Introduction
To begin with, this report is designed to assess and evaluate the strategic management and the business policy of Mercedes Benz Corporation. This paper analyzes the following parts of the company’s operation: market environment, resource and capability, and strategic fit. The last part of the research presents conclusions and recommendations regarding possible advancement methods of Mercedes Benz Corporation that its executives should explore and consider. This paper consists of the introduction, three parts of the main body, and conclusions.
Mercedes Benz is a German automotive brand that designs luxury and commercial vehicles. Carl Benz and Wilhelm Maybach created the company in 1925, then transformed it into Daimler-Benz AG the following year from the merger of DMG and Benz & Cie. The organization released the first diesel passenger car, later a limousine was launched as well. The brand’s success was soaring each day since it presented new to market ideas that attracted considerable numbers of customers.
The car brand is considered to be a luxury one, and it continues to be outstanding. Mercedes Benz’s purpose is “First Move the World” which contributes to the company’s aim of reinventing the automobile, which was initially invented by Benz (“Mercedes Benz Cars Strategy”, 2020). Moreover, the main desire of the organization is to create the most desired cars. The Mercedes-Benz strategy includes the following goals: increase profitability, surpass rivaling companies in comprehensive digitalization, and advance sustainability (“Mercedes Benz Cars Strategy”, 2020).
The top executives consider the critical factor of the company’s success a qualified team with goal-oriented and hardworking employees, each competent in their part of the organizational operation (“Mercedes Benz Cars Strategy”, 2020). Overall, Mercedes Benz is a respected automobile company based in the luxury segment moving to electric mobility and comprehensive digitalization to increase the profitability and sustainability of the organization.
Analysis of the Mercedes Benz Market Environment
Market Environment Conditions
A company’s market environment analysis includes examining six following factors: political, economic, social, technological, legal, and environmental. As for the political conditions of the Mercedes Benz organization, the most impact has a system of taxation, especially in the UK (“PESTLE Analysis Automobile Industry: Mercedes”, 2020). The UK automobile market charges the imported cars regarding their engine type. Therefore, it leads to a significant increase in the price of Mercedes cars related to locally manufactured automobiles (“PESTLE Analysis Automobile Industry: Mercedes”, 2020). The same situation happens to Mercedes Benz automobiles in other countries worldwide, resulting in a significant soar in car costs.
Economic factors of each country, such as currency fluctuations, lead to an increase in the price of a car. In other words, when the currency rates increase, cars cost considerably more, and therefore, fewer customers are interested in buying an automobile (“Mercedes Benz PESTLE Analysis”, 2020). As a result, economic factors influence an organization’s sales the same way as political ones contribute to soaring car costs.
Social conditions in the market environment are advantageous for the Mercedes Benz company. For instance, as the organization is based in the luxury segment of cars, most people with high incomes are willing to show their status and career success by purchasing an expensive car. Moreover, it is profitable for the Mercedes Benz company as well since it increases their sales, and their vehicles serve as a symbol of customer prestige (Handa, 2019). Consequently, it attracts more potential buyers who also desire a luxury vehicle that will show their wealth. However, some people seek the expensive looks of automobiles and at the same time pay attention to the safety and modern technologies implemented in the car.
As stated previously, Mercedes Benz company is moving to electric mobility and comprehensive digitalization and is producing vehicles that promise to be safe for their owners (“Mercedes Benz Cars Strategy”, 2020). Overall, the company attracts customers not only due to the expensive looks of cars that serve as a symbol of customers’ wealth and prestige but also because of its advanced automobiles that guarantee safety while using them.
The impact of technological factors on a company’s strategy is significant since most customers are attracted mainly due to the vehicle’s advancements. Thus, the Mercedes Benz organization is open to new ideas and provides its clients with safe automobiles. For instance, to protect the environment, the company implements eco-technology (“Mercedes Benz PESTLE Analysis”, 2020). Mercedes Benz improves its technology by launching hybrids and even driverless cars that reduce the harm to the environment and considerably decrease the number of accidents on the roads (Nobanee et al., 2021).
The company puts considerable effort, funds, and employees into its technological improvement to meet clients needs and outperform rivaling automobile companies that are not ready for such advancements. The only obstacle that might stand in the way of such strategies is the cost of experiments and the production of new technological ideas and concepts that consequently might affect the cost of a vehicle (“Mercedes Benz PESTLE Analysis”, 2020). Therefore, a company needs to control funding to reduce the increase in the price of automobiles. However, it should be noted that the company should not save up on safety experiments so that the quality of technological advancements would not be worsened.
While analyzing the market environment of Mercedes Benz company, I have also paid attention to legal factors that affect its strategy. The corporation bonds with the laws and regulations of the countries where its vehicles are presented. Moreover, the company actively supports various collaborations regarding mentioned laws and regulations (“Mercedes Benz PESTLE Analysis”, 2020). Mercedes Benz is consistent in meeting protections in the countries to attract customers as the company is presented on the market as the reliable one since it supports legal enforcements of not only their mother regions.
Furthermore, Mercedes Benz is an active supporter of numerous environmental and ecological agencies. The company participates in environmental enforcement laws and carefully controls its vehicles’ harm to nature. Consequently, such actions favor the Mercedes Benz as the investment in climate change programs is valued in the modern world.
Key Success Factors
It is evident that Mercedes Benz’s policy and strategy are impressive on the inside and the same on the outside. It manages to combine the luxury looks of the cars with the implementation of safe technologies that attract numerous customers with high incomes (“Mercedes Benz PESTLE Analysis”, 2020). The constant efforts of the company to advance the technical aspects of vehicles resulted in popularity gaining all across the world. It is evident from the fact that Mercedes Benz automobiles are widely considered to be the safest ones.
Furthermore, Mercedes Benz always works on its image and participates in law and regulation enforcement in numerous countries. As a matter of fact, the company actively supports and funds eco-friendly programs that combat negative climate changes. Such actions considerably enhance the company’s image and attract more customers as Mercedes Benz is viewed as a reliable and supportive company with high standards (“Mercedes Benz PESTLE Analysis”, 2020).
Overall, the organization supports the countries where its cars are presented, attempting to gain the respect of the residents. Consequently, such strategies influence the market environment increasing sales, company supporters, investors, and opportunities for further advancement for Mercedes Benz.
Resource and Capability Analysis
Internal Environment of the Mercedes Benz
To begin with, the internal environment of the Mercedes Benz is favorable for its advancement since the company’s financial resources allow it to grasp external opportunities and avert possible threats. Moreover, the organization’s distribution network is highly advanced, resulting in large numbers of customers to reach out to compared to rivaling automobile companies (Harvey, 2020).
The company’s relations with suppliers and dealers are transparent as the Mercedes Benz provides them with documents of annual reports and other activities (Harvey, 2020). As a matter of fact, it would take a lot of time and investments for rivaling manufacturers to create such a powerful and efficient network and, especially, a better one. Consequently, it positively influences promotions results since the Mercedes Benz vehicles are easily accessible for people who have become interested in them through advertisements.
Furthermore, the Mercedes Benz automobiles are widely recognized worldwide since the company’s brand image is strong and has been developed by effort and qualitative service over a long time. Consequently, the company represents trust and honesty and is the source of competency that similar manufacturing organizations cannot imitate. Therefore, such a high brand recognition positively influences Mercedes Benz’s sales and the company’s value on the market.
However, there are also harmful and non-valuable factors that affect Mercedes Benz, such as the cost of innovations. On the one hand, the number of experiments, materials, and effort paid for does not yield numerous benefits to the company’s advancement (Rosenzweig, 2018).
For instance, in the past few years, few technological innovations were proven to be safe and profitable for the company. Overall, research and development cost more than the benefits brought to the Mercedes Benz in the form of various innovations for vehicles. On the other hand, the company also works on advancing operating production and improving the manufacturing system (Harvey, 2020). Consequently, it helps in increasing the efficiency of production by optimizing the processes. Such innovations allow the Mercedes Benz company to reduce operational and manufacturing costs and gain economies of scale.
Organizational Unique Resources
As previously stated, the Mercedes Benz company has a highly advanced distribution network that allows it to present its vehicles almost in every country of the world. Moreover, it is significant to note that few automobile manufacturing companies have a global presence and consumer base similar to ones of the Mercedes Benz. The organization has invested in increasing customer loyalty which results in the following, “23% of the customers contribute to more than 84% of the sales revenue” (Rosenzweig, 2018). Such a strategy has also been implemented into the policy of other automobile manufacturing companies. However, they have not gained successful outcomes, and therefore, the Mercedes Benz has achieved a considerable competitive advantage in the market.
Furthermore, the Mercedes Benz company has managed to create an exceptional customer communication system that is unique on the market. For instance, clients have an opportunity to co-create vehicles with the organization and share their concerns regarding innovations (Rosenzweig, 2018). Such a system is considered a substantial competitive advantage as it is almost impossible to imitate such a form of client communication in similar organizations.
However, the unique resource that is significant for the company’s advancement is the employees of Mercedes Benz. The workers are trained, skilled and hardworking, which might not be the case with staff in similar companies (Amarachi, 2016). Moreover, the work environment motivates and inspires employees to be creative, work on innovations and maintain efficient and productive teamwork. The innovations lead to an increase in the competitiveness of the company and consequently to numerous benefits in the marketplace.
Core Capabilities and Competencies
Due to financial strength, Mercedes Benz is capable of realizing opportunities and possibilities externally and internally. Moreover, funding is also significant in the further advancement of the distribution network. With the material help, Mercedes Benz can focus on implementing innovations in their products and operating system, maintaining the quality of automobiles, and improving it through numerous experiments (Rosenzweig, 2018). Consequently, the organization should consider possible mergers for gaining competitive advantages in the market of vehicle manufacturing companies.
Furthermore, the company has potential for technological advancements on the basis of finances, skilled employees, and an effective manufacturing system. Having achieved an effective method of operating processes, Mercedes Benz is capable of smoothly managing global operations that might result in improvement of logistic management (Rosenzweig, 2018). The company can also focus on research and development more and put more effort into meeting customers requirements and expectations.
It is also significant to follow modern automobile trends such as driverless cars and hybrids. However, Mercedes Benz has to connect with professionals in these spheres to achieve such innovations and also, motivate its employees to develop mentioned technologies. This way, the company can improve its competency through its own capabilities in the financing side of the business, technological potential, and highly skilled team.
The Mercedes Benz brand has also improved its communication with the customers, contributing to increased customer loyalty. Furthermore, with such a client support system, the company can advance its strategy and overall operation through feedback (Rosenzweig, 2019). This Mercedes Benz resource can also positively influence brand image recognition, promotions, and advertisement outcomes and further result in a considerable soar in sales since the customers will trust the organization’s reliability and safety.
Analysis of Strategic Fit
Strategic Fit of the Mercedes Benz Company
To begin with, brand recognition plays a pivotal role in attracting new customers and the company’s growth on the whole. Mercedes Benz is widely recognized in its domestic market and also worldwide (Rosenzweig, 2020). The Mercedes Benz vehicles are luxurious symbols of customers wealth: earlier, the company was recognized for sedans, now it is popular because of its SUVs and sports cars.
Therefore, Mercedes Benz’s strength is its easily accessible popular vehicles that increase the company’s revenues, “SUVs from Mercedes have also gained popularity and sold more than 700 units” (“Daimler Annual Report”, 2016). Furthermore, the company has a global production network on four continents, allowing Mercedes Benz to distribute vehicles from the closer continents to the countries where the manufacturing factories have not been placed yet.
As previously stated, the Mercedes Benz company is in the luxury segment, meaning that its vehicles might not be affordable for people with an average income. Consequently, it allows the organization to fully operate in the countries where most residents have a high income and might become potential customers of Mercedes Benz (Pratap, 2021). However, it is significant to note that the cars require considerable costs for their maintenance as well.
For instance, Mercedes Benz has an opportunity to advance its operations in China. To respond to China’s announcement of achieving carbon neutrality by 2060, the company is planning to launch electric Maybach models for the China market (Bhasin, 2019). However, such productions will require considerable funding, and it would be more beneficial and advantageous for Mercedes Benz to design electric cars that are less costly but still exceptional in performance (Pratap, 2021).
Besides, the company is capable of aiming at collaborations with other popular automobile manufacturing organizations. This way, Mercedes Benz might increase customers’ interest in numerous vehicle brands and attract new clients to use their modern cars (Rosenzweig, 2020). In addition, it is advantageous as Mercedes Benz can put less effort and resources into manufacturing as the collaborating organization might focus on it due to better capabilities. Alternatively, the company might also attract more customers by cooperating with celebrities to increase brand awareness through their followers.
However, due to the global pandemic in the modern world, Mercedes Benz might struggle because of business partners’ potential bankruptcy and closures. For instance, if one of Mercedes Benz’s suppliers or partners ceases its operations, the company might acquire some difficulties as some details for manufacturing would not be available, and therefore production processes would also be impacted.
As the competition in the premium automobile segment grows, the company might lose customers to other manufacturers, “Mercedes is also facing intense competition from BMW and Audi and other premium brands in the global market. Particularly, in the Asian and US markets, the competition is highly intense” (Pratap, 2021). Therefore, Mercedes Benz should create new ways to outperform rivaling automobile brands and maintain its reputation and brand image.
Influence of Organization’s Strengths and Weaknesses on Opportunities in Market Environment
Due to significant brand awareness, Mercedes Benz is capable of operating on any continent in the world. For instance, the company operates in the following countries: France, Germany, Brazil, the USA, Hungary, and South Africa, which allows it to compete with other manufacturers based in these areas. Moreover, because of the Mercedes Benz’s spread, the company can attract numerous customers worldwide and increase sales since promotions would yield fruitful outcomes for the brand image (Shaw, 2021).
In addition, the organization has a customer-focused approach that contributes to the clients needs catering. Such a strategy attracts more customers as Mercedes Benz is viewed as a trustworthy automobile brand. Consequently, the company’s approach might serve as a definite competitive advantage in the vehicle market. However, as the Mercedes Benz automobiles are based in the luxury segment and are of a top cost, the company can advance its operations only in developed countries where most residents have high incomes.
Conclusions and Recommendations
The Mercedes Benz brand has earned considerable recognition in its domestic market, Germany, and worldwide. This company opts for technological advancements of its vehicles and operating processes in manufacturing. Moreover, the brand is focused on attracting new clients through advancing brand image, beneficial promotions, and especially customer-focused approaches. Mercedes Benz supports environmental and eco-friendly programs that combat climate change and frequently invest in such organizations operations.
However, some factors harm the company’s success, such as the high costs of technology improvement that affect the vehicles prices. The delivery taxes and fluctuations in currencies rates also influence the car’s expenses leading to a considerable soar in the prices. As a result, Mercedes Benz can fully realize its potential in the countries where the residents have high incomes that allow them to purchase and especially maintain such luxury automobiles.
For Mercedes Benz to remain one of the most sought-after vehicle brands, I would recommend continuing with the current company’s values and marketing techniques as they are already proven to be efficient in attracting customers. Though, I believe that the company should focus more on improving the customer’s experience connected to vehicle usage, purchase conditions, and support services. Moreover, to be considered a modern brand, it is vital to incorporate new technologies that would follow the latest trends in the automobile industry.
Consequently, to improve operating processes and manufacturing, Mercedes Benz managers should explore other companies success and the factors that lead to it. This way, the company might implement new ideas into the brand that would enhance its recognition and reputation worldwide. I believe that to attract more clients, Mercedes Benz can also focus on the production of electric mobiles that would reduce carbon emissions and bring less harm to nature.
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