Operational Strategies for BMW and Audi to Gain Market Share

This report discusses the operational strategies that BMW and Audi can adopt to gain market share over Mercedes-Benz. It explores the importance of continuous product development, optimizing the supply chain, and strategic direction for success in the automotive industry.

Business Operations

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
1. Introduction of company wide operations to improve the strategy.........................................3
2. Operational strategies for BMW and Audi to gain market share.............................................7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Business operations can be defined as a set of activities which a business engage in on a
regular basis in order to increase the values of the business to generate profits. Also, these
business operations are to be optimised for generation of huge amount of revenues from the
market. One of the important outcome of business operations is harvesting of value for the
business through the assets owned by the company and these assets can be both tangible and
intangible. Present report is based on the case study on Mercedes-Benz which is facing problems
is problems in their business operations and is struggling in achieving a competitive advantage a
head of BMW and Audi. Company has been struggling with the quality control problems on may
of its vehicles which has disappointed its loyal customers which have forced them to move
towards the competitors such as Audi or BMW. Cars of Mercedes-Benz had some problems with
alternators, batteries, brakes which made since 2001 which resulted in 1.3 million of cars to be
returned to dealers to get fixed which has affected the company's reputation and profitability
since. This report discusses introducing the company wide new operations for improving the
strategy and also different operational strategies that can be applied by BMW and Audi In order
to gain market share over Mercedes-Benz.
MAIN BODY
1. Introduction of company wide operations to improve the strategy
Business operations for any company can be always improved for successful operations
of business, honing effectiveness and efficiency. As Mercedes-Benz is facing a series of
problems in their operations which has slowed down the growth of their business and
profitability. Even it has affected the company's brand image that has been advantageous to its
competitors such as BMW and Audi. So, it is really important for the company to gain the trust
of its lost customers and improve its quality of cars in order to survive in the market. The only
way to improve its business operations is to improve its strategies of operations which can help
the company to overcome the problems a company is facing (Choi, Chan and Yue, 2016).
Operations management is the most important part for developing a business and it mostly
concerned with the efficiency as well as conversion of raw materials in goods and services. This
can help Mercedes-Benz in maximising the profits of the company and improve its public image.
So, in order to introduce company wide various development strategies, Mercedes-Benz can

make use of different strategies in order to improve their developments and these strategies are
explained below:
Just In Time: It is the inventory system which can help in the management of development of
the company and this approach can help Mercedes-Benz in aligning the raw material orders from
different suppliers and the production. With the help of this strategy, Mercedes-Benz can
increase its efficiency of its production can also help to make and complete production on time
for the company (Scott-Jackson and Michie, 2017). Also, this strategy can prove beneficial for
the company as it acts as a guide for reduction of waste in the process of production and
company can receive the goods as per the need of the production. With the help of this tool
Mercedes-Benz can not take excess of products in their order and this can prove one of the best
strategy for reducing wastes in the production process. Also, another benefit of JIT for
Mercedes-Benz is that it can also reduce the cost of inventory but this method requires the
producers to make a proper forecast in order to meet the demand quickly and accurately. So, this
strategy can help the company to minimise the losses within the short periods and can also help
the company to minimise the over capacity in the work- in-progress which improve the
operational strategy of Mercedes-Benz.
Total Quality Management: It is referred a continues process to detect and reduce any errors in
manufacturing, streamlining as well as production processes. This tool can help Mercedes-Benz
to improve experience of customers and make sure that all employees working in the
organisation are up to mark in their production and training process. This approach can help the
company to hold the parties which are involved in the process of production (Chatzoudes
Chatzoglou and Vraimaki, 2015). This process can be used by the company to increase their
quality of products as Mercedes-Benz is facing the problems of quality issues in their car models
since 2001. By applying this tool it can help the company to make sure that problems in the parts
like alternators, batteries and brakes all of these quality issues can be managed effectively by the
company. As this approach manly focuses on improving the quality of products and minimising
these in an effective manner. This tool does not only can help Mercedes-Benz to mitigate the
quality issue but also help in improving the quality and maintaining the quality standards of the
products and services of the company. This operational tool can help the company to get back its
brand image and fame which it used to enjoy and also the share price of the company can be
expected to increase.

Product design: Within the operations management, product design is considered as one of the
most crucial and important stage in the process of product development. For this it is very
important for the company to increase the consciousness and the efforts for designing the new
services. This strategy can help the company in gaining more earnings and product design has
got two main steps one is functional design and another is production design (Akalin, Huang and
Willems, 2016). Within the functional design, a product is designed to be functional. A company
like Mercedes-Benz can make decision about the dimension, materials, etc which can be used
and also the type of final products which are needed for offering the value proposition to
customer. While in the product designing stage, the designer of Mercedes-Benz have to consider
the modification which are needed in order to make developments in the company. Also, this
concept may includes the some stages like modular design, simplification and standardisation.
Supply chain: It is a type of management strategy which can help in flow of goods and service
to customers in a positive manner. Process of supply chain involves transformation of the raw-
materials into products and also there is an involvement of active streamlining of supply chain in
the business which can help in maximising the customers value. This can help Mercedes-Benz in
gaining the competitive advantage over its competitors. Mercedes-Benz is a company which has
lost its band image, grandeur and even the profit making capability due to poor management of
business operations (Hitt, Carnes and Xu, 2016). This has forced Mercedes-Benz to apply proper
supply chain management which can help the company to increase its profitability which has
lowered due to poor management of business operations in a workplace. So, in order to gain a
competitive advantage Mercedes-Benz need to adopt proper supply chain management in an
organisation. For this it is vital for the company to make efforts for developing and implementing
the supply chain which can be efficient for the company and can be economically feasible for the
company. Mercedes-Benz needs to adopt this system so that company have effective control over
the production process, the shipment as well as distribution of products in the market.
Operational objectives: It is considered as the most important term within the business, as these
objectives can help Mercedes-Benz in achieving the short term goals and the main objective of
this approach is to bring the company close to the long-term goals (10 Steps To An Effective
Manufacturing Operations Management Strategy, 2017). There can be may operational
objectives which can be set by Mercedes-Benz based on the current situation a company is in.
Some of the operational objectives which a company can set are as mentioned below:

I) Quality-It is the most important aspect of operational objectives and is also the consistent
indicator for meting the expectations of the customers. Improving and maintaining the
quality can help Mercedes-Benz to maintain the consistency in production of cars which
can provide a customer high level of satisfaction (Slack, 2018). This can make the
operations of the company much easier as operations can be done with accuracy which
can help the company in solving the quality issue.
II) Cost: As Mercedes-Benz is competing with BMW and Audi, so it is really important for
the company to compete over the prices which can be beneficial for the customers to
afford products of Mercedes-Benz. By lowering the cost of production of goods, less will
be charged from buyers and this can help customers to makes purchase of Mercedes-
Benz luxury cars. This can increase the competition in market and can pose challenge to
its competitors and this is important factors for the company to win the competitive
advantage in the market. Low cost product become more compatible along with the
quality, dependability and speed. Also, it is vital for the organisation to make
improvements in their operational objectives through reduction of cost.
III) Flexibility- this is also another important objective for successful business operations in a
company. This can help Mercedes-Benz to introduce the product and make modification
to the products which can increase the quality of products of the company. As company is
facing number of challenges in their operations and quality of products so, maintaining
the flexibility within their business operations can help the company is addressing the
issue in an effective manner and also increases the ability to change. Flexibility, results in
operation's ability of Mercedes-Benz to change their level of output and even producing
mix of products is very essential for the company to increase its flexibility to higher
levels.
IV) Speed- it is the most important criteria which needs to be satisfied in order to meet the
company's objectives of production. By increasing the speed, it can decrease the elapsed
time between the product and customers request until a customer receives the service.
One of the major advantage of operation's external customer is that it can help in
understanding the speed of delivery of products to customer. Faster a product can be
delivered to customer faster a Mercedes-Benz can gain its lost image and reputation. Now

it should be the main objective of the company to deliver the cars as fast as they can, this
will help in winning over the competitive advantage over BMW and Audi.
V) Marketing strategies-As Mercedes-Benz has faced a bad marketing due to various issues
in their products and business operations but with the help of effective marketing
strategies, a company can make customers aware about of its newly improved products
and services (Schwarz Hall and Shibli, 2015). A company with effective marketing
strategy is essential to raise the effectiveness as well as the productivity of the company
at higher scale. Mercedes-Benz can use marketing strategies to fix the quality the quality
price and also helps in development of coordination among the employees. This can help
in meeting the objectives of the market which can be accomplished by selecting a proper
target market and then collecting marketing mix.
VI) Brand identity-A Mercedes-Benz brand identity has devalued since 2001 which has
effects its brand image and profitability, but the main purpose of brand identity is that to
depict the quality image and picture in the minds of the customers. It can be used by
Mercedes-Benz to gather attention from customers and also with the help of quality brand
design as well as modification of car models can help Mercedes-Benz to improve its
brand identity in front of the customers. So, in order to gain competitive advantage over
other it is essential for the company to reduce the supply as well as manufacturing price
of steel as well as other parts which are used by the company.
2. Operational strategies for BMW and Audi to gain market share
Operational strategy can be defined as a methods which a company can use in order to
achieve its objectives. In order to achieve the operational objectives, it is essential for the
organisation to develop operational in order to gain high market share particularly within the
automotive industry as companies have high level of competition within the industry. By
developing a proper operational strategy both the companies Audi and BMW can examine as
well as implement the efficient and effective systems of using resources, the employees and
work-process. There are number of strategies which can be adopted by Audi and BMW in order
to gain high market share over Mercedes-Benz and some of the important are mentioned below:
Continual developments in products or service offerings: Both Audi and BMW in order to
gain high market share over Mercedes-Benz, companies need to make continuous development
in their new product and services towards at present Mercedes-Benz have failed to do so. There

are two major strategies which can be adopted by Audi and BMW to make continuous
development there are-
Trend-One single important thing which both the companies should to in order to gain the
market share is to develop new products and services in order to attract the potential customers.
It has become a trend to meet the level of expectations of the customers as both the companies
sell premium quality products and customers expect much from these companies (Chiarini and
Vagnoni, 2015). So, for both the companies to gain a market share it is vital to meet the level of
expectations of the customers in terms of quality, design, durability and cost of the product.
Based on the expectations of the customers and demand of customers there should be proper
developments made in the cars on continuous basis.
Strategic direction-for increasing the market share over Mercedes-Benz, both the companies
should have proper strategic direction for gaining the market share. So, there should be an
effective business strategies placed in a company (Slack, 2018). Also, the strategic direction of
the company should be such that it can increase the profitability of both the companies.
Optimising the supply chain: This is another operational strategy which can be adopted by
Audi and BMW to gain market share over Mercedes-Benz. By optimising the supply chain both
in-bound and out-bound it can help the companies to gain the competitive advantage in the
market which can help in gaining higher market share. In order to optimise the supply chain both
the companies should focus on their core strengths can out source all the supply chain activities
(Agrawal, Atasu and Van Wassenhove, 2018). Also, they can improve the collaboration with
their suppliers and with the retailers as per the demand data. By developing an effective
relationship with their suppliers and retailers both the companies can optimise their supply chain.
Also, it is equally important to build a responsive supply chain for effective operations of the
business. If both companies managed to optimise their supply chain it can save the cost of the
companies and also increase the sale of their products which can sure increase the market share.
Customer driven strategies: It is really important for both the companies to involve customer
driven strategies in order to meet the needs and demand of customers in an effective manner
(Operational Strategy, 2019). So, both the companies should develop the strategies which
evaluates and adapt towards the changing environments and needs of the customers and need to
continuously enhance the core competencies and based on these competence, Audi and BMW
should develop new strengths which can prove beneficial for the company to achieve higher

market share over Mercedes-Benz. While developing a customer driven strategies, it is vital for
both the companies to analyse and monitor the market trends due which they can advantage of
new market opportunities and need to avoid various possible threats in the industry. So, this
operational strategy can help in gaining the market share as it focused on the needs and desires of
the customer and developing the product accordingly.
Quality improvements: This is one of the best operational strategy which can be adopted by
BMW and Audi in order to gain high market share over Mercedes-Benz as this is the strategy in
which Mercedes-Benz have failed. In Audi and BMW is successfully able to improve the quality
of their products and services it can prove successful for both the companies to gain higher
market share (de Sousa Jabbour and et.al., 2019). If companies are providing the quality products
to customers at affordable prices and are able to maintain the quality standards in the future can
help in attracting the customers towards their products which can help both companies to gain
higher market share in the market. There various ways where Audi and BMW can improve the
quality of their cars, for example can improve the performance of their cars, add features and
durability, reliability, perceived quality, of their cars. By improving the quality in all the
segments where Mercedes-Benz failed can help Audi and BMW to gain higher market share and
higher profitability.
So, these are the effective operational strategies which can be adopted by Audi and BMW
in order gain higher market share over Mercedes-Benz.
CONCLUSION
It can be concluded from the above report the in order to improve the business operation
of the organisation, it is really important to improve the operational and operational strategies of
the company. Also, there are various tools and techniques which can be adopted by the company
for improving its business strategies and also it is also equally important that these improvements
should be across the company. Present report also concludes that in order to improve their
business operations in an effective manner various operational strategies should be developed in
order to gain the competitive advantage. There are various operational strategies which can be
adopted by a company but it is really important for the company to analyse the market trends and
customers needs before developing an operational strategy. Also, with the help of an effective
operational strategy company can gain higher market share over others and can gain competitive
advantage as well.

REFERENCES
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