Mercedes Benz: The Transition to a Continuous Innovation Process

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Table of Contents

Executive Summary
Origins of the Company
Business Model and Innovation Management
Opportunities and Challenges
Strategic Positioning
Competition and Performance
The Innovator’s Method
Conclusion
References

Executive Summary

Mercedes Benz’s development is characterized by a continuous increase in the role of innovation as a key success factor in competition. The domestic production complex is facing an acute problem of low innovation activity of enterprises. It is possible to achieve strategic dominance in the global market through the implementation of innovations. Therefore, an important feature of Mercedes Benz’s growth is the transition to a continuous innovation process.

Origins of the Company

Mercedes is one of the companies that stood at the origins of the automotive industry, its name is no longer just a world-famous brand, but a real legend with a million-strong army of fans owning cars of this brand and an even wider audience of those who dream of it. Mercedes is the embodiment of German quality, reliability, and technical excellence, a symbol of high style, elegance, and respectability (Yao & Schwarz, 2017). Owning a Mercedes-Benz car demonstrates the status of a host who is not used to saving on himself and his safety. It is difficult to imagine such a person acquiring Mercedes spare parts on the market or in doubtful points. The manufacturer made sure that the original Mercedes auto parts were available to car owners wherever they live or wherever they are.

Mercedes-Benz has been a classic in the automotive industry for more than a hundred years. The history of the company dates back to 1890. It was founded by Gottlieb Daimler near Stuttgart on the basis of the workshop of Wilhelm Lorenz, where, shortly before, the world’s first four-wheeled car with a gas engine was assembled. The Mercedes brand was assigned to a vehicle manufactured in 1902 and has since been firmly entrenched in the company’s products (Eder, Luckert, Kemmner, & Sass, 2016).

In 1926, Daimler-Motoren-Gesellschaft merged with Benz & Cie, as a result of which the concern acquired its world-famous name Daimler-Benz for a long time, and an emblem of three rays inscribed in a circle, symbolizing the dominance of Mercedes technology on earth, in water and the air, henceforth and forever flaunts on the hood of these prestigious cars.

Quality is the basis of the company’s philosophy, the highest level of which is demonstrated not only by cars but also by Mercedes auto parts. Mercedes-Benz auto parts are manufactured with impeccable quality in strict compliance with the DIN EN ISO 9000 standard. Original Mercedes spare parts have special branded packaging. In 1998, the German concern joined forces with one of the leaders of the overseas auto industry Chrysler (Hsiao, Lin, Lo, & Ko, 2016). Today, the Mercedes brand belongs to Toyota, which confirms the thesis that all the best in the world is gathered in one place. Mercedes spare parts are licensed by firms and other companies in Europe, the USA, and other countries, they can be purchased without risk of damage to the car from authorized dealers selling Mercedes auto parts.

Business Model and Innovation Management

The main business model of Mercedes Benz is innovation, which is in the basics of science and practice of general management. This is especially true of the management mechanism as a complex of interrelated elements of impact on the control object. The Mercedes Benz’s management mechanism has new principles of organization management, such as decentration, which is maintaining autonomy while recognizing supra-individual logic, and self-generation.

The complexity and multidimensional nature of Mercedes Benz’s management are most visible in the methods of organization management used today. Conditions and factors of changing the environment of the functioning of organizations, distorted images of real and virtual reality forced to evolve ways to achieve the goals of the organization. In connection with the simplification of organizational management structures, new vectors for the development of self-government and self-organization methods have appeared (Nielsen, Sladek, Muller, & Eberle, 2016).

Classical analysis and control as management methods and functions are gradually superseded by the monitoring and controlling system while minimizing instructions, regulations, and rules. In general, one can notice that Mercedes Benz’s management methods are developing from administrative and disciplinary to creative, self-organizing, from guardianship and formalization to emancipation and self-responsibility.

Mercedes Benz successfully implemented innovation and is the result of a company’s intellectual activity, imagination, creative process, discoveries, inventions, and rationalization. It is characterized by the introduction into the social sphere with new consumer properties or a qualitative increase in the efficiency of production systems (Yao & Schwarz, 2017). However, it should be noted that Mercedes Benz’s innovative attitude is not a simple idea, but it is the one that seriously increases the efficiency of its system.

Opportunities and Challenges

Innovation in the internal structural subspecies of general management, which is differentiated in large corporations and enterprises, such as Mercedes Benz, of various sectors of the economy. These segments are production management, marketing management, financial management, personnel management, foreign economic management, and innovation management (Eder et al., 2016). It is clear that each this type of control can be considered not only as a separate discipline in the educational process of future managers but also as a specific branch of management science, which Mercedes Benz develops and makes its innovative changes to mechanisms, systems, tools, improving research methods in these areas of knowledge.

Moreover, in Mercedes Benz’s production management, there are innovations in the organization of production, resource-saving, in the technical and design features of the products, which change the production technology and its management. Trends and patterns of development of innovative processes in industry are modernizing methods and solutions, taking into account the main factors and conditions that determine the effective implementation of the modern production management process. In the last decade, Mercedes Benz’s financial management has changed significantly (Nielsen et al., 2016).

New financial instruments and methods for managing a financial portfolio, interesting areas of the financial management process have appeared. Such innovations in business management include outsourcing, fundraising, updated forms of credit, the formation of new funds, changes in the methods of motivation and incentive.

Strategic Positioning

Mercedes Benz’s marketing is not only and not so much a specific market technology as a certain business philosophy that actively shapes the market and the needs of its customer. In Mercedes Benz’s marketing, there are direct marketing – any event aimed at obtaining a response from the consumer, and financial marketing – a systematic approach of investor-sellers to managing the sale of financial assets and investor-buyers to handle the accumulation of financial assets. There also non-profit marketing carried out by organizations and individuals that act in the public interest and do not seek economic profit, network marketing, social marketing, and strategic marketing, which consists in analyzing the needs of individuals and organizations; branding benchmarking and more (Nielsen et al., 2016). All these concepts play an essential role in establishing Mercedes Benz as the dominant leader in the automobile industry.

Competition and Performance

The formation and retention of competitive advantage affect the mechanism of functioning of the enterprise associated with the design, production, and sale of products. At the same time, in conditions of intensified competition in both domestic and foreign markets, innovative competitive advantages are most sustainable, and it is based on the use of innovation. It creates a competitive advantage with a medium and high degree of sustainability (Yao & Schwarz, 2017). Accordingly, innovative ensuring competitiveness of an enterprise means the creation and implementation of innovative competitive advantages in the field of improving product quality, reducing costs, methods of forming a product range, organizing production and management at an enterprise.

Mercedes Benz’s development is characterized by the leading importance of scientific and technological progress and the intellectualization of the main factors of production. The share of new knowledge embodied in technology, equipment, training, organization of production in developed countries accounts for 80 to 95% of growth (Eder et al., 2016). The introduction of new technologies has become a key success factor in market competition, the main means of increasing production efficiency and improving the quality of goods and services. Increase in expenses for the creation and development of innovative industries will allow the global economy to reorient itself from a supplier of factors of production to a producer of high-quality and competitive products.

The Innovator’s Method

Mercedes Benz’s development is taking place in the face of increasingly stricter requirements for the environmental parameters of industrial products. This cannot but be taken into account by manufacturers and forces them to constantly search for technological solutions that could significantly reduce emissions of harmful substances into the atmosphere, especially in relation to such a mass industrial product as a modern car. On the other hand, manufacturers are forced to take into account those budgetary constraints that consumers experience when deciding on the acquisition of technologically new types of goods (Nielsen et al., 2016).

It is this factor that encourages manufacturers-entrepreneurs to look for new forms of doing business and more aggressively use new materials, technologies and innovations that can not only provide unique consumer qualities of the product but also withstand an acceptable price level for the consumer. The negative impact of vehicles on the environment is manifested in various aspects. This includes the alienation of land for road construction and the violation of the ecological balance during their development and operation.

Conclusion

In conclusion, Mercedes Benz’s economic systems are characterized by three features, such as uneven development, high rate of change in consumer preferences. It also includes consumer awareness of the need to improve the living environment as a condition for maintaining normal human life. As the business and industrial sectors are constantly looking for not only new markets but also new product niches, the ability of companies to offer consumers unique types of goods and services that can be quickly absorbed by the market is of particular importance.

A solution to these problems will be possible if the state establishes certain rules for the development and support of a new type of product that is useful for society. Such positive practice already exists when financial instruments initiated by the governments of individual countries create economic incentives for entrepreneurs creating new innovative products.

References

Eder, T., Luckert, P., Kemmner, M., & Sass, H. (2016). OM 654 – Launch of a new engine family by Mercedes-Benz. Development Diesel Engines, 77(3), 60-67.

Hsiao, S. W., Lin, H. H., Lo, C. H., & Ko, Y. C. (2016). Automobile shape formation and simulation by a computer-aided systematic method. Concurrent Engineering, 24(3), 290-301.

Nielsen, B., Sladek, W., Muller, M., & Eberle, F. (2016). The latest heavy-duty engine generation from Mercedes-Benz – Part 1: Aims and design. Development Commercial Vehicle Engines, 77(6), 48-53.

Yao, Q., & Schwarz, E. (2017). Transnational venue management corporations and local embeddedness. International Journal of Sports Marketing and Sponsorship, 18(1), 70-80.

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