daimler - strategic management
DESCRIPTION
TRANSCRIPT
2011-11-15
Automobile Industry: Daimler AGIndustry Analysis
Presentation held by:
Evelina Baziuk, Polina Gribakov, Gamze Saba, Weronika
Salach
Industry Analysis
Our Presentation
1. Introduction:
• History and financial information
2. Industry Analysis:
• PESTLE
• 5 Forces Framework
• Opportunities and Threats
3. Strategic proposal for Daimler AG
2
Industry Analysis
History
• 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 reach
Source: www.daimler.com 3
Industry Analysis
Creating Value Added
Daimler’s vision:
to provide first-class service to their dealers and customers
and create additional value.
Source: www.daimler.com 4
Industry Analysis
Business Performance (2010)
5
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 billion
Source: www.daimler.com
Industry Analysis
6Source: www.daimler.com
Industry Analysis
Shareholders Structure
7Source: www.daimler.com
Industry Analysis
8
• 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
Current trends in German automobile industry
Industry Analysis
9
• 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
German Automobile Industry in numbers
Industry Analysis
10
• Number of competitors: 6 companies
• Homogeneity of products: homogeneous
• Cost of entry: very costly
Industry Structure (S-C-P Model)
OLYGOPOLY
Expected firm performance: Competitive Advantage
Industry Analysis
German market share of car manufacturers (%)
VW, 21%
Mercedes (Daimler), 9.6%
BMW/Mini, 9.1%
Others, 60.3%
Source: Adapted from Bekker (2011)11
Industry Analysis
Brand Architecture
• Mercedes-Benz Cars
• Daimler Trucks
• Mercedes-Benz Vans
• Daimler Buses
• Daimler Financial Services
http://www.daimler.com/brands-and-products/our-brands 12
Industry AnalysisTarget Groups
B2C
• Male/Female
• 30-65 years
• Middle or high income
level
• Conservative people who
love comfort
B2B
• Companies of different size
and industry
13
Industry Analysis
14
EXTERNAL ENVIRONMENTPESTEL Model.
Environmental
Industry Analysis
15
• 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
POLITICALPESTEL
Industry Analysis
16
• Foreign currency fluctuations
• Emerging markets (BRIC) – economies of scale
• Continuing globalization and consolidation
• Observed accelerated increase in car sales/market growth
ECONOMICPESTEL
Industry Analysis
17
• Popularity of eco-friendly/green products
• Growing affluence – ownership of more than one car
• Comfort and product quality demand
• A car = status object
SOCIO-CULTURALPESTEL
Industry Analysis
18
• HEV – hybrid electric vehicles
• All-electric vehicles
• F-cell: fuel-cell vehicles
TECHNOLOGICALPESTEL
Industry Analysis
19
• Stringent environmental regulations
� (2005) Euro 4, (2009) Euro 5, possibly Euro 6 in 2014
• Increased emissions
• Rising energy costs
ENVIRONMENTALPESTEL
Industry Analysis
20
• The ELV directive (End-of-life vehicles) of EC – hazardous substances
reduction
• Anti-bribery provisions
• Anti-trust investigation of EC
LEGALPESTEL
Industry Analysis
Source: Adapted from Porter (2008) 21
Rivalry among existing
competitors
Bargaining Power of Suppliers
1.Threat of New
Entrants
Bargaining Power of Buyers
Threat of Substitute/
Complimentary Goods
Business Environment Analysis
Industry Analysis
1. Large Economies of Scale:
• Mature Industry (Trade & Invest, 2011)
• Growth through acquisitions (Corswant & Fredriksson, 2002)
2. Product Differentiation:
• Brand recognition is highly valued by consumers (Hanzaee & Yazd, 2010)
• Customers are loyal to national manufacturers (Mintel, 2009)
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)
High Barriers of Entry
Rivalry among existing
competitors
1.Threat of New Entrants
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)
Some Industry Suppliers
•Exterior: Polyplex, Switzerland
•Interior: TAKATA PETRI, Japan
•Mechatronics: Mitsubishi, Japan
•Chassis: Kirchhoff Witte, Germany
•Powertrain: ElringKlinger, Germany
Bargaining power of suppliers is very low
Rivalry among existing
competitors
2. Bargaining Power of Suppliers
Industry Analysis
Buyer Power
• Almost all production output is
purchased, so industry depends on
buyers (Peters, 2000)
• Rising demand for high technology
lead to large investment in R&D
(Sedgwick, 2011)
The bargaining power of the buyers is moderately high
Rivalry among existing
competitors
3.Bargaining Power of
Buyers
Industry Analysis
25
Rivalry among existing
competitors
4.Threat of Substitute/
Complimentary Goods
Substitutes:
•DB – S Bahn Trains
•BVG – U Bahn Trains
•Storck Bicycle GmbH - Bicycles
Complimentary Products:
•BP - Petrol
•Kumho, Continental - Tyres
Not Many Substitutes for Automobiles
Source: Google (2011)
Industry Analysis
Key CompetitorsBMW
• Competes in car manufacturing and financial services
sectors;
• MINI Exclusivity
VW
• Reported to be the No 1 carmaker in Europe
Volvo
• 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
Highly Competitive Market
Industry Analysis
27
MATURE INDUSTRY:
1. Product refinement
2. Investment in service quality
3. Process innovation
NEW OPPORTUNITIESOpportunities from Industry Structure
Industry Analysis
28
1. Development in the BRIC countries
2. Growing demand for green technologies
3. Daimler and Reanult-Nissan cooperation
4. Global truck manufacturing
NEW OPPORTUNITIESEnvironmental Opportunities
Industry Analysis
Source: Datamonitor 201129
…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 20.0
OPPORTUNITIES Development in the BRIC countriesBrasil, Russia, India and China…
Industry Analysis
Photo: www3.mercedes-benz.com30
Mercedes-Benz S 400
BlueHybrid
• Saving fuel
• Reducing emissions
• ZERO emission
OPPORTUNITIESGrowing demand for green technologiesHybrid-electronic technology (HEV).
Industry Analysis
Photo: www3.mercedes-benz.com31
• Emission-free driving
• Reducing fuel consumption and CO2 emissions
• Lightweight components
• Cleaner engines
• 128 BlueEFFICIENCY vehicles
OPPORTUNITIESBlue EFFICIENCY
Industry Analysis
Photo: www3.mercedes-benz.com32
A hydrogen fuel cell vehicle
OPPORTUNITIESMercedes-Benz B-Class “F-Cell” Technology
Industry Analysis
Photo: www.japanmarkt.de33
• Smart for two
• Expanding the Smart®
family
• Green technologies
• Increase in volumes
(economies of scale)
OPPORTUNITIES Daimler and Renault-Nissan cooperation.
Industry Analysis
Photo: www.daimler.com34
• Accelerated growth 2010-
2015
• 17.2 million units (2010) →
26.5 million units (2015)
• Enhancing market share
OPPORTUNITIES Global truck manufacturing.
Industry Analysis
Source: Datamonitor (2011)35
Strengths Weaknesses
� Strong brand recognition and
market share
� Extensive production and sales
network
� Strong focus on research and
development
� Large scale of operations
� Product recalls
� Legal proceedings likely to
hamper reputation
� Underfunded pension
obligations
� Heavy debt could limit growth
Strengths and Weaknesses
Industry Analysis
2011-11-15 36
Strategic 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.
Industry Analysis
2011-11-15 37
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, p16-17
Component Design: Are there Really Large US Japan Differences?’, Research Policy, 25, 59–89
Corswant, F. & Fredriksson, P. (2002) ‘Sourcing trends in the car industry: A Survey of car manufacturers’ and suppliers’ strategies
and 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-Quarter
2007), 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_September2
010_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 behavior
factors; customer value and behavioral intentions‘. African Journal of Business Management 4(17) pp. 3775-3784 [Online] Available
at: http://www.academicjournals.org/ajbm/pdf/pdf2010/4Dec/Hanzaee%20and%20Yazd.pdf[Accessed: 8 November, 2011]
Industry Analysis
2011-11-15 38
References (2)Hoover's 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=2E43463B48565250524F3B444F432D49442823343137353823293B3D52435F4551305F2E434C2B3A434F4D504E5
92B3A48565250524F2B3A3D53535F234E4F444F43233B2E4655 [Accessed: 9 November, 2011]
Hoover's 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=2E43463B48565250524F3B444F432D49442823343138353323293B3D52435F4551305F2E434C2B3A434F4D504E5
92B3A48565250524F2B3A3D53535F234E4F444F43233B2E4655 [Accessed: 9 November, 2011]
Hoover's 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=2E43463B48565250524F3B444F432D49442823343138353423293B3D52435F4551305F2E434C2B3A434F4D504E5
92B3A48565250524F2B3A3D53535F234E4F444F43233B2E4655 [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=4
75603/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. 31
October, 2011 [Online] Available at: http://www.autonews.com/apps/pbcs.dll/article?AID=/20111031/OEM01/310319835/1424
[Accessed: 9 November, 2011]
Industry Analysis
2011-11-15 39
Thank you!