1. Daimler Chrysler Saidi Isaac Ron Sparks Candace Stocker Jeron Wright

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

3. The External Environment

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

5. Industry Analysis

6. Porter’s “Five Forces Model”

7. Competitor Profiles Toyota

8. Competitor Profiles GMFord

9. Company Profile

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

11. Primary activities Inbound Logistics Marketing and Sales Service marketing communications

12. Secondary Activities Human Resources Management Technology Development Firm Infrastructure

13. Strengths And Weakness Strong Brand names Broaden it with models Perfect fit and leaders Negative view of Mercedes

14. Competitive Advantages Wide variety of vehicles Mercedes’ strong characteristics

15. SWOT Analysis

16. Core Issue Automakers had been losing money. After 9/11/2001 sales of cars and trucks dropped dramatically – Mitsubishi’s sales were 20% – Chrysler’s sales were 5% – Mercedes’ sales were 2% 2003

17. 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

18. SWOT Summary S: W: O: T:

19. Financial Analysis

21. 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

22. 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

23. Stock Prices Trends Factors Economic conditions

24. Market Conditions Terrorist attacks Capital funding Acquisitions within the industry

25. Ford Profitability Ratio 200320022001 Profit Margin0.00357-0.007-0.042 Turn Over0.00156-0.003-0.062 Return on Investment (ROI).000557%.00242%.26% Return on Equity (ROE).0151%.128%2.95% Toyota-Daihatsu Profitability Ratio 200320022001 Profit Margin0.02050.02780.0294 Turn Over0.01330.01540.01211 Return on Investment (ROI).0272%.0428%.0356% Return on Equity (ROE).0634%.0863%.070% Daimler Chrysler Profitability Ratio 200320022001 Profit Margin0.00330.032-0.0044 Turn Over0.00250.0251-0.0032 Return on Investment (ROI).000825%.08032%.01408% Return on Equity (ROE).004265%.43%.0748% General Motors Profitability Ratio 200320022001 Profit Margin0.02080.00930.00339 Turn Over0.00850.00470.0018 Return on Investment (ROI).01768%.00434%.00061% Return on Equity (ROE).314%.236%.001% Profitability Ratio

26. Daimler Chrysler Leverage Ratio 200320022001 Total Debt-Total Assets Ratio0.5390.53540.556 Long-term debt to Equity Ratio2.122.2752.241 General Motors Leverage Ratio 200320022001 Total Debt-Total Assets Ratio0.94290.97940.9365 Long-term debt to Equity Ratio10.75529.6368.439 Ford Leverage Ratio 200320022001 Total Debt-Total Assets Ratio0.38650.3761.053 Long-term debt to Equity Ratio1.6292.4341.729 Toyota-Daihatsu Leverage Ratio 200320022001 Total Debt-Total Assets Ratio0.53770.49290.4814 Long-term debt to Equity Ratio0.66880.72380.7217 Leverage Ratio

27. Strategic Scenario

28. LONG TERM OBJECTIVE Number one automobile manufacturer in the world

29. BEST CASE SCENARIO Not to separate Operation Groups: Mercedes units Chrysler units Mitsubishi units

30. WORST CASE SCENARIO Separation of the groups Sale of Chrysler units loosen a mega-merger Money for Promotional

31. MOST LIKELY SCENARIO Separation of operations units Mercedes unit from Chrysler unit and Mitsubishi unit

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

33. Corporate Level Strategies

34. Alternative I: Reorganization Expected Benefits Winning Against the Competition Drawbacks

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

36. Winning Against the Competition Variety Increased attractiveness Stronger vehicle designs Extra kickers

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

38. Alternative II: Restructuring Expected Benefits Pros Cons

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

40. Pros Power of Mercedes Generated profits A focus to improve

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

42. Business Level Strategic Alternatives

43. 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)

44. Generic Strategies Differentiation Low-Cost

45. 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

46. 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

47. Grand Strategies Product Development Market Development Innovation

48. Preferred Strategic Choice Long-term Objective Corporate Level Strategy Business Level Strategy