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Analysis of DaimlerChrysler
Two of the worlds most profitable car manufacturers, Daimler-Benz and Chrysler Corporation have agreed to combine their businesses in a merger of equals. The transaction has created a global automotive corporation ranked in the worlds top car makers in terms of revenues, market after General Motors, Ford… The new company is called. It is leading by the Chief Executive Officer (CEO) Juergen E. Schrempp. It will be uniquely positioned to exploit the growth opportunities of the global automotive market in terms of geographical and product segment coverage. For example, Chrysler can improve its sells in Europe and Daimler-Benz in North America. With Daimler-Benzs non-automotive businesses, automotive electronics operations, DaimlerChrysler is a leader in transportation. First, I will talk about DaimlerChrysler environment, in 001 then I will speak about its capability with a SWOT analysis and at last but not least, I will recommend a future strategy.
The environment of DaimlerChrysler can be studied with a PEST analysis.
Political
Buy cheap Analysis of Daimler-Chrysler term paper
The Government's role is to stimulate the car industry, yet impose controls over the use of cars in order to provide an acceptable national infrastructure and the demanded perception of freedom. Governments can support carmakers because they provide jobs. For example, the United States (US) Government rescued Chrysler Corporation with a special Federal Loan Guarantee Program. Car makers have to deal with national governments about environment and security policies. DaimlerChrysler AG is organized under the laws of the Federal Republic of Germany.
Economic
It's the time for mergers. If companies want to stay alive, they have to grow fast and mergers are a good way. It's the motto "eat or be eaten". Car prices in European Union are likely to fall as the Euro. Europe's single currency will create greater price transparency. It will probably increase the merger mania. Economists and auto industries expect a slowdown in auto sales. Competition for market share is rising and put increased pressure on prices and margins. Price of fuel can disadvantage companies. Today we are faced with a great degree of overcapacity in the car industry running at 5%.
Social
During the last century, the car has transformed the lives of people in developed countries, providing a new degree of freedom and new opportunities for work and leisure. DaimlerChrysler has mainly a position in three automotive markets Europe, North America and Asia. These three markets are composed by a rich population. They can buy car easily. DaimlerChrysler sells a large range of products which touches all the class of the society. We can also say that the population changes it becomes older and more single. European and US markets are good for DaimlerChrysler because it's a source of national pride for Americans to buy Chrysler and for Germans to buy Mercedes. The United States of America (USA) and Germany are the most powerful countries in the world. The growth rate for motor industry in Europe is between % and %.
Technological
DaimlerChrysler must take care about new fuel which can change car making. It must also take care of the growth of the Internet because there is a lot of information about DaimlerChrysler and you can also make advertising. A lot of Money is spent in technology to preserve the environment and to secure the customer (e.g. airbag). They also develop entertainment in car like DVD lectors.
DaimlerChrysler has a large range of products in different markets. They product in each market luxury car (Mercedes), sedans, coupes, convertibles, minivans, jeeps, compacts, sport-utility vehicles, trucks, commercial vehicles like heavy trucks and buses. They also have Automotive Electronics which products automotive electronics applications.
The main competitors of DaimlerChrysler in its segments and markets are General Motors, Ford, Toyota, Volkswagen, Renault, Fiat, Peugeot-Citroen, Honda, BMW Rover… DaimlerChrysler is one of the five best car makers.
This is the environment where Daimler-Chrysler lives. Now, we talk about the strengths and weaknesses with a SWOT analysis and a product portfolio.
We're going to do the SWOT analysis. It will give us the strengths, weaknesses, opportunities and threat of DaimlerChrysler.
Strengths
The merger of Daimler and Chrysler brought strengths from both sides.
ɨ DaimlerChrysler is famous for its diversification.
ɨ They have a reputation for design and product development due to Chrysler Corporation
ɨ Reputation for innovation (e.g. Smart, A car)
ɨ Capacity of engineering and technology from Daimler
ɨ Luxury car image due to Mercedes-Benz
ɨ Good shares in European and North American markets
Let's see the different brands and their strengths in a product portfolio
Passenger cars & light trucks
Mercedes-Benz passenger cars are world renowned for their innovative technology and highest levels of comfort. It offers elegantly and technically brilliant products. Its youthfulness and dynamism are appreciated in all over the world.
The Chrysler Brand has a complete range of products with its sedans, coupes, convertibles, and minivans. Chrysler brand's focus is design, performance, fined-tuned athletic. Cars are not very expensive
The Jeep® Brand is one of the most widely recognized brands in the world because of its utility during the World War II and because it has four-wheel-drive capability combined with exceptional on-road handling and performance. It defines the sporty and versatile side of the sport-utility segment.
The Plymouth Brand combines contemporary styling, meaningful innovation and value in versatile products. It sells cars in three segments compact, sedan and minivan.
The Dodge Brand is popular in the USA and is recognized for its bold, powerful and capable image. It has a wide range of cars, minivans, sport-utility and trucks.
The Smart Brand is a new brand. It needs minimum road space. It is very useful for mobility in big cities during rush hours. But the car is still expensive.
The Commercial Vehicles and buses
DaimlerChrysler is one of the leaders in commercial vehicles and buses with four brands
DaimlerChrysler is the No. 1 in the world for trucks over six tons and buses over eight tons.
In Europe, DaimlerChrysler is represented by Mercedes-Benz for commercial vehicles and by Mercedes-Benz and Setra for buses. The Mercedes-Benz Atego is the leader of sells in the segment of delivery transportation. They also offer trucks for fire services or airport ground crews.
In North America, Freightliner Corporation is No. 1 for Class 8 heavy trucks. Sterling makes Class 8 trucks for construction, long-distance haulage and delivery.
It also exists Automotives Electronics which manufactures automotive electronics applications.
Weaknesses
DaimlerChrysler has several problems
It still has troubles about the merger between Daimler-Benz and Chrysler Corporation. There is a German dominance in Chrysler decisions which are unacceptable for Americans. So, designers, production people and executives have left Chrysler to join General Motors or Ford. It has an impact of the effectiveness of Chrysler. Furthermore, Chrysler's range of minivans, jeeps, and sport-utility vehicles are ageing.
DaimlerChrysler announced in 001 a loss of between €. billion and €.6 billion for Chrysler Brand
DaimlerChrysler try to lose less money by cutting jobs so the production will not be the same and will probably decrease. 6,000 jobs cut in America with Chrysler. Cut off 15% in the cost of materials and Chrysler claims that more than half its suppliers have already agreed to a programme of drastic cuts in costs over the next three years.
Smaller share in the market than General motors, Ford, in 001.
Mercedes shares some parts of cars that the consumer cannot see and he will pay more than usual.
Due to Business week "DaimlerChrysler still has not made money for its shareholders. The stocks trades near its low of 5 and is off about % in November 18"
The Jürgen Schrempp is the chairman of DaimlerChrysler and has a strong personality. He is unpopular.
DaimlerChrysler is not sure about the efficiency of Mitsubishi Motors Company which has a $ 5 billion debt. The CEO Jürgen Schrempp wants to cut the production of Japanese car maker by a fifth with a loss of ,500 jobs.
Opportunities
DaimlerChrysler try to enter into a new market like Asian market with Mitsubishi and Hyundai. It also tries to take share market in small cars market like Smart. Different vehicles can shares parts like engine blocks, batteries, gearboxes…
Threats
An impending recession can appear and consummation can decrease. A new entrant in the automotive market but it is impossible because automotive sector has no space for new entrants.
Investors don't trust the CEO Jürgen Schrempp because they doubt about him.
American car and light-truck market looks like sliding off its peak of 17.5 million to 16 million in 000 to around 001.
Now, we know the position of DaimlerChrysler in 001, we can find a strategy for the future.
I think it is not so important to try to grow faster by announcing alliances or mergers as much as you can. For DaimlerChrysler, it first has to consolidate Chrysler before trying to go in Asian market. If DaimlerChrysler does not take care of this company, it can lose it and the consequences will be horrible. The CEO Jürgen Schrempp must give more power to Chrysler Put an American manager at the head of Chrysler and increase advertising showing that Chrysler is an American brand even if it is German to increase share in the US Market. Automotive cars are a source of national pride.
They have to try to share parts between Chrysler and Mitsubishi because those companies sell the same class of products. So it's easier to share ideas and parts. Parts of Mercedes are more expensive.
The CEO has to reassure investors and shareholders.
A change in thinking is required from the just in case mentality of mass to the just in time requirement of lean production. They have to stop the overcapacity of 5%.
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