auto manufacturers because of our engineering excellence, innovative products, and superior service.

The External Environment

External Analysis
Economic Factors Social Factors Political Factors Technological Factors Ecological Factors

Industry Analysis

Porters Five Forces Model

Competitor Profiles
Toyota

Competitor Profiles
GM Ford

Company Profile

Value-Chain Analysis
Primary activities Secondary activities Strength and Weakness Competitive advantage

Primary activities
Inbound Logistics Marketing and Sales Service marketing communications

Secondary Activities
Human Resources Management Technology Development Firm Infrastructure

Strengths And Weakness

Strong Brand names Broaden it with models Perfect fit and leaders Negative view of Mercedes

Competitive Advantages
Wide variety of vehicles Mercedes strong characteristics

SWOT Analysis

Core Issue
Automakers had been losing money. After 9/11/2001 sales of cars and trucks dropped dramatically
Mitsubishis sales were Chryslers sales were Mercedes sales were 2003 20% 5% 2%

Core Issue (cont.)

How to differentiate themselves from global competition in a meaningful, sustainable manner. Growth of China automobile market Developing innovative vehicles that appeal to consumers How to remain profitable in the future

SWOT Summary
S: W: O: T:

Financial Analysis

World Ranking
9000000 8000000 7000000 6000000 5000000 4000000 3000000 2000000 1000000 0 GM FORD TOYOTADAIHATSU VOLKSWAGEN DAIMLERCHRYSLER

2000 World Ranking 2001 World Ranking 2002 World Ranking 2003 World Ranking

Units

Auto Manufacturer

Employment
In 1998, the average annual number of employees totaled 433,939 Peaked in 2000 at 463,561 By 2002, the average dropped to a mere 370,677 From 1998 to 2000, 92,884 people lost their jobs This equates to 25% of DaimlerChrysler employee force

Net Income
From 1998 to 2003 DaimlerChrysler only experienced a loss in net income within 2001 In 2000 the company had nearly a gain of 7.89 billion In 2001 this amount totaled a whopping negative 662 million Causes and effects

Stock Prices
Trends Factors Economic conditions

Market Conditions
Terrorist attacks Capital funding Acquisitions within the industry

Profitability Ratio
Daimler Chrysler Profitability Ratio 2003 Profit Margin 0.0033 2002 0.032 2001 -0.0044 Profit Margin Turn Over Ford Profitability Ratio 2003 0.00357 0.00156 2002 -0.007 -0.003 2001 -0.042 -0.062

Turn Over

0.0025

0.0251

-0.0032

Return on Investment (ROI) Return on Investment (ROI) .000825% .08032% .01408%

.000557%

.00242%

.26%

Return on Equity (ROE)

.004265%

.43%

.0748%

Return on Equity (ROE)

.0151%

.128%

2.95%

General Motors

Toyota-Daihatsu Profitability Ratio 2002 0.0093 0.0047 2001 0.00339 0.0018 Profit Margin Turn Over Return on Investment (ROI) Return on Equity (ROE) 2003 0.0205 0.0133 .0272% .0634% 2002 0.0278 0.0154 .0428% .0863% 2001 0.0294 0.01211 .0356% .070%

Profitability Ratio
2003 Profit Margin Turn Over 0.0208 0.0085

Return on Investment (ROI) Return on Equity (ROE)

.01768% .314%

.00434% .236%

.00061% .001%

Leverage Ratio
Daimler Chrysler Ford Leverage Ratio 2002 0.5354 2.275 2001 0.556 2.241 Total Debt-Total Assets Ratio 2003 0.3865 2002 0.376 2001 1.053

Leverage Ratio
2003 Total Debt-Total Assets Ratio Long-term debt to Equity Ratio 0.539 2.12

Long-term debt to Equity Ratio

1.629

2.434

1.729

General Motors Leverage Ratio 2003 2002 2001

Toyota-Daihatsu Leverage Ratio 2003 Total Debt-Total Assets Ratio Long-term debt to Equity Ratio 0.5377 0.6688 2002 0.4929 0.7238 2001 0.4814 0.7217

Total Debt-Total Assets Ratio

Long-term debt to Equity Ratio

0.9429
10.755

0.9794
29.636

0.9365
8.439

Strategic Scenario

LONG TERM OBJECTIVE

Number one automobile manufacturer in the world

BEST CASE SCENARIO

Not to separate Operation Groups: Mercedes units Chrysler units Mitsubishi units

WORST CASE SCENARIO

Separation of the groups Sale of Chrysler units loosen a mega-merger Money for Promotional

MOST LIKELY SCENARIO

Separation of operations units Mercedes unit from Chrysler unit and Mitsubishi unit

WHY
Maintain Mercedes position Profit for Innovation Costly to maintain and sustain other Have stronger brand image Succeed and Survive in the competitive markets

Corporate Level Strategies

Alternative I: Reorganization
Expected Benefits Winning Against the Competition Drawbacks

Expected Benefits
Units work cross-divisionally to maximize strengths Allows for the transfer of information, innovation, and expertise Cost-saving strategies Feasibility

Winning Against the Competition

Variety Increased attractiveness Stronger vehicle designs Extra kickers

Drawbacks
Negative view towards Mercedes Decrease in sales for Mercedes A way around these implications

Alternative II: Restructuring

Expected Benefits Pros Cons

Expected Benefits
Fixes Mercedes quality issue Increases the Mercedes brand image Helps DaimlerChrysler

Pros
Power of Mercedes Generated profits A focus to improve

Cons
Relying to much on Mercedes Holding up both ends Mercedes could still have quality issues How to reduce these

Business Level Strategic Alternatives

SBUs
Mercedes Car Group Chrysler Group Commercial Vehicles Services (DaimlerChrysler Bank) Other Activities (MTU Aero Engines, Mitsubishi Motors, European Aeronautic Defense and Space Company (EADS)

Generic Strategies
Differentiation Low-Cost

Evaluation of Business Level Strategies

Differentiation
Pros
High level of customer loyalty Charge premium for product Possible increase in revenue Reach wider target market

Cons
Companies imitate Consumers view changes Difficult to charge premiums

Evaluation of Business Level Strategies

Lower Cost Leader
Pros
Lower prices Higher profit margin Increase in revenue

Cons
Companies imitate Technology changes Bases for cost leadership erode

Grand Strategies
Product Development Market Development Innovation

Preferred Strategic Choice

Long-term Objective Corporate Level Strategy Business Level Strategy