MBA Assignment – Global Business Strategy (2004)

Global Business Strategy MBA Assignment – This paper discusses the impact of a merger between two motor giants taking Global Business Strategy into context. Contemporary business models are used and all material is referenced throughout. This assignment will prove very useful if you have an interest in Business Strategy. In May 1998, Germany’s Daimler and the US carmaker Chrysler merged, creating the world’s fifth largest car manufacturer, with combined revenues in the order of $130bn. Daimler’s strength lies in the European luxury car market, while Chrysler has a strong position in the US market, particularly with its sports utility vehicles (SUVs) and minivans. In some ways, the newly merged company has already proved a success. In 1999, for example, the new group brought cost savings of $1.4bn, which is forecasted to rise to $3bn in three years, through efforts such as joint purchasing, development and production projects.

Unlike recent auto industry mergers, which frequently involved the gobbling up of small or failing companies by more powerful rivals, the DaimlerChrysler deal involves two highly profitable companies, with combined net earnings of $5.7bn in 1997. Daimler-Benz has rebounded from losses in the early 1990s to post record profits, while Chrysler makes a larger profit per vehicle than any other auto manufacturer. The driving force behind the combination is the necessity to create ever larger globally based enterprises which can compete in all the major markets of the world, and especially in the three main centres of world capitalism; North America, Europe and Asia. Before the merger, Chrysler and Daimler-Benz were essentially regional producers, Chrysler with the third largest market share in North America, Daimler-Benz controlling the luxury market in Europe.

Everything was in place, each company came into the merger with a strong portfolio; each company viewed the other as an equally strong partner. Both automotive portfolios have very little overlap. Combining the strengths of two powerful, complementary automotive firms made for an outstandingly competitive, truly international corporation. This combination of two companies of relatively equal strength is particularly important in the international auto industry, where fewer and fewer firms are able go it alone in a global economy. The creation of DaimlerChrysler made for a robust corporation well positioned for the new century.

1: Background

2: World automotive market characteristics
Major changes in the global automotive industry
Recent technological developments in the automotive industry
Figure One: Disintermediation
Key players
Figure Two: Five-force analysis for the global motor industry
Bargaining Power of the Buyers
Bargaining Power of the Suppliers
Threat of New Entrants
Pressure from Substitutes

3: Stakeholder expectations
Figure Three: Stakeholders to a business
Figure Four: Stakeholders and their expectations

4: Weighing up mergers and acquisitions
Figure Five: Four possible ethical stances

5: Evaluation of the merger strategy
Figure Six: DaimlerChrysler European performance

6: Final thoughts

Global Business Strategy MBA Assignment

Global Business Strategy MBA Assignment

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