Hitt 13e Case Teaching Notes
Case 19: ZF Friedrichshafen’s Acquisition of TRW Automotive:
Making the Deal
Case Synopsis
Just five years after the 2008–2009 financial crisis, the auto parts manufacturing industry had
recovered well, and many industry players were seeing record-breaking years with greater
stability in their financial positions. The performance of each manufacturer seemed to vary
depending on four key factors:
• Region: North American firms had recovered well from the crisis, but more recent
economic downturns in Europe were impacting auto parts manufacturers there, in spite
Still, there was room for improvement across the industry, and ZF Friedrichshafen, a German
manufacturer, was one of many firms that began to evaluate long-term corporate strategy.
Juergen Holeksa, member of the board at ZF, explained: “In this process, we realized that there
are three global technology-driven megatrends in particular that we should pay attention to:
semi- or fully autonomous driving, safety, and fuel efficiency.”
With these trends in mind, ZF’s strategic leaders determined that acquisitions would be the
more expedient path to gaining access to new knowledge, capabilities, and resources. The firm
Learning Objectives
• Name and describe the general environment’s seven segments. (Chapter 2)
• Identify the five competitive forces and explain how they determine an industry’s
profitability potential. (Chapter 2)
• Discuss reasons why firms use an acquisition strategy to achieve strategic competitiveness.
(Chapter 7)
• Describe seven problems that work against achieving success when using an acquisition
strategy. (Chapter 7)
Strategic Issues and Suggested Discussion Questions & Answers
1. The case mentions at least half a dozen different trends affecting ZF Friedrichshafen,
TRW, and other similar organizations right now. Choose three of them and identify
how each selected trend relates to one or more of the seven segments of the external
environment and/or one or more of the five forces of industry competition.
Students’ answers will vary but should demonstrate a thorough understanding of these core
concepts. They might choose any of the following:
• Location: North American firms are doing well after recovering from the 2008 economic
(power of suppliers). Larger companies are often the product of merger and acquisition
activity that is consolidating firms in this industry, which is linked to volatility in the
capital markets (economic and global segments, intensity of rivalry).
2. Compare and contrast ZF and TRW. Based on ZF’s motives for making this acquisition,
what specific challenges do you think might arise during the integration process?
ZF and TRW share many similarities. The two firms are roughly the same age, earn about the
same in sales, and are about the same size in terms of employees, although TRW has a few
ZF acquired TRW for a number of reasons. The acquisition was an expedient way to enter the
U.S. market and increase its market power. It also lowers the cost of product development,
increases the speed to market, reduces the risks associated with new product development,
3. What megatrends in the industry and in the external environment are driving ZF’s
strategy for acquisitions? What motivated TRW’s board to accept the offer so easily?
An analysis of several significant trends within the industry and within the external
environment provided important insights into ZF’s acquisitions strategy. First, the European
4. Using Porter’s model of the determinants of national advantage, analyze ZF
Friedrichshafen’s chances of success with internationalization. Then, given that auto
manufacturers and auto parts manufacturers have agreed on international standards,
which international business-level strategy do you think ZF Friedrichshafen should
use—multidomestic, global, or transnational? Explain your answer.
Porter’s model indicates that ZF Friedrichshafen stands a very high chance of success in
expanding internationally, especially into the United States. Both its home country of Germany
Additional Resources
Just Auto, a website for auto industry professionals, maintains a company profile of ZF
Friedrichshafen, including current news and stock information:
In March 2018 at the Detroit Auto Show, ZF Friedrichshafen provided this glimpse into new car
technologies for 2020: