Managing Innovation in Business: A Case Study of Mercedes Benz

This report discusses the innovation history and capabilities of Mercedes Benz in managing innovation in business. It covers the four-dimensional innovation spaces, existing innovation capabilities and performance, and the industry in 2021. The report highlights how Mercedes Benz has maintained its position as a leader in the automobile industry through product, process, position, and paradigm innovation.

Managing Innovation
in Business

EXECUTIVE SUMMARY
This report will cover background information about auto mobile industry which in walls
regular innovation in their products and services. Innovation is the main element in an
organisation which enhance their sales and demands by adding new features on regular basis. It
is analysed that organisations should match the level of current market trends in order to gain
different competitive advantages. It is easier for an organisation to enhance demands of their
customers by providing them with unique and attractive features which are completely different
from the offerings of their competitors. Competitive rate of an industry is easily improved by
involving creativity in their different services and products. Organisations can adopt various
technological advancements by involving tools and tech names which are highly profitable for
customers as well as for organisation. For maintaining long-term sustainability in large market
areas it is essential to improve productivity by adopting innovations in cost-effective manner.
This report will include different innovations and innovative history of an organisation. The rate
of growth which organisation have adopted with the help of their capabilities and performances
are discussed in this report.

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Organisation and its innovation history..................................................................................1
Existing innovation capabilities and performance of an organisation....................................3
The industry in 2021...............................................................................................................5
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Innovation management a reference to the process of managing changes and innovative
procedures so that organisation can implement innovations in successful manner. Different
activities, practises and decisions are combined so that innovative strategies can be formulated
for achievement of goals (Biazzo and Filippini, 2021). Challenges can be easily overcome with
the help of innovative changes in an organisation which results in higher profitability.
Organisations can easily compete in the market by offering advanced and upgraded services to
their targeted audience. This report is based on Mercedes Benz which is a luxury vehicles
company. It was founded in 28 June 1926 by Karl Benz and headquartered in Stuttgart,
Germany. This report will include overview of industry and organisation along with its
innovation history. The existing innovation performances of an organisation is discussed and its
current capabilities are also mentioned in this report.
MAIN BODY
Organisation and its innovation history
Mercedes Benz manufactures commercial and luxury vehicle for their targeted customers
under their brand name. They are famous in all over world for offering premium vehicles and
services. Mercedes was the first brand who have created first internal combustion engines in their
vehicles. Large number of compilation of innovations are involved in the manufacturing
procedures and also focus on technology and safety altogether. In 1901 Mercedes Benz I have
developed a honeycomb radiator which assist in cooling engines of vehicles and have unique
texture which is a remarkable innovation created by them (Sanz-Llopis and Ostermann, 2020).
This attract large number of customers as this was very unique feature which was invented in
automobile industry. In 1906 they have a novated electric powered car which can be easily
operated with the help of batteries. Various vehicles of Mercedes such as trucks, fire service
vehicles, passenger cars and buses become available in electric powered which save lot of natural
resources and fuels. This also reduces pollution from environment by using electricity rather than
fuel for their operation which is a positive factor. After that they have also invented various
features so that they can compete their competitors in effective manner. Those innovation
includes a multi wave engines, supercharged engine, four wheel independent suspensions and
1

many more. All these innovations collectively help Mercedes Benz in attaining highest position
in auto mobile industry which make them first priority of large number of customers.
The four-dimensional innovation spaces
With the help of advanced technology organisations carry out new innovations that provide
better quality and services to their targeted customers. Mercedes Benz gains various competitive
advantages by adding new features and benefits in their existing products and innovating new
services which assist them in enhancing their revenue generation. The 4 P’s of innovation are
discussed below:
Product innovation: It suggest that organisations can involve alterations and changes in
their products and services so that they can satisfy the requirements of the customers. They can
change entire product or modify their existing products which can compete other organisations in
effective manner. Mercedes Benz have added large number of innovations in several years which
assist them in maintaining their brand image in all over the world.
Process innovation: This refers to the operations which companies use in order to satisfy
the needs of their targeted audience by involving some of the innovations. This results in
improving sustainability of an organisation for longer period of time (Sanchez-Herrero and et.al.,
2019). Mercedes Benz a focus on modifying their operations in tech related manner so that they
can make their vehicles more advanced. Technology is used for making innovative modifications
which acquire large market area with the help of their advanced benefits.
Position innovation: This factor focuses on targeting different segments of audience so that
organisation can generate revenues from diversified areas. It can be possible by adding
innovative features which are demanded by different segments of customers so that organisation
can satisfy the needs and wants of particular segment. Mercedes Benz also focuses on different
segments by offering luxury vehicles along with commercial vehicle so that they can target
different segments. They have added features according to the preferences of different segments
so that they can innovate according position-based customers.
Paradigm innovation: Organisation involves modifications and they shift their targets
according to the most profitable segment of the society. Mercedes Benz also involves themselves
in making electric vehicles for their new segments who majorly prefer those types of vehicles. It
increases their market share by diversifying their offerings in two different regions by fulfilling
requirements of different segments.
2

Existing innovation capabilities and performance of an organisation
Innovation is vital part for an organisation so that they can maintain their brand image in
market in better manner. Businesses can use various resources and technologies and invest huge
capital in innovating their products and services so that they can remain at highest position which
can on best possible revenues (Bahl, Lahiri and Mukherjee, 2021). They have acquired large
market area with the help of continuous innovation in their services and products by adopting
new features and techniques which are remarkable. Majorly focus on driving enjoyment, safety
and performance of their vehicles so that they can retain their targeted customers in effective
manner. In order to analyse internal factors of Mercedes Benz of which is support innovation a
swot analyses can be carried out which easily evaluate their performance. The analysis is
mentioned below:
Strengths Weaknesses
 One of the most attractive strengths of
Mercedes Benz is that they are the
leader in innovation. They are the first
company in auto mobile sector who
have introduced fuel injections, Diesel
engines, anti locking brakes and many
more advancements. It assists in
attracting different segments of
customers in appropriate manner.
 They are financially very well
developed organisation which assist
them in innovating and large number of
features for the targeted audience. West
Indies Benz regularly manufacture new
models and involve technological
innovations in their existing vehicles
which is positive factor for them.
 Being a luxury brand, it is a challenge
for them to fulfil the requirements of
each and every segment of society.
Mercedes Benz offers expensive and
premium vehicles of higher ranges
which is not affordable for every
customer.
 Mercedes Benz offers their vehicles in
limited global areas which results in
acquiring some of the places from large
society (Simmers and McMURRAY,
2019). It Affect the supply of vehicles
as they do not offer a product in every
country which is beneficial for their
competitors.
Opportunities Threats
 Due to continuous technical updates in  Some of the negative factors like a
3

vehicles, Mercedes Benz offers hybrid
features to their customers which
provides them opportunity to generate
higher revenues. It assists them in
collaborating with different
manufacturers of luxury vehicles and
electric car manufacturers.
 Increase in demand of luxury cars help
Mercedes Benz in generating a large
revenue as it increases their sales. It
provides them opportunity to expand
their offerings in underdeveloped
countries so that they can acquire
market.
fluctuation in the prices of fuels
majorly affect the demand of luxury
vehicles. Increase in prices of raw
materials and steel also negatively
affect manufacturing cost of vehicles in
Mercedes Benz which is a threat for
them.
 Various governmental policies affect
operations and profitability of auto
mobile sector. Mercedes Benz has to
pay heavy taxes which are mandatory
for them becomes threat is it affect their
profitability.
It is evaluated from the swot analyses that Mercedes Benz has enough resources which
includes a physical resource, financial resources, intellectual capital resources and Human
Resources. All these resources collectively help them in adding innovative features in their
vehicles in cost-effective manner. It provides the various competitive advantages which increase
their profitability rate. They tried to innovative features which are completely different from their
competitors so that they can ask tablet is different and unique brand image in their market. They
have also introduced tele aid in 2000 which is a better feature for security and also provide a
large number of navigation features (Saiz-Alvarez, 2019). It assists in making better connection
between drivers and cars with the help of computers, smartphones and buttons which are present
inside the car. They have tried to involve all the solution for digital problems that customers a
face so that they can increase their sales in most appropriate manner.
They can overcome various competitive forces including power of buyers, competitive
rivals, power of suppliers, threat of new entrants and substitute products. Overcoming all these
factors assist organisation in achieving success and goals in best possible manner which can be
done with the help of better innovations (Dodgson, Ash, Andrews and Phillips, 2021). They have
utilised various resources in their production processes including technological advancement so
4

that their value chain can remain in positive position. Mercedes Benz house be strong
relationship with their suppliers and competitors so that they can engage them by providing
better services and support on regular basis. Their innovations also include advancement in
customer relationship management so that they can support their customers by solving their
problems and queries.
The industry in 2021
Mercedes Benz focuses on inventing innovations which creates remarkable performance of
their overall brand in automobile industry. They analyse it demands and the requirements of their
customers with the help of various tools and techniques such as the reviews and feedbacks from
social media platforms. It assists them in involving features which are according to the current
market trends so that they can formulate competitive edge in the market. They invest huge
capital into research and development so that they can invent new technologies which can be
added in their vehicles. New features improve connectivity with the targeted audience which is
essential for growth and expansion. In 2021 they have invented second generation of MBUX in
their new S class. It includes five screens in their cars which involves OLED technology
(Ingram, Gaskell, Mills and Dwyer, 2020). The 3-D driver display and touch buttons make cars
more unique and attractive which allows driver in maintaining effective eye tracking. The
interior of Car involves learning algorithms and control panels which is one of the most attractive
features of Mercedes Benz cars. Different features like to ambient lighting, driving assistant
package, rare airbag, rear axle steering, over the air software, pre safe function, drive pilot and
digital light are some of the latest innovations. Despite the pandemic situation they have
generated higher revenue by fulfilling the requirements of the targeted customers in most
appropriate manner.
Mercedes Benz believes in enhancing experience of their customers on a larger scale by
providing them customise features. Travel and riding experiences of customers are improved
over the periods which is most pause it fat tyre for them to capture market area. Internet
connectivity in car assist customers in overcoming various challenges and problems in their day
to day travelling. Mercedes Benz have invested large capital in manufacturing electrical vehicles
so that they can make environment safer and more secure place for living beings. Large number
of fuels and gases which are non-renewable can be saved by them so that future generation can
also utilise them for different practises. Automated innovation becomes a solution for controlling
5

pollution from the environment is most likely feature of these passenger cars which add value in
their products and services. Mercedes Benz customised services according to the performance,
safety, sustainability and reliability which engage their customers for longer period of time.
Promising features like vehicle connectivity, shared mobility, artificial intelligence, human
machine interface, 3D effects and autonomous vehicles are included in the protection procedures
(Pandit, Joshi, Sahay and Gupta, 2018). Combination of all these features assist organisation in
competing with their competitors by developing interest of their customers in effective and
efficient manner. Autonomous vehicles assist drivers in analysing obstacles on the roads with the
help of computer vision which make journey more safer.
CONCLUSION
From the above report it can be analysed that innovation is major part of an organisation
which in proved their productivity. Offering something new to customers can add value in the
product and services which retain them for longer period of time. Regular modifications and
alteration develop interest of targeted audience which assist in higher revenue generation.
Organisations can achieve higher positions in their respective industries by upgrading their
services with the help of advanced technologies. This report includes about overview of an
organisation and its industry which includes different products and services. Their capabilities
are analysed so that innovation can be carried out an appropriate manner in order to capture the
large market share. Performance of an organisation in current time period is evaluated so that
level of innovation can be identified.
6

REFERENCES
Books and Journals
Podshivalova, M.V. and Almrshed, S.K.K., 2021. Managing the innovation potential of small
high-tech enterprises. Upravlenets, 12(4), pp.16-27.
Biazzo, S. and Filippini, R., 2021. Managing Product Innovation: A Framework. In Product
Innovation Management (pp. 21-39). Springer, Cham.
Sanz-Llopis, J. and Ostermann, M., 2020. Innovation in project management through framing
and challenge redefinition. International journal of managing projects in business.
Sanchez-Herrero and et.al., 2019. Educational Innovation Techniques Based on Assessment and
Development of Student Potential. In Organizational Transformation and Managing Innovation
in the Fourth Industrial Revolution (pp. 265-286). IGI Global.
Bahl, M., Lahiri, S. and Mukherjee, D., 2021. Managing internationalization and innovation
tradeoffs in entrepreneurial firms: Evidence from transition economies. Journal of World
Business, 56(1), p.101150.
Simmers, C.A. and McMURRAY, A.J., 2019. Organisational justice and managing workplace
innovation: How important are formal procedures?. International Journal of Innovation
Management, 23(03), p.1950026.
Dodgson, M., Ash, S., Andrews, J. and Phillips, N., 2021. Managing technology-enabled
innovation in a professional services firm: A cooperative case study. Academy of Management
Discoveries, (ja).
Ingram, J., Gaskell, P., Mills, J. and Dwyer, J., 2020. How do we enact co-innovation with
stakeholders in agricultural research projects? Managing the complex interplay between
contextual and facilitation processes. Journal of Rural Studies, 78, pp.65-77.
Pandit, D., Joshi, M.P., Sahay, A. and Gupta, R.K., 2018. Disruptive innovation and dynamic
capabilities in emerging economies: Evidence from the Indian automotive sector. Technological
Forecasting and Social Change, 129, pp.323-329.
Saiz-Alvarez, J.M., 2019. Managing social innovation through CSR 2.0 and the quadruple helix:
a Socially inclusive business strategy for the Industry 4.0. In Organizational transformation and
managing innovation in the Fourth Industrial Revolution (pp. 228-244). IGI Global.
Podshivalova, M.V. and Almrshed, S.K.K., 2021
7

8

9