Daimler Chrysler SWOT Analysis

As the number two auto manufacturer in total revenues DaimlerChrysler has positioned itself as
an industry leader, with this come many strengths. The DaimlerChrysler umbrella covers many
well-known brands such as Dodge, Chrysler, Mercedes Benz, and Jeep. This means
DaimlerChrysler has strong brands that are recognizable in almost every part of the world.
Within these brands DaimlerChrysler also has wide variety of automobile products that span all
price ranges and model types, from economy cars to luxury models. Brands such as Jeep are
recognized worldwide for off-road and SUV vehicles, while Mercedes Benz is one of the highest
quality luxury car makers in the industry. DaimlerChrysler is even represented in the realm of
ultra luxury with its Maybach brand which competes directly with manufacturers such as Bentley
and Rolls Royce.

In the arena of American car makers the Chrysler brand stands out as a leading innovator in
vehicle design. Chrysler is well known for category breaking models such as the PT Cruiser and
Plymouth Prowler. The Dodge Viper is a vehicle that broke away from the mold of other
American sports cars to drive the imagination of car buyers, and increase the connection of style
and image with DaimlerChrysler vehicles.

The merger of Chrysler and Daimler Benz which created DaimlerChrysler gave the company a
large worldwide presence. This presence is a quality one because DaimlerChrysler is considered
to be one of most respected companies worldwide according to a Financial Times survey of
world corporate leaders. This presence is further increased by DaimlerChrysler's strategic
partnership with Japanese car maker Mitsubishi. This partnership gives DaimlerChrysler
presence in the Asian regions which is does not currently enjoy with its current stable of brands.
This partnership will not only allow for greater product visibility for DaimlerChrysler in one of
the largest automobile markets, but will also allow for sharing of technology between
DaimlerChrysler and Mitsubishi.

DaimlerChrysler is currently a leader in hydrogen fuel cell technology. Hydrogen, considered to

be the next big breakthrough in automobile engines, has the ability to revolutionize the industry.
If or when this is the case DaimlerChrysler's commitment to research and development of the
technology will help ensure the company remains on the top of the automotive world.

With all of the strengths that come with being a top auto manufacturer every company must also
face weaknesses that can arise from the current business landscape and DaimlerChrysler is not
immune to these shortcomings. As the automotive industry continues to move in the direction of
globalization it is important for manufacturers to be strongly represented in all large and
emerging world markets. Although DaimlerChrysler is well represented in the American and
European markets they are not strongly represented in the Asian markets. DaimlerChrysler has
no brands of its own that command significant market share in either the Japanese or emerging
Chinese markets. DaimlerChrysler's partial stake in Mitsubishi was supposed to be an answer to
this problem but current drops in Mitsubishi's market share accompanied by other problems has
left DaimlerChrysler's future investments in Mitsubishi uncertain, and more importantly with no
strong plan to compete in Asian markets.

Related to the problem of Asian representation is the reality that none of DaimlerChrysler's
brands are truly marketable to worldwide consumers. Brands such as Dodge and Chrysler are
strong in the US, but have had limited success in other markets. The Mercedes Benz brand is the
most recognizable world wide, but as a luxury car maker it is harder to market to a majority of
consumers in different markets. The Jeep brand is well known and respected throughout most
markets, but its appeal is limited to the specialized group of SUV and off-road buyers.

The growing use of hybrid engines could also cause problems for DaimlerChrysler. There
strategy to focus on the entirely new hydrogen technology has left them behind many other
major manufacturers in the development of hybrid technology. As other major car companies are
preparing to roll out hybrid options for many of there most popular models DaimlerChrysler does
not plan to do the same anytime soon. By hitching there wagon to hydrogen power and not trying
to capitalize on rising hybrid trends DaimlerChrysler could be missing out.

What has been billed as a merger between America's Chrysler and Germany's Daimler Benz has
turned out to be more of an acquisition of Chrysler by Daimler Benz. The result is that most top
managers of DaimlerChrysler are from Daimler Benz and many of the leaders of Chrysler choose
to leave or retire. Many have speculated this "brain-drain" of Chrysler executives could hurt the
innovative reputation of the American brands in DaimlerChrysler's portfolio of manufacturers.
Much of the operations of DaimlerChrysler have also been moved to Germany where current
wage rates and labor laws have made it hard for DaimlerChrysler to cut costs and bolster its
bottom line.

With the evolution and changing environment of the Automotive industry DaimlerChrysler has
many opportunities to increase its strengths and fix some weaknesses. With DaimlerChrysler's
current shortage of Asian market share there Jeep brand could be a bright spot. With the growing
trend of consumerism in China it is currently the fastest growing auto market in the world, and
the Chinese desire for all things American could provide DaimlerChrysler with a golden
opportunity. In Chinese surveys of the most sought after American brands in China, Jeep is in the
top 5. DaimlerChrysler has also recently inked deals to build manufacturing plants for Mercedes
Benz in Beijing, China. These recent developments provide DaimlerChrysler with more chances
to push its products into a hugely coveted consumer market.

The decision to focus on hydrogen power research and development could also bode well for
DaimlerChrysler if the current prices of oil and gas become a future standard. The high prices
will help to put more focus and energy into viable fuel alternatives which could push the demand
for hydrogen powered vehicles, as well as provide opportunities for government subsidies for
continuing advancement of the technology. As a leader in hydrogen power DaimlerChrysler is
poised to be a large benefactor of any of these scenarios.

Along with new opportunities come the inevitable threats and opportunity costs associated with
any course of action which have the ability to affect DaimlerChrysler.

A current major threat is the shaky alliance between DaimlerChrysler and Mitsubishi. The
current downturn of Mitsubishi has left DaimlerChrysler in a very vulnerable condition. If they
continue in the partnership and hope Mitsubishi can pull out of its slump DaimlerChrysler could
still face the consequences of not finding other ways to bolster presence in Asian markets even is
Mitsubishi does right the ship. Even worse if Mitsubishi continues to flounder DaimlerChrysler
may have to cut its losses and find itself even further behind other manufacturers in the race to
sure up some of the largest auto markets in the world.

Another great threat is due to DaimlerChrysler's decision to put all its eggs into the hydrogen
fuel basket. If the current trend of hybrid engines continues to catch on and grow throughout
world markets DaimlerChrysler's reluctance to follow suit could cause loss of market share to
rivals who offer better hybrid engines in more vehicle models. Even worse, if hydrogen proves
not to be a viable energy source in the near future than DaimlerChrysler would not be able to
profit from recent heavy investments in the technology and be faced with huge sunk and
opportunity costs.

DaimlerChrysler has embarked upon a strategy of becoming a world wide leader in the
automobile industry, representing all vehicle types across all world markets. This is summed up
by DaimlerChrysler's four-pillar strategy. The four pillars include: Global presence, Strong
Brands, Broad product range, and Technology leadership.

DaimlerChrysler, formed by a merger of the American Company Chrysler and the German
Daimler Benz in 1998, was instrumental in the achievement of many of these pillars.
DaimlerChrysler currently sells products in over 200 countries and manufacturing plants in 17.
DaimlerChrysler also has headquarters covering all major geographic regions on every continent
except Antarctica. After the merger DaimlerChrysler had ownership of several major car
manufacturers with certain geographic presence. Daimler Benz was one of Europe's largest car
manufacturers, while Chrysler was a leading American country. This gives DaimlerChrysler a
large presence in two of the largest auto markets in the world. They also choose to purchase a 30
percent stake in the Japanese Mitsubishi Motors as a way to penetrate the Japanese markets.
These three markets are the largest in the world and gives DaimlerChrysler a strong global
presence.

DaimlerChrysler also wished to produce strong brands of automobiles with broad product ranges
to be offered in these markets. DaimlerChrysler currently lays claim to passenger vehicle brands
such as Chrysler, Dodge, Jeep, Mercedes, Maybach, and Smart. They also have ownership of
Freightliner, which is one of the largest commercial truck producers in the world.
These brand names represent all vehicle types currently offered to consumers. From Dodge and
Chryslers cars and trucks covering all price ranges and styles to Mercedes' and Maybach's
representation in the luxury market. Even specialized vehicles are represented; Jeep is a top
producer of off-road and SUV vehicles, while the smaller Smart brand produces economical
urban vehicles for sale in Europe and the Freightliner brand gives DaimlerChrysler a strong share
of the market in the commercial shipping and transportation.

In the arena of Technology leadership DaimlerChrysler boasts that it is a world leader in the
development of hydrogen fuel cell powered automobiles. DaimlerChrysler hopes that its research
into the new power technology will result in affordable vehicles powered by the alternative fuel
source in the neat future. This Technology has the potential to be the next industry standard for
engines and DaimlerChrysler is heavily invested in assuring that if or when it is they will be
positioned to offer the best hydrogen engines available. They are also looking in the direction of
cleaner, more efficient diesel engines as an alternative to hybrid technology. DaimlerChrysler
believes that advances in diesel engines are superior to the improvements made by gas/electric
hybrids currently offered by many competitors. DaimlerChrysler that strong research into these
alternative power sources will facilitate their desire to be a technological leader in innovation
among other companies in the automobile manufacturing industry.

Not all strategies are implemented seamlessly and Daimler Chrysler is no exception to this. One
of Daimler Chrysler's biggest current problems is its weak market penetration in Asia. While
they do have a strategic partnership with Mitsubishi motors it is apparent that Mitsubishi isn't
fulfilling the high expectations Daimler Chrysler expected. Daimler Chrysler is already on the
right track with its plans to open manufacturing facilities in China, but a more immediate impact
might be needed to ensure DaimlerChrysler doesn't fall behind in the region. A more immediate
presence could be achieved through another strategic partner, specifically with one of the Korean
builders Daewoo or Hyundai. Both companies have successful small car divisions, which are a
need for DaimlerChrysler, and more importantly they come with distribution centers throughout
the Asian market. Both companies have been recently seeking a large partner which provides an
opportunity for DaimlerChrysler. The addition of a new Asian partner to the DaimlerChrysler
stable can prove to be a great advantage through the immediate presence DaimlerChrysler could
gain presence in the underrepresented Asian market, but it could also turn out to be a drawback.
By taking on another acquisition or strategic partner DaimlerChrysler could face the same
problems it is currently experiencing with Mitsubishi. By only being partners with another Asian
firm DaimlerChrysler would not have ultimate control of the partner firm leaving more of a
liability than if DaimlerChrysler opted to simply acquire of the company.

DaimlerChrysler could also hedge its bets on hydrogen engines by investing more in hybrid
technology to provide more immediate returns. DaimlerChrysler's resistance to go ahead with
full scale implementation of hybrid engines has come from a number of sources, most notably
their focus on hydrogen and a belief that other fuels, such as diesel, may hold greater promise
than hybrids. DaimlerChrysler believes that hybrid power is only an interim step until the before
mentioned technologies are realized. Nevertheless, if DaimlerChrysler's assertions about the
future of hydrogen power are incorrect they could face large consequences of not embracing
hybrid engines. To fill this gap DaimlerChrysler could purchase plans for hybrid engines to
hedge their bets of the upcoming market for more efficient fuels. Many manufacturers have
begun licensing their hybrid technologies to other manufacturers, and while this isn't as good as
DaimlerChrysler producing there own technology, it will allow them to introduce hybrid engines
in there own models quicker and not lose precious market share to rivals. This would be an
advantage for DaimlerChrysler because the promises of hydrogen power, while great, are still
many years away and the use of hybrid engines and technology is growing exponentially in the
present. However, DaimlerChrysler believes that more efficient Diesel technology is the better
near-term solution t increase fuel economy. If Daimler were to follow the crowd into hybrid
technology they could face a loss of investment in new diesel technologies that may well be a
better answer than current hybrid technologies.

Chrysler has a weak marketing position in the auto market so far. In order to improve the
company marketing position, it is recommended that Chrysler should take prompt actions to
improve the dealership policies and give more attentions to quality issues. Successfully resolving
these problems will help the company handle other issues better and create new competitive
advantages.

Strengths

1) Reputation for V-8 Hemi engine - Chrysler has been known as the lead of horsepower
race since 1951 when the company unveiled its V-8 Firepower engine, also called Hemi
engine. Hemi has been recognized as sign of powerful machine for over 50 years. For this
reason, Hemi was also Chrysler's profit machine. Though Chrysler announced to limit the
use of Hemi for its new products recently, the reputation that Hemi created for Chrysler
will be supportive to the company's auto engine initiatives.
2) Domination of minivan market - Chrysler has been the dominant of minivan market for
over 25 years. Although the auto market has shrunk recently and many players have tried
to expand their market share, Chrysler and Dodge still hold over 40% share of U.S.
minivan market. This position would bring the company advantages over the competitors
if the Chrysler gives more focus on this market.
3) Focus on customer - Chrysler is the first auto company having Chief Customer Officer.
Even though customer care was not a strong point of Chrysler before, the company has
give more focus on customer care by appoint Douglas Betts to the Chief Customer
Officer. This move is a significant improvement in customer services and able to create
great competitive advantage.

Weaknesses
 1) Small and declining market share - Despite the dominant position in minivan market,
Chrysler's overall market share is still small and declining. In 2009, the company's market
share was only 9.2% (The Wall Street Journal, 2010), dropped from 11% of the previous
year. Though the company gained a bit improvement in market share by September 2010
(9.5%, The Wall Street Journal, 2010), this is still too small in comparison with other
automakers.
2) Management problems - It is said that the merger with Daimler in 1998 had made
Chrysler "a German-inspired mess" before Cerberus Capital Management acquired it in
2007. Additionally, analysts notice that the new owner does not have experience in auto
industry and "doesn't want to be in the auto business; it is in the money business". The
acquisition by Cerberus is thought to be "the beginning of the end of Chrysler as a
recognizable automaking entity altogether".
3) Quality problems - Chrysler's vehicles usually present in the list of worst vehicles ranked
by Consumer Reports and J.D. Power. This will definitely have negative affects on the
customer's buying decision.
4) Marketing - Chrysler has a weak marketing position in the auto market so far. In order to
improve the company marketing position, it is recommended that Chrysler should take
prompt actions to improve the dealership policies and give more attentions to quality
issues. Successfully resolving these problems will help the company handle other issues
better and create new competitive advantages.

Opportunities

1) Partnership with Fiat - The strategic partnership with Fiat would create opportunities for
Chrysler. Though minivan and SUV are Chrysler's strong points, Chrysler needs to have
smaller car in order to penetrate to South America or Asia market. Whereas, Fiat is well
know for its smaller cars. Thus, the partnership with Fiat would be helpful for Chrysler to
produce small car for new markets.
2) Increasing demand for green cars - The green car market is on the rise and forecast to top
3 million by 2015, of which U.S. market will account for 55%. As manufacturing green
cars is one of the Chrysler's focuses, this will be a great opportunity for the company to
improve its position.

Threats

1) Disappointed dealers - Under the control of Daimler, the dealer consolidation initiative
"had drained their passion for selling cars" because they had to "take more products than
they could possibly sell". The new owner has not resolved the problem and this would be
a big obstacle for the company's business.
2) Reliance on U.S. market - Chrysler is known to reliant on U.S. market as more than 90%
of its sales comes from North America. Therefore, the company would be very
vulnerable with the declining demand and fierce competition in this market