Contemporary Developments in Business and Management at Mercedes

Explore the business environment of Mercedes through PESTLE and Porter's Five Forces analysis. Learn about the marketing communication mix, effectiveness of responses, and areas for improvement.

CONTEMPORARY
DEVELOPMENTS IN
BUSINESS AND
MANAGEMENT
1
mercedes

EXECUTIVE SUMMARY
The business of the Mercedes has seen many changes till now in the markets and is still
standing firm in the markets with high brand value. This is the result of the effective business
policies and operations of the company. Here, particularly in this assignment of contemporary
developments in business and management the business environment of Mercedes is analysed
with various tools like Pestle, Porter’s forces etc. Mercedes is one of the organizations who has
seen continuous growth in all the business sectors and is capable to change the scenario of the
markets with the new innovation and vehicle models. This study includes the marketing mix for
the company and finally, the responses of the company have been evaluated with some
improvement areas.
2

CONTENTS
EXECUTIVE SUMMARY.....................................................................................................................1
INTRODUCTION................................................................................................................................3
TASK 1..............................................................................................................................................4
BRIEF OVERVIEW OF THE PRIMARY EXTERNAL INFLUENCING FACTORS TO THE
ORGANIZATION AND IMPORTANCE OF EACH TO THE ORGANIZATION......................................4
MACRO ENVIRONMENT...............................................................................................................5
MICROENVIRONMENT.................................................................................................................8
TASK 2............................................................................................................................................10
2.1 MARKETING COMMUNICATION MIX AND ITS RELEVANCE TO MERCEDES AND HOW IT
INFLUENCES POLICIES AND DECISION-MAKING WITHIN THE ORGANIZATION.........................10
EFFECT ON POLICIES AND DECISIONS OF THE COMPANY.........................................................12
2.2 EVALUATION OF THE EFFECTIVENESS OF THE MERCEDES RESPONSE................................13
2.3 AREAS FOR IMPROVEMENT IN THE RESPONSE OF THE MERCEDES....................................15
CONCLUSION.................................................................................................................................17
REFERENCES...................................................................................................................................18
APPENDIX.......................................................................................................................................20
3

INTRODUCTION
Mercedes-Benz is one of the organization which is popular in every country of the world and
people desire for its cars. It generally deals in the automobile sector only but nowadays it has
also business in the financial sector. It produces luxury cars, trucks, buses and vans which are
made brilliantly such that there is no chance of any error in the production or any other
business operation. If it is asked for someone that what brand he/she wants in an automobile,
Mercedes is in the answer (Daunton, 2015). Further for the future growth in the middle-class
sectors of the world or in the developing countries like China, India, Argentina, Turkey, etc., the
company has to analyse its present growth and presence in the markets.
For analysing some of the factors that influence the business operations of the organization and
it's decision-making process some tools will be used in this assignment like PEST analysis,
Stakeholder analysis, Porter’s Five Forces etc. Further in this assignment for the contemporary
development in the business and management of the Mercedes, its marketing communication
mix is illustrated to evaluate the position of the organization and the responses it gives to the
changes in the business environments. Finally, some recommendations will be made that can
significantly facilitate some better ways for the development of the business of the organization
successfully.
Figure 1: Mercedes Logo
4

TASK 1
BRIEF OVERVIEW OF THE PRIMARY EXTERNAL INFLUENCING FACTORS
TO THE ORGANIZATION AND IMPORTANCE OF EACH TO THE
ORGANIZATION
Mercedes is the global automobile brand started from Germany, it is the division of the Daimler
AG. Today the brand is the well known brand for the coaches, luxury cars, sports cars, buses,
trucks etc. The organization is created by the Karl Benz and Gottlieb Daimler in 1926. At
present, it has many subsidiaries and alliance operations in many countries to serve the people
with the world-class products. The company also manufactures cycles and electric cars
regarding the safety and protection of the environment and is very focused on this field to
expand the business in future (Bah and Fang, 2015). Till now the company has seen many
changes in the business environments and has never taken any step back in the business. The
business environment of the company includes both the internal and external factors of the
business which have both positive and negative impacts on the organization. Here for
understanding the external business environment or the macro environment of the
organization, PEST analysis is performed which is described below.
Figure 2: Macro and Micro Environment of Mercedes
5

6

MACRO ENVIRONMENT
PEST ANALYSIS
POLITICAL – these are one of the most important factors which are the major concern of most
of the companies but in case of the Mercedes, it is a little issue because of the effective
management team and proper planning. The organization has widespread business all over the
world and hence it has to deal with the import and export bodies of the government and their
laws and taxation. Sometimes these taxes are much higher while in some cases it is sufficiently
suitable for the organization (Hamilton and Webster, 2015). With the increase in the business,
it has developed many manufacturing sites all over the world to deliver the vehicles fast and
with fewer customs duties. In the UK there are some issues in the political structure and
policies of the government because of the Brexit but for this, Mercedes has increased its
operations in the other sites to fulfil the needs of the customers (Wetherly and Otter, 2014).
ECONOMIC – it is the factor which is directly linked to the financial terms of the business. the
economy of any country is directly linked to the automobile industry as people with high
earnings always seeks to buy a new or better vehicle. While in case of inflation, the common
people can never afford cars of Mercedes. Now the company has many models that are
designed for the higher middle-class people so that they can also get served by the best
facilities of the company. the economic condition of the UK is not well but the company has
many strategies to marketize their products and attain their goals.
SOCIAL – here the population and their cultures are the major role players. People’s behaviour
towards the brand is one of the major concerns of the companies and even today Mercedes is
far away from the reach of middle-class people. One of the major reason is the referral policy of
the company for any new purchase, because of this only the people with the high standard can
buy it. Talking about other social factors, the company is very popular among all group of
people in terms of the case, culture, age, gender because of its big brand image it created in
past 90 years.
TECHNOLOGICAL – the company has very less competition in terms of the technological
changes in the macro environment because of the reason that it always performs huge research
7

on all the possible ways to make their vehicles and services best in the world (Ehret, et al 2014).
Mercedes is the first company to present the petrol operated vehicle in the world, and till now
it is using the best technologies in their vehicles which is the reason why their cars are pretty
costlier than others.
Figure 3: PEST Analysis
Source: [Cirkovic D., 2017]
PORTER’S FIVE FORCES
Porter's five forces are one of the tools that effectively describes the position and value of the
organisation in the markets where it operates. This includes five major forces of the markets
that influence the operations of every organization. The Porter’s Five forces for the Mercedes
are described below.
THREAT OF SUBSTITUTES – for the Mercedes the threat of the substitutes is one of the major
concerning point because of the presence of the companies like BMW, Jaguar, Audi etc. while
the companies like Volkswagen, Toyota, etc. are emerging in the luxury segment which is
8

creating major problems for the Mercedes. Today, the threat of the new substitutes for the
company is directly linked to the innovation and technology because of environmental safety
and protection laws.
THREAT OF NEW ENTRIES – the new entries of the automobile markets have to do very hard
work to directly pose competition for the companies like Mercedes. This organization is one of
the largest automobile company which never have problems with the new competitors until
they come with very latest technology at low cost.
COMPETITORS RIVALRY – this is the major problem of the market of Mercedes in its class of
vehicles. There are many companies that pose tough competition to the company in all the
business operations from research to sales (Prajogo, 2016). With the advancement in the new
technologies for marketing, production, sales and management all the companies have tough
competition from each other.
BARGAIN POWER OF SUPPLIERS – since the company has an operation in almost every country
of the world hence there are many cases of big demands by the suppliers of the raw material
and final parts for the vehicles. Sometimes, with the inflation, the suppliers of the business
increased their demands which creates the problem for the company.
BARGAINING POWER OF CUSTOMERS – Mercedes provides world-class vehicles and services
because of which the bargaining power of the customers of the company is not a big deal. The
company has customer centred activities that are only to serve the people with the best
product in the world. This is a reason why company’s vehicles are always in the higher price
ranges.
9

Figure 4: Porter’s Five Forces
Source: [Myers M., 2013]
MICROENVIRONMENT
This is the factors that exist within the organization like the employees, management,
customers, suppliers etc. The microenvironment of the company is:
EMPLOYEES – these are the major stakeholders of any organization. The management of the
Mercedes is highly focused on giving them the best working environment so that their outputs
gets rewarded. Employees of the business impacts the overall functioning of the organization,
hence fulfilling their needs is the duty of the management team of the company. The people
inside the company are satisfied with the facilities they get, financially or supportively.
CUSTOMERS – this is one of the oldest company in the automobile sector and hence it has the
experience to handle the needs of the customers and maintain a better relationship with them.
All over the world, there are millions of Mercedes cars running on the roads and there has
never been a big issue for the customers in the quality of the vehicles.
MANAGEMENT – the management team of the company is very focused on delivering the best
products to the people according to their desires. Moreover, they also provide a lot of
10

motivation to their employees, implement best marketing strategies and regular training to the
employees.
These described macro and microenvironmental factors of the business of Mercedes are very
essential for the company. While if it has been emphasised that the influence of the factors is
majorly positive on the business operations of the company, which is because of the best
planning and decisions of the authorities of the company (Messai and Jouini, 2013). In future,
with the help of more research on finding better ways for eco-friendly engine mechanisms that
are cheap and beneficial for all and grow successfully.
11

TASK 2
2.1 MARKETING COMMUNICATION MIX AND ITS RELEVANCE TO
MERCEDES AND HOW IT INFLUENCES POLICIES AND DECISION-MAKING
WITHIN THE ORGANIZATION
Marketing communication mix is a mixture of the various activities or operation that an
organization performs in its marketing function. Marketing is emerging as the heart of the
business operations of all the companies including the Mercedes. The marketing plan of the
company has many platforms to reach people which are implemented in the past few years,
before which the company doesn’t perform any marketing activity accept mouth to mouth
publicity (Fill and Turnbull, 2016). Marketing is the broad business function of the Mercedes
which involves research and development for the new products and technologies, reaching the
people and making better relationships with them for future. It also involves communication
and promotion of the new vehicles in all over the world for the Mercedes. There are many
models for the marketing communication mix which only varies in the number of factors. The
illustration of the marketing communication mix of Mercedes is shown below.
12

Figure 5: Marketing Communication Mix
Source: [Mathur S., 2018]
ADVERTISING – this is one of the most important elements of the marketing operations of the
Mercedes, the company has recently started this promotion in past few years. it involves all the
messages and information that is transferred to the common people from the management of
the organization. For this, company uses many platforms like newspapers, TV ads, hoardings
and nowadays social media also like Instagram, Facebook, Twitter etc. most of the messages
are transferred through the paid ways of communication, hence company’s marketing
department has to manage all the decisions regarding choosing the best one and amount of
spending needed. Generally, the advertisement costs are higher than any other marketing
platform, which is the reason company in the starting days didn’t perform any marketing, they
just focus on giving the best quality.
PERSONAL SELLING – it is basically the part of the direct selling of the company. Here in this
element of the marketing mix company’s highly skilled sales and marketing department are
involved. Distribution or the salespeople of the company marketize their products according to
the decisions of the company (Kitchen and Burgmann, 2015). While the retail salespeople of the
13

company try to reach smaller areas and promote the products, the business of the company is
completely based on the high-class vehicles which don't need retail marketing as people are
already attracted towards the brand and its products.
PROMOTION AND DISCOUNTS – Sales promotion is the need of every organization which is
also emphasised by the Mercedes while it never has especially focused on giving discounts to
the customers because the company already gives the best product which not requires any
discounts. But today with the changes in the structure of the business new management teams
of the company have tried small discounts at the time of big festivals and occasions.
RELATIONSHIP WITH PEOPLE – public relation is the aspect that can significantly support the
overall business. Having a good image in the markets can make the company more successful
without any hard efforts. Public relations sometimes act as the advertising and promotion
department of the company but only when the image of the company is pretty good, and the
company performs the ethical operation in business. Loyal customers of the company always
marketize the products of the company without any expenditure of the company.
DIRECT MARKETING – it has the aspects of the promotion and the personal selling as it focusses
on the sales with the promotion. Mercedes uses interactive communication to share or transfer
the messages of the company to the people. Emails, Invitations, Events etc. are the major
platforms in the direct sales of the company (Armstrong, et al. 2015). Through these platforms,
the messages are directly sent to the clients which save a huge amount of time of the company.
EVENT SPONSORSHIP – this is the recent trend that is majorly used by the service class
organization but here also Mercedes made its presence in the many auto expos with their latest
cars and technology. But in most of the cases, this element of the marketing mix is left by the
companies (Khan, 2014). Sometimes it is included in the sales and marketing of the company,
the events included in this are the product launching events, non-profit events, general
involvement in the social causes etc.
MOUTH TO MOUTH PUBLICITY – this is the publicity which company uses from years and have
gained a significant popularity all over the world. This is done by the loyal customers,
employees, management team, their family members etc. to the common people which shows
14

efficiency and efficacy of the company to the markets. Sales from references are one of the
examples that are included in this, only with the help of some present owner of the product of
the company a new person can buy the vehicle.
EFFECT ON POLICIES AND DECISIONS OF THE COMPANY
The communication mix is the tool that plays an important role in the decision making of the
Mercedes. The mix forces the company to make better policies for the welfare of the people
involved in the business of the company. Since following all the elements of the mix in the
organization can significantly provide better results so, Mercedes is emphasising on its
elements sternly to attain the goals and objectives of the company effectively (Tomše and Snoj,
2014). With the help of marketing communication mix, the company can develop better policies
and decide better plans. The effect of the communication mix on the decision making of the
company can be seen on the marketing strategies and platforms it is using now to create a
more powerful presence in the markets (Daunton, 2015).
Communication mix is beneficial for the company because it helps to understand the needs of
the customers effectively and implement more influencing ways to reach and serve them in
future. With the help of different communication methods in the mix, Mercedes can overcome
from the image of the costlier brand and reach the middle-class people with its cheaper electric
models. In terms of the advertisement, in the present day's company is using many ways to
reach the people and promote its products and services in the world (Armstrong, et al. 2014).
The recent trend forces the company to use these ways because of the regular growth of the
rival companies in the same markets.
Communication mix is influencing the policies of the company as it changes the referral way to
sell the vehicles. Now people can directly buy a Mercedes model from the showroom, this
developed the notion of attachment with the people which is not present in past. For instance,
the strategies developed by the company to showcase the products its cars and other vehicles
in the auto expo’s is the result of the decision on promoting its products through seeing the
power of communication marketing mix that helps in reaching more people all over the world
(Penn, et al. 2016).
15

In conclusion, it can be said that the effect of marketing communication mix can be easily seen
in the decisions of the company. Moreover, in future Mercedes must implement this in all the
operations of the business so as to get a competitive advantage among the various competitors
like BMW, Audi, Jaguar, etc. One of the major reason, why should Mercedes implement it
because it helps in identifying the issues in the markets and them make better decisions for the
growth of the company in future.
2.2 EVALUATION OF THE EFFECTIVENESS OF THE MERCEDES
RESPONSE
With the changes in the business environment, the emergence of the eco-friendly technologies
in the automobile sector, the trend of electric vehicles etc. are posing major challenges to all
the companies including the Mercedes. Some of the changes in the business environments
force the company to make major changes in the overall functioning of the business in the
markets where it operates (Baker, 2014). Mercedes after analysing the changes in the business
environments make many policies and decisions for the sustainable growth of the company in
the future. The company takes decisions after understanding the demands of the factors that
are challenging the business.
The macro and micro factors of the business are significantly handled by the company with the
appropriate use of the marketing techniques and platforms to reach people and satisfy them.
Mercedes is one of the oldest organization which has lots of experience to run the business
successfully in the markets (Drucker, 2017). One of the recent examples is the reduction of
prices of the cars in India because of GST reforms made by the government of India. At the
same time company increase its rates in the France, Russia, America to balance the overall
business costing in these regions. At present company has a high brand value which is very
tough to be overtaken by any other automobile organization, the customers of the company
are very loyal which is the major power of the company.
In terms of following the rules of the governments, Mercedes is very firm in operating their
business according to the demands of the governments and hence it is far away from any kind
of obligations by anyone. The company has its own legal department which monitors all the
16

tasks and checks the ethical working of all the departments. The response of the company in
most of the negative impacts has given it a better way to make its low potential areas strong
again and build a big empire. With the emergence of the latest technologies, the company
always reforms its vehicle models (Harmon, 2014). At the same time company is finding new
ways to run the vehicles which don't harm the environment and serve the world with new
inventions. With respect to the environmental problems, the company is making bigger changes
in the overall mechanics of the engines and the development processes.
All the factors that affect the business of other companies are effectively handled by the
Mercedes and that is the reason why it is very successful all over the world. The company has
adopted many strategies to promote its products and services. The marketing department of
the company is highly focused on reaching its target audience and increase the sales rate in all
the sectors of the economies. The marketing department is one of the most important
departments of the company and is finding ways to attract people and is working very hard to
make their organization more successful (Boone and Kurtz, 2013). In conclusion, it can be said
that the responses made by the organization to deal with the negative influencing factors are
genuine and needed for the company. Still, there are some major areas on which company can
emphasise to continue its successful reign (Davis, 2017).
2.3 AREAS FOR IMPROVEMENT IN THE RESPONSE OF THE MERCEDES
The major areas for improvement of the responses made by the Mercedes reside in its
management team. If the management and marketing teams of the organization effectively
analyse the ways that are useful for the company even if they are used by some other company
can facilitate a new range of people to the company. The official of the company is still not
much focused on the marketing strategies as they know that their quality is always preferable
to the customers in place of strategies to make the company more popular.
The company is focused on improving the automobiles with their weights, improvement in the
tyres, more effective handling, air conditioning, concept cars that are more efficient etc. The
perception of the company is definitely acceptable, but it has many opportunities to make the
proper changes and become the leader among all the others (Mercedes, 2018). Till now
17

company always make standards for the others and it can still continue doing that but when it
operates with the latest trends because the people are not much focused on how the company
operates, but how it serves (Mercedes-Benz of Austin, 2017).
The strategy of the company to fundamentally change the mobility is based on three major
pillars:
 To grow profitably all over the world from the core business
 Lead the markets with best vehicle models and new innovations
 Create agility, flexibility etc. in the working operations (Daimler, 2018)
The world-wide profit for the core business and marketing activities lot of investment is
required globally. Here, the company can focus more on the developing countries like India and
China. The company’s strategy to promote its efficient combustion engines included in the
portfolio can be started from these Asian countries than all over the world. The company is now
linked with the connected, autonomous, shared & services and electric (CASE). i.e., they want
to become a leader in every field for which they create additional potential by joining these
fields. Till 2022 company aims to introduce electric bus transporter and many other electric
vehicles which are needed in the developing countries. In terms of the cultural framework of
the company, it is linked to a huge number of people and is operating in many countries.
Mercedes knows the benefits of having a business connected with the local cultures and
societies of the place. Finally, it can be said that the company is working very well and leading in
the world with this best services and automobiles while with some changes it has the
opportunity to lead the world. The marketing strategies should be focused more, and decisions
should be made after proper research (Mercedes-Benz, 2018).
18

CONCLUSION
In every business of the world, there are many challenges to be dealt with. Here in this
document, Mercedes has been taken and analysed on its business environment and strategies
it uses to deal with them. Initially, the business environment of the company is analysed which
consists of internal and external factors like political, legal, social, environmental, employees,
customers, forces of the markets etc. The impact of these factors is mostly positive for the
company while the few negative impacting factors are effective handles by the company and its
management. In the analysis of the internal and external business environment, PESTEL analysis
and Porter’s Five Forces have been analysed and it is found that the threat of the substitutes is
one of the major problems with the political structural changes in the countries.
After this, the internal environment of the company is evaluated, with the proper management
of the organization all the stakeholders of the business are satisfied with the operations of the
company. In the next section of this document, the Marketing Communication Mix and its
influence on the policies and decisions of the company are shown effectively. Further, the study
shows the responses of the company and some areas where the company can improve its
working and become more successful are illustrated successfully.
19

REFERENCES
1. Armstrong, G., Adam, S., Denize, S. and Kotler, P., 2014. Principles of marketing. Pearson
Australia
2. Armstrong, G., Kotler, P., Harker, M. and Brennan, R., 2015. Marketing: an introduction.
Pearson Education
3. Bah, E.H. and Fang, L., 2015. Impact of the business environment on output and
productivity in Africa. Journal of Development Economics, 114, pp.159-171
4. Baker, M.J., 2014. Marketing strategy and management. Palgrave Macmillan
5. Boone, L.E. and Kurtz, D.L., 2013. Contemporary marketing. Cengage learning
6. Daimler, 2018. Strategy, online available at
https://www.daimler.com/company/strategy/ last accessed on 4th January 2018.
7. Davis, M., 2017. The fundamentals of branding. Bloomsbury Publishing
8. Drucker, P.F., 2017. The Theory of the Business (Harvard Business Review Classics).
Harvard Business Press
9. Ehret, M., Kashyap, V. and Wirtz, J., 2013. Business models: Impact on business markets
and opportunities for marketing research. Industrial Marketing Management, 42(5),
pp.649-655
10. Fill, C. and Turnbull, S.L., 2016. Marketing communications: brands, experiences and
participation
11. Genchev, E. and Todorova, G., 2017. SALES PROMOTION ACTIVITIES–EFFECTIVE TOOL OF
MARKETING COMMUNICATION MIX. Trakia Journal of Sciences, 15(1), pp.181-185
12. Hamilton, L. and Webster, P., 2015. The international business environment. Oxford
University Press, USA
13. Harmon, P., 2014. Business process change. Morgan Kaufmann\
14. Khan, M.T., 2014. The concept of'marketing mix'and its elements (a conceptual review
paper). International journal of information, business and management, 6(2), p.95
15. Kitchen, P.J. and Burgmann, I., 2015. Integrated marketing communication: Making it
work at a strategic level. Journal of Business Strategy, 36(4), pp.34-39
20

16. Mercedes, 2018. Corporate history, online available at https://www.mercedes-
benz.com/en/mercedes-benz/classic/history/corporate-history/ last accessed at 4th
January 2018.
17. Mercedes-Benz of Austin, 2017. How to get the best gas mileage out of your Mercedes-
Benz, online available at https://www.mercedesbenzofaustin.com/how-to-get-the-best-
gas-mileage-out-of-your-mercedes-benz/ last accessed at 4th January 2018.
18. Mercedes-Benz, 2018. Focus on Efficiency, online available at https://www.mercedes-
benz.com/en/mercedes-benz/vehicles/wltp/focus-on-efficiency-vehicle-development/
last accessed at 5th January 2018.
19. Messai, A.S. and Jouini, F., 2013. Micro and macro determinants of non-performing
loans. International journal of economics and financial issues, 3(4), p.852
20. Penn, H.J., Gerlach, S.C. and Loring, P.A., 2016. Seasons of stress: understanding the
dynamic nature of people’s ability to respond to change and surprise. Weather, Climate,
and Society, 8(4), pp.435-446.
21. Prajogo, D.I., 2016. The strategic fit between innovation strategies and business
environment in delivering business performance. International Journal of Production
Economics, 171, pp.241-249
22. Tomše, D. and Snoj, B., 2014. Marketing communication on social networks: Solution in
the times of crisis. Marketing, 45(2), pp.131-138
23. Wetherly, P. and Otter, D. eds., 2014. The business environment: themes and issues in a
globalizing world. Oxford University Press
24.
21

APPENDIX
FIGURE NUMBER SOURCE
1 [http://logok.org/mercedes-benz-logo/]
2 [self-made]
3 [https://www.linkedin.com/pulse/restructuring-
founding-office-part-one-external-factors-cirkovic]
4 [http://masonmyers.com/five-forces-michael-porter-
business-fundamentals/]
5 [https://www.slideshare.net/professormathur113/16-
4-what-is-communications-mix-and-how-it-should-be-
set]
22