Porter's Five Forces Analysis of Mercedes

This assignment analyzes Mercedes-Benz using Porter's Five Forces framework to understand its competitive position within the luxury car industry. It examines factors like threat of new entrants, bargaining power of buyers and suppliers, and the intensity of rivalry among existing competitors. The analysis aims to identify key challenges and opportunities for Mercedes-Benz, informing strategic decisions for sustainable success.

PORTERS 5 FORCES ANALYSIS
OF MERCEDES

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK...............................................................................................................................................1
Porter's five model.......................................................................................................................1
Application of model...................................................................................................................1
Ethical issues...............................................................................................................................2
Benefit and challenges of working as team.................................................................................3
CONCLUSION................................................................................................................................3
REFERENCES................................................................................................................................4

INTRODUCTION
Present study is based on Mercedes, it is the global brand that offers high quality
premium auto mobile products to consumers globally. Current assignment will explain porter's
five forces of Mercedes (Rothaermel, 2015).
TASK
Porter's five model
Porter's five forces is the strategic analyses tool that helps in analysing competitive forces
and identifying strategies of the firm in effective manner. It focuses on five main competitive
forces that influence overall working of industry significantly (Yunna and Yisheng, 2014). These
forces are: competition, threats to new entrants, power of suppliers, power of customers, threats
to substitute products.
Application of model
Supplier bargaining power
Auto mobile industry is the big industry where power to suppliers are between
low to medium. Mercedes requires many kinds of raw material such as hardware parts etc. in
order to manufacture a quality cars (Pisano, 2017). In this respect cited firm makes connection
with mass suppliers. There are many suppliers those which provide these raw material to the
Mercedes. If one supplier offer raw material at high cost then entity can move towards other
suppliers. Thus, power of suppliers is slow. Mercedes has developed strong relationship with its
suppliers that helps the cited firm in conducting its operations in smooth manner.
Competition
There are many competitors of Mercedes such as Audi, Toyota etc. All these are global
brand and are offering high quality products to consumers. Ion such condition rivalry among
existing competitors is high in the Mercedes (Sölvell, 2015). Cited firm has to face huge
competition that creates difficulty for the entity to sustain in the market for longer duration. In
order to face this competition cited firm has to make modification and have to implement the
latest technologies so that it can gain competitive advantage in the market.
Bargaining power of buyers
Power of consumers is medium to high, consumers have variety of choice and they can
buy smilier products from other firm (Ortega, Jalón and Menéndez, 2014). Though, Mercedes
offer high quality premium products as per the needs of consumers thus, people are very satisfied
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with the brand. They are enjoying services of the business. But if they do not get their required
auto mobile products in Mercedes then they can move toward other car manufacture firm easily.
This can influence overall operation of the business (A Porter’s Five Forces Analysis of the
Luxury Cars Industry, 2017).
Threat to substitute products
Mercedes has high threat to the substitute products because there are many firm those
which are offering luxurious cars to the consumers. Though company conducts market research
and analyses needs of the customers. Cited firm offer products and services to them as per their
requirements so that they feel satisfied and like the products of the business (Rothaermel, 2015).
BMW, Toyota, AUDI offer same products in the same market that can influence mind of
consumers. Thus, Mercedes has high threats from substitute products.
Threat to new entrants
It is considered as another major force that influence overall strategic decision of the
industry. Mercedes is the luxury car manufacture firm that is performing well in the global
market. Auto mobile is the sector in which new entrants can not come easily because it requires
huge investments. Apart from this, new firm is required long term experience in the market in
order to conduct operations well. If any new entity enters into the business then there is high
chance to face huge loss thus, threats to the new entrants for the Mercedes is low (Yunna and
Yisheng, 2014).
Ethical issues
It is responsibility of the Mercedes that to take care of ethical aspects and conduct the
business in ethical manner. If cited firm fail to carry out the business in ethical manner then it
may create difficultly for the business to great extent and it may fail to sustain in the market for
longer duration (Pisano, 2017). Cited firm is required to advertise its cars in ethical manner.
There should not be any kind of words or images that hurt to any culture. If it damages any
culture then it may impact negative on the brand image of the business and entity may get failed
to carry out its business in effective manner.
Mercedes treats its employees well and behave with them properly. It treats its staff
members as assets (Ortega, Jalón and Menéndez, 2014). That is the reason that cited firm is able
to retain its skilled labour in the organization for longer duration. Company fulfil its
responsibility towards the workers and provide them healthy environment. This is considered ass
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one of the most essential ethical concern. If entity fails to do the same then it may impact on
profitability and sustainability of the organization to great extent (Yunna and Yisheng, 2014).
Benefit and challenges of working as team
Team working is considered as one of the most effective tool in the corporation. If all
workers are working as team in the Mercedes then it will help the firm in minimizing error and
completing the task within stipulated period of time. Team working help the manager in
managing activities well and resolving issue related to the business. On other hand it creates
difficulty for the firms as well because all employees belong from different culture thus, thee is
issue of language (Sölvell, 2015). Thus, they fail to communicate with each other well. In such
condition working of team get affected, if one person do not perform well then it will impact on
other;'s performance as well. Team working creates misunderstanding in the organization. If all
people perform their own task then it will help in minimizing confusion but team working
creates difficulty because all have to be depended on each other (Rothaermel, 2015).
CONCLUSION
From the above study it can be concluded that porter's five forces help the Mercedes in
identifying five major forces that can influence the business. By this way entity can make
effective strategies to deal with these forces and gaining competitive advantage in the market.
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REFERENCES
Books and Journals
Ortega, A. G., Jalón, M. L. D. and Menéndez, J. Á. R., 2014. A strategic analysis of collective
urban transport in Spain using the Five Forces Model. Investigaciones Europeas de
Dirección y Economía de la Empresa. 20(1). pp.5-15.
Pisano, G. P., 2017. Toward a prescriptive theory of dynamic capabilities: connecting strategic
choice, learning, and competition. Industrial and Corporate Change. 26(5). pp.747-762.
Rothaermel, F.T ., 2015. Strategic management. McGraw-Hill Education.
Sölvell, Ö., 2015. The Competitive Advantage of Nations 25 years–opening up new perspectives
on competitiveness. Competitiveness Review. 25(5). pp.471-481.
Yunna, W. and Yisheng, Y., 2014. The competition situation analysis of shale gas industry in
China: Applying Porter’s five forces and scenario model. Renewable and Sustainable
Energy Reviews. 40. pp.798-805.
Online
A Porter’s Five Forces Analysis of the Luxury Cars Industry, 2017. [Online]. Available through
<http://dasauto-skema.blogspot.in/2013/11/a-porters-five-forces-analysis-of.html>
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