Financial and operational strategy can sometimes be an area that many of us don’t understand but those that run companies, especially large ones, have to understand. In a large company that has many different areas of expertise the need to create separate entities and structures can help all areas of the business grow and raise money for the development of new products and the movement into new parts of the industry. These are the thoughts that are currently being considered by the team at Daimler when it comes to how the Mercedes-Benz name is structured and what it offers.
Current Structure
The current structure of the corporation that bears the Mercedes-Benz name is to have all aspects under one name. This means the Mercedes-Benz name covers the cars, trucks and buses and the financial aspects of the brand as well. This doesn’t allow for the flexibility that will be needed in the future for the company or the ability to raise funds as needed. The team at Daimler wants to see this brand move into services such as mobility and ride-hailing which would allow the Mercedes-Benz brand to be even more competitive than it already is.
Proposed New Structure
If you’re concerned that the Mercedes- Benz brand of cars could be broken up; don’t be. The plan from the leaders of Daimler is to create three separate companies; Mercedes-Benz cars and vans, Mercedes- Benz trucks and buses, and Mercedes-Benz financial services. This can allow the three to operate separately but under the Daimler umbrella, which will allow for the growth desired in each area at different speeds. This can make a lot of sense as the company looks to remain competitive with other brands that have already entered some of the areas that Mercedes-Benz wants to enter.
The annual general meeting of the company on April 5, 2019, is the anticipated goal date to make this change take place. By this time, CEO Dieter Zetsche is expected to have retired, but CFO Bodo Uebber will still be on board to handle the transition. By making these changes, the company will be able add the mobility services such as ride-hailing to the financing arm of the company. With the financial arm, Mercedes-Benz will be able to add a variety of services that wouldn’t fit into the other two parts of the company, allowing for the flexibility desired.
Money, Money, Money
The financial benefits of legally separating the three divisions will allow for a partial listing which will make it possible for Daimler to raise funds and invest in the new services that will be part of the future including autonomous driving systems and electric vehicles. Right now the entire company is worth over $70 billion with the trucks and buses division worth $36 billion on its own. This separation would unlock value and create the ability and flexibility desired. This could easily be the most intelligent way for Daimler to allow Mercedes-Benz to grow and become the company that achieves even greater sales and value than it currently does.
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