Mercedes Benz in New Zealand

This report examines the feasibility of Mercedes Benz expanding its business into New Zealand. It utilizes PESTLE analysis to assess the macro-environment and Porter's Five Forces model to analyze the competitive landscape. The report concludes that New Zealand's favorable business environment and Mercedes Benz's strong brand image create a promising opportunity for the company's expansion.

Mercedes benz in new zealand

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Global business environment is all the external and internal forces of the country that
influence the function and decision making process and resources and capabilities of the
organisation (Hamilton and Webster, 2018). Report is based on the Mercedes benz company,
which is the largest name among the luxury auto mobile brand in the world. It is a German based
auto mobile and known for the luxury vehicle, buses, coaches and trucks. Its headquarter is in
Stuttgart, Germany. In 2018, Mercedes benz was the biggest selling premium vehicle brand in
the world having sold 2.31 million passenger cars.
Report will include the global expansion of the Mercedes benz car in the New Zealand.
For this it will include the PESTEL and Porter's five force analysis of global business
environmental that strongly influence the expansion of the organisation in new country.
MAIN BODY
Background information of the organisation
Mercedes-Benz is a German based global auto mobile company. This Mercedes-Benz
brand is known for the luxury cars, truck, buses and coaches. The headquarter of the company is
in Stuttgart, Baden-wurttemberg, Germany. Mercedes-Benz is founded by Karl Benz in 1926,
92 years ago. In 1986 ' Benz Patent Motorwagen is considered to be the first auto mobile. T\he
three pointed star was incorporated as trade mark of the Mercedes. DMG management patented
the tree and as well as four pointed star in 1909. This Mercedes-Benz is subsidiary of Daimler
Limited company which is German multinational automotive corporation. Daimler was formed
with the merger of Benz & Cie and Daimler motoren in 1926 (Market share of new car
registrations in the EU: Mercedes,2019).
Mercedes-Benz is the producer of premium cars and the world's biggest manufacturer of
commercial vehicles. Vision and mission of the company is to be dedicated to0 their customers,
band committed to excellence aiming to provide premium solution for the customer, retail
partners and supporting them in every situation. It has 16 factories in 7 countries. In the February
2019, Mercedes-Benz had a market share of around 7.9 in the EU. The corporation is divided
into five different divisions: Mercedes-Benz cars, Daimler buses, Daimler trucks, Mercedes-
Benz vans and Daimler financial services. Mercedes-Benz cars has broad model range in 2017
Mercedes-Benz cars accounted for over 17 percent of worldwide Mercedes-Benz cars unit sales.

Mercedes-Benz follow the oligopoly market structure. In which oligopoly market
structure, market is being dominated by the few interdependent firms and likely change their
prices according to the competitors and have control o0ver the price of the products.
Major competitors of the Mercedes-Benz is Audi, BMW, Porsche, Lamborghini, Bentley
and Lexus. Sales of the Mercedes-Benz in 2018 was £2,382,791 in 2017 was £2,373,527 and in
2016 was £2,197,956. Revenue of the company in 2018 was £93,103 millio9n and profit
generated by the company in 2018 was £ 7582 million.
Background information on the business environment (New Zealand)
The economy of the New Zealand is the 53rd largest national economy in the world when
measured by the GDP, and the 68th largest in the world when measured by the Purchasing power
parity. New Zealand has one of the most globalised economies which largely depends on the
international trades special with Australia, European Union, the United states, china, south
Illustration 1: Mercedes: market share of February 2019
(source: Mercedes: market share of new car registrations in the EU from December 2017 to
February 2019)

Korea, japan and Canada. The population of the New Zealand is 4,792,409 in 2019 and GDP
was 42,940.58 in the year 2017 (Arora and Gourdie, 2017).
Analytical tools to be used
PESTLE
PESTLE is the strategic management tool that provide the useful framework to analyse
the macro environment factors on the business. It is the macro or external analysis of the external
environment in which business is operating or planning to be operate. These factors of macro0
environment are not controlled by the organisation but need be aware while making plan for
new business that affects and influence the business and trade policy. These factors are as follow:
 Political Factors – Political factors of the country is one of the most important factors
which affects the trade policy of the any business. Their legal rules and regulations and
the government policy affects the business that they made for their country. If the
government is stable of any country will decrease the chance of the any risk because legal
rules and policies would not be changes frequently in short time (PESTLE Analysis for
New Zealand,2019). In the New Zealand the risk of tradi9ng policy is high because the
government has changed in every three years. New government applies new rules and
policies, which could be good for the organisation but some times it create the risk of
changing policies that organisation need to be aware and also have to make changes in
their own trading policies and strategies. In same way labour forces is very expensive in
the New Zealand that could create the problem of managing the labours that a Mercedes
Benz is the big firm which need a high amount of the labours and employees because of
the high rate of the labours comp[any have to pay high amount to them. As in the high
lending rate in the New Zealand, to start the business in the new Zealand Mercedes-Benz
need vast amount of money which could be good for the government of the New Zealand
but it could reduce the profit and revenue of the Mercedes-Benz company. The business
freedom in New Zealand is 99.9% and trad freedom is 84.6% which gives the freedom to
any organisation for trading in the New Zealand (Cruz and Alley, 2017).
 Economic Factors – The economic condition of the New Zealand is good for the
trad9ingt and for the Mercedes-Benz as well. GDP of the New Zealand was 42,940.58 in
the year 2017. In 2016 New Zealand government revenue was NZD 90.833 billions
whereas expenditure was NZD 89.219 billions and the net government lending and

borrowing at NZD 1.604 billion in 2016 that shows that the New Zealand has enough
financial resources that were made available by the government to boost the economic
growth of the country. Resultant hoes hat the new Zealand economy is favourable for the
trading of the Mercedes-Benz company that it can expand its business here and the
government will also help them to lending and borrowing the finance and make available
all the resources that the Mercedes-Benz need to establish its company in the New
Zealand (New Zealand PESTLE Analysis & Macroeconomic Trends Market Research
Report,2019). New Zealand's people spend more which help[s to manage the circulation
of the money all over the country in terms of buying goods and luxury products and other
necessary products and its inflation and unemployment rate is also less than other country
that helps the country to increasing its GDP and if the inflation rate is low then any
commodity and services like labours, steel, iron and other products could be available at
very low price with help of this Mercedes-Benz can make profit can grow more in the
New Zealand. New Zealand is more suitable more producing luxury products like car for
the Mercedes-Benz (Jussani and et.al, 2015).
 Social and culture Factors – Every country haver different culture and their different
festivals. I the new Zealand there is majority of Christians, so during the time of the
Christmas increase the the import of the foods, beverage and electronic gadgets and cars
that also affects he economic condition of the country (Moutinho and Phillips, 2018). The
literacy rate is high and the unemployment rate is low that is good sign of the Mercedes-
Benz organisation that it can get the literate employees tat will boost the company growth
and expectancy is about 81 years which is a sign of good health of the New Zealand
population. If the people of the country are educated that will help to boost the economic
growth that they have the knowledge about latest technology that can help the Mercedes-
Benz to maximise its output at low cost and can make effective use of the available
resources. Social factors also include the attitude, power structure, migration for this
people of the New Zealand are educated and their attitude tow are the new things are also
favourable that they accept the new technology and the market easily and in the New
Zealand is full of resources at low price and all he technological improvement available
here, employment rate is high so the people of the New Zealand do not think to migrate

to new country. So the social and cultural factors of the New Zealand is favourable to
expand business in the New Zealand for Mercedes-Benz (Kelsey, 2015).
 Technological Factors – New Zealand has its own education system which is run by the
OECD for international students assessment ad it is constantly 7th best education system
around the world. Students shows their technical, mathematical and science skills and
teach others also. Which increase the literacy rate of the country that helps in developing
new technology in the country its self they do not need to borrow new technology from
the other country unless it is very necessary. New Zealand has made significant
development of the technology, it made available the internet in rural and urban areas.
Various mobile phone companies provide services at low price and the health care
services in the hospital, government introduced new health reforms to provide the best
medical felicity to people at their doorstep (New Zealand PESTLE Analysis &
Macroeconomic Trends Market Research Report,2019). This will help the Mercedes-
Benz company to build its new business n the new Zealand and will help in car
manufacturing and producing which need high technological equipment. New Zealand's
technological factors will support the Mercedes-Benz company for setting up its new
venture in their land and run the business smoothly with the availability of the new
resources and technology that will boost the producing and manufacturing function of the
Mercedes-Benz and also increase the sell of the car and increase the profit of the
company (Moutinho and Phillips, 2018).
 Legal Factors – The government has changed in every three years and new government
make their new rules, regulation and policy. Government has decrease the crime level in
the country so the people can enjoy the basic facility in the country. There is wide scope
in the country for international business and provide the freedom for trade that the
Mercedes-Benz can easily expand the business in New Zealand. The international
business has the full legal cover in the country that they can establish and run their
business without any fear of legal complication in the business activity (Pan, Chen and
Zhan, 2018). New Zealand provide all the legal facility of the organisation that have to
follow by the organisation if does not then influence the business of the Mercedes-Benz
company environmental policy that the organisation have to take care of the environment

while producing products and have to make their CSR policy that work for the
improvement of the society.
 Environmental Factors – New Zealand has its unique ecological system and is located
900 kilometres away from the Australia. New Zealand is an island country in the south
western Pacific Ocean (PESTLE Analysis for New Zealand,2019). Because of the being
an island risk of the heavy snowfall and heavy rain is always remain that can affect the
operation of the Mercedes-Benz company that the production of the company can stop
that the employees can not come on the work because of the changing environmental
condition.
Porter’s Five Forces Model
Porter'[s five forces model is the competitive analysis tool that is used to evaluate and
monitoring the strength and position of the competition and their intensity of the business in the
market. This theory is based on the concept of five forces that determine the intensity and
attractiveness of the competition in market, this model helps to identify the sustained position
and ability to make profit in the new marketplace (Porter's Five Forces: Analyzing the
Competition,2018). These five forces of the Porter that can influence the business are:
 Power of the supplier – Power of the suppliers largely depends on the number of the
suppliers, number of the substitutes suppliers available in the market, importance of the
business for the suppliers, switching cost and may more which force the organisation to
change in there pricing policy. When there is large number of the suppliers available in
the country for the Mercedes-Benz organisation, it will provide the ease in supply final
goods in the market at low price. If the number of suppliers is low it will increase their
price of supplying and with this Mercedes-Benz also have to increase their product price
that they have to pay more in supplying products or in the import and export of the raw
material for manufacturing of the cars (What is Five Forces Analysis,2019).
 Power of the Buyer – Customers are the main key for any business, every organisation
produce the goods for the customers and satisfying them. This force evaluate the power
of the consumers that affects the quality and pricing of the company. Thi9s depends on
the importance of the products, quality of the products, popularity of the products in the
market and etc. these things influence the customers to buy products. If Mercedes-Benz
does not produce the cars which is unique and give all the facilities that the competitors

not able to provide that that customers attract towards the Mercedes-Benz company car
that increase the sell and profit and thus affects the price that company can increase the
car price, if the customers does not buy cars and demand of the car gets low then
Mercedes-Benz company have to forcefully decrease their pricing (Stindt and et.al,
2017).
 Threat of substitutes and complementary goods – Competitors produce the substitute
products by using the different technology and try to solve the economic need of the
buyers. Like biggest competition of the Mercedes-Benz cars is Volkswagen, BMW,
Porsche and others who also try to provide the best cars at low price than the Mercedes-
Benz which is the biggest threat for the Mercedes-Benz that they also have to change
their pricing policy, quality of the products and design that can provide the best cars to
the customers and can increase their market share (Lüttgens and Diener, 2016).
 Threats of new entrants – New entrants in the auto mobile industry force and affects the
pricing policy of the products. But in the auto mobile industry threats of the new entrants
is particularly low. And Mercedes-Benz already has a big brand name in the auto mobile
industry that any new entrants can not down its brand image in the market and can not
down the business can not match its quality easily. For entrance in this auto mobile
industry need very large amount that anyone can not afford it that is great barriers to get
entry in this industry. So the threat of new entrants is low as respect to the Mercedes-
Benz (Toro-Jarrín, Ponce-Jaramillo and Güemes-Castorena, 2016).
 Competitive rivalry – Threats of the competition rivalry is high that there are many
industry who manufacture luxury cars like BMW, Porsche, Lamborghini, Bentley, Lexus
which launches the new advanced features cars and other vehicle that create the revelry in
the market for the Mercedes-Benz and force them to be change there pricing and
launched new designed car as opposed to its competition. But rivals in the market also are
the reason to be successful and become leader in the market. They influence and force to
produce and manufacture best quality products that will better than the competitors by
innovative technological changes. As the Mercedes-Benz use oligopoly market structure
that have the control over the quality and pricing of the market, so the competitive rivalry
does not force it at great extent (Porter's Five Forces: Analyzing the Competition,2018).

Illustration 2: tax structure of New Zealand
(Source: Tax structure compared to the OECD average)
Illustration 3: GDP ratio compared to the OECD
(source: Tax-to-GDP ratio compared to the OECD, 2017)

CONCLUSION
From the above study it has concluded that the macro environment of the New Zealand is
good for expanding the Mercedes-Benz new venture in the New Zealand. Its political,
economical, technological, legal, social all the external environment of the country is play
favourable role in accepting and running new business without any implication in the business
activity of the Mercedes-Benz. And also concluded the five forces of the porter's model that used
to analyse the intensity of the competition in the market does not affect the Mercedes-Benz
strongly as it is a biggest brand image in the luxury car manufacturing.

REFERENCES
Books and journals
Arora, A. and Gourdie, J., 2017. The impact of new financial reporting standards on charities in
New Zealand.
Cruz, J. and Alley, C., 2017. An analysis of how future investors and small financial institutions
in New Zealand can avoid the effect of double taxation on corporate profits.
Hamilton, L. and Webster, P., 2018. The international business environment. Oxford University
Press.
Jussani and et.al., 2015. Electric car and Porter’s five Forces: Marketing Positioning in the
Automotive Industry (No. 2015-36-0486). SAE Technical Paper.
Kelsey, J., 2015. The New Zealand experiment: A world model for structural adjustment?.
Bridget Williams Books.
Lüttgens, D. and Diener, K., 2016. Business model patterns used as a tool for creating (new)
innovative business models. Journal of Business Models. 4(3).
Moutinho, L. and Phillips, P., 2018. Strategic analysis. In Contemporary Issues in Strategic
Management (pp. 46-79). Routledge.
Pan, W., Chen, L. and Zhan, W., 2018. PESTEL analysis of construction productivity
enhancement strategies: A case study of three economies. Journal of Management in
Engineering. 35(1). p.05018013.
Stindt and et.al., 2017. On the attractiveness of product recovery: The forces that shape reverse
markets. Journal of Industrial Ecology. 21(4). pp.980-994.
Toro-Jarrín, M.A., Ponce-Jaramillo, I.E. and Güemes-Castorena, D., 2016. Methodology for the
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Roadmap. Technological Forecasting and Social Change. 110. pp.213-225.
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