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Authors: Jutta Fritsch (Technische Universitat Dresden); A Topfer (Technische Universitat Dresden); O Bialowons (Technische Universitat Dresden); R Friedwagner (Technische Universitat Dresden); R Sauer (Technische Universitat Dresden)
Published in: 1999
Length: 21 pages
Data source: Field research

Abstract

This is the first of a three-case series (399-024-1 to 399-026-1). In the ten years from 1985 to 1995, the well-known German motor vehicle manufacturer Daimler-Benz, transformed itself through a vast number of acquisitions into a large international industrial group. The purpose of all the acquisitions was to implement the Vision of an integrated industrial group, with its CEO Reuter as the spiritual progenitor of this strategy. Access to new markets and key technologies offering good prospects for growth and profits was to reduce dependence on the motor vehicles sector, while at the same time distributing the group''s profits between a number of business areas. This was to be achieved by the integrated exploitation of various technologies available within the group and the resultant synergies. In May 1995, Reuter passed over the Chairmanship to Jurgen E Schrempp. Huge losses of earning had caused the Vision to be seen in a different light. This case is intended to provide an overview of Schrempp''s strategic approach and clarify his criteria for success. The strict but clear policy of only permitting the group portfolio to contain businesses that both fitted in with his change of emphasis towards a group that was oriented around the transport of passengers and goods and associated services and were also capable of remaining profitable on a permanent basis resulted in a sustained process of restructuring. The first indication of this was provided by the restructuring of the group headquarters, which were over-large in comparison with those of other big international groups and gave rise to considerable costs. In a strategic filtering process, the Board of Management subjected all 35 business units to an intensive examination in order to determine their profitability, core skills and strategic fit and in so doing to increase the competitiveness and value of the group. The resulting portfolio streamlining reduced activities to 23 business units.
Location:
Industry:
Size:
Large
Other setting(s):
1995-1997

About

Abstract

This is the first of a three-case series (399-024-1 to 399-026-1). In the ten years from 1985 to 1995, the well-known German motor vehicle manufacturer Daimler-Benz, transformed itself through a vast number of acquisitions into a large international industrial group. The purpose of all the acquisitions was to implement the Vision of an integrated industrial group, with its CEO Reuter as the spiritual progenitor of this strategy. Access to new markets and key technologies offering good prospects for growth and profits was to reduce dependence on the motor vehicles sector, while at the same time distributing the group''s profits between a number of business areas. This was to be achieved by the integrated exploitation of various technologies available within the group and the resultant synergies. In May 1995, Reuter passed over the Chairmanship to Jurgen E Schrempp. Huge losses of earning had caused the Vision to be seen in a different light. This case is intended to provide an overview of Schrempp''s strategic approach and clarify his criteria for success. The strict but clear policy of only permitting the group portfolio to contain businesses that both fitted in with his change of emphasis towards a group that was oriented around the transport of passengers and goods and associated services and were also capable of remaining profitable on a permanent basis resulted in a sustained process of restructuring. The first indication of this was provided by the restructuring of the group headquarters, which were over-large in comparison with those of other big international groups and gave rise to considerable costs. In a strategic filtering process, the Board of Management subjected all 35 business units to an intensive examination in order to determine their profitability, core skills and strategic fit and in so doing to increase the competitiveness and value of the group. The resulting portfolio streamlining reduced activities to 23 business units.

Settings

Location:
Industry:
Size:
Large
Other setting(s):
1995-1997

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