Competitive Strategies of Mercedes-Benz: A Business Report

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Communication for Academic Purposes
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Table of Contents
Introduction......................................................................................................................................3
Discussion........................................................................................................................................4
Conclusion.......................................................................................................................................6
Reference List..................................................................................................................................7
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Introduction
Mercedes Benz is one of the leading manufacturers of luxurious and high-quality cars. Gottlieb
Daimler formed it, and it is the division of Daimler AG. The company has its headquarters at
Stuttgart Baden-Wurttemberg. The first model was produced under the design of Daimler and
Benz (Mercedes-benz.com, 2019). The company employed strategies like Generic and Porter
five-force strategy for dealing with their competitive position.
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Discussion
As per the presentation, I identified that the company Mercedes Benz used Generic and Porter’s
five forces to implore the competitive position of the organisation. The organisation Mercedes
Benz desires to improve its competitive position in the market, as there are several competitors
like BMW, Porsche, Audi, Volkswagen, Jaguar, Ferrari, and many more. I think it is important
for Mercedes Benz to employ different strategies to establish a strong market position. As I have
mentioned above, Mercedes Benz used generic strategies. In the opinion of Fathali (2016), the
three competitive strategies are cost leadership, differentiation, and focus, as these provide an
appropriate explanation for the distinct variations in dimensions of corporate innovation. These
dimensions include product innovation, process innovation, as well as administrative innovation.
It has been stated that there is a link between competition and innovation. I believe in the case of
Mercedes Benz; the competitive advantage can be achieved through innovation. It has been
noticed that the organisation invests a considerable amount of research to innovate features and
facilities in the products. As I have stated that, the organisation employs Generic strategy to gain
a competitive advantage in the market.
According to Xu et al (2017), the generic strategy, the organisation Mercedes Benz is noted to
use differentiation strategy. This strategy involves developing a product, which is considered as
unique in the industry and it shall make it stand out in among its competitors. I think the
organisation employs a differentiation strategy by making innovation, which is associated with
the design, features, technology customers’ service, or brand image of the organisation. In my
opinion, the organisation making innovation about the aspects mentioned above shall help it
attain brand loyalty, and it increases the price of the product. This would be imposed on its
customers, but it is the buyer’s loyalty that makes entry of the new firms in the market as a
barrier. This is because the buyers believe in the products developed by the organisation.
Moreover, I have observed that the differentiation strategy would be more effective and suitable
for the organisation in attaining competitive advantage. Further, the differentiation strategy
enables the company to generate more profits in comparison to the low cost strategy. I think that
the low cost strategy would be ineffective for Mercedes Benz, as it would not be able to provide
quality products, which is the major demand of the customers (Namada, 2018).
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Mercedes Benz is a company, which has a good brand name in the market and differentiation
strategy would provide the high-quality products at the best price. Therefore, I think it is a
suitable strategy for the organisation Mercedes Benz in comparison to the cost leadership, low
costs, and leadership strategies. Apart from this strategy, the organisation employs Porter’s five
forces to gain a competitive advantage. Porter’s five forces is an effective way analysing the
market forces, which are the threat of substitute, intense rivalry, and the threat of new barriers,
the power of suppliers, and power of buyers (Sölvell, 2015). I realised that Mercedes Benz
applied this strategy to identify the competitive forces, which shall affect its position in the
market as well as hinder its competitive advantage. The analysis of all the five forces shall help
the organisation to identify the reasons for not being able to attain a competitive advantage. The
intensity of rival companies like BMW, Audi, and Porsche, Jaguar Volvo, which manufactures
premium and luxury automobiles is high for the company Mercedes Benz. I think the other
forces have a low impact on the company; only the rivalry is high. Since the rivalry is high, it
shall affect the competitive advantage of the company (Arendas, 2016).
Apart from these two strategies, the other strategies, which I have noted, are supply chain
management, marketing mix, human resource management, financial analysis. In my opinion,
the supply chain management would help the company in gaining competitive advantage, and it
can be through outsourcing the non-core competencies along with coordinating the functions
with the supply chain. Apart from supply chain management, the marketing mix especially the
7Ps mix helps the company in communicating about the products and services along with
understanding the customers’ needs. Once the company knows about its opportunities and
threats, it would be able to leverage it according to the strengths and weakness to gain
competitive advantage. Further, the human resources management shall help to motivate the
employees, training them, which will increase its productivity and gain a competitive position
(Noe et al., 2017). The financial analysis would help it to understand its expenditures and
generation of revenues. In other words, if the company’s revenue generation is higher than its
competitors are, it is evident that it would be able to gain a competitive advantage.
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Conclusion
From the above reflection, it can be concluded that generic differentiation strategy and Porter's
five forces enables the organisation Mercedes Benz to identify the ways through which it can
generate competitive advantage and enhance its market position.
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Reference List
Arendas, Z., 2016. Industrial Relations in Car-manufacturing Industry: a Comparative Case
Study of Audi Hungaria, Gyor and Mercedes Benz, Kecskemet.
Fathali, A., 2016. Examining the impact of competitive strategies on corporate innovation: An
empirical study in automobile industry. international Journal of Asian social science, 6(2),
pp.135-145.
Mercedes-benz.com. 2019. Mercedes-Benz Corporate history.. [online] Available at:
https://www.mercedes-benz.com/en/mercedes-benz/classic/history/corporate-history/ [Accessed
15 Mar. 2019].
Namada, J.M., 2018. Organizational learning and competitive advantage. In Handbook of
Research on Knowledge Management for Contemporary Business Environments (pp. 86-104).
IGI Global.
Noe, R.A., Hollenbeck, J.R., Gerhart, B. and Wright, P.M., 2017. Human resource management:
Gaining a competitive advantage. New York, NY: McGraw-Hill Education.
Sölvell, Ö., 2015. The Competitive Advantage of Nations 25 years–opening up new perspectives
on competitiveness. Competitiveness Review, 25(5), pp.471-481.
Xu, L.U., Blankson, C. and Prybutok, V., 2017. Relative contributions of product quality and
service quality in the automobile industry. Quality Management Journal, 24(1), pp.21-36.
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