Mercedes 1998 Annual Report Download - page 7

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We initiated a public offering of more than 20 % of our mobile communication service provider,
debitel; and we are taking full control of Adtranz, our rail systems business, in order to turn the
company around.
Most importantly, we are now adopting a tough new yardstick for evaluating the performance of
each of our business units compared to our cost of capital – return on net assets, or “RONA”.
We established a minimum target of 15.5 % RONA before tax. However, we push each business to
do much better and achieve returns that match or exceed those of their best competitors’.
At corporate level, taking into account items like financing and taxes, we earn our cost of capital
when we achieve at least 9.2 % RONA after tax. In 1998, the stellar performance of our
businesses returned 11.6 % RONA after tax at corporate level, compared to 10.2 % in 1997.
CREATING THE NEW COMPANY. We aim to be truly one company – the world's leading
automotive and transportation products and services company.
Already, we are on our way.
In just the first 100 days of your company, we made great strides in bringing together all key
organizational functions so that our people can focus immediately on building the new company.
We combined:
쐍our procurement functions – the first step toward leveraging our combined annual purchasing
power of € 80 billion (US $94 billion);
쐍our sales and marketing organization – to maximize the strength and reach of our products;
쐍almost all of our staff functions, including quality assurance, corporate finance, legal,
communications, and our information technology departments, which have been combined
under one Chief Information Officer;
쐍our worldwide executive management development – to rapidly align performance evaluation
and career planning;
쐍our research and development activities for diesel engines, electric vehicles and fuel cell
vehicles into single dedicated teams – combining expertise and eliminating overlap;
쐍our financial services businesses – making DaimlerChrysler Services (debis) the world’s
fourth largest non-bank financial services company with € 70 billion (US $82 billion) in
assets.
All told, we are well on track to delivering our “synergy” target of € 1.3 billion (US $1.4 billion)
in bottom-line profit improvement for 1999.
But for us integration is much more than just combining org charts. It's about bringing people
together – in a way to really make this new company greater than the sum of its parts.
3
CHAIRMEN’S LETTER
Robert J. Eaton
Jürgen E. Schrempp