You are on page 1of 4

RESTRUCTURING OF DAIMLER-BENZ

Summary:
Daimler-Benz is an organization with 300,00 employees worldwide and consists of 4 groups: • Mercedez Benz : By far their biggest and most successful group with 200,000 employees. Deals in passenger cars and commercial vehicles. • AEG-Daimler Benz : Deals in rail systems, micro electronics, automation, heavy diesel engines. • Aerospace Group: It’s a part of the aircraft business. Deals in space, defence, civil and propulsion systems. • InterServices: Provides financial services, insurance brokerage, real estate, mobile communications, marketing and trading.

In 1995-1996 there was a need to refocus on what the company could do best. It was clear that their strengths were in car manufacturing, truck business and railroad sector. Mercedez benz had a strong competitive position with its cars and trucks in Europe, North America and Latin America. While the vans were doing well in Europe and buses, in Latin America. After this analysis, they decided that globalization and development of new product segments would help them grow. In 1995, they went

AEG was into robotics. but this reduces the ability to focus on every unit. weak link of the business gets unnoticed. Every unit would work on its own and behave like Daimler-Benz and not as a branch. create a strong base for itself and then diversify. In 1997. The minor problem was exposure to currency fluctuations. The reasons could be many. It seemed like one head unit couldn’t keep a tab of the operations of its other entities spread across the globe. It was also designed to promote cooperation. on a periodical basis. Even though they’ve adopted a decentralized approach. Hence. The organization should find its profit making entity. they now aimed at maximizing medium and long term profitability instead of short term profitability. Daimler-Benz realized from the mistakes made in the past and chose to correct its mistakes. were cut off. one will realize that the main problem area had to be an overdose of diversification. One cannot diversify overnight. Problem Areas: After reading the case. automation. The loss making units were pulling the whole organization down. rails. Daimler-Benz lost its market share as it was doing too many things at one time. they approached a decentralized structure. Its finances and reports should be looked into. extract as much profit as it can. Like no link between each sub-division. shortterm profitability leading to long term loss. Diversification into the world is good. AEG and Fokker. the organizational structure was decentralized and simplified so that decisions could be made faster. Their organization structure was centralized. Daimler-Benz wanted to capture these . Analysis: The company wanted to be leaders in every sphere of the manufacturing business but were completely let down.through huge losses due to currency fluctuations and blurring of the company’s image due to diversification. Therefore. the unprofitable arms of Daimler-Benz. This is what actually led to the losses. To achieve this aim of reduced costs and increased profitability. Mercedez-Benz was integrated into Daimler-Benz and chief Helmut Werner resigned from the company. the head office must keep a tab on the happenings of the different branches. It was difficult for them to focus on the important areas of the organization. All of this ate into profits. Hence. Therefore the various groups must work autonomously so that Daimler-Benz makes a name for itself worldwide. etc. the board was restructured. Daimler-Benz never wanted to restrict itself only to manufacturing.

Daimler-Benz wanted to acquire superiority in that field too. They should try tapping markets other than Europe and America. Promotion of entrepreneurial spirit is important. China and Japan. the clients from their other groups.markets also and emerge as a leader. They had a ready made customer base to deal with. Also. • • New Organisation Structure: . maybe since all other companies were venturing into Aerospace. set an industry there and make Mercedes-Benz affordable to the nationals. The various decisions that Jurgen Schrempp can take are as follows: • Decentralization is a key decision that can help save Daimler-Benz. Every employee should be accountable to himself. The reasons as to why they ventured into the finance sector could be because they could now get a regular inflow of cash. They could head to Asia. Globalization will help them grow in terms of sales and profitability. Each unit should have their own goals and targets. Daimler-Benz also ventured into the finance sector with its InterServices arm. Reward and recognition programs should be followed.