Application of the General Electric Model to the strategic business units of the DaimlerChrysler AG

Inhalt

1. Conceptual Formulation
1.1. About DaimlerChrysler
1.2. Division into strategic business units

2. Analysis in accordance with the General Electric Model
2.1. Assessment of the Mercedes Car Group SBUs
2.1.1. Luxury Cars
2.1.2. C-class/SLK/CLK
2.2. Assessment of the Chrysler Group SBUs
2.2.1. Chrysler Group passenger vehicles
2.2.2. Chrysler Group SUVs
2.3. Assessment of the Commercial Vehicles Division SBUs
2.3.1. DaimlerChrysler Group trucks
2.3.1. DaimlerChrysler Group vans

3. Recommendations
3.1. Classification in the GE-Portfolio
3.2. Growth SBUs
3.3. Borderline SBUs

Bibliography

1. Conceptual Formulation

1.1. About DaimlerChrysler

When Gottlieb Daimler and Karl Benz built their first car in 1886, neither of them would have imagined what a global company would arisen from their invention. The brands Maybach, Mercedes Benz, and Smart are known worldwide. They all belong to the subdivision Mercedes Car Group. In 1998, Daimler-Benz AG merged with the American Chrysler Corporation to form DaimlerChrysler AG. Since then, the well known brands Dodge, Chrysler, and Jeep were added as to the DaimlerChrysler AG as the Chrysler Group division. DaimlerChrysler bought Fuso, the truck division of the Japanese Mitsubishi Motors Company, for its Commercial Vehicles Division in March 2004. Also, Mitsubishi is DaimlerChrysler’s strategic partner and has already developed new engines and compact cars in several joint ventures.

The company’s Commercial Vehicles Division also includes well-established brands such as Setra (buses), Freightliner (trucks), Sterling Trucks, Western Star Trucks, as well as Mercedes-Benz buses and trucks. Not only does DaimlerChrysler AG offer vehicles but it also offers various services through its DaimlerChrysler Services and DaimlerChrysler Bank divisions. The former offers services like insurance services or toll collection solutions while the latter specializes in leasing, financing, financial investment, and even offers three different VISA credit cards.

1.2. Division into strategic business units

A strategic business unit is distinguishable from other business because it serves a defined external market where management can conduct strategic planning in relation to products and markets. Additionally, it has its own business strategy and objectives.

The DaimlerChrysler AG is divided into four different divisions: Mercedes Car Group, Chrysler Group, Commercial Vehicles Division, and DaimlerChrysler Services. Within these divisions, certain brands, for example Smart, remain independent. Other brands are responsible to another brand management, for example Maybach, which is responsible to Mercedes-Benz.

The first SBU in the DaimlerChrysler AG contains Maybach and Mercedes Benz luxury cars. Maybach and Mercedes-Benz are both luxury car manufacturer. Maybach is under the management of Mercedes-Benz; therefore, it is possible to take this brand into this SBU. The difference between Maybach cars and high end Mercedes-Benz cars is that Maybach cars are not produced by using assembly lines, robots, and other machinery; they are entirely handmade. Through a computer simulation the customer can pick out his / her perfect car and follow it through the whole manufacturing process. Also, Mercedes-Benz offers high-end vehicles like the S-class, the E-class, and the CLS with any imaginable extras. However, these cars are mass produced.

The second strategic business unit contains upper middle segment cars like the C-class, SLK and CLK. The target group for this segment are customers with upper middle to high income who want to drive a prestigious car of good quality. However, the price structure is still higher than that of DaimlerChrysler’s main competitors in this segment, for example BMW and Audi.

The A-class forms a strategic business unit in itself. With this car and its many variants DaimlerChrysler targets mainly young customers who want to have a Mercedes as their first

car. As for successive car purchases, this consumer group is more likely to choose another Mercedes from the huge variety DaimlerChrysler offers than another brand.

The fourth SBU within the Mercedes Car Group is Smart. Smart has its own management and offers small fun cars for young consumers. No matter if the customer goes for the regular Smart (a two-seater), the Smart For Four (for four passengers), or the Smart Roadster (a sporty two-seater), s/he always has the opportunity to order the car in his/her two favorite colors and to choose from a variety of different engines. As an additional feature, all models, except the Smart For Four, are also offered as convertibles. The buyer can go to the nearest Smart Center and pick out a Smart from a giant glass shelf or order it from a catalog if the combination is not available. Currently, DaimlerChrysler is about to introduce Smart in Canada, whereas Smart cars are still not available in the USA.

Mercedes Benz SUVs, or sport utility vehicles, present the fifth SBU within the Mercedes Car Group. Offered vehicles are all models of the Mercedes M- and G-class. The fifth SBU competes with the company’s sixth, the Chrysler Group’s SUV models, like the Dodge Durango or the whole Jeep product range, for example the Jeep Cherokee, Grand Cherokee, or the Jeep Wrangler. The seventh BSU is Chrysler passenger vehicles. This includes passenger cars, like the Dodge Neon and Stratus, or the Chrysler Crossfire. Minivans, like the Dodge Caravan and the Chrysler Voyager, form the eighth SBU. Light-duty commercial vehicles, like pickup trucks, represent the ninth and last SBU in DaimlerChrysler’s passenger vehicles sector.

The third DaimlerChrysler division is the Commercial Vehicles Division, as already stated above. This leads to two strategic business units in this sector: buses & trucks. The SBU

buses consists of Setra, a sole bus producer, and Fuso, which formerly belonged to Mitsubishi, as well as the bus producing part of the Mercedes-Benz subdivision belong to this SBU. DaimlerChrysler also counts mini buses and vans manufactured by Mercedes-Benz among the Commercial Vehicles Division and not among the minivan segment, unlike it is done with minivans of the Chrysler Group. The truck SBU consists of Mercedes Benz trucks, as well as the exclusive truck producers Freightliner, Sterling Trucks, Western Star Trucks, and Fuso’s truck producing subdivision.

The last division of the Daimler Chrysler Group is the DaimlerChrysler Services division. It can be split up into the strategic business units DaimlerChrysler Services and DaimlerChrysler Bank. The core duties of both SBUs have already been explained under point 1.1.

2. Analysis in accordance with the General Electric Model

All SBUs now have to be analyzed and categorized according to the GE Matrix concerning market attractiveness and business strengths. The former represents the external opportunities the company has, whereas the latter represents its internal strengths. Criteria for each opportunity or strength apply individually to each SBU and may include the competitive situation (opportunity), the company’s reputation (strength), the experience in the company’s manufacturing process (strength), and the quality of the company’s products offered (strength). On the one hand, if a market is not attractive enough, that means if there are not enough opportunities for a company to enter it or remain there, it is unlikely to pursue a share in this market in the future. On the other hand, if a company does not possess enough strengths to enter, or remain in this market, it will not succeed in this market. For the

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