Operational Strategies for Audi and BMW to Gain Market Share from Mercedes Benz

This article discusses the operational strategies that Audi and BMW can implement to gain market share from Mercedes Benz. It explores the challenges faced by Mercedes Benz and the areas where Audi and BMW can improve, such as quality control, technology advancements, and customer satisfaction. The article also highlights the importance of electric vehicles and the need for innovation in the automotive industry.

INTRODUCTION
TO BUSINESS
OPERATIONS AND
SERVICES 2019

Table of Contents
INTRODUCTION...........................................................................................................................3
Main Body.......................................................................................................................................3
1) Introduce a company wide operations improvement strategy. This improvement strategy
must include the tools and techniques.........................................................................................4
2) Operational strategies that Audi and BMW can implement to gain market share from
Mercedes Benz ...........................................................................................................................7
Conclusion.......................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Business operation and services is very essential aspect of any organization as it provides the
ease of achieving the organizational objectives with the help of different strategies and policies.
The management of business operation help the organization to attain the efficiency with the
help of planning and controlling the process of the operations. As business operation is defines as
the internal activities which will help the company to achieve the set goals and services are the
output which the company have generated after the completing the operations. As both processes
are very important or the any organization it is also essential to understand how to manage and
increase the efficiency of both the aspects which will increase the profits of the company this
report there is a detailed study about operations and services of Mercedes and how the company
will improve its operations with improvements in the strategies and policies. There is also
analysis of the competitor's operations and services strategies and policies which will decrease
the market share of Mercedes.
Mercedes is the leading automotive company in the world which was established in 1926 and
have headquarters in Stuttgart, Germany. The company have also focused on the quality of their
products and luxury to provide the maximum satisfaction to their premium customers.
Main Body
Mercedes Benz have been facing some issues which is resulting in fall of their reputations and
profit share in the market. It always specialized in luxury and now they are lacking. Their
competitors such as Audi, BMW has gone far ahead to win the race. Mercedes Benz have been
facing issues such as quality control, problems related to batteries and brake issues. In 2001 the
company even had to recall 1.5 million cars because of these issues. Their product the ultra small
city car was not successful due to poor sales and their most premium product S class was also not
selling well in the market because people were having trust issues that the performance of car is
not good or it will face some technical issues as before. They started loosing their loyal
customers who were shifting to their competitors such as Audi and BMW as they never faced
issues related to productivity. People believe that Mercedes Benz lost its reputation in the market
when they merged with Daimler Benz and American's Chrysler which may have made them the
5th largest car manufacturer with a team of 3,85,000 employees around the globe. Before this
merger company never faced issues related to quality and reliability and never had to face the
embarrassment of recalling their cars in such huge amount. To improve the quality they have

already cut 8500 employees and hired a new chief executive Dieter Zetsche who have already
announced that they are going to earn their position back in the luxury car market. The chief
executive admitted that just improving the quality will not put back their competitors such as
Lexus, BMW and Audi but they will beat them with time and regain their loyal customers.
1) Introduce a company wide operations improvement strategy. This improvement strategy must
include the tools and techniques
To change the nature of automobiles company have set fields for future oriented goals. They are
emphasizing on connected vehicles, improving and bringing advancement in the field of
autonomous driving. Company is focusing on enhancing the electric motors as it is the future of
cars. They are working on developing the digital methods and transport facilities. The objective
of Mercedes Benz is clear. The motive of our company is still to gain and be the leading
manufacturer in this industry and develop ourselves so that we can provide new and innovative
services. This all can be achieved only by improving the quality and satisfying the customer and
it is also necessary for future goals as in order to survive the company needs to provide products
and services which are successful in the eyes of the customer. To improve the quality and
improvement in operations Mercedes Benz has come up with a new 5 C strategy-
Core-
Goal of the company is to strengthen the core of the business on a global level in all the
segments they offer their services. The company is working on such products that when a
consumer buys their cars they will feel the thrill of it and they can do that by introducing new,
innovative and outstanding products. Most of their prospective buyers are in Asian countries
specially in China that is why they are trying to make it as per their needs, wants and
expectations. Mercedes Benz already has a established global network which helps them to act
flexibly according to the conditions of the market which is changing at an inconstant rate and act
according as per the wishes of customer. The company is also looking for new ways to expand in
developing their products, their service line, and units they deliver all over the world. The
revenue generated by the company is invested into their business so that they can invest
extensively for the development of current products and for future in our industry. (Wood and
Logsdon, 2017)

CASE-
It stands for connected, autonomous, shared and services, electric. This method focuses on areas
which are concerned with future oriented goals. Currently company is in the process of
transforming itself so that they can convert themselves from being an automaker to a company
who provides the services of mobility. They are shaping the intuitive mobility with products
which are comfortable and user friendly which will help in simplifying the life of the consumers
and the mobility. Current project of the company is to develop cars, trucks, buses and vans which
runs on battery instead of gasoline. They are focusing on converting their whole portfolio into
electric. The company has already made orders of battery which values more than EUR 20
billion ensuring that they will supply their own battery network globally until 2030. To develop
smart electric vehicles and as a manufacturer company is forming a 50-50 joint venture with
Geely Holding.
Demand of services which are digital and the vehicles which can be connected are
high and important for the consumers. They will see it before making a purchase. Now with
features like Mercedes ME in cars, Mercedes PRO in their vans, in trucks they are offering
Mercedes Benz Uptime. Company is offering services which are extensive and access to all the
brands in the world. Their MBUX infotainment system has taken the platform of infotainment
system to the next level because of the artificial intelligence theme of connectivity has a different
influence on customers. MBUX has different attributes it means that it can (Toney and Marvin,
MITRE Corp, 2015) learn new things with time and that will make the system up to date always
and it will help in simplifying the natural operation. The company has taken a big step because
they wanted to make a way for the autonomous driving so they updated their S Class model and
now the company is offering partial
autonomous driving which is a level 2 series. The company has announced their investment
plans in trucks it is for development of trucks which can be highly automated. In 2008 Mercedes
Benz was the first company to come up with free floating car sharing. A decade later the
company joined hands with their rival competitor that is BMW so that they can join the services
of mobility in ways such as sharing of cars and hailing the ride up to park and charging the
vehicles which are electric. Also vehicles which comes with fleet of self driving that park and
charge autonomously and can be interconnected with different vehicles even if their mode is
different. After combining the mobility and the feature of autonomous driving it will help them

to achieve the goals which are future oriented. Not only with BMW now they are planning to
join hands with Bosch so that by 2019 they can test the ride which is based on a automated
platform.
Culture-
By now company is adapting the change and respond to the changes that have come into the
transformation of automobile industry by overcoming the new and upcoming challenges. The
dynamic environment in the industry requires a rapid innovation to face the challenges which is
required in this sector. Companies at this stage needs to take a action which is agile in nature and
is aligned directly to the forces such as markets and customers. To cooperate our employees
Mercedes Benz has come up with a new leadership culture (Tarafdar, Beath and Ross,
2019)under the 2020 leadership program. So that the company can help in reinforcing the spirit
for becoming an entrepreneur which will help to cope up with the change faster and will help in
creating ways for innovation. Company is focusing on to create new methods for promotion and
development so that new models can be targeted and achieved in an easy way. Company has
started believing in innovations that comes from employees and patterns which will help them
externally and ensuring that they are already implemented in the process of development.
Company is developing a platform through which they can get innovative business related ideas
on a platform such as Startup Autobahn and Lab 1886. With the help of Benz the company has
taken initiative to develop and respond to digital change on a next level. So that they can allow
and experience the connected technologies and can collaborate between company and
employees.
Company-
Majority of shareholders of the Daimler group discussed about reorganizing the group and
approved that. This structure will change the whole scenario and process as after the deal the
group can sell its cars, buses, trucks and vans to any different entities who are independent and
they can send it legally. This new structure will come into effect from when the commercial
register is entered as hive down. This group will launch their new structure on 1 November 2019.
After this deal Mercedes Benz AG will be held responsible for the current and upcoming deals of
Mercedes Benz no matter what division be it cars, be it trucks or be it buses all will come under
Mercedes Benz AG or Daimler Truck AG. Financial services of AG which is legally

independent is named as Daimler Mobility AG all from 24th July 2019. (Sugiyama, Kato and
Sakamoto, 2018)
With the help of 3 companies that have so much power and
performance on a global level the group is making their structure more focused and a structure is
flexible. With the help of this new set up, group of Daimler is going to give their entrepreneurs
and other divisions more freedom than they used to give them before. This will help the
company to strengthen the market and improve the customer service so that they can team up
with the new companies and people easily and quickly. Growth and potential of earning can be
tapped so company needs to keep an eye on their markets, core competitors and customers. By
strengthening the structure of the group it helps in serving so that they can commit for long term
for future investor planning and new partnerships. (Steel, 2016)
Customer-
By initializing these steps and overcoming all the operations the company can satisfy the
customers and only after doing that the company can transform themselves successfully from an
automaker who is leading in the market to a leading mobility provider.
2) Operational strategies that Audi and BMW can implement to gain market share from
Mercedes Benz
Both the companies are different yet work with a similar approach. Both Audi and BMW have
started a new strategy which is adopted from the current changes and by the year 2025 they have
to become the leading provider of sustainable mobility. Strategy of 2025 is the biggest change
which both the companies has ever gone through in the history of their existence. As it has
helped them to transform their activities in business (Ramakrishnan, 2015) and has helped them
to ease the grabbing of the potential new segments. Both the companies are working crucially on
coming up with the electric portfolio both have come up with the technology but it is not
advanced as the range they provide was too less for day to day use. So that is why they have to
work on developing their technology. If the electric product gets successful this time then it will
help increase the sales annually and increase the turnover of the company by 2 to 3 million as
they have planned to launch more than 30 new electric vehicles by 2025. This will be difficult
for Mercedes Benz as they don't have the technology to cope up with both the companies so
company has to keep the resources updated. Otherwise they are planning to gain the market share

of Mercedes Benz and by implementing these strategies successfully it will (Oriade and et.al.,
2016) be a lot easier for them to gain the share of Mercedes Benz. They are planning on
obtaining the share by offering new competencies and features in their vehicles such as
digitization, updated infotainment system, technology for autonomous driving and the range of
battery so that the car can run more on a single charge. They are going to align their components
of business again in a better way. So that it will be easy for them to expand with the help of the
new solution of mobility. Efficiency in the group and improvement in the group and for the
projected investment optimization of resources and portfolio is necessary so that companies can
turn their turnover to double digits in billion. This will increase the return on investment of the
companies by 15 per cent by the year 2025 and the return on sales will increase by 7 to 8 per
cent. Key tasks of both the companies is to increase the profitability of the company and that can
only be happened by following the respective measures. Their study includes concerned topics
such as planning of product, product positioning, product development and platform for
lightweight, power trains and (Renfroe, 2015) communication with vehicles. The aim of both the
companies is to be a leader on a global level and this can only happen by providing new and
constant innovation and keeping up with the needs and expectations of consumers. They have a
target so that they can beat Mercedes Benz and that is they want to increase their sales by 8 to 10
million units a year so that they can also come under the category of sales maximization instead
of just making their names with profit maximization. In order to that they have to recruit or
manage (Hazen and et.al., 2018) top employer and employee at every level of management. Both
the companies are expecting a return of at least 8 per cent on sales and that is before tax so that
they can maintain the distant and prosperity in future and maintain the position of the company
financially and if anything uncertain arises companies can take a necessary action to counter it or
cope up with it. For the future both have planned to come up with the models that are eco
friendly. People holds a thought only to move if the price is moved they never see the quality the
company offers and the cost to sale difference as in how much the cost of the product is. That is
why company also has the burden to decrease the time of output and cost of production. Every
company uses some performance indicators such as timely delivery to the customers, revenue of
sales, operating cost and profit, return on sales, return on investment, inflow of cash without tax.
Products made by the company are on the basis of area they are targeting and going to serve.
Basic concept of global operation strategy (Grayson and Hodges, 2017)

Vertical Integration-
This method is concerned with alliance of venture which is related to partnership. It comes in to
order when the company is facing some issues in the process of manufacturing for a individual
product. This method states that a level is needed to be maintain by both Audi and BMW so that
organization can control the suppliers whether they are upstream and downstream it will help
both of them to achieve factors such as economies of scale. (Choi, Chan and Yue, 2016)
Manufacturing Process-
Both the organizations are confused sometimes to take decisions between high and low volume
and between homogeneous or differentiation. They have come up with a new matrix which helps
them to solve the problem of market manufacturing congruence problem and helps in decision
making of the company. This matrix is concluded and explained with the help of two indicators
which are process choice and process structure and both have been extended with the help of
product life cycle.
Audi and BMW are making cars on a modern platform so that they can improve their efficiency,
flexibility and production so that they can beat their arch rival in the game who is Mercedes
Benz. (Braithwaite and Christopher, 2015)
Conclusion
The report had a in depth study about the different strategies and models used by the Mercedes to
increase the operational efficiency to compete with the rival like BMW and AUDI which also
have their products of same range, and the company have also focused on what will be the
circumstances to if the competitors were successful in achieving the market share of the
company and what steps Mercedes has to take to survive from the competition. The company
had improved its services to provide maximum satisfaction to their customers and also focused
on many innovative marketing strategies to target the premium customers in the market and
increase the sales to achieve the set objectives of the company.

REFERENCES
Books and Journal
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business operations and risk management. IEEE transactions on cybernetics, 47(1),
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Grayson, D. and Hodges, A., 2017. Corporate social opportunity!: Seven steps to make
corporate social responsibility work for your business. Routledge.
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analytics for operations and supply chain management. Annals of Operations
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measurement model to assess the operations readiness of software under construction.
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Operations Using User Experience Adaptive Information Sharing Terminals.
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Toney, M.S. and Marvin, M.A., MITRE Corp, 2015. Method and system for modeling business
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Wood, D.J. and Logsdon, J.M., 2017. Theorising business citizenship. In Perspectives on
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