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Essay / Research Paper Abstract
This 5 page paper discusses three strategic issues this company faces – declining sales, confusing data, and conflict between the two major divisions. Data are included. 3 illustrations. Bibliography lists 7 sources.
Page Count:
5 pages (~225 words per page)
File: MM12_PGdmchr.rtf
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Automakers have used a variety of incentives such as zero percent financing and even offering no payments for one year but sales are still in a slump (US Business Reporter,
2002). Further, the big three are losing a large chunk of their market share in the light truck vehicle market to Toyota and Honda (US Business Reporter, 2002). DaimlerChrysler, the
third largest carmaker in sales behind General Motors and Ford, with sales in more than 200 countries, has experienced plummeting sales resulting in massive layoffs (US Business Reporter, 2002, Hoovers,
2002; DaimlerChrysler, 2002). Furthermore, there is constant friction between Daimlers home office and the Chrysler unit (US Business Reporter, 2002). Acquisitions, such as Daimlers acquisition of Chrysler and investments in
other companies (Daimler owns 37.3 percent of Mitsubishi and 10 percent of Hyundai Motor), has eroded Daimlers financial resources making it even more difficult to withstand the current economic slump
(US Business Reporter, 2002; Hoovers, 2002). The following table illustrates DaimlerChryslers declining sales. (US$ millions) 2001 2000 1999 Revenue $136,256.0 $152,446.0 $151,035.0 Gross Profit $34,542.0 $38,673.0 $41,404.0 Gross Profit Margin
25.4% 25.4% 27.4% Total Net Income ($590.0) $7,411.0 $5,785.0 Net Profit Margin (10.6%) 4.9% 3.8% (Source: Hoovers, 2002). In 2001, DaimlerChrysler announced its target operating profit for 2002 was
$5 billion (Business Week Online, 2002). In February 2002, the company announced it would fall short of that target by 28 percent, or $1.4 billion (Business Week Online, 2002). The
company has faced slow growth and declining sales in both the light truck divisions and the large luxury car divisions but they are realizing good sales in the smaller size
Mercedes models (Business Week Online, 2002). Another fact is that DaimlerChrysler is offering larger incentives than the other Automakers - their average is $2,411 per vehicle compared to an industry
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