Environmental Analysis of Mercedes Benz

This article provides an environmental analysis of Mercedes Benz using PESTLE and Porter's Five Forces analysis. It also discusses the resource capabilities, competitive strength, and weaknesses of the company.

Running head: ENVIRONMENTAL ANALYSIS OF MERCEDES BENZ
ENVIRONMENTAL ANALYSIS OF MERCEDES BENZ
Name of the Student
Name of the University
Author Note

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ENVIRONMENTAL ANALYSIS OF MERCEDES BENZ
Part 1
Macro-environmental analysis – PESTLE analysis
Factors Describe the
forces and the
impact of these
forces
Strength of the
forces
Need of
modification of
the strategies
Actions
recommended
for changes in
strategy
Political The regulations
and the rules of
government are
important
factors that
affect the
automobile
industry.
The government
forces are
strong in case of
the automobile
industry in
markets of
Europe and the
UK.
No The company
needs to
formulate the
strategies
according to the
regulations of
the particular
area.
Economic
conditions
The crisis in the
economic
conditions have
affected
Mercedes Benz
and the industry
as well.
The economic
conditions can
strongly affect
the operations
of the
automobile
industry.
Yes. The
company needs
to modify the
strategies
according to the
needs of the
economic areas.
The major
change needs to
be made in the
ways by which
the company
operates and the
prices charged.
Sociocultural
forces
These forces are
based on the
preferences and
the trends of
people.
The cultural
forces have
strong effect on
the automobile
industry (Bettis
et al., 2016).
Yes. The
product
offerings need
to change with
changes in the
trends.
The changes in
product
offerings are
important to
keep up with
the trends.
Technological
forces
The changes
that take place
in the
technological
environment
can affect the
systems that are
implemented in
the cars.
The
technological
forces can affect
the ways by
which the
investments are
made by the
company in
improved
technologies.
Yes. The
company needs
to change the
processes
within the cars
to keep up with
the
technological
changes.
The
technological
offerings can be
changed to in an
appropriate
manner to keep
up with the
demands of
customers.
Environmental
forces
The
environmental
forces are based
on the carbon
emissions made
by the cars and
the friendliness
with the
environment.
The
environmental
forces have a
strong effect on
the ways by
which the
company affects
the external
environment.
Yes. The
company needs
to update the
products so that
they
environment
friendly.
The
organization
needs to update
the products so
that the harmful
emissions are
reduced.

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ENVIRONMENTAL ANALYSIS OF MERCEDES BENZ
Legal and
regulatory
forces
The laws and
the regulations
that are made
by the
government
affect the
international
market.
The regulations
and laws in the
external
environment
affect the
operations of
the company.
Yes. The laws
and regulations
affect the ways
by which the
organizations
develop the
operations
(Steinbach et
al., 2017).
The company
needs to modify
the strategies so
that they are
able to comply
with the rules.
Industry analysis – Porter’s five forces analysis
Forces Describe the
forces and the
impact of these
forces
Strength of the
forces
Need of
modification of
the strategies
Actions
recommended
for changes in
strategy
Competitive
rivalry
The premium
and luxury
automotive
industry us
competitive in
nature with
major
organizations
like, BMW,
Lexus and
Audi.
High Yes Strategies need
to be modified
by Mercedes
Benz to keep
with the
competition.
Threats of new
entrants
The barriers to
the entry of new
companies are
high so the
threat of new
entries is low.
Low No The
modification of
strategies is not
required for the
industry as the
low entry of
new
organizations is
constant.
Bargaining
power of the
suppliers
The huge
number of
suppliers of the
automotive
industry is a
major reason
behind the low
power of the
suppliers.
Low No The low
bargaining
power of the
suppliers is
important for
smooth
operations of
the company.
Bargaining
power of the
buyers
The high
bargaining
power of the
High Yes Mercedes needs
to develop the
products in such

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ENVIRONMENTAL ANALYSIS OF MERCEDES BENZ
buyers is due to
the existence of
large number of
companies.
a manner which
will help in
differentiating
from the other
companies.
Threats of the
substitutes
The threats
related to
substitutes are
low as the
luxury cars face
completely
different
purpose as
compared to the
low budget cars.
Medium Yes The company
can develop
cars which fulfil
the purpose of
showing status
symbol and
further provide
efficiency as
well (Durand,
Grant &
Madsen, 2017).
Position of the industry rivals
The major competitors of Mercedes in the industry are, Audi, BMW, Lexus, Volvo,
Porsche and Jaguar. High Price
Jaguar Mercedes Benz Audi
Infinite BMW
Low Quality High Quality
Volkswagen Ford Honda
Toyota
Dacia Renault
Low Price

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ENVIRONMENTAL ANALYSIS OF MERCEDES BENZ
Key success factors
The key success factors that have led to the growth of Mercedes in the market are
mainly based on the variety of high quality and high performance luxury cars that are offered
to the customers (Mercedes-Benz. 2018).
Profitability offered by the industry
The automobile industry has huge prospects based on profitability that can be
provided to the customers who are an important part of the company. The products of the
organization are mainly offered to the premium high income based group (Frynas & Mellahi,
2015).
Part 2
Resource capabilities of Mercedes Benz
Resource
based
capability
Valuable Rare Imitable Non-
substitutabl
e
Contribution
of the
resource to
competitive
advantage
The high
quality
research and
development
of Mercedes
High High Medium Medium This quality
helps the
company to
create a
different
position in
the market.
The
luxurious
sedan
designed by
Mercedes
High Medium Medium Medium The high
quality and
luxurious
sedan that has
been
provided by
the company
has helped in
maintaining
its
competitive
advantage
(Hill, Jones

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ENVIRONMENTAL ANALYSIS OF MERCEDES BENZ
& Schilling,
2014).
Competitiveness of the cost structure and value proposition of customers
The value proposition of the company is mainly to provide the highest amount of
comfort to the customers. The company also aims to develop the safest and most reliable cars
in the luxury car based industry.
Competitive strength of the company
The major competitive strength of the company related to the rivals is based on the
levels of safety that are provided by the cars. The premium customers are mainly affected by
the products and the services that are provided by Mercedes (Morschett, Schramm-Klein &
Zentes, 2015).
Weaknesses of the company
The high cost of the after sales services that are provided by Mercedes is a major
weakness. The goals of the group of organization have conflicts with each other. The
distribution based facilities of the company have also fallen short (Stacey & Mowles, 2016).

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ENVIRONMENTAL ANALYSIS OF MERCEDES BENZ
References
Bettis, R. A., Ethiraj, S., Gambardella, A., Helfat, C., & Mitchell, W. (2016). Creating
repeatable cumulative knowledge in strategic management. Strategic Management
Journal, 37(2), 257-261.
Durand, R., Grant, R. M., & Madsen, T. L. (2017). The expanding domain of strategic
management research and the quest for integration. Strategic Management
Journal, 38(1), 4-16.
Frynas, J. G., & Mellahi, K. (2015). Global strategic management. Oxford University Press,
USA.
Hill, C. W., Jones, G. R., & Schilling, M. A. (2014). Strategic management: theory: an
integrated approach. Cengage Learning.
Mercedes-Benz. (2018). Retrieved from https://www.mercedes-benz.com/en/
Morschett, D., Schramm-Klein, H., & Zentes, J. (2015). Strategic international
management (pp. 978-3658078836). Springer.
Stacey, R., & Mowles, C. (2016). Strategic management and organisational dynamics: The
challenge of complexity to ways of thinking about organisations.
Steinbach, A. L., Holcomb, T. R., Holmes, R. M., Devers, C. E., & Cannella, A. A. (2017).
Top management team incentive heterogeneity, strategic investment behavior, and
performance: A contingency theory of incentive alignment. Strategic Management
Journal, 38(8), 1701-1720.

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ENVIRONMENTAL ANALYSIS OF MERCEDES BENZ