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The automobile industry is one of the most interesting business sectors in the global environment for analysis. The traditional small Japanese cars are now supplemented by Japanese luxury models, such as Lexus and Infinity, to compete with European cars made by BMW and Mercedes. The Japanese Toyota and Nissan companies not only are targeting luxury car markets in the USA, but also in Europe. Fearing that a "Fortress Europe" may evolve from the European Community Programme 1992 (in short EC 1992), the Japanese strategy is to establish themselves in the European market by setting up manufacturing plants, especially in England where the former Japanese-friendly Thatcher government encouraged such investments 1!. One interesting question is how European carmakers will respond to the Japanese threat.
The purpose of this article is to analyse Daimler-Benz, renowned for its Mercedes-Benz luxury cars, by using the TOWS Matrix for developing strategies that systematically integrate the threats (T) and opportunities (O) in the external environment with the internal weaknesses (W) and especially strengths (S) of the firm. Daimler-Benz has been selected because its Mercedes cars are known worldwide for engineering excellence. Yet, this firm will face fierce competition from Japanese carmakers. In addition, this traditional car company has been undergoing dramatic changes, venturing into non-defence and defence electronic gear, consumer goods and aerospace. However, these businesses will be mentioned only briefly. This article will introduce a strategic planning model and the TOWS Matrix for the analysis of critical issues faced by Daimler.
STRATEGY FORMULATION
Conceptually, strategy formulation is simple: just analyse the current and expected future environment, determine the direction of the firm, and develop the means for achieving the end. In reality, however, this is a very complex process, especially when applied to a company as diversified as Daimler-Benz. The strategy formulation process model, shown in Figure 1, will aid this analysis and provide the framework for the discussion. (Figure 1 omitted) Thus, the typical steps in strategic planning are as follows:
(1) Identifying the various organizational inputs, such as people, capital, managerial skills, technical skills, and the goal inputs of stakeholders such as stockholders, employees, suppliers, community, governments and, of course, customers.
(2) Preparing the enterprise profile.
(3) Clarifying the orientation of managers, especially top managers.
(4) Determining the...