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Autor: anton 20 June 2011
Words: 3175 | Pages: 13
The Core Competencies Of Daimler Chrysler
INTRODUCTION: Theory and Principles
In 2002 companies will continue to grow and become market leaders only if there ability to examine the companies core competencies by identifying, cultivating, and exploiting these competencies continues now and beyond into the future. Failure to do so could be catastrophic for even the most powerful of companies, not in the short run but over time competitors will get ahead and the technology gap is so significant in core competencies that these corporations will never be able to catch up. That is why as we progress into the 21st century core competencies of a company is what is going to keep the company competitive and ahead of the rest, and on the brink of technological breakthroughs in their specified area. In this new-economy world, where companies compete on the basis of core competencies and relationships, human resources (meaning a skilled and knowledgeable workforce) will emerge as a key source of competitive advantage. Core competencies, by definition, are "knowledge sets and technical skill sets," (Vicere, 2001) which is "the collective learning of the company as a whole" (Prahalad & Hamel, 1990). Thus, core competencies of a company will only get stronger as application or the sharing of ideas and or poaching of personnel enhances them. Just as easily "core competencies can also diminish if they are not being applied or shared within a company relating to Strategic Business Units (SBU)" (Kotler, Armstrong, Brown & Adam, 1998). Strategic alliances between companies is emerging, and this encompasses the merging of two companies core competencies and producing core competence, core products and end products which no other company can rival, thus producing technological breakthroughs which previously seemed impossible.
The goal of core competencies is "to build world leadership in design and development of a particular class of product functionality" (Bradmore, Joy, Kimberley, & Walker, 1997). Having advantages and control over core products is critical for several reasons. A dominant position in core competencies and core products enables a company "to shape the evolution of applications and end markets" (Jain, 2000). Strategic core products born from the evolution of core competencies leads companies to economies of scale and scope. It should be noted that cultivating core competencies does not necessarily mean spending millions and millions on research and development, rather "core competency is: co-ordination of production skills, integrating technologies, organisation of work, delivery of value, communication, involvement and commitment to working across organisational boundaries" (Jain, 2000). In order for a company to be seen with a futuristic outlook and on the brink of technological breakthroughs a company would have to be the leader at each level meaning "1. Core competency, 2. Critical components and 3. End products," (Prahalad & Hamel, 1990) only then can it distinguish itself from it competitors as a market leader.
CASE STUDY: DAIMLERCHRYSLER
Daimler Chrysler is one of the world's leading automotive, transportation and services companies. Its passenger car brands include "Maybach, Mercedes-Benz, Chrysler, JeepÐ’Â®, Dodge and smart. Commercial vehicles are produced under the Mercedes-Benz, Freightliner, Sterling, Western Star, Setra, Thomas Built Buses, Orion and American LaFrance brands. With 372,500 employees, Daimler Chrysler achieved revenues of EUR 152.9 billion ($136.1 billion U.S) in 2001" (www.daimlerchrysler.com). Daimler Chrysler today has a global workforce, a global shareholder base, a global brand awareness and a global outlook. Daimler Chrysler's strategy rests on four pillars: Global Presence, Strong Brands, Broad Product Range, and Technology Leadership" (www.daimlerchrysler.com).
Daimler Chrysler has changed a great deal Ð’â€“ from wide-ranging diversification to fully concentrating on the development, manufacture and sale of the world's leading automobiles. The aim has been clearly stated: "Daimler Chrysler wants to become the number one automobile manufacturer in the world through continuous and economically sensible growth" (www.daimlerchrysler.com). The biggest challenge in the coming years will be to work with the considerable potential for growth and profit of new technologies and growing markets. "The success of Daimler Chrysler is based on strong brands, efficient processes and innovative technologies" (www.daimlerchrysler.com). However, it is above all the long years of experience and passion for building the best passenger cars and commercial vehicles for its customers that give Daimler Chrysler the competitive edge on the international markets. Daimler Chrysler has consistently increased its focus on passenger cars and commercial vehicles. To this end the corporation has sold off numerous business units outside the core area of the worldwide automotive business.
DaimlerChrysler stands for one of the most innovative automotive manufacturers in the world. No other industry leader and technological pacemaker has played a greater role in shaping the development of the car, and none is shaping its future with such assurance. Of course, "the success of a company has a lot to do with the people who work for it and manage it" (Lehmann & Winer, 1996). "Innovation has been at the heart of the Daimler Chrysler brand from the earliest times. Its engineers have made history with a string of technical innovations, which steadily advanced frontiers, making vehicles safer, more comfortable and more environmentally compatible. Be it the crumple zone, airbags, ABS, ESPÐ’Â®, the sandwich frame or the ABC active suspension system Ð’â€“ Daimler Chrysler has throughout the ages been an industry leader with a strong commitment to technological progress" (www.daimlerchrysler.com). This is the approach the brand continues to bring to every new model it builds. And "this is the way it will stay," says JÐ“Ñ˜rgen E. Schrempp Chairman of the board of Management (www.daimlerchrysler.com). "With low-emission power sources like the fuel cell, state-of-the-art safety systems like the electro-hydraulic Sensotronic Brake Control or predictive crash analysis, Daimler Chrysler shall continue to offer its customers top-flight technology and to set new trends" (www.mercedesbenz.com). In short: Daimler Chrysler remains synonymous with the future of the automobile. The common ambition of Daimler Chrysler people in every era has been to develop vehicles that are objects of value and deliver their own unmistakable blend of handsome looks, outstanding safety, powerful engines and impeccable comfort. "Safety, quality, innovation and design form the basis for success" (www.daimlerchrysler.com). Highly motivated and committed employees work consistently on improving this basis. "Daimler Chrysler have devoted around 7.4 billion Euro to research and development, with more than 75 per cent of this investment going into securing the future of the vehicle business" (www.daimlerchrysler.com).
DOES THIS COMPETENCE PROVIDE POTENTIAL ACCESS TO A WIDE VARIETY OF MARKETS?
Daimler Chrysler continued its strategy of focusing on its core strengths. For its customers all over the world Daimler Chrysler concentrates and will continue to improve on what the company does best, building innovative automobiles in all segments of the market. By means of strategic partnerships and investments in related companies Daimler Chrysler is doing justice to this demand better than ever before. Daimler Chrysler is number one for premium vehicles, "the market leader for off-road vehicles and minivans and the biggest manufacturer of commercial vehicles in the world. The aim is not only to maintain these positions, but also to strengthen and achieve them in other market segments too - not least by focusing the entire group on the automotive business" (www.daimlerchrysler.com).
"Through the alliance with Mitsubishi Motors Corporation and the investment in the Hyundai Motor Company, DaimlerChrysler has secured very good access to the rapidly growing Asian markets" (www.daimlerchrysler.com) thus ensuring a promising competitive position in the long term. "Daimler Chrysler is represented in more than 200 countries around the globe and has production facilities in 37 countries" (www.daimlerchrysler.com). Against a background of International competition and the worldwide integration of the research and development departments along with its production and sales capacity opens up extraordinary potential for synergy and efficiencies. "With Mercedes-Benz, smartÐ’Â®, Chrysler, JeepÐ’Â®, Dodge, Freightliner, Sterling, Western Star, Setra and Orion, the automotive group has unique brands with which it can cover all the important market segments throughout the world. From the smallest urban car to the biggest truck" (www.daimlerchrysler.com) - at Daimler Chrysler, customers all over the world can find the right vehicle to meet their individual needs. And the product offensive continues: "over the next five years the company will be updating more than 80 per cent of its current models and launching around 60 new models" (www.daimlerchrysler.com).
Furthermore not only have these technologies been incorporated in Daimler Chrysler vehicles but also, these days whether it 's the airbag, ABS or Active Body Control, no other company has shaped the progress of automotive construction more than Daimler Chrysler has.
ABS and the Airbag have been installed in virtually every new car built thus utilising Daimler Chrysler technology which has truly outsource and reached maximum utilisation in every part of the world as well as exposure. It should be noted that every single car company and manufacturer in the world incorporates this technology into its cars thus Daimler Chrysler maximising its potential to access every single possible market in the automotive industry. "But it doesn't end there", says JÐ“Ñ˜rgen Schrempp Chairman of the board of Management (www.daimlerchrysler.com). "Around 28,000 employees are working worldwide on the research and development of technical innovations. In the past year alone, Daimler Chrysler invested 10.4 billion in fixed assets and 7.4 billion in research and development. The company registers around 2,000 patents every year, ensuring that it maintains a long-term leading position in the face of global competition, which is becoming increasingly tough" (www.daimlerchrysler.com). Not only within Daimler Chrysler but other companies are inquiring and using these technologies as well thus again using its core competencies to access every possible vehicle construction company in the world and displaying its market superiority. Safety, which has always been an important selling point for Daimler Chrysler vehicles, is yet another important area of innovation. "Thinking vehicles are helping the vision of accident-free driving to become reality. A system that automatically monitors lane driving for commercial vehicles" (www.daimlerchrysler.com).
"The introduction for the PROTECTOR automatic emergency brake to series production is planned for 2004. The brake is activated in an emergency, e.g. if a truck gets too close to the vehicle in front. Precrash sensors, which automatically scan the area around the vehicle helping to prevent collisions between vehicles, are also currently at the development stage, as are an infrared night vision system and a pedestrian assistant, which identifies pedestrians and cyclists when the vehicle turns corners" (www.daimlerchrysler.com). Naturally these technological innovations will first be fitted to Daimler Chrysler vehicles namely "Mercedes Benz and the Maybach which are the manufacturers prestige vehicles" (www.mercedesbenz.com). But, in the future these technologies will be seen as standard and will be fitted right across the vehicle manufacturing industry throughout the whole world like its technological breakthroughs with ABS and Airbags, which are standard in many vehicles. This truly shows that Daimler Chrysler are on the brink of innovation and such innovation will lead to core competencies which will be unrivalled in the automotive construction business thus providing access to the whole car making market, with its innovative forward thinking products.
DOES THIS COMPETENCE MAKE A SIGNIFICANT CONTRIBUTION TO THE PERCEIVED CUSTOMER BENEFITS OF THE END PRODUCT?
Daimler Chryslers core competencies evolve around "outstanding safety, powerful engines, innovative technologies and quality design" (www.daimlerchrysler.com). In the previous question I outlined the many innovative competencies that have now swept right through the automotive construction business and the many new innovations along the way and in the construction pipeline, such as road safety for pedestrians. These competencies do not only make a significant contribution to the perceived customer benefits of the end product but is looked upon as imperative for a 21st century car that has to have the best safety features around. The end product using Mercedes Benz and the Maybach as an example first and foremost is a car that has "stylish looks, outstanding safety features and the body which customers know will not crumple if in a severe accident" (www.maybach-manufaktur.com). This all points to safety of passengers and is a huge benefit and significant contribution to the perceived customer benefits of the end product. This doesn't only refer to Daimler Chrysler but to every other car manufacturer in the world.
For example, when the corporate professional walks into a car showroom with his wife and two kids safety is naturally at the top of his list whether it's a Ford, Holden, BMW, Toyota, Mazda, Mitsubishi, Fiat, Alfa Romeo, Peugeot, Renault, Jaguar, Lotus or Rolls-Royce is irrelevant. The corporate professional wants his wife and kids to be safe therefore will have Airbags installed along with ABS brakes and active body control therefore utilizing Daimler Chrysler core competencies in his car, regardless of make. This is seen as a huge benefit to the end product as the corporate professional knows that his family will be safe in the event of his family being in an accident with these "value added safety features" (Stanton, Miller, & Layton, 1994). Also every country has safety levels and criteria which each car must meet before being given permission to be on the road. Because of Daimler Chryslers innovative technology in crumple zones and passenger safety, car manufacturers are looking to Daimler Chrysler through research in this area in order for there cars to meet this criteria and being given the ok by the countries automotive safety authority. This all leads to safer cars on the roads and car manufacturers paying Daimler Chrysler for this privilege in research and technology with regards to the best materials to use for manufacturing etc. An example of Daimler Chryslers core competencies making a significant contribution to the perceived customer benefits of the end product is that nowadays there are more safer cars on the road using the technology divised by Daimler Chrysler in the form of "ABS and Airbags" (www.daimlerchrysler.com). Reading an article in the Herald-Sun on the 9th of April clearly shows how Daimler Chryslers core competencies are making a significant contribution to the perceived customer benefits of the end product, which is a safer car, quality innovation and design. The article said:
"David Beckham (a top soccer player in England) has splashed out $407,000 on an armoured Mercedes Benz S500 to transport his family in absolute safety. The S500 has features such as ABS brakes, 8 Airbags, re-strengthened crumple zones as well as the armoured vehicle being able to with stand gunfire, gas attack and a blast from a landmine directly underneath" (Herald-Sun, 9/04/02, pg.11).
IS THIS COMPETENCE DIFFICULT FOR COMPETITORS TO IMITATE?
"Daimler Chryslers core competencies of outstanding safety, powerful engines, innovative technologies and quality design can be imitated in parts by other companies such as Honda with engine design and production" (www.honda.com), but to what extent? Honda's core competencies of engine design and production might be good but what about Honda's other core competencies? In no way imaginable can Honda rival Daimler Chrysler or for that matter can any other car manufacturer rival Daimler Chryslers core competencies. Then there's the question of really how good are Honda's engines? The fact of the matter is Honda's engines might be good but Daimler Chryslers engines are also hi-tech and with there association with the McLaren Formula 1 team its engines too cannot be rivaled and not even Honda can compete with Daimler Chrysler. Ferrari's engines are just as great as Daimler Chrysler but then again Ferrari doesn't do too well in Daimler Chryslers other core competencies.
Some companies might have some of the core competencies of Daimler Chrysler for instance safety and Volvo but Daimler Chryslers core competencies in these other core areas are unrivalled. One car manufacturer might have one core competency like Daimler Chrysler but not any others and that is what sets Daimler Chrysler from the rest of the pack as displayed in the example of "ABS brakes, Airbags and crumple zones in which Daimler Chrysler is on the brink of innovative technology" (www.daimlerchrysler.com). Competencies such as these cannot be imitated because they simply don't have the infrastructure and trying to play catch-up now is simply impossible.
Therefore, Daimler Chryslers core competencies cannot be imitated and it would be impossible even if a company was game enough to try and imitate it because if the entry barriers wouldn't put a rival company off the shear speed at which Daimler Chrysler is producing this technology would. This is the reason that Daimler Chrysler finds itself in this position today. "The strategic outlook of its top managers recently in off loading numerous business units outside the core area of the worldwide automotive business has enabled and stamped very clearly Daimler Chryslers strategic focus on the global automotive industry. Businesses such as the flotation of the European Aeronautic, Defense and Space Company (EADS), into which Dasa has been incorporated and the joint IT venture between debis Systemhaus and Deutsche Telecom and the sale of the railway engineering subsidiary Adtranz to Bombardier are all expressions of this strategic focus" (www.daimlerchrysler.com). Having disengaged itself from aeronautics, railway systems and telecommunications, Daimler Chrysler AG now generates more than "90 per cent of its sales in the global automotive industry. It is for this reason that Daimler Chrysler is at the frontier of innovation and well on its way of producing its goal in the not to distant future of being the number one car manufacturer in every major segment in the automotive industry" (www.daimlerchrysler.com).
It should be noted that a lot of Daimler Chryslers innovation with regards to safety and engines derives from Daimler Chryslers association with the McLaren Formula 1 team, in which Mercedes Daimler Chryslers premier car, supplies engines to this front running Formula 1 team. A lot of this "research information and development into these Formula 1 cars is then transformed into Mercedes engines, which are powerful and resilient" (www.mclaren.com). Essentially McLaren and Mercedes have a partnership in which they share information and this can only benefit Mercedes which in turn benefits Daimler Chrysler.
Until companies master the science of creating knowledge-management systems, core competencies will continue to reside in the minds of the people inside an organization. Relationships, by definition, are owned by people within companies and not by the companies themselves. That means that the new focus on core competencies and relationships brings people management to centre stage, and positions talent-pool management as a critical element of business strategy along with core competencies. The explosive growth of the search firm business is just one symbol of this shift. As companies seek out the best talent, competition is heating up, and raiding other companies for talent has become a common place event in a very competitive market place that strives to get that competitive edge on its competitors. Companies will stop at nothing to become the market leader and it appears that a companies core competencies and future for that matter lies within the personnel and skilled workforce they hire, along with the companies direction and futuristic outlook. Essentially, DaimlerChrysler will continue to grow and become market leaders in every major segment of the automotive industry because of there ability to examine the companies core competencies by identifying, cultivating, and exploiting these competencies which continues to grow now and beyond into the future.
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