Mercedes-Benz Business Project: A Comprehensive Strategic Analysis

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Extended Business Project
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Table of Contents
Introduction................................................................................................................. 3
Company Overview.....................................................................................................4
Strategic Position of Mercedes...................................................................................5
Internal Analysis of Mercedes.....................................................................................7
Product Differentiation:............................................................................................7
Human Resource Management...............................................................................8
Marketing Mix........................................................................................................ 10
External Analysis of Mercedes:.................................................................................13
Recommendation and Conclusion............................................................................15
Reference List...........................................................................................................16
Appendix................................................................................................................... 18
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Introduction
In the international market scenario, business requires an analysis of both the
internal and external environment of the organisation as it would help in formulating
the strategies and effective business policies for the appropriate functioning of the
organisation. This assignment is an extended business project, which deals with
complete details of the concerned business functions and its future strategies for
formulating the plan of action required to achieve the targets. It is done after a proper
evaluation of all the components of the concerned business. The factors included in
this project are the analysis of internal environments such as product description,
policies for human resource management and marketing mix, the external
environment analysis of the leading automotive organisation, Mercedes. At the end
of the project, recommendations will be suggested for better business operation of
Mercedes in future years.
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Company Overview
Mercedes-Benz is a leading organisation in the automobile industry. The company is
a division of Daimler AG and a German-oriented global automobile brand. The
company is famous for its various automobile products in the category of luxury
vehicles, coaches, trucks and buses. Mercedes-Benz has its headquarters in
Stuttgart, Germany. In the year 1962, Daimler-Benz first coined the name of the
brand. By the year 2018, the company came up as the largest selling premium
vehicle’s brand (Mercedes-benz.com, 2019). It sold about 2.31 million customer or
passenger cars.
Mercedes-Benz can be considered as the gasoline-powered first automobile brand.
The predecessors of the organisation are Benz and Cie. (1883 – 1926) and Daimler-
Motoren-Gesellschaft for the period 1890 – 1926. The tag line of the brand says “the
best or nothing”. Karl Benz created the first petrol-powered car, which was financed
by Bertha Benz and was patented in the year 1886. Mercedes-Benz’s origin is traced
to the creation of Karl Benz. Since its origin, the company has maintained a brand
value and reputation for its durability and quality of their products. From an
iSeeCars.com study in the year 2014, it was found that Mercedes has the lowest
recall rate regarding their vehicles (Iseecars.com, 2019).
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Strategic Position of Mercedes
Among the sector of luxury automobile brands throughout the world, Mercedes-Benz
is one of the renowned brands. In this section, both the factors of the internal and
external environment regarding Mercedes will be analysed as it would help to
determine the strategic position of the brand. The company as an automobile
manufacturer has adopted a positioning strategy of safe and very reliable vehicles
that have resulted in the establishment of the brand in premium price category
similar to its rival international automobile companies (Martín et al., 2018). They
have tactfully divided their market into several geographical units like cities and
nations. The main target of the organisation is the wealthier countries. The
demographics of the company mostly include the middle-aged people along with
both male and female adults.
Figure 1: Position Map of Mercedes-Benz
(Source: Glawar et al., 2017)
Mercedes-Benz along with Audi and BMW, the top rivals of the company, resides in
the same zone of being the most expensive brands in the automobile industry. Other
than this strong competition, the company uses a multichannel business approach in
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its operation. For this approach, it links with several formats of channel network for
delivery. Mercedes has a strategic partnership with several companies of this
industry such as Nissan, Baidu, Formula-one and other such companies, which
has helped it to create mind awareness.
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Internal Analysis of Mercedes
Product Differentiation:
The automobile has become busier than earlier as the customers are demanding a
variety of choices. As a result, the competitive environment has increased in the
market. There are methods to set the business at a top level: cost leadership and
product differentiation. Cost leadership attracts more customers with its cost
structure. On the other hand, product differentiation is the best technique to attract
loyal customers with varieties of new model of cars and e-bike
(Guajardo et al., 2015).
Product differentiation is the marketing strategy of differentiating and offering
different products and services from the other company in the market to gain more
number of customers. A product can be differentiated based on the following factors:
Price: It is the most common factors that attract more customers with the structure of
the brand’s product. It separates quality products from cost-effective products. The
Mercedes Benz focuses on the price structure of the products also. The company
provides enough opportunities for the customers to use their products at the
minimum price.
Performance and Quality: the product can also be differed based on performance
and quality of the products. Customers are more conscious of the performance of the
products. Hence, the Mercedes Benz needs to improve the performance of the
products, which will give more customers globally (Pham, 2016).
Looks: looks is one of the main elements in the automobile industry. more the
modified look, it will attract more number of customers. as Mercedes Benz launches
various luxurious and attractive looking products, the customers look forward to
using the Mercedes Benz products.
Channels of Distribution: a channel of distribution also plays a vital role in
differentiating the products from others. The company has a huge number of
channels around the world. The Mercedes Benz builds up a distribution channel to
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transport the cars and bikes in other countries. Various stores are in many countries
like Mexico, Algeria, Spain, and others.
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Human Resource Management
Human Resource Management is a department that plays a vital role in any of the
organisation in the world. The department is the mainly responsible for employing
more staff in the organisation. The department focuses on the performance of the
employees ensuring the best work practices are in the workplace in the organisation.
Mercedes Benz is one of the top companies who have an effective human resource
department. The department plays a key role in the company ensuring the number of
employees required in the company for the efficient performance to achieve the
target. the HR department provides a training to the selected employees with proper
training facilities for working effortlessly afterward. The training activities are needed
to be performed related to the objectives if the company. In addition to this, the hr
department sorted out the best performers in the training period and allocates their
works. The department also focuses on the management ensuring maintenance of
the standards and regulations of the company to provide sufficient facilities and
safety to the employees. The HR department recruits the best workers for significant
performance to achieve the target of the company and to retain the brand name at
the top of the table. Therefore, Human Resource Management is considered as a
key element of the company for the development of the company. The Mercedes
Benz possess experienced and skilled employees, which help the company to retain
its competitive advantages (MANDHANYA, 2015).
The department also provides all the required facilities to the employees and the
employees are able to meet their expectations. As a result, the employees work with
determination and loyalty towards their job. Hence, the company improves its
performance to its best level. The management also rewards the best performers
among them all. As a result, the employees put more efforts to get the rewards and it
motivates the workforce to give the effective performance in their particular works to
increase the productivity of the company. The HRM has taken the initiatives to
improve the performance of the employees to its extent level. the management uses
five dimensions to determine the performance of the company. Those are respect,
credibility, fairness, camaraderie and pride (Gopal and Thakkar, 2015).
In addition to these, the HR department also provides various services and
opportunities to the employees to develop their personal lifestyle. As a result, a huge
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number of employees work in the Mercedes Company as they get all requirements
to form the company to meet their expectations.
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Marketing Mix
Marketing mix can be of two types consisting of either 4Ps or 7Ps. It indicates the
factors that should be kept in mind by the organisation while formulating their
marketing strategy. The factors inclusive this analysis are Product, Price, Place,
Promotion, Packaging, Positioning and People (Luo et al., 2015). The 7Ps should be
continuously monitored as the products, customers, market scenarios and needs or
desires of the customers change rapidly without any notice. The marketing mix of
Mercedes evaluates the factors, analyses and explains the market strategy of the
brand. The 7Ps are as follows:
Figure 2: 7P’s Marketing Mix
(Source: JAIN, 2017)
Product-
Mercedes-Benz has identified itself as one of the leading premium car-manufacturing
brands in the world. The strongest point of attraction for this brand is its products. It
has a wide range of products comprising of passenger vehicles, trucks, coaches etc.
which are comparatively heavy equipment vehicles and light commercial passenger
vehicles which is an intractable part of product strategy. In the product portfolio of
Mercedes, the strongest segment is the luxury car category that comprises of SUVs,
Sedans and sports cars.
Price-
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Mercedes-Benz belongs to the luxury segment in the automobile industry. It is a
brand of premium-priced luxury vehicles. It provides its products and services to the
niche segment of the society that prefers and gives importance to quality over the
price. As a result, the price is always higher than the usual automobile companies in
the industry. In the global market, the price of their cars ranges from $30,000 -
$100000 and sometimes more than that. The pricing strategy for the company based
on its features and services provided is premium pricing.
Place-
Mercedes-Benz has a diversified business operation across the globe. It caters to a
large number of countries with its service stations and dealerships all over the world.
The global business expansion depicts its strong position and strategy distribution in
the marketing mix of the company.
Promotion-
The promotional strategy in the marketing mix of Mercedes-Benz utilises all possible
media channels for its promotion. The channels used are online pop-ups, social
media platform, website, TV, billboards and many others. The marketing strategy of
Mercedes is always determined on its technology utilised, product etc. the company
has built up brand awareness with the help of several customer-centric activities
such as Mercedes Trophy (Chaudhuri et al., 2018)
Process-
The company has installed various systems in their business operation for ensuring
that their products are always available at their outlets and notify about the lowering
of inventory levels. They have an online order taking and delivery process. For
understanding the customer requirements or demands, Mercedes-Benz has involved
itself in pointing out market opportunities.
Physical Evidence-
Mercedes-Benz has opted for a distinct colour packaging for selling their products. It
makes the product more identifiable in the automobile industry. The vehicles are
placed on unique shelves with a distinct design and colour. It has a user-friendly
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