Mercedes Benz: Evaluating Competitive Edge, Ethics & Stakeholders

This essay provides a comprehensive analysis of Mercedes Benz, a renowned German luxury vehicle manufacturer, examining its competitive position through internal and external assessments. The internal analysis focuses on the resource-based view (RBV), highlighting the company's physical, financial, and human resources that contribute to its competitive advantage. The external analysis employs PEST (Political, Economic, Social, and Technological) and Porter's Five Forces frameworks to evaluate the macro-environmental factors and industry dynamics affecting Mercedes Benz. Furthermore, the essay delves into the company's social impact, covering ethical considerations, code of conduct, and stakeholder needs. It also touches upon Mercedes Benz's strategic initiatives, such as 'Project Future' and the 'Leadership 2020' program, aimed at fostering growth, innovation, and a customer-centric approach. The analysis considers Mercedes Benz's market positioning, target audience, and strategies for maintaining its leadership in the luxury automotive sector. Desklib offers a wealth of similar resources for students seeking academic support.

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Mercedes benz
Business essay plan

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Contents
Introduction................................................................................................................................2
Comparative analysis of Mercedes’s competitive position........................................................3
Internal analysis......................................................................................................................3
External Analysis....................................................................................................................5
Considerations by the companies to create social impact........................................................10
Ethical considerations...........................................................................................................10
Code of conduct....................................................................................................................12
Needs of stakeholders...........................................................................................................13
Academic theories....................................................................................................................15
Conclusion................................................................................................................................17
References................................................................................................................................19

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Introduction
Mercedes Benz is a German brand known for luxury vehicles, coaches, buses, and trucks.
The Mercedes Benz is a division under it’s parent company, the Daimler AG group of
companies. Mercedes Benz is a popular brand in the automotive industry. The Daimler group
is engaged in developing automotive products. Mercedes Benz was established in 1926 and
having headquarter at Stuttgart, Germany. It is a well-recognized brand around the world and
was rated among the top ten most recognized brands. The company leads in the engineering
technology and managed to feature in it’s vehicles. This brand is sold all across the globe.
The dealers of the company exist in more than 130 countries. The models of the Mercedes
Benz are sold with diverse specifications in the various regions of the world as per the
geographical factors. The company has twelve series such as Mercedes –Benz E-class coupe
and have more than 100 kinds of models. The company can be divided by high quality and
performance of luxury cars. The aim of Mercedes Benz is to carry on its growth across the
globe in all the vehicle segments. The company further plans to expand production units,
development, service around the world. The company was ranked 12th on the ‘best global
brands 2011’ with the brand value of 27,445 million dollars. The tagline of the company is
‘The Best or Nothing’ and it is successfully tying it’s heritage of excellence in style,
performance, engineering, and safety. The new model of the company, the rollout has created
a great response to evolving in the favor of green technologies. The company also continues
it’s partnership with Tesla for the lithium-ion battery packs. Mercedes Benz targets middle
and upper class who are aged above 40. The company updates it’s technologies to make cars
more famous among customers. It is a dominant player of luxury automakers and is having
40% of share in the market.
In this report, the comparative analysis of Mercedes Benz will be done. The competitive
position of the company is defined in the terms of internal and external analysis. The internal
analysis includes the resource-based value. The external analysis includes the PEST and five
force analysis. The internal and external analysis aims to find out the factors that affect
business and the effect of such factors can be positive or negative. Further, the social impact
is defined which are considered by the company. The social impact includes the ethical
considerations, code of conduct and needs of stakeholders. The company is transforming it’s
units through the fourth strategic pillar, ‘project future’ which transforms divisions into the
legal independent units. It focuses and strengthens the divisional structure of Daimler. The

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company makes 5 C strategies to push forward biggest changes in the company such as core,
case, culture, company, and customers. Out of these customers is the most important
component for the company. These components help to attain profitable growth and assist in
increasing the value of the company and share the future of mobility. Mercedes Benz has
established a leadership culture under the leadership 2020 program to cooperate across
business units.
Comparative analysis of Mercedes’s competitive position
Internal analysis
Resource- Based Value (RBV)
The resource-based identifies the distinctiveness of the Mercedes Benz’s superior
performance and competitive advantage in order to generate unique product creations at a
lower cost which assists in earning higher profits. The company is having attractive and
powerful assets.
Component Resource Competencies
Physical Mercedes Benz is one of the
top five automobile
companies in the world. The
Mercedes Benz possesses a
respectable position in the
automotive industry because

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physical assets of the
company such as plants and
machinery are valuable and
huge (Kozlenkova, Samaha
& Palmatier, 2014). The
company has several
numbers of plants and
equipment across Europe, the
U.S. and the Asia Pacific.
of it’s ability to innovate on
time. The company
introduced a combustion
engine automobile, safety
cell concept, electronic
stability programme brake
assist system and many more.
The company focuses on
bringing the invention so that
it can achieve a competitive
advantage.
Financial Mercedes Benz earned
revenue of 95 billion euros in
2011 (The Statista, 2018).
The assets of the company
are reputable and it possesses
the respectable brand. The
company is often linked with
comfort, luxury, and status.
The company makes a huge
capital investment in the
design and inventions which
enhances the sales of the
company (Nielsen, Sladek,
Müller & Eberle, 2016).
Mercedes Benz possesses the
core competency because of
it’s high reputation and
demand for products in the
market. The company
understands the want, need
and class of customers and
brings the model in the
market as per their paying
capacity (Viveros, 2016).
Human The corporate culture of the
company holds perfection
and high quality in the
manufacturing process.
Mercedes Benz is having a
human resource which
focuses on the quality of it’s
products. The company
The perfection is considered
to be the foremost success
factor in the marketplace.
The company is able to
maintain quality and
durability due to it’s efficient
and skilled team of human
resources. It is one of the

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struggle for perfection which
is it’s core competency
(Merkisz, Gallas, Rymaniak
& Siedlecki, 2017).
factors behind the company’s
success. The quality of the
human resource results in the
quality of products.
Mercedes Benz achieved
fifth place in the quality
study 2007 by J.D. Power.
The resource-based value comprises the physical, financial and human resources which helps
Mercedes Benz to attain competitive advantage. The physical assets of the company such as
plants and machinery are valuable and huge. The assets of the company are reputable and it
earned revenue of around 95 billion euros in 2011. Mercedes Benz has acquired the best and
skilled human resource which creates the best corporate culture and focuses on producing the
quality products (Hoffmann, Benz, Weirich & Herrmann, 2014).
Mercedes Benz carries on the most innovative practices in the manufacturing of engineering
vehicles. Their unique approach sets apart from the competitors. The company attains a
competitive advantage based on different marketing strategies in different countries. It
implements changes so that the need of customers can be met easily. On the basis of Porter
generic strategy, the company attains a competitive advantage on the basis of cost leadership.
Mercedes Benz is lacking cost leadership strategy (Herrmann, Kožuch, Lettmann &
Brünemann, 2016). As it produces vehicles for premium customers because the company
ensures that it provides premium quality. The company differentiates on the basis of design,
comfort, technology, and engine. The cost focus of Porter’s generic strategy considers the
specific target of people. The company compares it’s cost with the competitors such as BMW
and Audi and tries to keep the cost minimum than it’s competitors. The target group of
customers is generally of a higher class. So the company provides the products at genuine
cost for the target group of customers. Mercedes Benz tries to differentiate its products by
bringing updated technology and inventions and focuses on the targeted group (Oliinyk, et.
al. 2017)
External Analysis
PEST Analysis
Political factors: Mercedes is responsible to expand company worldwide. It has to deal with
a foreign policy about the import of manufactured goods, VAT rates, and labour rights.

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Normally the VAT is required to be paid if the vehicle is purchased from the European
nation. The automotive industry has complicated political issues. These issues arise from the
western world are of less importance for the Mercedes Benz because a number of leading car
manufacturers are initiated from the western world (Görke, et. al. 2017). The political forces
from the developing countries are more complex. The rules and regulations are set for
protecting the car manufacturers from the developing countries and for enforcing extra taxes
and tariffs against the car manufacturers from other countries. The automotive industry is
equally affected by the laws and the regulations. There is a requirement of standards for
handling manufacturing of automotive by the government authorities. The legal aspects in the
automotive are strict so the life of consumers depends on the quality and consistency of the
vehicles. The Singapore government has implemented laws on the automotive emissions
standards and the product liability of automobiles (Clyde & Co, 2015). These laws are
prescribed by the National Environment Agency of Singapore in the regulations of
environment protection and management. It prescribes minimum emissions standards for
vehicles in Singapore.
Economic factors: The world has entered into a temporary recession after the financial crisis
in the U.S. and Europe. Many developing countries are able to recover at a satisfactory level.
It affects the strategies relating to operations and marketing of the leading automotive
companies worldwide. The automotive industry also has multiplier effects on the economy of
a particular country. It is also experienced that the automotive industry consumes a large
volume of steel, iron, computer chips, copper, plastic, rubber and more (Pacagnella Júnior,
Porto, Pacífico & Salgado Júnior, 2015). It is also specified that every one worker is engaged
in the automotive industry, there are six other jobs being created in other industries. The
economy growth affects Mercedes as the income of consumers increases subsequently.
However, the inflation results in the negative effect on the sales (González & Vílchez, 2015).
Social factors: People have their respective social and cultural practices in every part of the
world. For instance, the culture in the East and West is considerably different. The cultural
differences are something which cannot be neglected by the automotive manufacturers. The
globalization has made culture and consumer behaviors are apparently becoming alike around
the world. People are judged on the basis of the car in the developing countries. The class
who drives a high-class vehicle are considered wealthy and powerful (Pelliccione, et. al.
2017). The preference of consumers for the model of car may differ across the globe. The

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company also launches models as per the social structure such as the company has invented
electric cars and small cars to fight the issue of global warming. The company has also
invented the environmentally friendly car called BIOME. It gives oxygen from the fuel pipe.
In Singapore, the buses will be allowed to continue but the number of cars will be cut to zero
in 2018 to reduce the impact on the economy (The Guardian, 2017). The government is going
to freeze the number of private cars on the road.
Technological factors: The technological advancement is a critical and important element for
the Mercedes Benz. The new technologies and designs are discovered and used by the
company in order to achieve a competitive advantage in the marketplace. The change in
technology affects the automotive industry. It occurs due to the advancement of the internet.
The new trends taking place day by days cannot be ignored by the automotive industry
(Hollebeek, Glynn & Brodie, 2014). It has been experienced that 60% to 80 % of consumers
visit the automotive web-portal before going for test drive session. The entire is making
changes in the supply chain management of the automotive industry. The technology has an
important role in the promotion and production. It has reduced the requirement of the labor
force. The company can save the cost of the labor force due to the advancement of
technology. The company can produce more cars in the short period of time (Dickmann, et.
al. 2016). The company can promote the latest products by making use of different sources
such as the internet and T.V. commercials. The company is keeping it’s focus on the
environment to ensure all the products are eco-friendly.
5Force Analysis
Force Strength
(weak/ moderate/ strong)
Features
The threat of new entrants The threat of new entry is
low. Any company which
enters in the automotive
industry force the price down
of other company and affects
the profit margin negatively.
There are substantial barriers
to entry in the industry
(Jarzabkowski & Kaplan,
Mercedes Benz is a
developed brand and has
become a symbol of prestige
and status. The brand loyalty
of customers is developing
over time for Mercedes Benz.
The company has a
significant market share and
away from the competition of

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2015). The barriers to the
new entrance are relatively
high in the automotive
industry.
Asian firms.
Bargaining power of buyers The bargaining power of
buyers is high. There are
several numbers of the
luxury car manufacturers and
has varied products. The
customers have different
brands vary in quality,
performance, presentation,
and price. The buyers can
also access the information
of products and can compare
the features with different
brands before taking a final
decision to purchase.
The buyer power is high
because they have several
alternatives. Mercedes Benz
offers exhilarating
performance, sophisticated
style, and intelligent
technology. The innovative
features of the company
enhance safety, performance,
and entertainment. The
company reinvents the
vehicles with the advanced
technology and designs the
new vehicles for the buyers.
Bargaining power of
suppliers
The bargaining power of
suppliers is low. There is a
number of suppliers in the
automotive industry. Out of
them, most are of small size.
The manufacturers are of
large size and the suppliers
are not in the position to
bargain and influence price.
A very high quality is set by
the manufacturers and
specified standards for the
raw material. The
manufacturers make deal
with only those suppliers
Mercedes Benz has several
suppliers and it is an honor
for the suppliers to be part of
the company. The company
has set specific standards for
the raw materials, so the
suppliers who can comply
with the standard can only
supply raw materials to the
company (Jud, 2015).

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who can comply with their
requirements. The suppliers
of the company comprise
makers of leather products,
car interior, wood designers
and providers of electronic
devices. The switching cost
for the company is high
(López-Navarro & Segarra
Ciprés, 2015).
Threat of substitutes The threat of substitute
product is moderate in the
automotive industry. The
threat of substitute products
is the likelihood of new
innovations which increases
the probability of customers
switching to the substitutes,
for instance, Jaguar or BMW.
The other threat from the
substitute products is the
cheap price in the same
quality of the product. People
often prefer to get a better
product at a cheap price
(Maharaj, Chisoro &
Karodia, 2016).
The luxury cars do not assist
just the purpose of
transportation. The vehicles
are also a symbol of status,
reputation, and achievement.
The threat of the substitute
products is insignificant as
the vehicles of Mercedes
Benz are premium
automobiles (Kotler & Maon,
2016). The vehicles of the
Mercedes Benz are must
have for the wealthy people
as it becomes a status of
symbol.
Competitors intensity The threat of competitors is
high in the automotive
industry. The competitors of
the company are BMW,
Audi, Volvo, Jaguar, Lexus,
and Porsche. The vehicles
Mercedes Benz has a
significant market share in
the automotive industry. The
company had the highest
seller units in 2015. The
competition is highly

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designed by the competitor
companies are significantly
different in design, functions,
performance, and technology
(Karaosman, Morales-Alonso
& Grijalvo, 2015). The cost
of the company is premium
so the marketing and
communication is an
important part of the
company for the potential
customers. It generates a
perception of status,
recognition, achievement,
and success.
competitive and the conflict
among the competitors is
high. The exit barriers are
also very high due to the
huge investments put in
(Mathooko & Ogutu, 2015).
Mercedes Benz is a global leader in premium cars. It invests huge money in the
manufacturing and bran building. Mercedes Benz has powerful competitors such as General
Motors, Ford Motor, BMW, Volkswagen, Volvo, Mazda and more. The company faces
competition mainly from Audi and BMW which are said to be the most expensive brands in
the industry. The features which make Mercedes Benz are elegance and precision better than
anybody. The safety innovation is the other point which makes the brand unique. In order to
compete with other automotive companies, Mercedes have an association with it’s
competitors. In order to compete with Audi and BMW, Mercedes Benz maintains a
reputation for the quality of it’s cars along with the design and motorization.
Considerations by the companies to create social impact
Ethical considerations
Mercedes Benz preserves human rights and obeys the law. The company has a global
responsibility and is committed to the principles of United Nations Global Compact. It
particularly focuses on the protection of human rights and fundamental rights at work. It is
associated with the freedom of association, elimination of discrimination, rejection of forced
labor and child labor. The ethical considerations focus on the sustained environmental
protection and fights against the corruption. The company ensures that not only the

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employees and business partners but customers also follow these principles. The
international, local laws and provisions also comply (Ramos-González, Rubio-Andrés &
Sastre-Castillo, 2017).
Mercedes Benz undertakes to treat each other and partners fairly. The company maintains an
atmosphere of openness and tolerance, admiration and politeness along with the fairness and
trust. Every employee is required to respect and maintain the dignity of others. It ensures the
long-term success of the company. It promotes and respects the diversity. The company treats
everyone with equality and do not discriminate regardless of nationality, religion, gender,
age, disability, medical condition or color. Mercedes Benz protects the rights and privacy of
every individual. Any intimidation or harassment is prohibited in the organization. It is the
duty of the organization to create a fair and friendly work environment (Reinhardt, Domingo,
García & Christodoulou, 2017). The information is secured in the organization and it takes all
the necessary steps to prevent unauthorized use. The ethical considerations undertake to take
care of the company’s property and assets. The transparency if focussed on conducting audits
and investigations.
Lead successfully with business partners and customers. The company aims to maintain
decency in the way it performs the business with its products. It treats competitors fairly and
cooperates with the business partners in a respectful manner. The company always take stand
for the fair competition and obey the laws. These laws include tax and customs duty, anti-
terrorism laws, money laundering act and foreign trade legislation (The Guardian, 2017).
Mercedes Benz keeps the information confidential and does not disclose it. The company
keeps itself ahead of the competition and do not share information without authorization. The
information is kept confidentially related to competitors, partners, and customers. The
company does not believe in giving and taking bribes. It believes and respects the personal
interest and private life of the employees. The company keeps the inside knowledge to itself
(Stylidis, Rossi, Wickman & Söderberg, 2016).
It is the ethical responsibility of Mercedes Benz to be aware of social responsibility. The
company supports it’s employees by providing assistance. For instance, Laureus is the
initiative taken by the company to support social responsibility in the form of non-profit
projects at home and abroad. Mercedes Benz encourages volunteering by holding society
together. The employees of the company can freely express their opinion. They have freedom
of expression. The company always stands for the quality and safety of products. It works on