Operations Improvement Strategy for Mercedes-Benz: TQM, JIT, Lean Production, and Training & Development

This report discusses the operations improvement strategy for Mercedes-Benz, including Total Quality Management (TQM), Just in Time (JIT), Lean Production, and Training & Development. It also explores the operational strategies that BMW and Audi can implement to gain market share from Mercedes.

UGB165 Introduction to
Business Operations and
Services 2019

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Operations improvement strategy................................................................................................3
Operational strategies that BMW and Audi can implement........................................................8
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Operations and services two key aspects within an organisation, venture or company, in
which top-level management in each business is responsible for always running its various
operations & services on a progressive path. This is too important task for upper management of
a business, because without having progressive path to operations & services, the management
cannot timely achieve own decided aims and objectives. In this modern world, there is huge
competition in each sector or industry (Pajewski, Fontul and Solla, 2019). That’s why every
business or company need to effectively serve and operate its various operations as well as
services in market place. After considering these factors, a company can be easily achieved
excellent competitive advantage within its respective sector or industry. This report discusses
Mercedes-Benz’s two key aspects called operation and service. Currently Mercedes-Benz suffers
from various business issues, based on tie-up and quality, etc. in which few productive strategies,
techniques and tools of operation improvement has been mentioned in this report that can help
Mercedes-Benz in order to develop own operations and services. There are some strategies of
operation also has been described below in the report which can help to BMW and Audi to gain
market share from Mercedes.
MAIN BODY
Operations improvement strategy
On the basis of existing organisational situation, upper management at Mercedes-Benz
has highly required to use a productive strategy of operations management. Existing
management within company have to employ few effective techniques and tools in own business
environment, in which by employing various techniques as well as tools, the company will easily
develop own operations and services in market place. There are Audi, Ferrari, BMW, Land
Rover etc. some major competitors for Mercedes-Benz, and these competitors are using various
techniques and tools for properly improving its various services and operations (Roth and et.al.,
2016). That’s why, upper management at Mercedes-Benz have to use different techniques and
tools in order to gain huge competitive advantage under the luxury car sector.

According to various automobile sector experts, the market competition within
international automobile sector is continuously increasing. There are many new entrants comes
in this sector with their new ideas and innovation regularly. That’s why Mercedes need to start
offering vehicles with the best quality and durability in its selected market segments for dealing
with the issue of high market competition. Few productive techniques and tools of operations
management has been discussed below which will definitely help Mercedes-Benz to develop its
vehicles’ quality within global automobile sector.
TQM (Total Quality Management)
The top-level management of Mercedes-Benz need to implement this TQM technique in
its production department to or produce the quality services and products. Nowadays, many other
companies within automobile sector also has successfully employed this total quality
management technique in their production departments to offer excellent quality cars within the
market place (Ruiz-Lozano and Tirado-Valencia, 2016). This is the major reason that, upper
management of Mercedes has required for using TQM technique or approach in own production
department. The marketing department of company has covered market research, and it has
found that many of people in the European countries are ready to give very priority to such
automobile businesses which has offered vehicles with the best production quality. Generally, a
car is that type of assets that customers has purchased for the long-time usage, so Mercedes-Benz
need to understand this common thing. Nowadays, total quality management (TQM) is one of the
best strategies for different companies that can help in improvement of quality of products.
The management of the Mercedes need to adopt some effective decisions for
implementing the total quality management strategy. TQM can be supported to the company to
properly manage an appropriate quality of own luxury cars. Basically, people who comes under
group of high income are able to afford Mercedes-Benz’s cars. There are company charges too
high rates from different various customers when they have purchased cars through this
company. So, top-level management of venture is responsible for providing the best quality
luxury cars with the additional modern and digital specifications to various customers. On the
other hand, this luxury car venture commonly uses value-based strategy of pricing to set the
specific rate to its luxury cars. Basically, many of companies which has used value-based
strategy of pricing are always provides premium cares in market place (CAMACHO, MERAYO

and NÚÑEZ, 2016). In this situation, vehicles which has provided by Mercedes-Benz also comes
in premium category. That’s why, this business needs to provide an excellent quality of premium
cars to own customers.
Top-level management within Mercedes-Benz have to give appropriate instructions to
own production manager to implementing TQM in own production department. With the help of
TQM strategy, Mercedes-Benz can be able for solving problems that has based on the car
batteries, brakes and alternators. Nowadays most businesses within market place gives high
priority to such cars that has durable batteries, because this type of cars batteries mostly helps for
using various innovative features of the car to the long time. Currently, Mercedes-Benz offers
full digital as well as modern cars with electronic tools, gadgets, equipment, etc. In this situation,
department of production within company need to use well-developed electronic gadgets within
its various luxury cars to provide full satisfaction to various customers within market place. Total
quality management strategy of operations management can support Mercedes-Benz to properly
control the quality of own services and products (Rosello, 2017). This strategy will be able to
business to again gain the large base of customer within luxury car sector. Many other
manufacturers of luxury cars are also existing in market place for same purposes. So, Mercedes-
Benz have to put own huge efforts to attract many of new customers or people towards own
business by offering luxury cars with the best quality.
JIT (Just in Time)
JIT or just in time is another strategy to properly develop different services and
operations of a business. Just in time strategy mainly help to a business for reducing the wastage,
improving the productivity of department of production. This is the main reason that, upper
management at Mercedes need to consider JIT (just in time) strategy in own production place.
On the other hand, production manager within Mercedes-Benz also have to focus for properly
implementing existing strategy in its workplace. Basically, when company has used this strategy
in own production department, then it can be able for saving its lots of useful money and time.
According to existing situation of company, the management have to only produce luxury
vehicles with excellent quality (Dastyar, Rippel and Freitag, 2020). Currently key competitors of
Mercedes-Benz, for example; Audi, Land Rover, BMW, Volvo, Ferrari, etc. has highly focused
on gaining large market share within the luxury car sector. In this situation, the production

department of Mercedes-Benz highly need to be very aggressive in its job role to develop such
cars which will be able to Mercedes to stand against its key competitors strongly.
On the basis of various business magazines and reports, nowadays only such companies
enable to gain base of loyal customer that has succeeded in gaining full trust within market place.
In previous few years, Mercedes-Benz lost lots of loyal customers because of cars or vehicles
with poor quality. For example; lots of customers was returned 1.3 million cars of 2001 model to
company’s authorised dealers due to very poor quality of services and cars. On that time, brand
image of Mercedes also was highly decreased because of that incidence. So, from that precious
time to date, upper management of company puts own great efforts to gain achieving excellent
brand value in market place. In this situation, the JIT strategy can be given its effective
contribution for increasing brand image of company. Nowadays, los of company’s competitors
are taking huge advantages from this just in time tool (Chamberlain and et.al., 2019). Basically,
JIT is the operations management’s major approach that provides opportunity for developing
various operations of Mercedes. So, when Mercedes-Benz can able to succeed for developing its
various operations, then company can be easily served excellent services in luxury car sector.
Basically, JIT approach says that, present management of business always need for
preparing a proper schedule to order the raw-material to improve existing production processes.
During preparing schedule, manager of production needs to order only such services and
products from suppliers which are very mandatory in present production processes. Basically,
when manager of production within company do this same, then it can simply save its many
precious resources and time, because when production team of a business orders unnecessary
raw-materials within processes of production, then department indirectly promote the wastage
aspect in production processes, so this wastage mostly increase different expenses of the
company.
Wastage in production team always negatively impact to production processes as well as
financial conditions of a business. In this situation, top-level management of Mercedes need to
provide proper order and guidance to own production team to reduce wastage aspect in
workplace (Goenaga and et.al., 2017). By taking this action, management can be able for running
company on progressive way. On the other hand, JIT strategy will support to business to save
many of its useful resources in the production department. This is too appropriate deal for the

business, because as the luxury car producer there is Mercedes-Benz can need for using many
expensive resources. So, JIT technique can be helped to company to systematically save own
very expensive resources in workplace. At the end, business will be able for providing very
excellent services also within the market of luxury car.
Lean Production
Lean production strategy also can highly contribute in developing Mercedes-Benz’s
operations and services. So, company’s top-level management need to consider this strategy also
production department. Basically, many people have considered this lean production strategy as
the lean manufacturing strategy that helps in cutting out the waste aspect, and improving the
quality of products. This strategy of operations management has also used by lots of companies
to develop quality of different products as well as services. So, company has highly required for
taking lots of benefits by this lean production strategy. Nowadays, many companies within
market place are investing too large money or fund to more improve quality of own services and
products, in which implementing the lean production strategy in production team is most
appropriate deal for Mercedes-Benz (Viloria, Wang and Gaitan, 2019). Basically, if company has
implemented lean production strategy, then it has no need for investing very higher fund to
develop quality of own cars or vehicles.
The company works under the market of luxury car for long time period. From the
establishment to date, top-level management within this business has always believed for
offering proper services within market place. But in precious two decades, existing luxury car
industry was faced lots of challenges within daily operations. Suppose, the business has offered
such cars within market to own various customers that was having very poor-quality brakes and
batteries etc. On that time, existing manufacturing business of luxury car was received lots of
feedbacks and reviews from customers within market place. So, the management of business
have to give proper order to own production team to use this lean production strategy also during
producing luxury cars or vehicles. This strategy will be defiantly helped to business to improve
own various services and operations. Nowadays, well-developed services and operations of the
business are enough for developing base of large customers within market place (Gružauskas,
Baskutis and Navickas, 2018). There are many businesses are ready for putting lots of effort to

develop quality services, so Mercedes-Benz highly need to take many advantages or benefits
from approach of lean production.
Training and Development
The company’s management need to offer few specific sessions of training and
development. In these sessions of training and development, upper management within
Mercedes-Benz is fully responsible for inviting some experts of business who can teach all
existing managers, employees and leaders etc. of company about how to improve services as
well as operations of business. When various people within business will be attended these
sessions, then employees can be developed as well as trained for serving excellent or best quality
services within market place. That’s why company need to focus for developing and improving
people’s skills and abilities by different sessions of training and development. In these sessions,
upper management of Mercedes need to inform it’s all people about the actual important of
quality control strategies. This is really too necessary task for venture, because without aware
employees, they cannot gain appropriate knowledge about various techniques of quality control,
and at the end people or employees will not be able for using these strategies in workplace.
On the basis of above factors, Mercedes-Benz currently has great chance to achieve large
loyal customers within luxury car industry by providing cars or vehicles with excellent or best
quality. The business lost own high brand value due to bad or poor-quality cars within last two
decades (Bika, Baysal-Gurel and Jennings, 2020). So, these sessions of training & development
can be positively affected to Mercedes, because sessions will be able to business to gain high
reputation within its respective industry again. On the other hand, these sessions help for
properly employing various strategies of quality management as well. That’s why upper
management of business need for considering the training & development aspects during taking
different steps towards developing quality of own services and operations.
Operational strategies that BMW and Audi can implement
There are a lot of operational strategies which Audi and BMW can adapt to since there
are a lot of strategies which are present in the market for the upper management to take for the
company to be able to take the market share from Mercedes. Mercedes is a great competitor for
BMW and Audi in the market for luxury cars which are present in the market and there is extra

ordinary gain in market share from Mercedes which is visible in the market and that is not good
for the competitive advantage. BMW and Audi are competing against each other in the market.
There are some effective operational strategies which are going to be discussed in the further
report for the company to adapt so that they would be able to have higher and daily efficiently
and smooth functioning and performance in the market which is going to make the company
have larger market share than Mercedes as well.
Improve the organization's supply chain
The operations management and upper management will have to improve the supply
chain of the company and must use the appropriate distribution channel for the business to be
able to have timely delivery and products and services to reach the customers which is important.
Customers prefer those organizations which are providing their services and products on time
which is good for the reputation and standards of the company as well (Rakesh, 2017). Mercedes
is having an aggressive supply chain which the company has developed over years of experience
so that there is going to be effective delivery for the customers. If the management of Audi and
BMW are going to make the right decisions then the company will be able to operate effectively
and efficiently in the market as well.
Provide quality products and services
This is one of the operational strategy and other method for Audi and BMW to gain the
competitive advantage and market share from Mercedes. The competition in the market is
increasing daily therefore it is very important for the company to maintain their quality of the
products. The competitors are going to take advantage of the quality and this factor has to be
well maintained for the organization to be able to maintain their brand value and image in the
market. The customers are having huge expectations from Audi and BMW in the market which
is why the company must make sure that for manufacturing the company is using the right raw
material in order to be able to maintain the standards and functioning of the company which is
going to make Audi and BMW be able to take the market share of Mercedes in the market.
Proper use of resources

There are a lot of resources which are consumed by Audi, BMW and Mercedes which is
going to make all the businesses have a limitation. But in the case of Mercedes they have taken
actions in making use of limited resources so that they can continue to be able to give the right
products and services. Production managers of Audi and BMW will have to make the right
decisions for the company to be able to get the right working and functioning which is going to
be good for the reputation of the organization (Chirumalla, 2018).
Reduce costs wastage and improve productivity
Audi and BMW are trying to reduce the waste output in the company which is making
the company have limitations in productivity and products and services are not going to improve
according to the standards of the company. There are a lot of techniques and principles which are
coming in the market to be able to get in this factor for the brand value and image in the market.
There are different operational approaches which are being used in Audi and BMW which are
TQM, JIT, Lean production, etc which are effective ways but they are having drawbacks for the
organization as well which is not a good factor for a long run.
The top management or upper management and operations management of Audi and
BMW will have to take the right strategies for themselves only then the company will be able to
gain the competitive advantage and the market share which has been taken by Mercedes. There
are a lot of methods and implementations which the company can do in order to be able to get
this factor as their strengths and work upon the weaknesses of the company.
CONCLUSION
On the basis of above findings, it can be concluded that currently many appropriate
techniques, methods and ways simply available in market place which upper management of
business need to use for improving its services and operations. In precious two decades,
Mercedes-Benz has faced very higher criticism within luxury car industry because of own poor-
quality cars. But now the business has excellent opportunity for again establishing own huge
empire within its industry of luxury car. Present management of Mercedes can be easily achieved
effective brand value within market by adopting lots of techniques and tools in own daily
operations of business. On the other hand, BMW and Audi simply able for achieving very large

share of market from Mercedes-Benz. However, both companies have to use above-mentioned
strategies of operations.

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