Mercedes Benz: A Comprehensive Analysis of Competitive Advantage and Market Dynamics

This research study delves into the competitive landscape of Mercedes Benz, a global automotive giant known for its luxury vehicles. The report analyzes the company's strengths, weaknesses, opportunities, and threats using Porter's Five Forces and PESTLE frameworks. It examines the company's competitive advantage, including its supply chain, pricing strategy, brand value, marketing efforts, and human resource management. The study also explores the external factors influencing Mercedes Benz's growth in the UK market, including political, economic, social, technological, legal, and environmental factors. Finally, the report provides recommendations for Mercedes Benz to enhance its market position and achieve sustainable growth.

Extended Business Project –
Individual Report Framework: Mercedes
Benz

Table of content
1. Introduction...............................................................................................................3
2. Company Overview..................................................................................................3
3. Competitive advantage.............................................................................................4
4. Analysis tools............................................................................................................5
5. Recommendations....................................................................................................9
6. Conclusion................................................................................................................9
Reference list..............................................................................................................10

1. Introduction
This research study is made to understand the various factors that can affect the
growth of a business and for this research study, the company is Mercedes Benz.
The research discusses both past and present position of the company and the
forces that are used by the company to make a prominent and effective impact to its
rivals in the market with same business type. The study involves the analysis of
different external factors that can affect the growth of the business with the help of
PESTLE. Porter’s 5 Forces analysis has been used to understand the market
conditions which can be studied and considered by the marketers of the company to
make the company grow more successfully.
2. Company Overview
Mercedes Benz is a global automobile industry that started its company year of
1926. The company mainly deals with luxury cars manufacturing. This is the first
company that came up with the idea of petrol-powered moving vehicles. The
company is a tie up of two different companies, ‘Mercedes’ and ‘Benz’ and these two
companies were owned by Gottlieb Daimler and Karl Benz respectively (LaMondia et
al., 2016). These two companies are having its base at Germany. The company
became a brand after the human race understood the importance of luxury. This
company mainly manufacture cars and apart from that, the company also
manufactured vans and trucks but it never received that much market attention like
the cars. The company is famous for its product’s quality and longevity. The
company faced a downfall in its brand image in the period of 1990s but it again
gained the market position in the era of 2000s. The company manufactures a vast
range of cars from sports car to hatchback cars. The company is now a leading
automobile manufacturing brand in the globe, having its market in most part of the
world. The company distinguishes their cars’ models by segmenting them with
alphanumeric orders. This alpha numeric concept came up in the year of 1994 and is
still continuing (Mgbemena and Bell, 2016). The company also develops a huge
number of cars and they are also separated by different fuel consumption process,
from CNG to Petrol. The cars that were previously made by this company were only
for the purpose of luxury and this motive remained same till now. Only the customers

who are concerned about their luxury and sometimes performances, are the
potential customers of Mercedes Benz.
Figure 1: The growth rate of Mercedes Benz
(Source: Americanmuscle.in, 2018)
The above graph shows the market growth of the Mercedes Benz since 2014 till
2017. This shows how drastically the demands for cars manufactured by Mercedes
Benz have grown over the last three years.
3. Competitive advantage
Competitive advantage defines the gain of market position both by financial and
positioning over the competitors providing same products or service to the customers
in the same market. Few points on how Mercedes Benz makes competitive
advantages are discussed below:
Supply chain: As the company deals with manufacturing cars, it is necessary for the
company to make an effective supply chain management and this company is very

much constant with its supply chain. This makes the company different from different
companies providing same product type.
Pricing: When it comes to price, customers are very much aware of what they can
maximum receive from a company by expending the least. The Company divides
their products with different pricing and this makes customers to buy product from
this company. The pricing are made on the basis of different product features and
this makes the company more attractive to the customers.
Brand values: Mercedes Benz became a brand after it has gained popularity in the
automobile industry. This brand value is something that makes the customers to rely
on the company from which they are purchasing the product.
Marketing: A company like Mercedes Benz have a huge marketing chain as they
are performing over the global market. The company makes best possible marketing
strategies based on different targeted market and this help the organization to
understand the different needs of customers with different background.
HR: The Company recruits eligible human resources that makes proper usage of
available resources and also help in creating a healthy relation among the internal
and external public with the company. The internal and external public involves the
workers, the raw material suppliers and definitely the customers. The human
resource team also help to maintain a proper workflow between the different
departments that are there in the company.
4. Analysis tools
Porter’s 5 Forces
The porter’s five forces discuss the effect of five factors that can help the company to
understand the market threats and scopes. This can be used by the company to
understand the market condition more effectively (Porter, 2008). With the help of this
analysis the condition of the buyers, suppliers and also the rivals can be done.

Figure 1: Porter’s five forces
(Source: Jussani et al., 2015)
Threats of new entry (LOW): This states the emergence of new industries in the
present market and how it is limiting the growth of the chosen company. The entry of
new companies in the market of UK is few and thus, this company can make the
company perform the way they are doing right now. The company already
possesses a brand value which the new company can never acquire. As the
economy of UK is facing a downfall because of Brexit, the taxation policies are
getting higher in values which are limiting the entry of new companies in the market.
Buyer’s power (HIGH): As Mercedes Benz is an automobile industry; the targeted
buyers of the company can shifts its bargaining attitude towards the other available
companies providing the same type of products to them (Jussani et al., 2015). It is
very much essential for the company to understand the buyer’s power as this can
help the organization to produce the product the way the customer demands.
Threats of substitutes (HIGH): As there is presence of different companies
providing the same kind of product, the buyers can easily shift to other companies for
fulfilling their demands. The buyers always tend to get more benefits by spending
less money. If the targeted customers find that they can get more benefit from the
other automobile companies, the buyers can easily change their preference from
Mercedes Benz to some other company.

Supplier’s power (MEDIUM to LOW): The main suppliers of the automobile raw
materials are generally in tie-up with Mercedes Benz, the main material that is
required for cars manufacturing is steel and as there are only few companies that are
supplying the raw materials, this limits the shift in bargaining powers of the suppliers
in supplying the raw materials that are needed by the company (Collis and
Montgomery, 1999).
Competitive Rivalry (HIGH): In the present market of UK, as there are many
different companies are already existing and providing the same product line dealing
with luxury cars, the customers can easily shift their preference from Mercedes to
any other companies. This can become a threat to the chosen company. The
customers will be choosing the company providing the same quality products with a
low pricing or rather the customers will tend to fetch the same features from different
company at a lower rate.
PESTLE ANALYSIS
In this part of the research work, the various external factors of the market are
analyzed so that the market condition can be understood by the marketers of the
company to make proper strategies that can support the growth of the business and
can gain competitive advantage over its rivals in the market of United Kingdom
(Australia, 2017).
As the chosen company is already having its operation in the market of UK, it is very
much essential for the company to understand the various external factors of the
market that can either foster or limit the its growth. This analysis is important to plan
the strategies that the company can exercise in the future to make proper growth in
the economy.
Political factors
The policies made by the existing political groups of United Kingdom and the
decisions made by them are stable, which can stand beneficial for Mercedes Benz to
exist in the present economy (Mgbemena and Bell, 2016,).
Because of Brexit, the political stability might be hampered and this can affect the
growth of the company in the near future.

Economic factors
As there is increasing number of migrants, the government is spending more of the
government funds on the migrants, this can affect the company by not passing any
loan if it requires in the future.
As the economy is facing a downfall because of Brexit, it becomes tough for the
industry to run its business function easily.
As the per capita incomes of the individuals are comparatively higher than the other
economy, an individual can afford a luxury car of Mercedes. This is beneficial for the
company as this will increase the sales at a higher rate. On the other hand, as the
economy is facing inflation, this will negatively affect the sales growth of the
company
Social factors
The recent trend of automobile industry is changing so the company must work
according to the demand of the targeted customers.
As the economy of UK consists of a large population number it becomes easier for
the company to make a continuous growth. The economy of the present market is
much liberal and this can also enhance the company to perform more effectively.
Technological factors
The technology availability in the market is high and this is a benefit, which the
company can enjoy while performing in the market.
The work forces in the present market are aware and familiar with the various
technologies that are available in the present market and this is again a benefit for
the company to make successful business functions.
As there is available sources of updated technologies, Mercedes Benz can produce
a larger number of cars in a less time frame. This will help the company to maintain
its production level.
With the help of advanced technology, the company can also deliver the product
knowledge to a larger mass by choosing the suitable media platforms.
Legal factors

As the laws of UK are changing because of the Brexit, the company can face a
problem because of this. The legal factors involves the various laws related to safety
and health issues of the workers, the working time of the labours and also the laws
related to the customers. If there is stability in the laws and policies that are made by
the government of UK, the company can perform well in this economy.
Environmental factors
The present government of UK is getting more aware of the environmental issues
that are getting degraded because of the automobile industries; this affects the
company by making proper implication of technology, which reduces emersion of
carbon particles in the air.
5. Recommendations
By over viewing the market growth of the last few years it can be recommended that
if the company makes car segmentations more clearly, the company can attract a
huge customer base depending on which market the company is about to make the
changes. The company can again develop new ideas for extending the vans
manufacturing process, this can even attract customers who are need of this product
line. The company can also use the smart branding techniques so that it can reach a
larger number of customers in urban areas. The company must be flexible to the
different market conditions to sustain its profit rates and also to grow more in the
near future.
6. Conclusion
A conclusion can be made that the company can increase its market advantage if
there is proper implementations of the strategies are made. Mercedes Benz though
being a global leading company in the automobile industry is losing its value and
somewhere. The marketers of the company should make proper strategies
depending on the market conditions. The research involves the PESTLE analysis
and Porter’s five forces analysis so that the company can examine the market
conditions and also the market position of the company and also its rivals.

Reference list
Americanmuscle.in. (2018). Muscle cars in india| Classic american cars for sale |
American cars for sale. [online] Available at: http://americanmuscle.in/ [Accessed 16
Apr. 2018].
Australia, M.B., 2017. Change Process.
Collis, D.J. and Montgomery, C.A., 1999. Competing on Resources: Strategy in the
1990s. In Knowledge and strategy(pp. 25-40).
Jussani, A.C., Heer, A., Ibusuki, U. and de Moura Côrtes, C., 2015. Electric car and
Porter’s five Forces: Marketing Positioning in the Automotive Industry (No. 2015-36-
0486). SAE Technical Paper.
LaMondia, J.J., Fagnant, D.J., Qu, H., Barrett, J. and Kockelman, K., 2016. Shifts in
Long-Distance Travel Mode Due to Automated Vehicles: Statewide Mode-Shift
Simulation Experiment and Travel Survey Analysis. Transportation Research
Record: Journal of the Transportation Research Board, (2566), pp.1-11.
Mgbemena, C. and Bell, D., 2016, April. Data-driven customer behaviour model
generation for agent based exploration. In Proceedings of the 49th Annual
Simulation Symposium (p. 21). Society for Computer Simulation International.
Porter, M.E., 2008. The five competitive forces that shape strategy. Harvard
business review, 86(1), pp.25-40.