Effect of Macro Environment on Business Strategies

This report analyzes the effect of macro environment on a given business organization and its strategies. It examines the internal environment factors and capabilities using suitable frameworks. It evaluates Porter's Five Forces model for competitive analysis and discusses various strategic planning for the organization.

Table of Contents
Introduction .....................................................................................................................................3
Applying suitable model analyse the effect and cause of the macro environment on a given
business organisation and its strategies..................................................................................3
Examine the internal environment factors and capabilities of a given business organisation
using suitable frameworks......................................................................................................5
Evaluate Porter's Five Forces model for identifying competitive analysis of the market .....7
Various Strategic planning for the organisation.....................................................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................12

Introduction
Business Strategy consists plan, procedure and decision undertaken by the business
organisation in order to accomplish the goal and objective. The Business strategy helps company
in improving performance as well as productivity for achieving pre-decided target within
particular business industry. In context of Mercedes, the supervisor emphasised on making an
effective strategy that helps in expanding future success and growth of company by satisfying
need and preferences of customer. The effectual plan of action helps in achieving goal and
objective of organisation within given time period. The current report includes PESTLE analysis
which is used by marketers to determine and evaluate the external factors which affect the
business and is used widely in order to analyse external environmental factor of company. In
assistance of this, VRIO and SWOT analysis is adopted by the company for assessing internal
factor of company. Also, it includes Porter's Five Force model in order to achieve competitive
advantage over rival firms. At last, it involves Ansoff matrix for accelerating future growth and
success of the company.
Applying suitable model analyse the effect and cause of the macro environment on a given
business organisation and its strategies
It is important to analyse its external environmental factor in order to carry out its
business functions as well as operations in an appropriate manner. In context of Mercedes
company, the manger adopted PESTLE analysis to determine the effect of external environment
on business organisation which is mentioned below:
Political Factor: These factors are those which includes laws, rules and restrictions etc.
These factors play a crucial role for every company to be stabilised in the marketplace. In
discourse to Mercedes, the high authority focuses on providing best car at affordable price to its
customer in order to satisfying them. In addition to this, the company focuses on taxation
structure that is one of the political factors that impact on import of car industry (Johnson 2016).
It includes several factors such as employment law, tax policy etc. The use of crude oil helps
auto mobile industry in expanding their sell in the marketplace in order to achieve future success
and growth of the company. Due to stable political condition, the company does not change its
policy, it imposes positive impact on performance level of business organisation.
Economic Factor: These play an important role in the business organisation. It includes
inflation as well as deflation rates that directly affect the profitability and sales of the company

(Zucchella and Previtali , 2019). Because of high taxes and low wages rate it is not possible for
people to purchase the car in country. So, it is very difficult for Mercedes company to sell a car
for increasing profitability as well as future success and growth of the company. The supervisor
of the company focuses on providing the best car to customer at affordable price that helps in
expanding brand image and goodwill of the company. The manager of Mercedes provides
innovative and unique car to its customer in order to satisfy them. It affects the company in
favourable manner.
Social Factor: It involves demographics, age, region and income that affect profitability
of the company. In context of Mercedes, the supervisor analyses need, lifestyle and preferences
of customer in order to achieve future success and growth of the company (Amran and et. al.,
2016). The manufacturing of car depends on need and wants of consumer that helps in increasing
profitability of business organisation. Apart from this, if there is change in lifestyle of customer
which is adopted by competitive firms it can impose negative impact upon the company .To
handle this, the R&D department of Mercedes should assess the need and preference of
customer in order to enhance competitive advantage over rival firms. The main focus of
company to offer car to its user in order to increase their standard of living in the society. Thus, it
imposes positive impact on the success of business organisation. In assistance of this, they offer
innovative products and services to its customer for increasing their standard of living can
imposes positive impact on productivity as well as profitability of business firm.
Technological: Technology plays a very important role in every organisation for
accelerating productivity and profitability of the company. It assists the business organisation in
expanding its business online through the use of advertisements, public relation, events and
sponsorship. Technology is essential for simplify the work, reduces resources and workforce that
affect the cost efficiency and production capacity of business organisation in positive manner
(Linder and Williander 2017). In reference to Mercedes, the supervisor emphasised on
implementing advance technology for future growth and development of company. For instance,
the technology used in Germany provides a lot of advantage to the manufacturer of Mercedes
because it offer innovative cars in order to attract customers for achieving competitive
advantage over rival firms. Thus, the main purpose of company is to execute advance technology
for providing quality products to customer in order to accelerate future success and growth of the
company. Due to implementation of advanced technology, the manager of Mercedes makes

innovative products and services in order to attract ample of customer thus it helps in increasing
future revenue of the company. In addition to this, the implementation of advanced technology
helps them in providing innovative products and services to its customer. It increases customer
trust and loyalty towards products and services of business firm. Apart from this, it increases
sales as well as profitability level in upcoming period of time can be considered as a positive
impact for the company.
Environmental Factor: In present context, the business which performs their operations
and functions towards the interest of society get assistance from government authorities. In the
context of Mercedes, the management team of the company emphasised on weather condition
which imposes direct impact on timely delivery of car. They focus on managing and recycling
the waste material in order to prevent the society from pollution thus it helps in accelerating
brand image and goodwill of the company. The company provides the car to its user that best fit
to the interest of society. Therefore, it imposes favourable impact on the performance of business
organisation in better way.
Legal Factor: Herein, Mercedes ensures that all sectors across the business organisation
follow the law, rules and regulations in respect of auto mobile industry. It is essential for
Mercedes company to comply the laws in relation to the data protection. Due to data stolen the
company can lose its competitive advantage over rival firms (Lai, Melloni, and Stacchezzini,
2016). The supervisor of the Mercedes focuses on giving equal opportunity to all worker
irrespective of caste, creed, age and gender. The manager of Mercedes follows all rules and
regulations which will be beneficial for the success of the company. It helps in increasing the
confidence level of employees towards the products and services which are provided by the
company can be considered as a positive impact on the performance of business firm.
From the above-mentioned macro environmental factor, Mercedes Company focuses on
adopting advance technology in order to enhance competitive advantage over rival firms.
In addition to this, there is different cost strategic option/ Porter’s Generic strategies which are
going to be mentioned below:
Cost Leadership strategies: In cost leadership strategy, the main purpose of business firm is to
target large area of market at fewer prices. The manager makes effective strategy in order to
boost maximum return at minimum cost.

Differentiation strategies: Herein, in context of Mercedes, the manager focuses on providing
unique products and services in order to attract large number of customer. It helps in increasing
sales as well as profitability level in upcoming period of time.
Focus Strategies: The main purpose of Mercedes is to target market by providing unique and
innovation products to its customer in order to maximize return at minimal price.
Examine the micro environmental factors and abilities of a given business organisation by
adopting suitable structures
To analyse the internal environmental factor in an appropriate manner, Mercedes adopted
VRIO analysis that helps in accelerating skill and knowledge towards internal abilities of the
company (Oldman and Tomkins, 2018).
Resources Valuable Rarity Inimitable Organised What is the
result?
Global
presence
Global
Presence
- - - Competitive
advantage
Mercedes
Benz is
focusing on
customer
centric
organisation
which means
their structure
cars according

to customer’s
lifestyles.
Financial
resources
Financial
resources
Financial
resources
- - Competitive
advantage on
temporary
base
Distribution
Network
Distribution
Network
Distribution
Network
Distribution
Network
- Partially
competitive
Competent
Employees
Competent
Employees
Competent
Employees
Competent
Employees
Competent
Employees
Competitive
advantage
To analyse the internal environmental factor in an effective manner, Mercedes company
adopted the four resources such as Global presence, financial resources, Distribution Network
and competent employees.
Valuable: Valuable resources are those that have the potentiality to add worth for
customer in order to achieve competitive advantage over rival firms. In context of Mercedes,
Valuable resources which is mentioned below:
 Global Presence: Mercedes have a global presence in the marketplace in order to
gain competitive advantage over rival firm.
 Financial Resources: Herein, the company emphasised on providing the quality
resources that is different from the rival firm in order to gain the customer trust and
loyalty.
 Distribution Network: The distribution Network helps the company to give
timely delivery to more and more customer that helps in accelerating revenue as well as
profitability of the company.
 Competent Employees: The supervisor of Mercedes hire a trained staff thus it
results in increasing productivity of the business organisation. In addition to this, it assists
in enhancing trust and loyalty of customer in order to achieve a competitive advantage
over rival firms. For example- Chaverolet has been unable to gain the customer trust
because of limited skilled employees whereas Mercedes Benz higher the expertise in their
company.

Rarity: It includes those resources which are unique and specific in order to achieve a
competitive benefits over rival firms at marketplace (Madhushree, Kumar and Aithal, 2018). It
has been examined that the global presence is not rare for Mercedes as there are a lot of firms
which have a global presence. The rare resources which is considered by Mercedes which is
mentioned below:
 Financial resources: Herein, the company provide unique features as well as
accessories of car to its customer in order to retain them for a longer period of
time which cannot be duplicated by any organisation.
 Distribution Network: Hereby, Mercedes provides timely delivery to its
customer which is not copied by any organisation (Ransbotham and et. al., 2017).
It helps in expanding revenue as well profitability of the company.
 Competent Employees: The training offer by Mercedes is specific and unique
which is rare thus it helps in accelerating productivity of the company
Inimitable: These resources which is inimitable by the competitive firm. In context of
Mercedes, the manager implements advance technology which is not imitated by its rival firms.
Distribution Network: The Mercedes company timely deliver best feature and
accessories of car to customer that is not imitable. Thus it helps in accelerating revenue and
profitability of company.
Competent Employees: The training offer by Mercedes is not imitable by its
competitive firm thus it assists in enhancing productivity of the company.
Organised: It includes those resources which need to be organised in an effective
manner in order to attain goal and objective of the business organisation. The training which is
provided by Mercedes company is very effective in order to accelerate skill and knowledge of
employees for achieving the present requirement of organisation.
Competent Employees: Due to highly competent, efficient and skilled employees,
Mercedes emphasised to conduct its international activities in an appropriate manner. It assists
the entity to retain and sustain for a period of time (Zhu and Chertow, 2017). The competent
employees help them in accelerating sales and profit of company to gain a competitive
advantage.
Value chain analysis

Value chain analysis refers to the functions and activities performed in the company that
add economic value to the products as well as services and these functions are operate at best
level so that problems do not arises. There are two kind of activities involved in it. Primary as
well as supportive activity.
Primary activity: Primary activity means making and transferring the products and services to
its user in order to satisfy them. It includes different functions in relation to Mercedes which is
going to be mentioned below:
Inbound logistic: Herein, the raw material is taken form the producer in order to make
them finished products.
Operations: In operations, the raw material are produced to make finished goods. Value
is also added to the goods as it moves over the manufacturing line.
Outbound logistics: After producing the products, it is circulated among the consumer,
wholesaler and many more in order to satisfy them.
Marketing and sales: The manager of the Mercedes company adopt the promotional
strategy such as advertisement, publicity, sales promotion and many more in order to
attract more and more customer. It helps in increasing future sales as well as profitability
level.
Services: After selling of the product, it is vital for salesman to provide after sales
services to its customer such as warranties as well as guarantees. For example- After
customer’s purchases the car salesman of Mercedes Benz help them in delivering process,
and other payment process. This results in increasing of goodwill of the firm.
Support Activities: Support activities help the above-mentioned activities in achieving
competitive advantage over rival firm. It included four factors in reference of Mercedes which is
going to be mentioned below:
Infrastructure: This states that management of organisation have proper financial, legal
and market research department at their place so that functions as well as operations are carried
out appropriately and decisions making is done in proper manner.
Human resource Management: The HR Manager of Mercedes hire talented and capable
employees that helps them in achieve future success and growth of company.

Technology development: The Mercedes company helps in implementing advanced
technology for providing innovative and unique products and services in order to gain
competitive benefits at workplace.
Procurement: Herein, the organisation purchase the material at affordable cost in order to
gain more and more profit at marketplace.
Evaluate Porter's Five Forces model for identifying competitive analysis of the market
It is crucial for company to frequently estimate competitive forces of the market to invent
best strategies for business. In addition to this, manager of John Lewis has successfully analysis
the Porter Five Force (Zucchella and Previtali, 2019). Therefore, it provides attractiveness and
strengths of a company that lead to profitability and productivity within organisation. It also
helps to understand strategy which suits according to competitive environment of an industry. In
this, the analysis of Mercedes Benz which is a luxury brand auto-mobile company that access
within global environment. It involves various models’ threat of new entrants, threat of
substitutes, bargaining power of customers, bargaining power of suppliers, competitive rivalry.
Threat of new entrants: It refers to new entrants in the market for identifying
competitive edge. This is low because existing brands has its own high market share and
productivity that cannot meet its level of competition in according to its profitability. Entry of the
new company lead to production costlier in order to attain sustainability in the market. In context
to Mercedes Benz, this is a high luxury brand in automotive industry which enhances cost
advantage towards the existing company. This company focus on innovation for differentiated
products in relation to the new entries within market area. Threat of new entrants for company is
really low as the investment required for setting up such company is very high. New companies
entering this market are really less. But small manufacturers are able to attract the customers
easily because of low prices of equipment’s and tools. So, they affect the entity profit and sales
revenue & competition is increased slowly in market.
Threat of substitutes: It refers to alternative products available in the market. This is
moderate in context to Mercedes Benz; this company includes substitute products to the other
companies which provides manufacturing cars. Further, substitute products cannot offer same
type and quality of luxury vehicles. Only few alternatives are available in market and this
company focus on quality of its products as well as high price. Products should be unique that

attracts customers for buying that they cannot shift to another brand or product. The companies
which provides substitutes products that are manufactured within the low profit. However, the
few alternatives are available for the product of Mercedes vehicles. Threat of substitute for Benz
is low as the segment in which company provides car is luxury. There are a number of
companies but all of them have different advantages. Benz focuses on business class people
looking for luxury. This affects the firm in positive manner because they are able to attract more
customers as well as resources/ raw materials with better prices.
Bargaining power of customers: It is defined as framework in which customers could
place business for getting high quality products and services. There are number of suppliers in
market that Mercedes Benz manipulates in order to which has the large number of firms who are
manufactured that products (Wood and Logsdon, 2017). This is high because the company focus
on the large customer base that builds the high brand loyalty for sustain in the market for a
longer period. It could attract the more customers in order to attain the productivity and
profitability. The buyers of Mercedes company provide the large customers in order to achieve
the high market share. This focus on motivating more customers in the market. Bargaining power
with customers are high. In order to gain most of market share Benz have provided their
customers with ample opportunity to negotiate which also helps in building customer loyalty.
Bargaining power of Suppliers: It is referred to forces on suppliers that company could
increase its prices as well as reduce the prices. This is low be as the suppliers has no control on
their prices and they also have low switching costs. This leads to the buyers of Mercedes Benz
for switching on to the other suppliers. With reference to this company, they purchase the raw
materials from the suppliers with low cost. If in case the product is not set for this brand whether
they can switch to other suppliers. They have multiple suppliers that are available in different
geographical area. The manufacturer produces the high-quality products deliver to those
suppliers who meet the need and requirement of producer. The manager of Mercedes Benz
emphasised on providing best features and accessories of vehicles in order to achieve the future
growth and success of the organisation.
Competitive Rivalry: It is analysis of competition towards the various existing firms. In
context to Mercedes Benz, number of competitors are very less in the market. This is high
because the competitors which are available in market have largest market share (Kono, 2016).
This company could focus on variations of its products so that efforts of the competitors would

have low effect within customers that their aim for the unique products. The industry of
Mercedes Benz is rapidly growing within every year and it is estimated to carry onwards in the
upcoming years. The cars provide by Mercedes company is luxurious thus, it results in order to
achieve the competitive advantage of a rival firms. Examples of several competitors can be
taken such as Audi, Rolls-Royce, BMW, Jacquar. However, there’s some or other difference in
features but on a wider basis of judgement they are each other’s competitors.
From above analysis of Porter Five Forces Model in context to Mercedes Benz, the
strategies which are developed after the analysis of competitive edge for profitability of industry.
This enhances the planning for making strategies so that company could increase its productivity
within the marketplace.
Various Strategic planning for the organisation
Ansoff Matrix is evaluated as a process in which it includes the planning for build up the
strategies that encourage organisation to design the predefined goals and objectives for future
growth. It is further created by American Igor Ansoff who is a manager and a mathematician. It
is a tool and technique which is used by the business to analyse risk related in near future. It
includes the various strategies for determining effects for growth such as market penetration,
market development, product development and diversification. In addition to this, it identifies
new technologies to increase profitability and attracts more customers (Acuña-Carvajal and et.
Al,. 2019). It looks after the opportunities for grow in return to get the revenue. Further, it
involves increasing of sales so that it led to the high productivity within the market.
Market penetration: It is defined as existing product in existing market. It provides
business for exploring strengths and weaknesses throughout competition in market. The analysis
of the Mercedes Benz company has grabbed the opportunities which are available in market so
that they build variations which are made within the luxury market. Further, it acquires
competitors within same market for better productivity. In addition to this, this company has
made the strategies for development of its growth. In 2017, this company sold 2.3 million cars all
over the world and increases to 9.9% of sales within existing products. In current market
company could still have possibilities to stab in the market.
Market development: It refers to existing product within the new market conditions. In
context to Mercedes Benz, it influences new market for increasing higher competition among the

brand level. This company would explore its business activities into the new marketplace (Linder
and Williander, 2017). For example, in China, the entrants for expansion of new business
depends on the other marketing conditions. The analysis of annual report initiate the entry of new
market from last 3-4 years has verified that it increases to high profitability. It should offer
through new markets which includes the various culture of customers and its environment.
Product development: This could focus on new products in the existing marketplace.
With reference to Mercedes Benz, it avails the products that is more innovative and unique to
meet customer satisfaction within the competitive market. The development of new products
does not consider any choices, but it is compulsory for the global automakers. Mercedes Benz is
effectively using this strategy by innovating and creativity of cars to meet the needs and wants of
customers.
Diversification: This would include new products with the new marketplace. In relation
to Mercedes Benz, this strategy begins to invent innovative bicycles so that it creates positive
response within the market. However, diversification strategy is the entry of domestic goods and
services in new market which do not succeed in the future. This company could have uncertainty
in success of the household goods and further it focus on manufacturing of automotive sector
industries (Kono, 2016). The end result after development of new product and market it should
analysis the low risk in relation to the unconnected diversification.
Mercedes Benz introduces AMG GT that is four door versions which helps them in boosting its
sales as well as profitability level in upcoming period of time.
Mercedes Benz should focus on expanding new markets and also provides new
technologies for the creation of new products. Further, it also helps in unconnected
diversification which lead to high risk involved with the new brand loyalty. It identifies the
market in order to achieve growth and estimates future risk which is to be appeared in current
market. This company is made by German automaker which enables the product should be
unique and differentiated as compare to other brands. The company brings new products in new
market in order to earn more and more money. But it contains the high level of risk. But, the
company decides to satisfy their customer with innovative products and services in the new
market.
Strategic Plan for Mercedes Benz-

Strategic management plan is a plan which helps an organisation to analyse all the aspect
sin a business environment and then create a standard plan. The strategic plans help in deciding
goals and objectives of a firm. Strategic management plan of Mercedes Benz is mentioned
below:
Vision- Vision of given company is to diversify in global market and also increase its position in
market both domestic as well as international. It is also looking to become leading automobile
company providing luxury vehicles. The aim of the business organisation is to plan a vision in
success a manner that helps them in increasing sales as well as profitability level at marketplace.
Mission- Mission of company is to create brand awareness amongst market and also attract more
customers towards it.
Aims- Mercedes aim is to focus on its activities including functional as well as operational in
order to maximise profits. It helps them in boosting its brand value and reputation of the business
firm.
Values- Company believes in carrying out its business with utmost ethically conducted
behaviour. They believe in creating healthy relationship with their clients and employees.
Strategies and Tactics- Company is aiming at market development in which they launch same
product in different part of world. They are looking in to increase the number of markets they
deal in with same range of vehicles they already have. In addition to this, they maintain
strategies, policies and procedure in order to identify the strategy which is made by its
competitive firm. It helps them in achieving competitive advantage over rival firm.
Market Research- Company prefers conducting research in a marketplace before entering into
any market. This helps in identifying any future problem that may arise and also helps the firm to
solve that problem. These researches help in increasing credibility of business in market.
The Mercedes Benz launches Mercedes F015, this car has enormous features such auto
parking, self-driven technology etc. It will be bit cost expensive but due to changing mode of
technology and innovation, this concept car will change the era of automobile industry. In
addition to this, it helps in boosting sales as well as profitability level in future period of time.

CONCLUSION
From the above report it can be concluded that the strategies of business consist of
decisions which are taken by the organisation. Further, it involved Porter Five Force model
which analysis the company strength and weakness in order to improve productivity and
profitability within an industry. In context to Mercedes Benz, manager of this company emphasis
to build the effective strategies which lead to future growth. Ansoff Matrix analysis the current
market conditions for development of the product effectively and efficiently. It further includes
Pestle analysis which determines the external environment of company for sustain in the market
for a longer period of time. In addition to this, it includes VRIO and SWOT analysis which is
affected by the internal environment and capabilities of company. Moreover, its analysis
competitive advancement through the marketing conditions of business. However, it provides
various opportunities in providing the better customer satisfaction.

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