Strategies for Gaining Market Share in Luxury Automotive Industry

This report discusses the operational strategies that Audi and BMW can implement to gain market share from Mercedes-Benz in the luxury automotive industry. It covers topics such as optimizing the supply chain, developing innovative products, and focusing on customer-driven strategies. The report also highlights the importance of continuous product development and the need for a strong supplier relationship.

Business Operations and
Services

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
Introduction to companywide operations improvement Strategy................................................3
Operational strategies for gaining market share..........................................................................7
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Business operations indicates to the activities in the business which are mainly run for
achieve business objectives. Management of the business are operate these all activities in the
business environment and try to gain productive response from their efforts. All activities are
cover by the top-level management of business, management provides specific guidelines to all
lower level management employees. All employees are responsible for their respective work.
Business operation includes planing, organizing, controlling, selecting, implementations etc. All
operations of the business are not only one time process, business management needs to maintain
all activities in a continuing form and once it gets the final result then again start all operation
process with more improvement and efficiency.
This report is based on the case of luxury German car maker brand Mercedes-Benz. This
brand is known for its luxury cars production in the world. Mercedes-Benz already gain a high
reputation in the multinational market by providing highly modern and unique cars to the
customers. Mercedes-Benz has high reputation but in the year 2004, company's operating profits
fell on the back of poor sales of the luxury brand and restructuring costs at its smart car
divisions. Company also facing quality control problems on many of its vehicles. In that case
many of their previous customers have been moving to competitors like Audi and BMW.
Mercedes-Benz also faced some other problems in the customers cars in year 2005. That time
Mercedes-Benz loss their high goodwill in the market, because customers are not satisfied from
their products. Then company make many changes in their business environment to recover that
goodwill again. In this report we are also discussed operations improvement strategy and the
operational strategies that Audi and BMW can implement to gain market share from Mercedes-
Benz.
Introduction to companywide operations improvement Strategy
The module discusses about fall of Luxury car making company of Germany, Mercedes
Benz. This company fell of due to quality control issues in the car models and distraction of
management over DiamlarChrysler which took their eyes off from Mercedes Benz. For
introducing operational improvement there are various factors that must be considered as many
times while focusing on big issues and concerns small issues remain unsolved which can later
disturb performance. For this small issues should be timely resolved and should be given equal
importance though less time and efforts required for them. Other factors to consider are

motivation and morale of the employees and line managers. Often during crisis motivation of
employees and line managers start to fell off, management should ensure that they remain
motivated as they are a important factor to bring organisation back on track. Timely detection of
problems and measurement of performance also plays a critical role in success of business. So
performance of employees in all aspect should be timely measured like Mercedes Benz quality
kept falling but they did nothing on time which later came as loss and embarrassment to
company and problems that cause quality and operational inefficiency should be detected timely
this is possible through effective monitoring of the operations. For improvement of operations
there are various tools and techniques that can be applied in the company, some of them that can
improve Mercedes Benz's operations are as follows-
Total Quality Management- TQM is an system or a techniques for improving
operations of whole organisation. This system focuses on improving process and operations at
every level of the organisation. This includes goods and services, material for their
manufacturing, tools required for their manufacturing and any other process involved in
organisation from manufacturing to final output. Standards for quality are decided and then while
in process are measured with these standards to assure quality. Total Quality Management is a
customer focused approach as finally customers decide whether the efforts of the company are
successful or not. All the employees of a workplace are involved in this approach. Systematic
evaluation is done in TQM (Lapiņa and Aramina, 2015.). One after other step of the process which
is quality check of material, measuring quality of process, checking quality of output and at last
packaging of the product are measured and evaluated. Continuous improvement in process and
commitment to quality are main principle of TQM. Quality being the main reason behind fall of
Mercedes Benz, company must adopt this technique it will help in prevention of potential
drawback regarding quality.
Product Design- A problem solving approach that includes identifying market of new
product and then recognising problem or customer needs, developing a new solution for the
problem and then proving the product with market. This concept is generally used while making
new product. This approach focuses on end to end development of product. The questions to be
answered in this includes identifying the problem then who are affected by the problem and how
are we going to solve this problem. For this developer needs to empathise with those having
problem. Explain the problem then brainstorming for having creative ideas to solve the problem

and selecting the best idea (Brunner and et.al. 2016.). Then testing the idea to validate against
other ideas and possibilities . If idea is valid then designing process starts which is developing
design process, a series of steps that are going to be undertaken by designers from starting of the
product to its completion. In general a design may include, describing vision of the product,
research of the product, analysing users, idealization, designing, testing and validating and
activities after launch. Mercedes Benz can also use this technique to improve design of existing
product and to launch a new product to grab the customers by offering something new.
Root Cause Analysis- As the name refers Root Cause means main cause behind the
problem and Root Cause Analysis is defined as a systematic process undertaken to identify the
cause for problems and how they can be resolved and prevented. Generally this is related with
manufacturing process like breakdown in machinery may cause lost productivity and answering
related questions like what happened, why it happened and how it happened and how this can be
prevented (Vidyasagar, 2016). This can also be taken in other references related to production.
This helps in early identification of cause and measures to prevent this can be taken timely to
avoid repetition of the problem. This helps in presents and future needs for improvement. RCA's
main objectives are to focus on corrective measures and why the event occurred having error.
Various events where RCA is used include accidents, productivity issues, manufacturing issues,
maintenance problems etc. Process of RCA includes describing the issue (what is the problem,
why it has occurred, how it affected the process), collecting relevant data and evidence (to
collect data that can justify that there is a problem), identification of all issues that contributed to
the problem (what are all causes that created an unfavourable event), determining main/root
cause and lastly implementing measures to solve issues (what techniques can be adopted to
resolve the issue and prevent its future occurance) and prevent them. Mercedes Benz can use this
technique to identify what caused reduction in quality of its models.
Just In Time- This is an management philosophy, in which production is undertaken just
when customer demands and in the same quantity and quality demanded by customer whether
for final use or for further procession. In JIT there is no storage of inventory and final goods in
advance. As per this philosophy waste of time money and efforts have reduced. Along with these
waste due to overproduction, waiting time, processing, storing and from defection in product
have also reduced (Kang and Bekkers, 2015). Other areas where JIT works are, set-up reduction,
small size of storing area, adequate load on plant, better monitoring and controlling, better

coordination of process, improved quality and timely problem analysis and solving. All these
benefits have made JIT a popular choice and Mercedes Benz can also use this concept to
overcome losses and then for better quality control.
Supply Chain Management- Management of flow of goods and services including the
process of transforming raw material into final product. This term refers to efforts made by
suppliers to develop and implement chains that are efficient and economic as possible. This
covers activities from production to product development and information system needed to
direct these undertakings. SCM controls production, shipment and distribution from centre and
helps to cut excess costs and faster delivery of products to the customer. There are six
components of supply chain management that are, planning and managing resources that are
required to supply company's product or service to customer (Stadtler, 2015). Choosing suppliers
to fulfil the need for raw material, manufacturing product, quality test and packaging then
delivering goods and services by coordinating customer orders, scheduling delivery, dispatching
and receiving orders, creating a network to receive damaged goods and establishing support
process.
Operational objectives- Operational objectives are short term objectives which ensures
efficiency of operations in the organisation. These objectives are-
Cost and Volume Target- Company needs to make all its operations cost effective so that
it can compete in the market (Palmer, 2018). Which is monitoring and measurement of cost per
unit. Cost structure of the companies working in the same industry usually remains same and
they compete with each other on a very small difference of cost. That small difference is a result
of process and operational effectiveness which result in low cost per unit and enables company
to gain higher profit or contribute in increased saving.
Quality targets- Quality is one of the main factor that impact growth and profit of a
business. Maintaining and exceeding quality keep a company ahead of its competitors. Quality
can be measured through rate of defective goods, average use of product, satisfaction of
customers, customer complaints. If all these factors are favourable Quality of goods is good and
not then special attention should be given to quality measures.
Efficiency and flexibility- Efficiency in the process and flexibility in targets are cost
effectiveness and response to short term and unexpected targets. How well a company can

comply with targets that gives less time to complete. This is dependent on factors like
productivity of labour, efficient use of resources, lead time etc.
Environment friendly practices- This includes practicse of an organisation that directly
impact environment. This includes energy used by company, recycling of material,harmful waste
generated by company.
Improved Staffing- production is somehow directly linked with quality of manpower
working on production. If manpower engaged I the process of production is efficient then
productivity will be high and cost will be low.
Better use of Information Technology- technology has been an integral part in production
and efficient use of technology can help in increasing production, reducing cost and time. How
well a company use its technology decides its stand in competition. Technology this way can
also help in reducing cost and increasing profit.
Operational strategies for gaining market share
Operational strategies are indicates the methods which are useful in the achievement of the
business goals and objectives. Management of the any business are responsible for the
implementation of these strategies in the business environment to run their all business activities
in systematic way. Operational strategies provides some useful terms for the business which
helps to grow business in any condition (Denny and Dismukes, 2017). Many popular and
successful companies completely follow these all strategies in their organization and easily
achieve their decided target. In the Audi and BMW also be able to gain market share in the world
by using these strategies in their respective organization. Operational strategies are very
necessary for the companies to make their company more profitable in the full of competitors
markets (Welford, 2016). Operational strategies also a bundle of tools which are make business
activities more productive and maintain a good environment in the business.
There are various operational strategies that Audi and BMW can implement to gain
market share from Mercedes-Benz;
1. Continuing developments in products or service offering : Development of the
products or services are the first operational strategy that Audi and BMW needs to
follow in their business, because current market of the luxury automotive are fully
covered by competitors. In this situation both brands need to improve their product and
services quality in the market which attracts more and more people towards brand.

Customers always expect good services form the companies in that case Audi and BMW
are responsible to give them best services to take positive attention from the people.
Development of the products and services in the Audi and BMW means to focus on the
more technological aspects because both are the automotive brands and in the
automotive technology plays the biggest role. Companies need to implement that all
updated innovative tools in their products to beat other competitors in the market. These
are basically based on the “come first, get first” formula. Both brands needs to develop
their products but at a time and on also on continue basis. Companies need to present
their innovative and develop version of the products in the market before other brands
(Thumb, 2016). Audi and BMW also needs to hire some highly qualified people in the
company which put their all efforts in the company and work for achieve company's
targeted goals. Both are needs to make some unique designs of the vehicles which
attracts customers too much. Specially in the car market all customers demand for the
attractive car designs. So, both are need to focus on the making of unique and attractive
car designs which completely show the customer's high status to the society.
2. Optimizing the supply chain : Optimizing the supply chain are also a good attempt to
both Audi and BMW. In this case both needs to optimize their supplying chain system in
systematic manner. Audi and BMW needs to improve supply chain for the perfect
delivery of the products (Aras and Crowther, 2016). Supply chain is a critical process of
the business. Both needs to manage it with complete study and analysis of the chain
management and process, because these are help in the reducing supply chain costs,
improve delivery performance, reducing complexity in supply chain and optimizing end-
to-end visibility etc. Management of the companies are responsible to maintain a healthy
supplier relationship in the market. So, at the final result with the help of with the help of
effective supply chain companies able to gain market share from Mercedes-Benz.
3. Customer Driven Strategy : Current market of the automotive industry are full from
competitors. Inn this highly competitive business environment Audi and BMW needs to
focus on the actual need and demand of the customers. Try to analyse the basic
requirement of the customers and fulfil them with company's best services. These are the
first key to get more and more attention of customers towards brand (Karaosman,
Morales-Alonso and Brun, 2017). This strategy include; identify target market, know

customers needs, understand all aspects of the market and then fulfil that all demands
and needs of the market by our best quality products and services.
(1) Identify Target Market : Audi and BMW needs to identify their target market of the
products and then try to implement all marketing strategies in that particular market where
people show interest on luxury products, The next procedure is to take attention from the people
by company's promotion ads. These are very necessary for both luxury brands to analyse and
identify target market.
(2) Focus on Customers Needs : There are different people with different ideology.
Companies need to listen their customers and try to understand what they actually want. Then try
to focus on only that things which completely satisfy customers (Ovrum and Bergh, 2015). Give
them best of the best quality services and products, and provide complete information about the
products and services.
(3) Take Customers Feedback : It is also great tool to interact with customers. Audi and
BMW needs to provide feedback form to customers. In this feedback form customers able to
express their point of view about brand, What they feel after purchase company's products and
services, What they expect from brand etc.
In year 2005 Mercedes-Benz's customers faced technical problems in their cars. Then
customers start giving bad feedback to the company, Mercedes-Benz listen them but there are
company loss their high goodwill in the market. So, Audi and BMW needs to provide the best
quality products to customers, because it can help to maintain brand's high reputation in the
market.
4. Quality Improvements : The another useful operational strategy that Audi and BMW
can implement to gain market share from Mercedes-Benz. This strategy refers to
improve the quality of the products during production process. Both companies are needs
to hire some innovative and creative vehicle designers and engineers to improve
products quality in the company (Richards-Gustafson, 2019). Then they highly qualified
hired people are responsible to make some unique vehicles for the company which
attract customers too much near brand. For example; Tesla Motors release their
exclusive CyberTruck recently, these unique Truck collecting high attention from the
people because the Truck has the exclusive body and look, their build quality also take
people's too much attention in the current time.

So, these all are the major operational strategies that Audi and BMW can implement to gain
market share from Mercedes-Benz.
CONCLUSION
It can be concluded that there are many business operations and services are operated by
the management of the company or business. It includes various useful activities in the business
which are help to the business to achieve targeted goals in decided time period. Management of
the company or business are the main responsible body to run these all operations in the whole
organization. Management needs to follow some basic business strategies to operate all
operations and services in systematic way. It also concluded that there are operations
improvement strategy and their tools & techniques are playing great role in the business
environment. This strategy help in improve productivity of the business and make able to
business for avoid such elements that put negative impact on the business. It also includes some
important advise and opinion to Audi and BMW to gain market share from Mercedes-Benz by
using operational strategies. There are many important and useful strategies that really helps to
the both companies to increase their market reputation and also able to gain market share from
the competitor Mercedes-Benz.

REFERENCES
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