Improvement Strategies for Mercedes Benz

This report discusses the companywide operations improvement strategy for Mercedes Benz and provides advice on the operational strategies that BMW and Ferrari can implement to gain market share from Mercedes-Benz. It covers topics such as competitor analysis, financial highlights, issues faced by Mercedes Benz, and improvement strategies like TQM, lean management, Six-sigma, supply chain, and customer engagement.

Introduction to Business
Operations and Services

Contents
INTRODUCTION...........................................................................................................................1
Introduction of the companywide operations improvement strategy..............................................1
Overview or profile of the Mercedes Benz..................................................................................1
Competitor’s analysis of Mercedes Benz....................................................................................2
Financial highlights.....................................................................................................................2
Issues facing by Mercedes Benz..................................................................................................3
Companywide operations improvement strategy........................................................................4
Advise on the operational strategies that BMW and Ferrari can implement to gain market share
from Mercedes-Benz.......................................................................................................................6
Introduction about BMW.............................................................................................................6
Introduction about Ferrari............................................................................................................7
Suggested operational strategies to gain market share from Mercedes Benz..............................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
It is important to analyse the business performance on regular basis. There is huge
importance of this aspect as this will help in determining information about deviations occurred
in actual and have impact over quality along with determinants which are evolved with time
period and needed to include within businesses for maintaining sustainability. It is management’s
duty that apply all necessary steps through which they will able to identify core information and
further build the strategies which aid in improving future operations. This is much needed
exercise in today’s environment as large number of external factors impacts the business in
different manner. Study about these factors help in formulation of preventive exercises that
safeguard an organisation in tough situation. These work as shield for an organisation, where
they never go down in market from where not possible to comeback. The main aim of this report
is also to gain information about the aspects that went wrong with Mercedes Benz and adopt the
improvement strategies through which able to get back in market. The selected organisation for
carrying the whole report is Mercedes Benz. It is a car manufacturing organisation that provides
its products and services in all over the world. The organisation has good name in formulation of
luxury and quality cars but recently faced the issues that resultant into down step in market.
The aspects covered in this report includes providence of information about companywide
operations improvement strategy and the operational strategies that can be implemented by
BMW and Ferrari to gain market share from Mercedes Benz.
Introduction of the companywide operations improvement strategy
Overview or profile of the Mercedes Benz
Mercedes Benz is a German global automobile marquee that was founded in 1926 by
Karl Benz, Gottlieb Daimler and headquartered in Stuttgart, Germany. Company is well known
for its products which are luxury vehicles, trucks, vans, coaches, buses and ambulances.
Company has a strong brand value and international leader within premium cars. Mercedes Benz
has an essential presence within sports & motorsports via sponsorship and participation
respectively. Segmentation of Mercedes Benz is luxury automobile including sedans & Suv’s.
Target customers of company are business professional from the higher income group.
Therefore, company has strong position in marketplace because of their premium car and other
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automobile. Mercedes Benz is a manufacturer of commercial vehicles and producer of premium
cars with a global reach (Cytrynski, Neerpasch, Bellmann and Danner, 2018).
Competitor’s analysis of Mercedes Benz
Mercedes Benz is a global automobile organisation and a division of Daimler AG, a
German company. Company is considered as one of the well-known and most celebrated names
amongst the other luxury automobile brands across the globe. Mercedes Benz is famous for
luxury vehicles, Lorries, coaches and many other products. There are different competitors of
Mercedes Benz including, BMW, Audi, Volkswagen, Jaguar, Ferrari, Volvo, Aston Martin,
Porsche etc. All these are main competitors of Mercedes Benz that have impact over sales and
market ratio of company. Audi is a main competitor because it is German international brand that
designs, produces, markets, engineers, as well as distributes luxury vehicles. Company has about
9 production units in al over the world. Audi is famous for manufacturing or producing
sophisticated designed engineered cars. BMW is also a main compactor because of their electric
cars. Therefore, all these are main compactors and specialise in selling of luxury products to the
targeted customers. In order succeed over competitors, company must retain talented workforce
and also produce better quality at affordable price as compare to other brands. This will help
them in improvement of their growth and improvement of brand image at marketplace (Liu and
Chen, 2020).
Financial highlights
This is the part that depicts the financial highlights of an organisation along with reason
behind the fluctuations in yearly amounts or results. This is one of the important aspect that clear
shows the profitable or unprofitable picture of an organisation along with change in overall trend
as compared to the past years. The same is analysed in below in respect to Mercedes Benz for the
purpose of ascertaining clear picture that how an organisational performance is changed as
compared to the previous years (Uhl, and Gollenia, 2016).
.
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Figure 1Income Statement
Figure 2Income Statement (€ Billion)
It is cleared from the above graph and figures of income statement that decreasing trend
was existing within an organisation regarding to net income. There is continuous fall in the
amount of net income in all the three years 2017, 2018 and 2019. The amount of net income gets
by an organisation in year 2017 was 10.53 which fell down in year 2018 and get the mark of
7.25. This trend continued in year 2019 where huge fall was noticed and an organisation gets the
mark of 0.38. This clearly depicts that that financial performance of an organisation was
decreasing continually due to increasing number of issues along with large competition. Now,
the organisation has to focus over development strategies through which they able to regain the
same position within the market along with improvement in financial performance of future up
coming years (Choi, Chan and Yue, 2016).
Issues facing by Mercedes Benz
Due to slow growth within the entry-level division, an ageing flagship line as well as
ongoing sales problems in China, Daimler AG’s Mercedes-Benz unit is facing a bigger issue and
tough completion against key rivals such as Volkswagen AG and BMW Group. Although
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company has witnessed a 19 % growth within international sales since 2007, BMW and Audi
have witnessed gains of 70 % and 35% respectively in the same time duration. Daimler CEO
DR. Dieter Zetsche is purposing to enhance competitiveness and efficiency by implementing a
more consistent sales strategy within China in an attempt to spur growth, at the same time as
enlarging the description of new models, mainly in lower-end and higher volume section
inhabited through the likes of Audi’s Q3 as well as BMW’s 1-Series.
Staff cut is another issue faced by Mercedes Benz in US. As the united states Market is
slowing, speaks may be running a leaner enterprise. Mercedes discern Daimler plans to reduce
head matter at its Mercedes-Benz cars division to help control the disruptive shift to self-using
and electric motors. After a couple of profit warnings this year, Daimler said it plans to lessen
spending through approximately $1.1 billion by using the give up of 2022.Companywide
operations improvement strategy (Follmann, 2019).
Companywide operations improvement strategy
It is gathered from the all above presented information and financial highlights of
Mercedes Benz that number of issues are present and needed to remove for attaining further
developments within the market. The direct impact of these issues were upon net income of an
organisation where is continually decreased in three consecutive years 2017, 2018 and 2019.
Now, to get over from this situation, organisation is needed to implement companywide
operational improvement strategies like TQM, lean management, Six-sigma, supply chain and
customer engagement (Hazen and et. al., 2018). All these are defined below along with the
proper application upon organisational functioning for further improvements;
TQM: TQM is the persistent procedure of distinguishing and diminishing or dispensing
with mistakes in assembling, smoothing out supply chain management, improving the client
experience, and guaranteeing that representatives are speed up with training. Further TQM is
also characterized as a client arranged procedure and focuses on persistent improvement of
business activities. It guarantees that every associated work (especially work of representatives)
are toward the shared objectives of improving item quality or administration quality, just as
upgrading the creation procedure or procedure of rendering of administrations. However, the
accentuation is put on reality based dynamic, with the utilization of execution measurements to
screen progress (Ivanov, Tsipoulanidis and Schönberger, 2017).
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This is needed to apply by Mercedes Benz in in all of their operative aspects specially in
production. The principals upon which this will works for an organisation are employee
empowerment, commitment from management, continuous improvement and customer focus.
This activity has huge importance in direction of improving the quality of cars as all its
associated determinates from very starting are present and performed in qualitative manner. This
creates the core structure where everything exists in qualitative manner along with customer
focused. There will be huge role of this activity in future to improve business performance of
Mercedes Benz.
Lean management: Lean is characterized as a lot of the board practices to improve
proficiency and viability by taking out waste. The centre standard of lean is to decrease and wipe
out non-esteem including exercises and waste. Lean assembling, or lean creation, is an
arrangement of methods and exercises for running an assembling or administration activity. The
procedures and exercises vary as indicated by the current application yet they have the equivalent
basic guideline: the disposal of all non-esteem including exercises and waste from the business
(Zengin, 2018).
There is huge need of this aspect within Mercedes Benz. This helps an organisation to
identify the aspects which are innovative and ultimately help in improvement of overall quality.
This exercise simultaneously aids in reduction of cost along with meeting the current needs of
consumers. The final benefit of this ascertained in the way of competitive edge over other big
players like BMW and Ferrari.
Six-sigma: It is a statistical-based, data driven and disciplined approach as well as
continuous improvement methodology that will support an organisation in eliminating of defects
in their products, services or procedures. By using six-sigma, Mercedes Benz can easily improve
their operational strategy because it will help them in reduction of personal time and skills,
reduce wastage, reduce inventory needs, reduce workers and defects, increase customer
satisfaction etc. All these are main benefits of six-sigma that will be gained by Mercedes Benz
and enhance their operational strategy (Kumar, 2016). This will support company in attraction of
large number of customers and also achievement of competitive advantages easily. This turn to
helps Mercedes Benz in increment of sales and in improvement of its brand image at
marketplace and in customer’s mind. Upon the implementation of six-sigma approach within
operational management, Mercedes Benz can accomplish maximum customer satisfaction by
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improving return of sales, minimising the defects, improving production process etc. Therefore,
it is effective approach of company to use and improve their operational effectiveness and
efficiency.
Supply chain: This refers to the network between an organisation and its suppliers to sell
and distributes a particular product to the end consumers. This network covers different number
of activities, entities, people, resources and information. There is application of using supply
chain for Mercedes Benz is it helps them in improvement of its business operational strategy
easily. There are number of advantages that may be gain by Mercedes Benz if they will be used
supply chain in their business operations. These benefits are improved distribution networks,
devised distribution strategy, monitoring of cash flow, establishment of information conduits,
tracking of inventory etc. All these are considering main advantages of supply chain that will
help Mercedes Benz in improvement of its business operations and attainment of competitive
benefits (Luthra, Garg and Haleem, 2016).
Customer engagement: This refers to the emotional connection and relation between a
brand and a customer. Highly engaged customers purchase more, promote more, demonstrate
more loyalty etc. It is beneficial for Mercedes Benz to improve customer engagement because it
will support them in promoting of their products at marketplace. It is a responsibility of company
mangers to provide high-quality customer experience because it will support them in increasing
customer conversation, reduce cost of service and marketing, more customer acquisitions, better
customer engagement, improved crisis management, improved operational strategy, increased
customer loyalty and retention etc. These are major benefits suggested for Mercedes Benz if they
use customer engagement strategy in their business operations (Imes and et. al., 2019).
Advise on the operational strategies that BMW and Ferrari can implement to
gain market share from Mercedes-Benz
Introduction about BMW
BMW is a German multinational organisation that was founded by Camillo Castiglioni,
Franz Josef Popp, and Karl Rapp in 1961 and headquartered at Munich, Germany. Company is
specialising in producing of motorcycles and luxury vehicles as well as manufacturing of aircraft
engines. BMW is known for its luxury vehicles and performance. Company has international
presence by means of group subsidiaries within 41 nations over 3000 local importers and
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dealership in over hundred nations (BMW Group, 2020). The BMW also has a strong position at
marketplace because of motorcycle sector and operates productively within the area of financial
services. Company operates their own financing business, which tenders financing for vehicles.
Therefore, BME has good and strong position in marketplace. Company develops, manufactures
and sells motorcycles, cars as well as accessories and spare parts worldwide.
Introduction about Ferrari
Ferrari is an Italian-Dutch luxury sports cat manufacture that was founded by Enzo
Ferrari in 1939 and headquartered in Amsterdam, Netherlands, Maranello, Emilia-Romagna,
Italy. Company was specialising in manufacturing of luxury sports car. Company has a rich
racing history as well as is a well-known premium car brand. Therefore, it is a multinational
organisation that was engaged in the engineering, design, production and sale of luxury
performance sports cars (Coccia, 2016).
Suggested operational strategies to gain market share from Mercedes Benz
The competitors of the market needed to adopt the different strategies through which they able to
gain the market share of Mercedes Benz (Marques, 2016). This has huge importance in the
current period of time because market situation of Mercedes is not good where customers also
finding the alternative options that able to provide them best deal. The big players of market like
BMW and Ferrari has the opportunity to focus over the market analysis and made changes in
their product for the attraction of new customers towards acceptance of their offerings. Now, it is
the duty over the management that they focus over the application of best develop strategy
through which they able to grab the competitive edge and gain the market share of other
competitors. In this regard, strategy of Ansoff is better as provides the four different
determinants from which an organisation selects the one which is best suited in the current
situation and help to grab the large market share (Gong, Greenwood and Song, 2017). The four
determinants of this strategy are defined below;
Market penetration: This is the strategy that includes improvement in marketing activities
through which an organisation able to improve the sales of current products and offerings. This is
the least risky strategy.
Market development: This is the strategy about the providence of existing product in new
market. This has risk but can ascertain the benefit of current performance of offerings in earlier
markets (Freitas, 2018).
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Product development: This is the strategy about the providence of new product in same
market. This has high level of risk but can take the benefit of brand image.
Diversification: This the strategy about the providence of new product in nee market. This
is the riskiest strategy to adopt (Steenkamp, 2017).
The one which will be best for the BMW and Ferrari is product development. Here, they
have to focus over the development of new electric vehicles that are more competent than the
offerings of Mercedes Benz and able to provide the large number of benefits. Here, they also
ascertain the benefit of current brand name and image. This will be the best strategy through
which they able to grab the large amount of market share.
CONCLUSION
It has been concluded from the that there is huge need regarding the regular analysis of an
organisational performance. This will provide the opportunity to gain the information about the
internal and external factors that have impact over business activities along with the
opportunities that are present in market to grab. This exercise improves the strength of the
management where they able to build the successful strategies and gain large market share. The
main role of such exercises is early identification of issues and deviations of performance so the
same will be removed through use of effective preventive measures. Mercedes Benz was going
through the large number of issues in past and management not focused over their recovery. This
was the main reason that organisation faced the decreasing trend of net income in year 2017,
2018 and 2019. Now, the way that helps an organisation in further attainment of same position in
market is improvement of quality and focus over the use of quality improvement strategies like
TQM and lean management. These not only help to improve the quality but also aid in reduction
of unnecessary expenses. The level of competition in automobile industry is high where big
players like BMW and Ferrari are present. In this situation, better for all organisations to focus
over maintaining quality of their offerings.
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REFERENCES
Books and Journals
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business operations and risk management. IEEE transactions on cybernetics. 47(1).
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of the management of technology leading to superior organisational performance in
the discovery process of R&D labs. Technology Analysis & Strategic
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Cytrynski, S., Neerpasch, U., Bellmann, R. and Danner, B., 2018. The active suspension of the
new mercedes-benz GLE. ATZ worldwide. 120(12). pp.42-45.
Follmann, J., 2019. The Mercedes-Benz Plant in South Africa as an Example of Restructuring–as
seen from a Different Perspective. In Deutsches Arbeitsrecht für ausländische
Investoren| German Labour Law for Foreign Investors (pp. 71-85). Springer Gabler,
Wiesbaden.
Freitas, D. M. D., 2018. Equity research-Ferrari NV (Doctoral dissertation, Instituto Superior de
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Gong, J., Greenwood, B. N. and Song, Y., 2017. Uber might buy me a mercedes benz: An
empirical investigation of the sharing economy and durable goods
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research in support of big data analytics for operations and supply chain
management. Annals of Operations Research. 270(1-2). pp.201-211.
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capabilities. U.S. Patent 10,250,520.
Ivanov, D., Tsipoulanidis, A. and Schönberger, J., 2017. Global supply chain and operations
management. A Decision-Oriented Introduction to the Creation of Value.
Kumar, S., 2016. Application of Six Sigma in Automobile Industry. Int. J. Explor. Eng.
Technol. 2(1). pp.39-44.
Liu, K. and Chen, Y., 2020. A Study Of Worldwide Patent Strength Of Competitors On
Autonomous Parking. System. 6(2).
Luthra, S., Garg, D. and Haleem, A., 2016. The impacts of critical success factors for
implementing green supply chain management towards sustainability: an empirical
investigation of Indian automobile industry. Journal of Cleaner Production, 121,
pp.142-158.
Marques, I., 2016. Business Process Reengineering At Mercedes-Benz (Doctoral dissertation).
Steenkamp, J. B., 2017. Global brand strategy: World-wise marketing in the age of branding.
Springer.
Uhl, A. and Gollenia, L. A. eds., 2016. A handbook of business transformation management
methodology. Routledge.
Zengin, S., 2018. Re-define Product and Services Development: A Customer-Centric Perspective
in Financial Services. In Strategic Design and Innovative Thinking in Business
Operations (pp. 311-330). Springer, Cham.
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BMW Group. 2020., [online] Available through: <
https://www.bmwgroup.com/en/company.html>
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