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Daimler-Benz's Move towards the Next Century
WITH THE TOWS MATRIX Heinz Weihrich

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 Nissancompanies 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 suchinvestments1. 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 mentionedonly briefly. This article will introduce a strategic planning model and the TOWS Matrix for the analysis of critical issues faced by Daimler.

European Business Review  Heinz Weihrich

1

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 theend. 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. Thus, the typical steps in strategic planning are as follows: 1) Identifying the various organizational inputs, such as people, capital, managerialskills, 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 purpose and major objectives of the enterprise. 5) Identifying the present and future external environment. Thisrequires an analysis of the enterprise's threats and opportunities. 6) Preparing a resource audit with the focus on the firm's internal weaknesses and strengths. 7) Developing alternative strategies, tactics and other actions. 8) Evaluating the various strategies and making strategic choices. 9) Testing the strategy at various stages for consistency. 10) Preparing contingency plans. 11) Although notdirectly a part of the formulation of the strategy, the preparation of medium- and shortrange plans as well as the provisions for strategy implementation and control must also be considered and are shown by broken lines in Figure 1.2

Top management orientation

Present external environment

External threats and opportunities

Mediumrange planning

Inputs People Capital Managerial skillsTechnical skills

Short-range planning Enterprise profile Forecast of future environment Alternative strategies Evaluation and strategic choice Implementation

Goals of claimants

Purpose and major objectives of the enterprise

Resource audit

Internal weaknesses and strengths

Control

Consistency testing Contingency planning Source: [2] Feedback

Figure 1. Strategic Planning...
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