PESTLE & SWOT Analysis of Mercedes-Benz in the UK Automotive Industry

Desklib provides past papers and solved assignments for students. This report analyzes Mercedes-Benz using PESTLE and SWOT.

2019
(A PESTLE & SWOT analysis on Mercedes-Benz)
Name of the Student:
Student ID:
Module Code:
Mercedes-
Benz AUTOMOTIVE INDUSTRY IN UK

AUTOMOTIVE INDUSTRY IN THE UK
Table of Contents
1. Introduction..................................................................................................................................3
2. Company Overview.....................................................................................................................4
3. Competitive Advantage...............................................................................................................4
4. PESTLE & SWOT Analysis........................................................................................................5
4.1 SWOT Analysis.....................................................................................................................5
4.2 PESTLE Analysis..................................................................................................................6
5. Supply Chain Management..........................................................................................................9
6. Marketing Mix...........................................................................................................................10
7. Recommendation.......................................................................................................................11
8. Conclusion.................................................................................................................................12
9. References..................................................................................................................................13
2

AUTOMOTIVE INDUSTRY IN THE UK
1. Introduction
The automotive industry in the UK has been improved with the ultimate involvement of one of
the leading companies, Mercedes-Benz. The automotive industry is highly focused on embracing
the technological advancement in order to gain a competitive advantage in both the local and
global markets.
The study delves down into discussing the competitive advantage of the business in the UK
market. The core aspects of the research are associated with PESTLE & SWOT analyses of the
automobile organisation. Two other essential attributes, such as, supply chain management and
marketing mix elements of Mercedes-Benz are going to be discussed.
3

AUTOMOTIVE INDUSTRY IN THE UK
2. Company Overview
Mercedes-Benz is based on manufacturing the sophisticated and highly automated cars with the
ultimate touch of innovation. The company has been established in the year 1886, while the
engineer Mr. Karl Benz had firstly invented the world’s first car. On that note, it is to mention
that the invention has pioneered a significant pathway of technology and innovation, which has
successfully completed the decades (Mercedes 2019).
3. Competitive Advantage
In order to study the competitive advantage of Mercedes-Benz, it is crucial to focus on the
different product lines of the parent company. As opined by Law (2017), the parent company of
Mercedes-Benz is Daimler Inc. The different product lines of the parent company include trucks,
public buses and vans (Calabrese 2016). Additionally, another business unit of the parent
company is indicative of Daimler Financial Services. It has been helpful for the UK-based
automobile company, Mercedes-Benz, in several markets for better establishment and support. In
that case, it is to mention that the support and establishment have been gained by the business in
terms of dealership financing, technological support and management (Mercedes 2019).
In case of having an in-depth scenario of competitive advantage of Mercedes-Benz, it is
important to focus on the total number of plants owned by the business. On that note, it is to
mention that the organisation has a total of 38 plants (Mercedes 2019). From the total number of
plants, 23 plants are situated across the globe, and they are directly company-owned plants.
Among the 23 plants, there are nine plants of powertrain, nine vehicle and five car assembly
plants. Each and every plant is situated in the most strategic locations that are effective for the
business in targeting the developing countries. At the same time, the core focus of Mercedes-
Benz is on controlling the operational costing (Mercedes 2019).
4

AUTOMOTIVE INDUSTRY IN THE UK
4. PESTLE & SWOT Analysis
4.1 SWOT Analysis
S – Strengths
In case of discussing the internal factors, as per the SWOT framework, the foremost aspect is
indicative of the strengths. The specification is made below:
 High top-of-mind-awareness (TOMA) in the competitive market
 Worldwide facility of manufacturing
 Rapid innovation in the products (Gheibi et al. 2018)
 Strong financial stability
 A wide range of product portfolio
 Strong grip in the developing countries (Mercedes 2019)
W – Weaknesses
The main weak points of Mercedes-Benz in the competitive market are as follows:
 Distribution is not at all properly grown or developed
 Expensive in case of after-sales service along with maintenance
 The arrival of conflicting objectives in turn of the company groups (Mercedes 2019)
O – Opportunities
The possible scopes or opportunities of Mercedes-Benz across the globe are specified in a below-
listed manner:
 Strategic alliances
 Shifting growth to the Asian markets
 High demand for premium cars
 Technological advancement Growing automobile industry in terms of economic growth and freedom (Mercedes 2019)
T – Threats
5

AUTOMOTIVE INDUSTRY IN THE UK
In order to focus on the likely threats of the UK-based automobile company, the specification is
as follows:
 An intense level of competition from other rival brands, such as, AUDI, BMW and Volvo
 Economic uncertainty, such as, unemployment and recession
 Unpredictable and rapid changes regarding fuel pricing
 Governmental regulations
 High investment and fixed costing in the R & D department (Tsangas et al. 2019)
Figure 1: SWOT analysis of Mercedes-Benz
(Source: Tsangas et al. 2019)
4.2 PESTLE Analysis
P – Political factors
In order to study the external factors, which impact on the business activities of Mercedes-Benz,
as per the PESTLE framework, the foremost factor, is indicative towards political scenario. In
accordance with the aspects of BREXIT, the business organisations of the UK face several issues
in terms of sustainability in the market. Hence, it can be mentioned that Mercedes-Benz is no
exceptional in case of struggling with the BREXIT impact (Mercedes 2019).
6
Strength
Worldwide facility of manufacturing
Weaknesses Expensive in case of after-sales service
Opportunities
Technological advancement
Threat Governmental regulations

AUTOMOTIVE INDUSTRY IN THE UK
The major impacts of BREXIT that can be seen on the business of Mercedes-Benz are indicative
towards sales and labour market. Near about 51% of the exported cars in the UK are purchased
by the customers of the European Union. Thus, due to the presence of BREXIT, the impact on
the business of Mercedes-Benz can be observed in terms of sales volume (Mercedes 2019).
Additionally, in case of imports by volume, around 85% of the UK’s passenger cars are
represented by the European Union. Thus, the significant impact of BREXIT can be noticed in
importing scenario of this automobile company (Gao et al. 2017).
In turn of the labour market, it is to mention that the number of European Union workers in the
UK has fallen by 2.25 million (Mercedes 2019). As a result of it, the UK automobile businesses
have to focus on recruiting non-European Union employees. The impact of this phenomenon can
be observed in the high growth of wage, which has been one of the major concerns for UK
companies. Hence, the impact is also viable on the business of Mercedes-Benz (Mercedes 2019).
Therefore, due to BREXIT effects, the negative impact is seen on the business of Mercedes-Benz
in terms of import-export and labour market.
E – Economic factors
In order to learn about economic factors, it is indeed essential to address the three most common
aspects of the UK economy. Based on Khan et al. (2015), it can be stated that the major
economic factors include interest rate, inflation rate and GDP growth rate. On that note, it is to
mention that current GDP growth rate (0.2%), interest rate (0.75%), and inflation rate (1.8%)
bring significant impact on the annual revenue generation and profitability of the automobile
companies, along with, Mercedes-Benz, in the UK.
Therefore, in case of the swings of economic factors, negative impacts are observable on the
business of UK-based car manufacturing organisation, Mercedes-Benz.
S – Social factors
In turn of the social factors, it is to state that Mercedes-Benz focuses on the CSR (Corporate
Social Responsibility) in order to get blended with the community. The business is concentrated
on different types of social, arts and cultural initiatives for blending with the community
(Mercedes 2019). The initiatives include Australia Business Arts Foundation (AbaF), Melbourne
7

AUTOMOTIVE INDUSTRY IN THE UK
Symphony Orchestra (MSO), Committee for Melbourne, Melbourne String Ensemble (MSE),
and The Society for Australian-German Student Exchange (SAGSE). Additionally, the business
is associated with making sponsorship and donation in the NGOs, such as, Ovarian Cancer
Research Foundation and Starlight Children’s Foundation (Mercedes 2019).
Therefore, due to strong CSR activities through donation and sponsorships, a positive impact is
noticeable on the business of Mercedes-Benz.
T – Technological factors
In case of the technological factors, it is to mention that the business is rapidly embracing
technological advancement in order to enhance the customer base and profit margin. In that case,
it can be stated that one of the major attempts of involving technology with the products can be
observed in specific cars, which is started and accessed through the high-quality process of
voice-recognition (Mercedes 2019).
Therefore, in case of the high-class technology adoption and application, a positive impact is
viable on the business of Mercedes-Benz in the UK.
L – Legal factors
In turn of the legal factors, it is indeed essential to focus on the legal frameworks that influence
the automobile businesses. On that note, it is to mention that in accordance to the provisions of
Fair Trading Act 1973, it is necessary to build an effective relationship with the customers in
order to reflect the level of loyalty (Mercedes 2019). It helps Mercedes-Benz and several other
automobile companies in strengthening the customer base.
Therefore, due to regulatory involvement, positive impacts are observable on the UK-based car
manufacturing business, Mercedes-Benz.
E – Environmental factors
In order to study environmental factors, it is indeed necessary to involve the legal frameworks in
terms of environmental responsibilities. In accordance with the legal provisions of the
Environmental Protection Act 1990, the indication is associated with waste management and
improving the scenario of air contamination (Mercedes 2019). On that note, it is to state that the
8

AUTOMOTIVE INDUSTRY IN THE UK
automobile companies, along with Mercedes-Benz in the UK, concentrate on involving the three
Rs (Reduce-Reuse-Recycle) and reducing the carbon footprints as an essential responsibility to
the environment (Mercedes 2019).
Therefore, in case of the legal sustainability regarding environmental aspects, positive impacts
are noticeable in the business of Mercedes-Benz.
5. Supply Chain Management
In order to study the supply chain management of Mercedes-Benz, it is essential to discuss that
the business is concentrated on the new centre of the supply chain for reducing the logistics
costing. In that case, it is to mention that the company is advancing the combined strategy of
making supplier network more flexible and global. Based on Fahimnia et al. (2015), it can be
mentioned that in case of supply and chain, a combined strategy is revolving around
autonomous, connectivity, electric, along with services and shared. Mercedes-Benz is highly
focused on the localisation aspect (Mercedes 2019).
Additionally, in order to expand to the strong global network of 2000 suppliers, the company is
focused on the policy of sourcing parts, in which locations, the vehicles are produced. It is
effective in minimising vulnerability regarding political developments, such as, trade conflicts
(French and Russell-Bennett 2015). Additionally, the organisation believes that the enhancement
of localisation is effective in maintaining the appropriate synchronisation of manufacturing. In
that case, it is to mention that Mercedes-Benz is concentrated on the central building block as the
local suppliers’ proximity to the production plants. It is useful in producing and calling up the
parts by maintaining proper synchronisation with the manufacturing (Wang et al. 2016).
9

AUTOMOTIVE INDUSTRY IN THE UK
Figure 2: Supply Chain Management
(Source: Wang et al. 2016)
6. Marketing Mix
Product, the products of Mercedes-Benz are sold under the five broad categories with individual
product lines. The categories include:
 A-Class: Subcompact luxury Hatchback / Sedan/Saloon
 B-Class: Subcompact luxury Multi-Purpose Vehicle (MPV)
 C-Class: Compact executive Sedan/Saloon, Estate, Coupé and Cabriolet
 CLA: Subcompact luxury 4 Door Coupé and Estate
 CLS: Mid-size luxury 4 Door Coupé and Estate (Mercedes 2019)
Price, the company is focused on the competitive pricing strategy in order to gain an advantage
regarding profitability in the market (Dangelico and Vocalelli 2017).
Place, the organisation focuses on selling products through two marketing channels. The first
one is about selling to the wholesalers, and another is direct selling via the official website.
Promotion, Mercedes-Benz uses both traditional (such as, television media) and social media
platforms (such as, Facebook, Twitter and YouTube) in order to advertise the products and reach
to a large number of potential customers (Bahadir et al. 2015).
10

AUTOMOTIVE INDUSTRY IN THE UK
People, the executives of sales and marketing of the organisation play a vital role as they are
highly trained with persuasive techniques.
Process, the company makes sure the availability of products at retail stores. It ensures
availability in terms of notifying the inventory levels (Godey et al. 2016).
Physical evidence, Mercedes-Benz sells products in the unique packaging colour and design,
which is easily identifiable in the retail stores.
7. Recommendation
 It can be recommended that Mercedes-Benz is required to focus on embracing more
advanced and upgraded technology for vehicles. There is a requirement of an advanced
sensor. For instance, if someone intentionally tries to close the door of a car on one’s
hand, due to the latest sensor technology, the door will be automatically stopped.
11

AUTOMOTIVE INDUSTRY IN THE UK
8. Conclusion
It can be concluded that the automotive industry in the UK is getting modernised day-by-day.
The report has been concentrated on presenting the competitive advantages of one of the UK-
based car manufacturing companies, Mercedes-Benz. PESTLE & SWOT analysis has been two
of the core essentials of the study throughout. Supply chain management and marketing mix
elements of the automobile company have been discussed by focusing on the current scenario.
12