Analysis of Mercedes Cars Using Porter's Five Forces Model in the UK

This report provides an analysis of Mercedes Cars using Porter's Five Forces model, focusing on the UK automotive market. It examines five key competitive forces: supplier bargaining power, competitive rivalry, the threat of new entrants, the bargaining power of buyers, and the threat of substitutes. The analysis assesses the competitive landscape, identifies key competitors like BMW, Audi, and Rolls Royce, and evaluates the impact of factors such as brand equity, investment requirements, and customer choices. The report concludes that Porter's Five Forces model is a valuable tool for understanding market conditions and developing effective business strategies, especially in a dynamic industry like the automotive sector. The report also discusses the importance of market segmentation and product positioning strategies for Mercedes to mitigate threats from competitors and substitutes.

Porter's Five Forces Model
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TABLE OF CONTENT
INTRODUCTION......................................................................................................................3
TASK.........................................................................................................................................3
Porter’s Five Forces Model....................................................................................................3
CONCLUSION..........................................................................................................................4
REFERENCES...........................................................................................................................5
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INTRODUCTION
Porter’s five forces model is a tool which is helpful in analysing market conditions in
quite prominent and adequate manner. By taking help of this method, manager of company
can comprehend range of competition and effect of other factors like availability of
substitutes, supply power etc. on business operations. This assignment is based upon
Mercedes Cars that is operating its business operations in UK.
TASK
Porter’s Five Forces Model
This tool consists five criteria which is explained below:
Supplier’s Bargaining Power between Low & Medium
There are various suppliers that are found in automotive industry. Numbers of
suppliers are low in size on the other size number of car manufacturers are wide. So in this
case suppliers are not in position to negotiate with Mercedes Company because suppliers
have sufficient power to influence price or can change and set price according to them.
Competitive Rivalry
Luxury and premium car companies always show high competition in automotive car
industry. Main competitors of Mercedes car company is BMW, Audi, Volvo, Jaguar etc.
main difference among all brands are technical aspects like capacity of engine etc., design,
functions, luxury facilities etc. Cost of Mercedes cars are higher than its rivals because this
function makes this corporation more valuable than other competitors like Porsche, Range
Rover etc.
Threat of New Entrant
Mercedes venture is having high brand equity and this organisation is quite able in
availing advantage of its brand value in market. As it is clear that automotive industry
requires larger amount to get invested if any firm wants to enter in this market section.
According to discussed viewpoint, it is clear that risk of new entrant is low because every
companies do not have sufficient amount to put into automobile industry. In market,
Mercedes has become symbol of prestige, status and it is quite difficult to other firms that
they imitate or generate this thing in their products and associated services.
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Bargaining Power of Buyers
There are many manufacturers that are operating their business functions in
automobile industry like BMW, Lexus, and Porsche etc. and all these firms are serving
variety of brands, designs, functions etc. so on the basis of this, it is shown that buyers are
having larger choice options that provides them adequate bargaining power to make choice
over more than 10 brands whom are also having sufficient brand equity in marketplace. In
this section, Rolls Royce cars are giving great competition to Mercedes cars because Rolls
Royce is offering fully customised cars that can hit actual need of every customer and client
retention could become easy for corporation. This action ensures bargaining power of buyers
who have potential to purchase and maintain a luxury car.
Threat of Substitute
Numbers of competitors are very and due to this section, it is clear that there are many
organisations are present in marketplace which is providing great models and options which
is a threat for Mercedes Benz cars and to deal with this issue, corporation has to acquire new
market segment and should always try to position their product with appropriate market
target strategy.
CONCLUSION
This report is concluded as porter’s five forces models that presents five criteria are
having great study on market condition analysis and this factor is very useful in analysing
situation of new market in novel industry.
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REFERENCES
Books & Journal
E. Dobbs, M., 2014. Guidelines for applying Porter's five forces framework: a set of industry
analysis templates. Competitiveness Review. 24(1). pp.32-45.
Yunna, W. and Yisheng, Y., 2014. The competition situation analysis of shale gas industry in
China: Applying Porter’s five forces and scenario model. Renewable and
Sustainable Energy Reviews. 40. pp.798-805.
Porter, M. E. and Heppelmann, J. E., 2014. How smart, connected products are transforming
competition. Harvard Business Review. 92(11). pp.64-88.
Mathooko, F. M. and Ogutu, M., 2015. Porter’s five competitive forces framework and other
factors that influence the choice of response strategies adopted by public universities
in Kenya. International Journal of Educational Management. 29(3). pp.334-354.
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