A Comprehensive Business Strategy Report on Mercedes-Benz's Operations

This report provides a detailed analysis of Mercedes-Benz's business strategy, encompassing various aspects of strategic planning. It begins with an overview of the company's mission, vision, objectives, and goals, followed by an examination of factors considered during strategy formulation, including SWOT and PESTLE analyses. The report evaluates the effectiveness of different techniques used by Mercedes-Benz, such as scenario planning and value chain analysis. It then explores alternative strategies, specifically focusing on market development and justifies the selection of this approach. Furthermore, the report delves into the implementation of the chosen strategy, outlining roles, responsibilities, required resources, and the contribution of SMART targets to achieving the company's objectives. The analysis covers the application of various frameworks such as BCG Matrix, Ansoff Matrix and Porter's Five Forces. This report offers valuable insights into the strategic choices made by Mercedes-Benz and their implications for the company's performance and market position.

BUSINESS STRATEGY

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
LO 1- PROCESS OF STRATEGIC PLANNING...........................................................................1
1.1 Business mission, vision, objectives and goals.....................................................................1
1.2 Factors considered when formulating strategy.....................................................................2
1.3 Effectiveness of techniques used..........................................................................................5
LO 2 – FORMULATION OF NEW STRATEGY..........................................................................8
LO 3 – APPROACHES TO STRATEGY.......................................................................................8
3.1 Alternative strategy...............................................................................................................8
3.2 Justification of the selected strategy.....................................................................................9
LO 4 – IMPLEMENTATION OF CHOSEN STRATEGY..........................................................10
4.1 Roles and responsibilities ...................................................................................................10
4.2 Required resources..............................................................................................................10
4.3 Contribution of SMART targets..........................................................................................11
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15

INTRODUCTION
The business strategy is done to achieve the objectives and goals set by Mercedes Benz.
The business strategy can be a long term planning , which can cover up to 4-5 years. The main
concern while making any business strategy is to increase the finance of the company, so that
they can develop more quality product by using advanced technology. This assignment deals
with the process while planning the business strategy for Mercedes Benz(Verbeke, 2013). This
also deals with the macro and micro environmental factors which are affecting the business
strategy. There are various approaches shown in this assignment which will be used in evaluating
the strategies set by Mercedes Benz. Lastly, it will show the methods, roles and responsibilities
when the company is implementing the strategy.
LO 1- PROCESS OF STRATEGIC PLANNING
1.1 Business mission, vision, objectives and goals
Terminologies Application of Mercedes Benz
Mission: The mission is the long term
aspirations of the company. This statement will
tells; what to do? What are the benefits of the
products provided to the customers? The
mission statement will also tells about the
present capabilities of the company.
The mission of Mercedes Benz is to improve
the effectiveness of their business processes
and quality management system. Their mission
is to develop such kind of products which are
of high quality and high standard, and having
latest innovation and quality design.
Vision: the vision is all about an idea which
can be hypothetical, can be unattainable and
just like a dream. But this will give emotion to
the company and will form a base of
motivation of the company.
The vision of Mercedes Benz is to become
number one in quality, profitability and image
in the automotive industry (Leonidou and et.al,
2015.). Their vision is to become the most
renowned company in the service of customers
in the whole world.
Objectives: These are the goals, which are set
by the company for the period of 4-5 years.
These objectives are related to profit marketing
The objective of the company is to improve the
quality of their products and services. To be
alert of the environment. To serve the customer

and non-profit marketing also. with the best quality services possible.
Goals: The goals set by the company are very
short term objectives. This are used in
evaluating the performance of the company.
Mercedes Benz is setting up the new targets in
the quality of products and services. They will
compare their quality with the previous years,
so that it will be easy to know the improvement
in the performance of the company.
Core competencies: These are the values which
are used in differentiating one company from
its competitors. This will be used by those
companies which are doing same kind of
business.
Some of the competencies which are followed
by Mercedes Benz are;
 Customer service
 Safety of consumers
 Environment concern.
1.2 Factors considered when formulating strategy
SWOT ANALYSIS
Strengths
 Global leader in automotive industry
 Very famous and strong brand image
 High safety standards
 Strong presence in motor sports, which
is under McLaren Mercedes.
Weaknesses
 The maintenance cost is very high
 The market is highly competitive.
 Less service centres for the customers
Opportunities
 The market of auto-mobile is growing
very fast, and this will increase the
income.
 The new hybrid car development which
are very fuel efficient
Threats
 Increased tax for new vehicles.
 Fuel prices are increasing
 Different policies of the government of
different countries.

PESTLE ANALYSIS
Political factors: The taxation system is the most important factor which affects the
industry of imported cars. The duty charged for the imported car will be around 140%-300%.
This is based on the cost of car and its insurance (Mithas, Tafti and Mitchell, 2013). Mercedes
Benz is very popular brand and the cost of the car becomes more when it is imported, so it is a
major threat for the company's profitability.
Economic factors: Mercedes Benz is a German brand, so it will be directly affected by
the economy of Germany. The economy of Germany is 4th largest by nominal GDP, and a growth
rate of 1.8%. But the unemployment rate of Germany is around 6.8 %. So Mercedes Benz is
giving jobs to local people in order to keep their brand image very high, and thus increase the
sales in local market.
Social factors: This will be affected by the income of the people. People with high
income buys BMW or Mercedes car, as they want to retain their name and prestige. This will be
an opportunity, but people will low income are not able to buy the car of Mercedes and this will
directly impact on the profitability of the company.
Technological factors: Mercedes Benz is the 3rd largest brand of auto-mobile in the world.
By the help of new technology, they have introduced the prototype of hybrid cars, which will be
the future generation of automotive industry (John R., 2015).
Legal factors: The legal law affects the performance of the company because these will
prevent them from selling the cars on higher prices. The federal, state and local system have their
own rules and regulations. In order to do the business more effectively, the company have to
follow all the legal framework set by the governing body.
Environmental factor: Mercedes Benz cars are majorly based on fossil fuels. The energy
consumption is 40% of petrol, 30% of diesel cares and the rest are hybrid cars. The carbon
emission from the cars are very less and this will not pollute the environment.
BCG MATRIX
STAR
 Mercedes trucks are the star class
Question Mark
 The recent scandal of Volkswagen is

products of the company.
 They are very cost-effective, reliable
and sustainable in the market.
 The slogan given by Mercedes for this
is “Trucks, you can trust”.
the question mark for all companies in
the industry.
 The hybrid cars are still the question
mark, because they are not running for
longer duration of time and this gives
the problem to the company.
Cash Cows
 In agriculture farming in entire Europe,
people are using mostly Mercedes Benz
tractor.
 They are highly efficient and very less
costly compare to other (Business
strategy 2017). At the same time, the
performance is of highest quality.
 The sales of tractors brings lots of
money to the company.
Dogs
 The Mercedes Benz vans are the prime
example for this one.
 It will not make any kind of sense to
invest in such products which is having
very low value.
 This will distract the whole
management staff of the company at the
time of selling.
ANSOFF MATRIX

The company is using market development strategy with the help of new market and
existing products. The main products will be trucks and tractors, which are bringing the pride
and money to the company (Matzler, and et.al., 2013). SO, when any new market is opening
across UK in agriculture and transportation, then Mercedes Benz is using these two products for
the development of market.
1.3 Effectiveness of techniques used
SCENARIO PLANNING
The scenario planning is a technique which is used by Mercedes Benz to think about the
future. There will be a group of some people which will develop some small scenarios. The
planning is used by the company to build their future goals. This ensures their long term in the
industry (Fojcik, 2015). The current strategy used by Mercedes Benz is market development
strategy. This planning will be helpful in forecasting the future of the company in automotive
industry.
SETTING LONG AND SHORT TERM GOALS

The main goal of the company is to overtake BMW and become the best and largest
brand in the industry. The aim is to strength their core business. To use all the advanced
technologies in their products, which will help them in growing globally. The advanced use of
digitalization in their upcoming products is another goal which was set by Mercedes Benz.
VALUE CHAIN ANALYSIS
The value chain analysis is an accurate approach in finding out the competitive
advantage. The value chain of Mercedes is having series of different activities, which will help
the company in building their brand value.
In primary activities, they have inbound and outbound logistics. Inbound are the one,
which is received by the company form the suppliers, and once they are finished, these products
will become outbound logistics, ready to sent to the supply chain, which is through whole-
sellers, retailers and then ultimately to final consumers (Khalili and et.al., 2013). The support
activities like human resource, procurement and technology development will help Mercedes
Benz in gaining the competitive advantage in market. For that they need to reduce the cost, and
secure the lowest price possible for purchasing the highest quality product.
PORTER'S FIVE FORCE ANALYSIS

Threats of New entrants: This is comparatively low. Because the initial investment is
very high, and it will be very difficult to attain the economic scales.
Bargaining power of buyer: this is high, because there are various substitutes in the
market, so consumer can afford to buy less costly cars. The information can be easily accessible
to buyers, so they can know which brand is best in the market at lowest cost possible.
Threat of substitutes: This will be moderate. Because of the economic conditions, people
are now buy less costly cars.
Bargaining power of suppliers: This is also moderate. Because in market, there are
limited amount of suppliers (Ghosal, 2015.).
Rivalry among competitors: this is very high, because some other brands like BMW,
Audi are offering the same quality of products within the same price range.

LO 2 – FORMULATION OF NEW STRATEGY
This task is enclosed in power point
LO 3 – APPROACHES TO STRATEGY
3.1 Alternative strategy
The alternative strategy chosen for this is market development. This is a growth strategy,
which is used in developing or identifying the various new segments of market for their existing
product. This strategy is chosen after identifying that the interest of the customer is increasing
towards the new hybrid car of Mercedes Benz. By this product, the customers of the competitors
are also attracting, and they are also started to buying the product of Mercedes Benz company.
The SWOT analysis on this strategy has been done, which can be understood as;
Strengths: The main strength of this strategy is to attract the new consumers. As it was
clear that the automotive industry is expanding in various parts of the world, where it is not so
popular. Mercedes Benz took advantage of this situation and they started marketing their
products in those parts of the world (Ghezzi, 2013). This increase the awareness among the
people about the products, the company was offering. The internal strengths like the high
production rates, good brand image in market and high sales rates, all will play an major role in
the development of this strategy in the new market.
Weaknesses: The major weakness is the time required for the production of the product.
As in new places, there will not be any high technological equipments, by which the production
can be done on a faster rate (Morris, and et.al, 2015). But this is not the case in market
development strategy. The customers have to wait for their product for a certain period of time,
and this will make the customer very furious.
Opportunities: As the market is new, and strategy is also new, the chances are very high
to increase the profitability of the company. People are not that much aware about the products,
so the company will run a marketing survey. This is done to identifying the needs of people and
like wise they will make the product.
Threats: The main threat is the rise of competitors. Because the market is new and all the
other big companies like BMW, Audi will try to establish themselves as the major production

company of that area (Acquaah, 2013.). SO the competition is very high for Mercedes Benz in
regarding to this aspect. So they have to give fast and high quality product and services to the
consumers and on lower cost from their competitors. So that more number of people gets
attracted towards their company, and buy their products.
3.2 Justification of the selected strategy
The strategy selected was market development strategy. This strategy was selected to
develop the new market with already existing products rather than developing the already
developed market. This strategy is basically a two way process. Firstly the company starts with
the research process. In this process, the market is segmented according to their needs and use of
products. The main aim is to expand the business into the market which is not yet explored
completely. Mercedes Benz can take the support of media also in doing marketing of their
products. Then once the segment is selected, the next step of market development strategy is top
create promotional strategy. Another thing which can be done is the pricing of the product.
In the new market, there will be more number of competitors, so the company have to
reduce the prices of the cars or heavy commercial vehicles. The set price should be such that, the
consumer can afford the product. At the same time the quality of services should also be of the
highest quality and on the lower cost (Dahlberg, Hokkanen and Newman, 2016.). One of the
main challenge faced by Mercedes Benz is that the market development strategy is somewhat a
bit costly. The investment required is high in this strategy. It is just like a coin having two sides,
if the investment and strategy will not went correctly, then it will be a huge loss to the company.
But if the strategy is very well adopted by the market, and the consumers are liking the product
of Mercedes Benz, then the income and profitability of the company will be beyond imagination.
The another factor of selecting this strategy is that the opportunities in this strategy is
very vast. There are various segments in which the company can invest their money and can get
the positive results. Company can give various offers to the customers. The brand image of the
company is well renowned in the whole world, that is the reason the consumers can easily trust
the product and services of the company. The amount of money charged by the company is also
low as compare to other companies, so this will attract more number of consumers. Though,
there will be some threat as, there are some chances of failure (Fontana, Sastre-Merino, and
Baca, 2015). The strategy might fail and can cause pay loss to the company, but if the market is

responding well, this can be a huge success to the company for selecting the market development
strategy.
LO 4 – IMPLEMENTATION OF CHOSEN STRATEGY
4.1 Roles and responsibilities
HRM manager: The success of the company is dependent on the result of highly skilled
and motivated leaders like HRM manager. Manager of Mercedes Benz is highly responsible for
the management of staff, and provide the solutions to the customers. The recruitment of new
employees and arrangement of training program for them is set up by HR manager.
Marketing sales manager: The sales manager is having the responsibilities to managing
the suppliers. The vehicles and services should be available in a very short time to the
consumers, and also the inventory of the company show room should be enough (Budayan,
Dikmen, and Birgonul, 2015). The manager have to make sure that all the products are available
at the right time, and if the demand increases, then they should be able to supply all type of
vehicles without any delay.
Finance manager: The finance manager of Mercedes Benz needs to attract more number
of investors towards the company. The investors should invest the money in the company, so that
new products can be manufactured in mass quantity. The money will be helpful in implementing
the new strategy which was developed.
Apart from all the top level managers, all the employees must share equal responsibilities, which
will be related to increase the business. The employees must make sure that the high quality
service should be provided to the customers (Kellermanns, Dibrell and Cruz, 2014). The
manager must ensures that all the experienced employees should remain in the company in order
to serve the queries of the customers well and in more effective way. There are some business
analyst also in Mercedes Benz, and their job is to use all the information available to them and
make a well-structured strategy for the company. This will keep them well prepared for future.
4.2 Required resources
There are various set of resources, which are available for the formation and
implementation of strategy. The resources used by Mercedes Benz are;