Daimler - Strategic Management

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Daimler - Strategic Management

  1. 1. Automobile Industry: Daimler AGIndustry AnalysisPresentation held by:Evelina Baziuk, Polina Gribakov, Gamze Saba, WeronikaSalach2011-11-15
  2. 2. Industry AnalysisOur Presentation1. Introduction: • History and financial information2. Industry Analysis: • PESTLE • 5 Forces Framework • Opportunities and Threats3. Strategic proposal for Daimler AG 2
  3. 3. Industry AnalysisHistory• Gottlieb Daimler and Carl Benz:• the invention of the automobile in 1886• Headquartes: Stuttgart• 125th anniversary, one of the biggest producers of premium cars• the world’s biggest manufacturer of commercial vehicles with a global reachSource: www.daimler.com 3
  4. 4. Industry AnalysisCreating Value AddedDaimler’s vision:to provide first-class service to their dealers and customers and create additional value.Source: www.daimler.com 4
  5. 5. Industry Analysis Business Performance (2010) Manufacturing Facilities in 17 countries Market Capitalization about EUR 54.0 billion Total Revenues EUR 97.8 billion (2010 financial year) Net profit/loss EUR 4,674 billion Automotive Sales 1,895,400 vehicles thereof: 1,276,800 Passenger Cars thereof: 355,300 Trucks (2010 financial year) Employees 260,100 (December 31, 2010) R&D Expenses EUR 4,849 billionSource: www.daimler.com 5
  6. 6. Industry AnalysisSource: www.daimler.com 6
  7. 7. Industry AnalysisShareholders StructureSource: www.daimler.com 7
  8. 8. Industry AnalysisCurrent trends in German automobile industry• 5-7% of annual market growth• Online ordering• Most of R&D are being outsourced• German automakers buy more parts from outside than produce in house• Increased automakers bargaining power• Mass customization of products 8
  9. 9. Industry AnalysisGerman Automobile Industry in numbers• Largest industry sector in Germany (20% of total German industry revenue)• One of the largest employers (workforce – 723.000)• Europe`s №1 automotive market in terms of production and sales• Germany hosts the largest concentration of OEM plants in Europe (30 OEMs, 4 major brands)• 2010 – 17% of worldwide cars production• Country`s most innovative industry sector (R&D – EUR 57,4 billion)• 2005-2009 – yearly 0,2% decrease in unit labor costs 9
  10. 10. Industry AnalysisIndustry Structure (S-C-P Model)• Number of competitors: 6 companies• Homogeneity of products: homogeneous• Cost of entry: very costly OLYGOPOLY Expected firm performance: Competitive Advantage 10
  11. 11. Industry AnalysisGerman market share of car manufacturers (%) VW, 21% Mercedes Others, 60.3% (Daimler), 9.6% BMW/Mini, 9.1%Source: Adapted from Bekker (2011) 11
  12. 12. Industry AnalysisBrand Architecture• Mercedes-Benz Cars• Daimler Trucks• Mercedes-Benz Vans• Daimler Buses• Daimler Financial Serviceshttp://www.daimler.com/brands-and-products/our-brands 12
  13. 13. Industry Analysis Target Groups B2C B2B• Male/Female • Companies of different size and industry• 30-65 years• Middle or high income level• Conservative people who love comfort 13
  14. 14. Industry AnalysisEXTERNAL ENVIRONMENTPESTEL Model. Environmental 14
  15. 15. Industry AnalysisPOLITICALPESTEL• Government regulations - environmental issues• 2009: car scrapping incentive announced (Umweltprämie)• 2,500€ for a >9-year-old car and buying a new one• Autobahn (Germany) – no speed limits 15
  16. 16. Industry AnalysisECONOMICPESTEL• Foreign currency fluctuations• Emerging markets (BRIC) – economies of scale• Continuing globalization and consolidation• Observed accelerated increase in car sales/market growth 16
  17. 17. Industry AnalysisSOCIO-CULTURALPESTEL• Popularity of eco-friendly/green products• Growing affluence – ownership of more than one car• Comfort and product quality demand• A car = status object 17
  18. 18. Industry AnalysisTECHNOLOGICALPESTEL• HEV – hybrid electric vehicles• All-electric vehicles• F-cell: fuel-cell vehicles 18
  19. 19. Industry AnalysisENVIRONMENTALPESTEL• Stringent environmental regulations (2005) Euro 4, (2009) Euro 5, possibly Euro 6 in 2014• Increased emissions• Rising energy costs 19
  20. 20. Industry AnalysisLEGALPESTEL• The ELV directive (End-of-life vehicles) of EC – hazardous substances reduction• Anti-bribery provisions• Anti-trust investigation of EC 20
  21. 21. Business EnvironmentAnalysis Industry Analysis 1.Threat of New Entrants Rivalry Bargaining Bargaining among Power of Power of existing Suppliers competitors Buyers Threat of Substitute/ Complimentar y GoodsSource: Adapted from Porter (2008) 21
  22. 22. High Barriers of Entry Industry Analysis 1. Large Economies of Scale: • Mature Industry (Trade & Invest, 2011) • Growth through acquisitions (Corswant & 1.Threat of Fredriksson, 2002)New Entrants 2. Product Differentiation: • Brand recognition is highly valued by consumers (Hanzaee & Yazd, 2010) • Customers are loyal to national manufacturers Rivalry (Mintel, 2009) among existingcompetitors 3. Cost Advantages Independent of Scale: • Experienced management board (more than 15 years in the industry) (Osiris, 2011) 4. Government Policy : • The CO2 emissions to be reduced to 120 g/km by 2012 (Trade & Invest, 2011) • Otherwise 0.95 € charge per g/km of CO2 (Trade & Invest, 2011)
  23. 23. Bargaining power of suppliers is very low Industry Analysis Supplier Power • Automobiles consist of more that 20.000 parts (Liker et al, 1996) • Supplier markets are operated by small and medium-sized firms (Peters, 2000) Rivalry2. Bargaining Power of among existing Suppliers competitors Some Industry Suppliers •Exterior: Polyplex, Switzerland •Interior: TAKATA PETRI, Japan •Mechatronics: Mitsubishi, Japan •Chassis: Kirchhoff Witte, Germany •Powertrain: ElringKlinger, Germany
  24. 24. The bargaining power of the buyers Industry Analysis is moderately high Buyer Power • Almost all production output is Rivalry purchased, so industry depends on among 3.Bargainin buyers (Peters, 2000) existing g Power ofcompetitors Buyers • Rising demand for high technology lead to large investment in R&D (Sedgwick, 2011)
  25. 25. Not Many Substitutes for Automobiles Industry Analysis Substitutes: Rivalry among •DB – S Bahn Trains existing •BVG – U Bahn Trainscompetitors •Storck Bicycle GmbH - Bicycles Complimentary Products: •BP - Petrol 4.Threat of •Kumho, Continental - Tyres Substitute/Complimentary Goods Source: Google (2011) 25
  26. 26. Highly Competitive Analysis Industry Market Key CompetitorsBMW• Competes in car manufacturing and financial services sectors;• MINI ExclusivityVW• Reported to be the No 1 carmaker in EuropeVolvo• Leading maker of trucks, buses, and construction equipment as well as marine (Volvo Penta), aircraft (Volvo Aero), and industrial engines• Struggles to suggest he right product mix for the right market
  27. 27. Industry AnalysisNEW OPPORTUNITIESOpportunities from Industry StructureMATURE INDUSTRY:1. Product refinement2. Investment in service quality3. Process innovation 27
  28. 28. Industry AnalysisNEW OPPORTUNITIESEnvironmental Opportunities1. Development in the BRIC countries2. Growing demand for green technologies3. Daimler and Reanult-Nissan cooperation4. Global truck manufacturing 28
  29. 29. Industry AnalysisOPPORTUNITIESDevelopment in the BRIC countriesBrasil, Russia, India and China… …witness a rapid increase in car sales (in million units). BRIC expected growth in 2011 2010 2011 Brasil 4.5% 3.5 3.7 Russia 17% 1.8 2.2 India 10% 2.8 3.0 China n/a 18.1 20.0Source: Datamonitor 2011 29
  30. 30. Industry AnalysisOPPORTUNITIESGrowing demand for green technologiesHybrid-electronic technology (HEV). Mercedes-Benz S 400 BlueHybrid • Saving fuel • Reducing emissions • ZERO emissionPhoto: www3.mercedes-benz.com 30
  31. 31. Industry AnalysisOPPORTUNITIESBlue EFFICIENCY • Emission-free driving • Reducing fuel consumption and CO2 emissions • Lightweight components • Cleaner engines • 128 BlueEFFICIENCY vehiclesPhoto: www3.mercedes-benz.com 31
  32. 32. Industry AnalysisOPPORTUNITIESMercedes-Benz B-Class “F-Cell” Technology A hydrogen fuel cell vehiclePhoto: www3.mercedes-benz.com 32
  33. 33. Industry AnalysisOPPORTUNITIESDaimler and Renault-Nissan cooperation. • Smart for two • Expanding the Smart® family • Green technologies • Increase in volumes (economies of scale)Photo: www.japanmarkt.de 33
  34. 34. Industry AnalysisOPPORTUNITIESGlobal truck manufacturing. • Accelerated growth 2010- 2015 • 17.2 million units (2010) → 26.5 million units (2015) • Enhancing market sharePhoto: www.daimler.com 34
  35. 35. Industry Analysis Strengths and Weaknesses Strengths Weaknesses Strong brand recognition and Product recalls market share Legal proceedings likely to Extensive production and sales hamper reputation network Underfunded pension Strong focus on research and obligations development Heavy debt could limit growth Large scale of operationsSource: Datamonitor (2011) 35
  36. 36. Industry AnalysisStrategic Recommendations 1. Continue investing into R&D for further product refinement. 2. Launch new products and refine the old ones. 3. Invest into service quality heavily. 4. Concentrate on capturing market share in the emerging markets and economies.2011-11-15 36
  37. 37. Industry Analysis References (1)Bekker, H. (2011) ‚ List of 20 Best-Selling Car Manufacturers in Germany in 2010‘ [Online] Available at: http://henk-bekker.suite101.com/list-of-20-best-selling-car-manufacturers-in-germany-in-2010-a328223 [Accessed: 10 November, 2011]Clark, J. (2010) ‚Daimler AG Recognized its Best Suppliers with the Daimler Supplier Award‘ eMercedesBenz. 19 March, 2010[Online] Available at: http://www.emercedesbenz.com/autos/mercedes-benz/corporate-news/daimler-ag-recognized-its-best-suppliers-with-the-daimler-supplier-award/ [Accessed: 9 November, 2011]Company Spotlight: Daimler AG.Full Text Available MarketWatch: Automotive, Sep2011, Vol. 11 Issue 9, p16-17Component Design: Are there Really Large US Japan Differences?’, Research Policy, 25, 59–89Corswant, F. & Fredriksson, P. (2002) ‘Sourcing trends in the car industry: A Survey of car manufacturers’ and suppliers’ strategiesand relations’. International Journal of Operations and Production Management 22(7) pp.741-758 [Online] Available at:http://www.emarketing.net.cn/upload/file/2009/02/17/201234875118940.pdf [Accessed: 8 November, 2011]Daimler: Not a One-Legged Story.Full Text Available Black Book - The Best of Bernstein - Pan-European Edition (Fourth-Quarter2007), Sep2007, p33-36, 4p.Daimler: Outperforms Challenging Western European Market. Full Text Available White Book - European Autos Data Book - 4Q:10:Will Anyone Ever Make Money in Mass-Market Europe Again?, Feb2011, p75-77.Datamonitor: Daimler AG (2011) DaimlerChrysler AG SWOT Analysis, p1-12.Germany: Trade and Invest (2011) The Automotive Industry in Germany. Issue 2010/11 pp. 2-7 [Online] Available at:http://www.gtai.com/fileadmin/user_upload/Downloads/Industries/Automotive/1_Englisch/IndustryOverview_Automotive_September2010_GTAI.pdf [Accessed: 8 November, 2011]Hanzaee, K. & Yazd, R.M. (2010) ‚The impact of brand class, brand awareness and price on two important consumer behaviorfactors; customer value and behavioral intentions‘. African Journal of Business Management 4(17) pp. 3775-3784 [Online] Availableat: http://www.academicjournals.org/ajbm/pdf/pdf2010/4Dec/Hanzaee%20and%20Yazd.pdf[Accessed: 8 November, 2011] 2011-11-15 37
  38. 38. Industry Analysis References (2)Hoovers Company Records (2011a) Daimler AG. NexisUk[Online] Available at:http://www.lexisnexis.com/uk/nexis/mungo/docEP.do?twi=0&format=GNBFI&cmdfmt=prthex&risb=21_T13203199888&docNo=1&cmd=2E43463B48565250524F3B444F432D49442823343137353823293B3D52435F4551305F2E434C2B3A434F4D504E592B3A48565250524F2B3A3D53535F234E4F444F43233B2E4655 [Accessed: 9 November, 2011]Hoovers Company Records (2011b) Volkswagen. NexisUk[Online] Available at:http://www.lexisnexis.com/uk/nexis/mungo/docEP.do?twi=0&format=GNBFI&cmdfmt=prthex&risb=21_T13203199888&docNo=1&cmd=2E43463B48565250524F3B444F432D49442823343138353323293B3D52435F4551305F2E434C2B3A434F4D504E592B3A48565250524F2B3A3D53535F234E4F444F43233B2E4655 [Accessed: 9 November, 2011]Hoovers Company Records (2011c) Volvo. NexisUk[Online] Available at:http://www.lexisnexis.com/uk/nexis/mungo/docEP.do?twi=0&format=GNBFI&cmdfmt=prthex&risb=21_T13203199888&docNo=1&cmd=2E43463B48565250524F3B444F432D49442823343138353423293B3D52435F4551305F2E434C2B3A434F4D504E592B3A48565250524F2B3A3D53535F234E4F444F43233B2E4655 [Accessed: 9 November, 2011]Liker, J. K., R. R. Kamath, S. N. Wasti, and M. Nagamachi (1996) ‘Supplier Involvement in Automotive Industry’.Mintel (2009) ‚Car Ownership and Purchasing in Europe - August 2009’ [Online] Available at:http://academic.mintel.com/sinatra/oxygen_academic/search_results/show&/display/id=475603/display/id=475603/display/id=475603/display/id=475603/display/id=476866#hit1 [Accessed: 8 November, 2011]Osiris (2011) Daimler Managerial Report. [Online] Available at: http://osiris.bvdep.com/version-2011104/cgi/template.dll?checkathens=1&kick=1&product=20&user=her.6148710033156812&pw=bloDVkxRmnKJKOs5Nc1Y%2bw%3d%3d [Accessed: 8 November, 2011]Peters, J. (2000) ‚Buyer Market Power and Innovative Activities‘. Review of Industrial Organization 16. pp. 13-38 [Online]Available at: http://www.springerlink.com/content/j5gj54822r082m64/fulltext.pdf [Accessed: 9 November, 2011]Sedgwick, D. (2011) ‘Suppliers praise BMW, Daimler. Paying for technology wins high survey marks’. Automotive News. 31October, 2011 [Online] Available at: http://www.autonews.com/apps/pbcs.dll/article?AID=/20111031/OEM01/310319835/1424[Accessed: 9 November, 2011] 2011-11-15 38
  39. 39. Industry AnalysisThank you!2011-11-15 39

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