Category: Mercedes-Benz

Competing successfully implies implementing specific strategies, which objectives can be summarized as knocking the socks off rival companies by doing a better job of providing what buyers are looking for (Thompson, Gamble and Strickland). Applying the aforementioned objectives, it can be seen that the investment decision taken by Mercedes-Benz is exactly targeting such strategy. Mercedes-Benz is planning 3 billion Euros investments in German passenger car locations, almost half of which were already put in expanding the company’s Rastatt plant and building a new plant at the Hungarian location of Kecskemét, with 600 and 800 million Euros respectively (Daimler “Daimler Invests Euro 600 Million in Center of Excellence for Compact Vehicles”). Examining such investments, it can be seen that the company has chosen the focused low-cost provider strategy, in order to gain competitive advantage, specifically in a time of global crisis.

Two distinctive characteristics of the investments made by Mercedes-Benz can be seen in the niche chosen for the investments and the main objectives stated by the company. Regarding the first, the production enlargement is concerned with the expansion of the line of products for the A- and B-class vehicles. Both classes are compact luxury cars, and according to the company, it will expand the production line to four models instead of two, in order to acquire new customer groups (Daimler “Daimler Invests Euro 600 Million in Center of Excellence for Compact Vehicles”). Looking at the structure of the unit sales for 2008, it can be seen that the sales for the A- and B-class cars are coming second after the C, CLK and SLK- class, which are ranged from sports to premium, and smaller than executive in size (Daimler “The Mercedes-Benz Cars Division”). In that regard, it can be assumed that a larger demand is present for the smaller cars in the luxury segment, as well as the focus on the cost reduction, where among the expansion objectives it was stated that “Production costs are a key factor in the competitiveness of the price-sensitive compact vehicle segment” (Daimler “Daimler Invests Euro 600 Million in Center of Excellence for Compact Vehicles”), as well as making the small-car lineup more profitable (Rahn and Reiter).

The aforementioned characteristics of the investments match with the strategy characteristics in focusing on a narrow buyer segment and outcompeting by serving the members of the segment at a lower cost (Thompson, Gamble and Strickland). Accordingly, the differentiation of the product line, combined with the efforts to lower the costs can be seen successful, due to the fact that the industry itself has many niches and segments, which allows the company to focus its strengths and capabilities, and avoiding competition for the same customers.

Analyzing the preferences for the selected locations and the way they will allow the reduction of production costs, the geographical locations is concerned only with the Hungarian plant, as the Rastatt plant will be only updated. In the latter, the update of the plant includes 710,000 square foot body shop, which implies cost reduction through increasing the volume of the manufacturing (Abuelsamid). Accordingly, in Kecskemét, the location choice might be based on the central position of the Hungarian city in Europe, as well as the work force costs reduction. Considering that this particular car segment is price-sensitive, it can be assumed that the creation of 2,500 job positions in the economically underdeveloped Kecskemet will allow saving a significant amount of costs on workers wages (Associated Press).

Thus, it can be seen that commercial investments in the case of Mercedes-Benz imply two distinctive approaches combined together, i.e. the differentiation of the products in the specific segment, as well as reducing the costs in production. Further investments in the 3 billion plan might consider upgrading other manufacturing plan for other segments of the market.

Works Cited

Abuelsamid, Sam. “Daimler Launches €600 Million Small Car Investment, a-Class Bev in 2010”. 2009. AutoBlog Green. Web.

Associated Press. “Daimler Starts Construction of Hungary Car Plant “. 2009. New York Times. Web.

Daimler. “Daimler Invests Euro 600 Million in Center of Excellence for Compact Vehicles”. 2009. Daimler.com. Web.

“The Mercedes-Benz Cars Division”. 2009. Daimler.com. Web.

Rahn, Cornelius, and Chris Reiter. “German Carmakers May Face Indian Threat in Small Cars (Update1)”. 2009. Bloomberg.com. Web.

Thompson, Arthur A., John Gamble, and A. J. Strickland. Strategy : Winning in the Marketplace : Core Concepts, Analytical Tools, Cases. Boston, Mass.: McGraw-Hill, 2004. Print.

Executive Summary

There are a number of challenges faced by organizations wishing to conduct business with other firms in a foreign country. The reason behind this is that the organization will be required to engage either in the importation or exportation of goods or services. The Emirates Motor Company has for many years engaged in the importation of Mercedes Benz from Germany into the UAE.

One of the major challenges that the organization has suffered is lack of sufficient funding. As such, the organization has not been in a position to fully exploit the UAE market. The company also has to deal with high cost of operations. Importation activities require firms to pay for shipping and loading charges for the goods. The importer also has to incur insurance charges. The costs result in an increase in the cost of commodities making them undesirable to customers. Delays in payment also make it difficult for the company to replenish its stock.

Introduction

Mercedes Benz is a Germany based manufacturer of automobiles. It is a division of Daimler AG. Mercedes Benz as a brand engages in the manufacture of a wide variety of automobiles which range from luxury cars, coaches, trucks, and buses (Coughlin & Ambrosio, 2012). Today, it is a multinational company with franchises spread across the world. The company is regarded highly both locally and internationally. It is known for its brands of luxury vehicles.

The three manufacturers currently dominate the world market for luxury cars. Over the past years, Mercedes Benz has been seen to engage in activities aimed at increasing its global presence. The company has been seen to open franchises in Asia, Europe, and the Middle East in order to take advantage of the rapid economic growth in the regions. The company has also been seen to keenly monitor its African market. It has opened a franchise in Egypt to help it conduct business with Africa more efficiently and effectively. In 2014 alone, Mercedes Benz sold 2.5 million cars.

Besides the manufacture of automobiles, the company also offers financial services. It performs this role through the help of Daimler Financial Services AG. The arm of the organization has aided the company to further penetrate the Middle East market. A major event took place in 2009. The company announced its operations in the Middle East. It introduced Mercedes-Benz Leasing Middle East. It also opened Mercedes-Benz Finance Middle East. The two new companies owned by Mercedes Benz had their headquarters established at Dubai, one of the regions making up the United Arab Emirates (UAE) (Coughlin & Ambrosio, 2012).

They were established with the aim of providing lease and loan services to private and business customers who wish to purchase pre-owned and new commercial and passenger automobiles from Mercedes Benz. The move has enabled Mercedes dealers to be in a position to offer customers with a wide range of financial services. In the process, the company has made it easier for potential automobile customer to prefer Mercedes Benz cars as a result of the wide range of credit facilities provided. As a result, the demand for the brand in the UAE has risen (Adler, 2006).

In this paper, the author will focus on Emirates Motor Company (EMC). The entity is a branch of the Al Fahim Group that is charged with the responsibility of running the automobile division. Today, EMC owns the largest Mercedes Benz facility in the world. The company engages in the marketing and distribution of Mercedes Benz vehicles in the UAE. It is also important to note that EMC also engages in the servicing of these automobiles ranging from luxurious saloon cars to large trucks.

To this end, the company stocks a wide range of Mercedes Benz genuine parts. Today, the company boasts of a prestigious clientele that consists of members of the business community, oil companies in the region, and most importantly the UAE government. The company obtains its stock from Daimler AG (Wiehager, 2011). Mercedes Benz V-class automobiles are however rearly imported into the UAE. In this paper, more emphasis will be put on the challenges associated importation of Mercedes Benz automobiles from Germany to the UAE. Among the challenges that will be discussed are delays in payment, high cost of operation, insufficient funding, as well as a huge domestic market for Mercedes Benz brands in Germany.

Literature Review

An Overview of the Emirates Motor Company’s Import Business

Most of the manufacturing activities for Mercedes Benz are carried out within German. However, some of the franchises in the UAE are involved in the assembly of the brand and sales of spare parts. Some of the outlets that deal with Mercedes Benz automobiles import finished cars from Germany with the aim of distributing them to their stores spread across the UAE. The Al Fahim Group and Gargash Enterprises are the leading dealers of Mercedes automobiles in the UAE. The Al Fahim Group owns the (EMC), the authorized distributor of the Mercedes Benz brand within the UAE (Coughlin & Ambrosio, 2012). Gargash Enterprises on the other hand is the official Mercedes Benz distributor within Sharjah, Dubai, as well as the Northern Emirates. The two dealers mainly re-export their cars to other countries in the Middle East.

History of Importation of Mercedes Benz Automobiles from Germany to the UAE

There are a number of factors that affect the manner in which international trade is conducted. Of key importance are the political relations between countries. The nature of political relations between two countries determines the volume of trade that exists between them. International organizations, such as the World Trade Organization (WTO) and the UN Security Council can also have an influence on a country’s trade volumes. For example, the two can impose sanctions on a particular country. Such a country is no longer I a position to trade freely with others.

The entry of goods, as well as their exit into the country is hindered. The relations between Germany and the UAE are good. As such, firms that are based in the two countries carry out business among themselves with limited restrictions. Trade in automobiles between the two countries has been on the rise. Daimler AG, the manufacturer of Mercedes Benz automobiles has good business relations with the Al Fahim Group (Wiehager, 2011). Through EMC, the Al Fahim Group engages in the distribution and marketing of automobiles in the region on behalf of the Daimler AG.

External Analysis of the World Automobile Industry

In order to analyze the world automobile industry, we will conduct the PESTLE analysis. The PESTLE framework has six components. They are used to analyze external agents affecting the entity. The factors must be specific to the industry in which the organization is a player for them to make sense (Gould, 2012). The factors include those to do with political and economy environment. Others touch on technology and legal aspects of the business. Finally, there is the issue of the environment. Mercedes Benz just like any other brand is affected by these factors. The factors are external, which means that the company has no control over them. As such, the only option left for company is to modify its activities in a manner that helps it best deal with these factors.

Political factors have a great impact on the world automobile industry. To begin with, political stability is important if automobile companies are to successfully venture into a particular market. Political instability negatively affects the ability of automobile companies to conduct business (Plunkett, 2011). They lack the ability to set up premises in areas associated with political unrest. Political relations between countries also have an adverse effect on the automobile industry. Bad political relations between countries have negative effect on trade between them.

At times, country(s) may impose sanctions against another (Plunkett, 2011). Iran is one of the countries in the world that has had sanctions imposed on them. The reason behind the sanctions has been that the country has in the past decades engaged in the manufacture of nuclear weapons. Its activities have been viewed by many as a threat to world peace therefore necessitating the introduction of the sanctions. The United States of America (USA) has been on the forefront prohibiting local firms from conducting business with Iran. Other western powers, such as Germany, Britain, and France have also harshly criticized Iran’s nuclear programs. Iran can therefore not trade with these countries in all sectors including the automobile industry.

Players in the world automobile industry also have to cope with a wide range of economic factors. One of the major economic factors affecting the industry is the fluctuation in GDP. The situation has been most evident in Europe. Europe is one of the largest markets for automobile manufacturers. Further decline in GDP among the members of the European Union will result to a decline in sales volume (Gould, 2012).

A fluctuation in the currency exchange rates also has a widespread effect on the automobile industry. Changes in the value of a particular country’s currency will definitely have an effect on the prices of the automobiles. Subsequently, the purchasing ability of customers in that particular country will be affected. Volatility in the prices of oil also has an effect on the world automobile industry. When the prices of oil are low, more people will purchase automobiles and vice versa.

Social factors also have an adverse effect on the automotive industry. One of the factors that have had a major effect on the industry is the social status of customers. Those people who are of a higher social status tend to purchase luxury car brands, such as BMW, Mercedes Benz, and Audi (Jürgens, 2004). People of a lower social standard on the other hand tend to purchase cheaper brands of automobiles, especially those manufactured by Toyota.

Change in social status will therefore definitely cause a significant change in the industry. Gender is also a major social factor affecting the automobile industry. Females have been found to prefer smaller cars compared to men. It is important for automobile companies to consider these social factors when making a decision on what to produce. Automobile manufacturers also have to be careful when it comes to relating with their employees. Abuse of employees in the sector is harshly criticized by the World Trade Organization (WTO).

Public opinion is also a major social factor affecting manufactures and marketers in the automobile industry especially with the widespread use of the social media todaay. In a Daimler AG, the owner of Mercedes Benz annual shareholders meeting in April 2010, there were widespread calls for the company to end their association with Iran. A section of the shareholders at the meeting started what came to be referred to as the ‘Stop the bomb coalition’.

During the meeting, Dr. Dieter Zetsche’s, Daimler AG’s chief executive officer (CEO) announced that the company would cut down their volume of trade with Iran (Donnelly & Harrison, 2012). Trading was to be limited to old customers in Iran with more emphasis being put on fulfilling old contracts. The company was also to give up its 30% share it held Iranian Diesel Engine Manufacturing (IDEM). The company was a subsidiary of Iran Khodro. A resolution was also passed that Daimler AG would also desist from exporting three axes cars into Iran.

On 11th of November, 2010, Daimler AG, through their CEO announced that they had completely suspended their activities with Iran. Daimler AG feared that trading with the country would result in them being named and shamed as key supporters of the Iranian Regime. In the process, they would also stand the risk of losing contracts within the USA and other western countries opposed to the activities being carried out by the Iranian government. Mercedes was blamed for the exportation of Mercedes Benz Axor 2628 trucks into Iran (Donnelly & Harrison, 2012). There were fears that these trucks would later undergo some modification and used for military purposes. Such trucks can easily be converted into mobile rocket launchers a situation that can further Iran’s nuclear activities.

Technology is a major factor affecting any firm, in any particular market. It helps firms improve on the efficiency and effectiveness of the organization or the products it manufactures (Wang, 2013). The automobile industry is characterized by high levels of innovation. For example, innovations, such as cheaper airbags and seatbelts are common in the industry. Such technologies are associated with quick adoption. Firms operating in the automobile industry have to pay attention to such innovations.

The popularity of ‘green technologies’ in the industry should also not be ignored. Other technological factors affecting the industry include the rising demand of alternative fuels and the realization of the driverless car concept. Companies that engage in the manufacture of automotives have no option but to adopt these technologies in order to have competitive advantage over other players in the sector. The emergence of internet-enabled car systems is also a major upcoming trend in the industry.

Players in the world automobile industry also have to consider the legal factors affecting trade. It is paramount that any firm wishing to conduct business in any part of the world conforms to the rules and regulations governing the area (Miller, 2013). Legal issues facing the automobile industry range from the international, national, regional, and local levels. Any changes in these rules and regulations will definitely affect the automobile manufacturers and marketers.

One of the most common legal issues in the industry relate to the patents and copyrights with regard to innovation. Automotive manufacturers who come up with new auto devices and functionalities often tend to bar others from using them without their go ahead. At times, such innovations can be from members of the public. It is important that manufacturers obtain authorization to do so from these innovators before duplicating their technology. Failure to do so can result to legal suits that can see the company lose a lot of money settling.

Environmental issues also impact on players in the sector. Many environmental issues in the sector touch on the issue of pollution. Many environmental agencies have initiated campaigns that champion the adoption of green technologies (Wang, 2013). Such technologies are aimed at reducing the levels of pollution. Many automobiles companies currently produce vehicles that are powered by fossil fuels. However, the concept of bio-fuels is on the rise. Automobile manufacturers, such as Daimler AG have also come up with electric cars.

They are associated with minimal pollution levels. Most of the automobiles today are also attempting to adopt the technology. There has also been a change in the manner that automobile manufacturers used to dispose their waste. Today, manufacturers are not allowed to dump toxic wastes in public places or close to the water resources. Compliance with environmental regulations has also been viewed as an aspect of corporate social responsibility. Those who fail to comply are often shamed and this may affect their sales.

External Analysis of the Trade between the UAE and Germany in Automobiles

In order to conduct an external analysis of the trade between the UAE and Germany in the automobile sector, the PESTLE analysis framework will be used once again. The UAE is politically stable. It is considered to be one of the most liberal and peaceful countries in the region. Despite the recent political unrest in the Gulf region, the country has maintained relative peace and calm. As such, it is easy for EMC to conduct its import business.

The country also enjoys one of the simplest tax structures. It leads the world at position one. Companies operating in the UAE, such as EMC do not have to deal with complex tax frameworks. The government of the UAE has also signed a number of trade agreements. To begin with, the country is a member of the Association of Southeast Asian Nations (ASEAN). It is also a member of the Gulf Cooperation Council (GCC). In 1988, the European Union established bilateral relations with the member states of GCC. Companies operating in the UAE have benefited from such agreements through easing of foreign trade regulations.

In 2007, the UAE adopted stringent rules aimed at controlling the importation and exportation of goods. The law particularly banned the importation of goods that were deemed to threaten the country’s security. It has also been viewed to be in support of sanctions imposed by the United Nations (UN) on any particular country (Plunkett, 2010). The UAE federal government has also come up with a social welfare system that is comprehensive. Companies operating in the country are required to be mindful of the special groups in the country, especially women living rural areas.

Economic factors also affect the automobile business between Germany and the UAE. The country enjoys one of the lowest lending rates in the world. Interest rates between 2007 and 2015 have ranged between 1.28 to 4.75 percent. Inflation rates by beginning of March this year stood at 4.30 percent. They currently stand at 3.61 percent which indicates a downward trend. As such, the automobile industry in the country is likely to experience some rapid growth.

Approximately 53 percent of the country is employed (Farameh, 2011). 19.9 percent expresses no desire to work. The remaining close to 27 percent is unemployed. The number is rising with the influx of immigrants into the country. The per capita levels are also high at $63,181. As such, people have supplus income to spend on luxury goods such as automobiles. The country’s gross domestic product (GDP) is also experiencing rapid growth at 4.6 percent. As of 2013, it was at $ 570 billion with the industrial sector accounting for 56.1 percent. The UAE dirham also performs well against the key world currencies (Farameh, 2011). One UAE dirham equals 0.2722 US dollars. With the stable economy, there are minimal fluctuations which mean fewer challenges for importers, such as EMC.

A number of social factors have also been seen to affect trade in the UAE automobile industry. To begin with, luxury is the lifestyle in the country. Close to 50 percent of the population buy new luxury goods, such as cars while 49 percent are seen to purchase second hand items. Approximately 78.7 percent of the UAE population is aged between 15 to 64 years. It is estimated that about 73.9 percent of these individuals are immigrants (Laabs, 2009).

With the population growing at a rate of 3.282 percent, there is an expected growth of the number of people at the age bracket. The group is mainly consisted of working people who love luxury goods, such as cars. Although the UAE is currently the world’s richest nation, there is poor distribution of wealth and education. About 90 percent of the country’s wealth is owned by 0.2 of the local population. As such, only a small number of people have access to resources.

Muslim is the dominant religion. They are liberal people and love sports, such as street racing often with luxury car models. The UAE population has been viewed to put more emphasis on quality of goods. As such, many luxury goods, especially automobiles are recalled following quality issues (Laabs, 2009). Many people in the UAE buy Mercedes Benz automobiles following constant innovation by the company. The trend has been of benefit to EMC since people tend to influence each other’s purchasing behavior.

Majority of the people being youths, they want to go with the trendy car models. The country is also considered to be extremely capitalist in nature. Little emphasis is put on social policies. However, plans are underway to enact a legislation seeking to increase the duration for maternity leaves from 45 days to 6 months. The move will affect players in the industrial sectors since employees will require to be given longer leaves. Most of the UAE population spends their leisure time in sporting activities, such as car racing.

When it comes to technology in the UAE in automobile industry, it is important to note that the government of the UAE funds research. It does this through the National Research Foundation (NRF) established in 2008. It was designed in a manner that promoted innovation at public colleges and universities. Players in the automobile sector have also been seen to fund research. A good example is the Al Fahim Group which engages in extensive research in automobiles. With the growth of the sector, more funding is expected.

The UAE government is committed towards supporting world-class research and innovation. Players in the local automobile industry have also been keen to watch the emerging trends in the world market. Today, the UAE can be considered to be one of the most technologically advanced countries especially when it comes to the automobile sector. Intellectual property is also protected by the local government through copyrights and patents. However, there are potentially disruptive industries creeping in at the edge of the automobile sector. Such industries include air and rail-road transport.

Legal issues also have a major effect on the automobile sector. Plans are underway to introduce an anti-monopoly rule. The law is to ban the rising trend in the UAE where certain companies and agencies are given all the rights in the distribution of certain brands. Right to private property is also protected by the federal and the local governments (Haig & Haig, 2011). The government of the UAE has also developed an intellectual property regime that operates on internationally recognized standards. More emphases have been put on brand protection.

Customer protection laws are also in place. The UAE Law No. 24/2006 prohibits companies from engaging in the sale of sub-standard goods, fakes, as well as unfair business practices, such as hiking of prices (Farameh, 2011). Companies operating in the UAE are also required to provide employment opportunities to the local population. The UAE legal system through the Emirates Institute of Health and Safety (EIHS) requires that companies do not produce or sell goods that put both employees and consumers at risk.

Environmental factors have also been seen to affect the manner in which the UAE conducts trade in automobiles with other countries. The country’s population has recently been seen to champion environmental friendly cars. Although a majority of the country’s population was initially seen to love 4×4 models, customers in the region have become increasingly cautious of the environmental effects of the use of such automobiles. The realization of the concept of the electric car, thanks to increasing calls to automobile manufacturers to adopt green technology is a major environmental issue facing the sector.

Many buyers in the UAE today have expressed interest on such automobiles (Laabs, 2009). Environmental activist groups, such as Earth First and the Greenpeace movement have also put pressure on players in the automobile sector to adopt green technologies. There are also environmental protection laws that are enforced at the municipal level. Companies are given permits pertaining to water usage and air pollution. Clean up is done at the expense of the polluter. Permits may also be cancelled. Use of energy efficient technologies has also been stressed with the aim of reducing pollution levels.

Internal Analysis of the Emirates Motor Company (EMC)

In order to conduct an internal analysis on EMC, two frameworks will be used. The two are the PESTLE analysis and the SWOT analysis. The paper will begin with conducting a PESTLE analysis of the company and later the SWOT analysis. Once again, PESTLE analysis will look into the political, economical, social, technological, legal, and environmental factors affecting the organization.

PESTLE Analysis

Political environment

When it comes to political issues facing EMC, the organization is in good relations with the government. The company has conducted business in the UAE since 1962. It has also risen to the ranks of one of the biggest dealers in automobiles across the globe (Fich, 2009). As such, it is viewed by the government as one of its revenue sources.

The UAE government has also in many occasions been seen to purchase automobiles from the company especially Mercedes Benz Saloon cars for the police department. Following the widespread criticism against Iran, many multinational companies have desisted from conducting business with the country (Fich, 2009). Mercedes Benz is one of the companies that have been on the forefront cutting their ties with the country. As such, EMC no longer sells cars in Iran. The development negatively impacted on performance of the company considering that the demand for luxury automobiles in Iran is on the rise.

Economic environment

In economic terms, the EMC is a well established company in the UAE automobile industry. It owns the greatest Mercedes Benz facility in the world where showrooms and service bays are housed. However, Mercedes Benz dealers in the UAE incur high costs of operations by engaging in the importation of automobiles from Germany. Importation is an expensive practice. It increases the handling charge which translates to an increase in the prices of the imported cars. Storage space for the Mercedes Benz cars also has to be allocated in holding facilities.

Exportation activities from Germany are carried out via sea transport. The cars also have to be off-loaded back to from cargo ships which increase the cost of operations. The shipping charges also increase the cost of the undertaking. Tariffs are also charged for the importation of the cars further increasing the operational cost (Bohlander & Snell, 2007). The price of the imported cars therefore tends to go up to compensate for the costs incurred. The Mercedes Benz cars are therefore unable to compensate with other luxury car brands, such as BMW and Audi which has assembly points within the UAE (Fich, 2009). The high cost of importation also drives many customers to go for cheaper car brands as well as second hand cars.

Social issues

There are also a number of social issues affecting EMC. To begin with, Mercedes Benz as a brand is viewed as a preserve for the rich. The reason behind this is that Mercedes Benz automobiles are expensive (Harrington & Niehaus, 2004). Only those of a high social status purchase from the EMC. Other Mercedes Benz lovers who cannot afford to purchase new cars often go to firms that deal with second hand automobiles.

As such, EMC sales have remained lower compared to other dealers who stock other cheaper brands (Laabs, 2009). The company has also been linked to the Iran administration. The reason behind this is that the company has been accused of conducting business with the Iran government. Despite Daimler AG insisting that Mercedes Benz ceased operations in the country, IDEM continues to manufacture a wide range of automobiles under Daimler’s license. Daimler AG has however denied any involvement with the IDEM stating that they are no longer responsible of the company’s manufacturing activities in Iran.

Technology

When it comes to matters revolving around technology, the EMC has not been left behind. It has been at the forefront in supporting innovation. The company has been seen to adopt the use of the green technology. Currently, the EMC stocks electric cars in its showrooms. For this reason, it has been viewed by many in the UAE as progressive (Lamoreaux, 2007). The company also stocks the latest releases by Mercedes Benz. Recently it unveiled the new 2015 S-Class Mercedes Benz, one of the newest models of luxury cars across the world. As a result, most customers go to EMC for the latest models.

Legal matters

There are also a few legal issues affecting EMC and its operations within the UAE. The brands stocked by EMC are compatible with the set standards in the UAE. For example, most German made cars are left hand drive. The UAE requires that persons driving on their roads own left-hand drives. Automobiles stocked by EMC meet this requirement. As such, there are very few cases or product recall to Germany following failure to meet UAE standards.

However, recent accusations of having conducted business with Iran have made customers all over the world raise questions concerning the ethics of the company. On matters of environment, EMC has been seen as one of the leading automobile dealership companies within the UAE that champion environmental conservation (Yang, 2013). The company has been able to achieve this by stocking Mercedes Benz automobiles that are electricity powered. The adoption of green technologies have added an element of corporate social responsibility on the company’s profile which helps increase its competitive advantage.

SWOT Analysis at EMC

With the help of a SWOT analysis, the author of this paper will be able to conduct an internal evaluation of EMC. Through the framework, one can analyze the strengths, weaknesses, opportunities, and threats (SWOT) facing the company.

Strengths

One of the major strengths associated with EMC is that it has one of the greatest facilities dealing with automobiles across the world. As such, it is able to accommodate a large number of vehicles compared to its competitors. The facility houses a number of showrooms and service bays. As such, the company is in a position to better serve its clientele. Most customers in the automobile industry want to view the available models before deciding on which to purchase.

As such, the expansive showrooms at EMC’s facility help customers to make informed choices (Fine, 2009). The company is also keen to stock the latest models. The expansive showrooms enable the company to have more space to accommodate new Mercedes Benz models that have just hit the market (Fine, 2009). It is also important to note that showrooms are an important marketing avenue especially in the automobile industry. They enable a company to showcase to potential customers what they have to offer.

The service bays available at the facilities owned by the company also enable the organization to offer after sales services to customers. Such services include repairs and maintenance. In the process, they are able to gain a competitive advantage against their rivals (Bertelsen, 2012). The service bays also act as a strategy to promote the sales of genuine Mercedes Benz spare parts, one of the commodities retailed by EMC.

Weaknesses

Despite the strengths, there are also a number of weaknesses associated with EMC. One of the major weaknesses of the company is insufficient business financing. The exportation of automobiles is a costly undertaking. Any firm wishing to venture into the industry must therefore have adequate finances. The EMC is owned by the Al Fahim Group. The group has interest in other sectors of the economy, such as the hospitality, industrial, and manufacturing industries. As such, the group is not in a position to solely focus in the automobiles import business.

The groups finances have to be divided among its ventures. As a result, EMC has little chances of experiencing future expansion. Importation also requires payment of insurance policies to protect the company businesses. Like any other business, Mercedes Benz dealers, EMC also have to protect their investments through purchasing insurance policies. The company also only deals with Mercedes Benz products. As such, they lack variety for customers to choose from (Fine, 2009). Many low income customers tend to avoid purchasing automobiles from the company since they are of the view that it stocks products only affordable by the super rich.

Opportunities

There are a number of opportunities associated with EMC in the UAE automobile import business. The UAE automobile industry is one of the most attractive in the region. There is a high demand for luxury cars in the country. The UAE population has also been identified to be very selective when it comes to cars. They go for those that decked out using accessories. Mercedes Benz automobiles are exported into the country from Germany at a markup price of approximately 30 percent.

The increase in prices has largely been attributed to the installation of accessories, such as alloy wheels and airbags. The nature of the country’s population has offered the company with an opportunity to increase the sales of genuine Mercedes Benz spare parts and accessories. The large facilities owned by EMC also enable the company to stock many automobiles than any other dealer in the region. Another opportunity that EMC can exploit is the rising GDP in the country. As such, the purchasing power of customers has also increased (Bertelsen, 2012). The realization of the concept of the electric car by Daimler AG has also been beneficial to the company. It can take the read in the manufacture of such models in the region.

Threats

Besides the opportunities highlighted above, it is important to note that EMC is also faced by a number of threats. The most common threat in any market is competitors (Ahmad, 2013). In the UAE automobile industry, the company faces stiff competition from other players, such as BMW, Audi, Nissan, Toyota, and Ferrari among others. Competition has significantly reduced Mercedes Benz sales volume by EMC. The fact that the company does not stock other global brands makes it easy for other dealers to dominate the market.

Delay in payment is also a major threat to EMC. It often takes long for EMC to receive payment for the cars that have been delivered to customers. Coupled with the long shipping periods, the two pose a major threat to the success of the organization. Delay in payment results in reduced profitability for EMC. The reason behind this is that businesses depend on revenue obtained from past transactions to ensure continuity (Bertelsen, 2012). Failure by customers to pay for the cars exported to their country in time results to revenue shortages. As such, the company does not have enough funds to replenish stock.

Methodology

The study was conducted to establish the challenges faced by EMC in the importation of Mercedes Benz from Germany. The research was qualitative. The researcher used a survey to assess the view of EMC on the challenges that face their organization as they import their stock from Germany. The survey was a questionnaire prepared by the researcher.

It consisted of simple open ended questions. The questionnaire was to be completed by workers at EMC. Specialists in the organization, such as those who deal with import logistics and financial reports were also required to complete the survey since they were viewed to have better knowledge on the day-to-day running of the company. The surveys were later collected and analyzed.

Data for the project was also collected through a review of existing literature. The researcher sought to gather information from books and journals that were related to the research. Only recent sources were used for the research. The researcher believed that the use of current sources would be instrumental in gathering up-to-date data for the research. The resources used for the research were also cited within the work presented by the researcher. The practice introduced the aspect of authenticity in the researcher’s work.

References

Adler, D. (2006). Daimler & Benz, the complete history: The birth and evolution of the Mercedes-Benz. New York: Collins.

Ahmad, M. (2013). Marketing case studies and SWOT Analysis: SWOT analysis applied to marketing case studies. Saarbrucken: LAP LAMBERT Academic Publishing.

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Mercedes-Benz Company

The automobile manufacturer Mercedes-Benz was founded in Stuttgart, Germany, in 1926. The company originated from the idea of engineer Karl Benz but was produced together with Gottlieb Daimler at his manufactures. Today it is a globally recognized brand in the sector of luxury automobiles and other motor vehicles. Two engineers had an equal share in the company, and it was due to the combined efforts that they managed to create the automobile unique in its quality, that it nowadays remains one of the distinctive marks of high quality (Clarke, 2005). The company’s objective today is combining long-existing tradition, automobile quality, digital innovations in the production process, and luxurious design.

Mercedes-Benz Products

Mercedes-Benz is most famous, of course, for the automobiles. Nevertheless, they manage to produce all sorts of other motor vehicles, including buses, trucks, and vans. Since the 1990s, Mercedes-Benz management decided to make generalizations concerning the nomenclature of the vehicles’ classification. Therefore, the system of classes was introduced to all the factories, research and production centers. The objective of introducing classes, each of which contains a letter and a numeric code is to make the unique indications for all the models Mercedes-Benz ever produced.

At the moment, there are classes A, B, C, D, E, G, K, L, R, S, and T, as well as some models with the special design features that do not relate to any of the indicated categories. Among them, there is hybrid class for hybrid electro-diesel engine or turbo class for the vehicles with the turbocharged engines (“Mercedes-Benz”, 2016).

The latter models that form separate classes are not produced at the massive scale for now. However, there has been an increase in demand for the diesel-powered cars. It includes both those vehicles that belong to the class D and the models of hybrid automobiles which engine can work on both diesel and electric power (Venturi, Mohrdieck, & Friedrich, 2013).

The compact cars are included in the classes A and B vehicles. In the category of class C automobiles, there are mostly those models that owned Mercedes-Benz the reputation of the luxury brand. The initial C itself refers to cabriolet shape of the vehicle. It is one of the most famous and recognizable car body styles.

Whereas D refers to the diesel-powered vehicle, the initial E stands for the capacity for the fuel injection. In such a way, if the indicators E or D are absent in the name of the automobile model, it means that the car has just a regular engine powered from petrol (Greiner, Doerr, Nauerz, & Graeve, 2004). The letter G stands for the model called Geländewagen and other vehicles in the same series, with the similar body shapes. The letter K in the name of the model refers to the shortened or compressed parameters of some parts of the vehicle. The initial L stands for the lightweight cars, whereas R refers to the racing models. The class S includes a number of subcategories, the most know of which would be the sport cars (Venturi et al., 2013).

Other areas of production that the company in which the company is involved are the production of bicycles, motorsports, as well as a lot of resources that are invested in developing new models and working on new designs.

Two crucial points on which Mercedes-Benz is working today, are the environmental status of the vehicles, attempts to shorten the emissions, and the entirely digitalized model of manufacturing that is a brand new advancement in the automobile industry.

Configuration of Resources Suppliers

Given the wide range of the types of vehicles that Mercedes-Benz produces, it is no wonder that the company supplies automobiles, buses, vans, and other vehicles for the different purposes worldwide. The main strength of the brand is its diversification. Not only Mercedes-Benz has a spectrum of models that covers all areas of both passenger and commercial transportations.

It also covers the areas related to the car manufacturing. Thus, other services offered by Mercedes-Benz include different sorts of financial, leasing and insurance operations concerned with the vehicles. It other words, the set of Mercedes-Benz’s assets in different areas related to the motor vehicle is so wide that the company often operates the process of production from the scratch, with the minimum number of suppliers.

However, the production process has many stages, and it can be logistically challenging to produce all the vehicles in one place. Therefore, the company managed to organize the process of manufacturing worldwide in order to lower the logistical costs. However, at the same time, it means that they have to work with the smaller local suppliers and distributors in some situations.

Factories

The location of the company’s factories has to have the strategic purpose. In many cases, the installation of any new plant or factory of Mercedes-Benz is linked to the potential emerging market in the country where the factory is built. In such a way, there is a number of brand new Mercedes-Benz factories in Brazil, Russia, Asian countries (including China and India). Potential market targets are mostly highly populated countries with the growing economies. The combination of those two factors can potentially create a successful appeal for Mercedes-Benz products.

Either they can be those that are considered luxury products or the vehicles meant for the commercial or public transportation. Apart from that, Mercedes-Benz continues to improve its positions on the automobile market inside the US by developing and expanding its production in Alabama and Florida. The 415,000 square-foot production facility was opened in the latter, which brings the manufacture to the entirely new level (Basch, 2010). Also, given the company’s plan to digitalize the production process, it is fair to expect the introduction of new production facilities that would function according to the new strategic model.

Warehouses

As a rule, Mercedes-Benz has large production facilities in different parts of the world that at the same time, can serve as the part of the logistical network because some automotive parts are stored there. Nevertheless, Mercedes-Benz presupposes a low level of the individual plant, factories, and warehouses management. In other words, the management is rather centralized, so the logistic chain and the storage units are merely supplementary elements of the Mercedes-Benz’s production process.

Distributors

There was a number of controversies recently concerning the distribution of Mercedes-Benz cars in Argentina. The German manufacturer Daimler AG, under which label Mercedes-Benz still operates, however, denied the allegations relating to the unlawful distribution.

Nevertheless, Mercedes-Benz US operates with the help of individual distributors within the US, organizing the trade of the vehicle both through the larger facilities around the country, including Alabama, Florida, California, and Delaware and with the help of smaller distributors. The same principle the company applies for the distribution in other countries (Silberman, 2015). The third-party distributors are involved when logistically it is not profitable for the company to sell the vehicles through its own facilities.

Technical support centers

The recently introduced model of the digital revolution in Mercedes-Benz’s production also “applies to the way [the company] makes contact with our customers” (“Mercedes-Benz sets out to digitalize value chain”, 2015, para. 5). The innovation technologies, in this respect, have to be quite promising. However, for now, the company has a wide range of customer assistance services, including contacting per telephone, email, postal mail, chat, or fax (“Mercedes-Benz”, 2016).

Engineering design

In terms of customer appeal, Mercedes-Benz has a large spectrum of designs. The vehicles produced under the brand name vary in their transportation purposes and outer looks, as well as the engineering aspect of the production. As it was previously pointed out, the company attempts to digitalize the manufacture to make the designs more efficient and accurate (“Mercedes-Benz sets out to digitalize value chain”, 2015). Another concern of the company is to minimize the environmental damages. Given those facts, the engineering goals of Mercedes-Benz today are to shorten the emissions and reorganize the manufacturing due to the new entirely digitalized model.

Sales office

The headquarters of the company is in Stuttgart, Germany. Depending on the level of the company’s geographical presence in certain countries, there are different numbers of local sales offices. In the US, they are usually attached to the major production facilities (“Mercedes-Benz”, 2016).

Communication links

The ways customers can contact Mercedes-Benz include getting in touch per telephone, email, postal mail, chat, or fax (“Mercedes-Benz”, 2016). There are different services for customer assistance, service improvement, customer suggestions, etc. The managerial structure of the company is centralized, which means that the feedback from customers gets to the central office of the company.

In conclusion, Mercedes-Benz is a leading automobile manufacturer that seeks to combine the traditional quality with the innovative approaches in production, and meets the standards of value chain evaluation.

References

Basch, M. (2010). Mercedes-Benz opening 415,000-square-foot facility near Jacksonville airport. The Florida Times Union. Web.

Clarke, C. (2005). Automotive production systems and standardisation: from Ford to the case of Mercedes-Benz. New York, NY: Springer Science & Business Media.

Greiner, J., Doerr, C., Nauerz, H., & Graeve, M. (2004). The new 7g-tronic of Mercedes-Benz: Innovative transmission technology for better driving performance, comfort and fuel economy. SAE transactions, 113(6), 283-293.

Mercedes-Benz sets out to digitalise entire value chain, from design and development to production. (2015). Autocar Profesional News Desk. Web.

Mercedes-Benz. (2016). Web.

Silberman, L. (2015). The End of Another Era: Reflections on Daimler and Its Implications for Judicial Jurisdiction in the United States. Lewis & Clark Law Review, Forthcoming, 1(2) 15-22.

Venturi, M., Mohrdieck, C., & Friedrich, J. (2013). Mercedes-Benz B-Class Fuel Cell: The world largest hydrogen vehicle fuel cell fleet experience. In Electric Vehicle Symposium and Exhibition (EVS27), 2013 World (pp. 1-11). Barcelona, Spain: EVS27.

Introduction

Gottlieb Daimler made a significant contribution when he came up with the internal combustion vehicle. This is the vehicle that formed the foundation stone for the now world-famous brand known as Mercedes Benz. Chrysler and Daimler are the mother companies that gave rise to Mercedes Benz as an independent brand. The brand is highly respected for its superior quality. People strive to drive this brand as a mark of achievement given the prestige that is associated with it. With all the class and prestige that is attached to Mercedes, the normal business climate is experienced with all its elements such as bad times when business is low, good times when sales are high, challenging times when competition from other industry competitors make strides that threaten the position of Mercedes and dull moments when the business climate cannot be characterized as either good or bad. Other brands that are closely related to Mercedes that will feature in this paper are the Maybach and the Smart.

Industry Forces for Mercedes

The five forces that Mercedes, Maybach and Smart have to be aware of are the same for any industry. These forces determine the direction of the individual company. They include the bargaining power of buyers, the bargaining power of suppliers, the possibility of new players joining the fray and therefore threatening the company through competition, the rivalry among the competing companies within the industry and the threats that are posed by existing competitors in the industry (Porter, pp. 97-115). Mercedes produces quality cars but this does not mean that there are no competitors.BMW is just one example of potential competitors whose presence cannot be taken for granted by the leadership of Mercedes.

The Nine Cell Matrix Analysis for Mercedes Benz, Maybach and Smart

Mercedes Benz as a company employs the four principles of being technologically savvy, producing superior brands, having a powerful global presence and being able to have a wide variety of products for the market. It is for the last principle of having a variety of products for the market that Mercedes finds itself in a position where some products do well in the market while others do not. The new brands of Mercedes S-Class and E-Class had sold 39% more in May 2010 compared to the figures of 2009 (BenzInsider.com).This simply tells us that these two brands are to be found in the top left box of the nine cell matrix or within the green zone. Generally, they give the company an opportunity to not only grow but also invest without hesitation. Maybach on the other hand is not a hot brand. In 2008, it sold 300 units. This is a 50% drop from the 2002 launch figure of 600.

Smart is another brand that is on the downward slope. At the time of launch, Smart sold 1916 units in a period of 2 months. This has since dropped by 66% to an all time low of 278 units in the month of January.

High Attractiveness: High sales or improved sales for the company as shown by the above figures are an indication of high attractiveness. In the event that the company is not making any losses or profits, the company is said to be medium in terms of attractiveness or in the yellow zone. Here, any kind of action has to be done with caution. Then there is the red zone within the nine cell matrix which is made up of two bottom boxes of the right-most column and one right-most box of the bottom row which indicates low attractiveness and at this level instead of investing, the leadership is advised to divest the remaining resources and exit the industry. Once again with Mercedes making progress in sales, it is not in this part of the nine cell matrix.

The Matrix for Mercedes Benz

The Maybach position indicates that it is dangerous to continue to do this kind of business because the losses are prohibitive. It is in the red zone. The Smart is even more risky because it is in the red zone and therefore going by the data given above, abandoning this brand may be the best option.

Works Cited

1. “ Double-digit sales increase for May puts Mercedes-Benz on track for 2nd quarter” BenzInsider.com . 2010.
2. Heinrich,Gunnar.“Maybach Lives! Forbes Reveals US Sales Figures”. 2010.
3. Loveday,Eric. “Smart For two Sales Drop Dramatically, Can Electric Version Lift The Brand? “ 2010.
4. Porter, Michael. Competitive Strategy: Techniques for Analyzing Industries and Competitors. New York: Free Press, 1980.Print.

Introduction

Today, all forms of businesses are extensively globalized, operate in increasingly competitive markets, are driven by the internet, and are conscious of speed. The new business world has created complicated challenges for managers (Wintzer 2007, p.2).

These challenges are accompanied by claims of top management misconducts, ethical mistakes, and exorbitant executive compensations (Atomic Dog Publishing 2001, p.2; Morden 2007, p.4; Certo 2000, p.166). For this reason, corporate leaders are under unmatched pressure to respond to strategic challenges faster, responsibly, and with greater certainty (Atomic Dog Publishing 2001, p.2; Parthasarthy 2006, p.47).

As a result, effective strategic management is critical for survival of all organizations including the well established firms. A strategy refers to plans made by the top management to develop and preserve its competitive advantage (Atomic Dog Publishing 2001, p.2; Saloner, Shepard & Podolny 2006, p.25).

Strategic management is wider than a strategy; it refers to a process that entails an analysis of an organization’s environment by the top management before designing a strategy and plan for putting it into practice and controlling the strategy (Atomic Dog Publishing 2001, p.2; Griffin 2011, p.67).

Strategic management involves considering what must be done before formulating a strategy by evaluating the success of an executed strategy.

Resources brought by Swatch and Mercedes Benz into their partnership that came up with Smart car

The process of making Smart car started in 1994 after a deal was sealed between Daimler-Benz, maker of Mercedes-Benz and Swatch, Swiss watchmaker (Hitt et al 2011, p.248; Metais & Pin 2001, p.1). A joint venture of the two companies created a firm known as Micro Compact Car AG whose headquarters were located in Biel, Switzerland.

After announcing the deal, three co-directors were appointed to head the new company, which was later to be known simply as the ‘Smart’ after moving to Germany from Biel. The directors were engineer and designer Johan Tomforde and financial administrator Christopher Baubin from Daimler-Benz and swatch marketing manager Hans Jurg Schar.

SMH (makers of the swatch watches) contributed 49% of the initial capital of 50 million Swiss francs while Daimler-Benz contributed the remaining 51% (Metais & Pin 2001, p.1).

The company comprised of two branches namely MCC GmbH based in a suburb of Stuttgart known as Renningen charged with the responsibility of designing the car. Hayek’s SMH Auto SA, was to design electric drive system for the car, while Hayek engineering would appraise the design and manufacturing of new car (Metais & Pin 2001, p.2).

Nicolas Hayek, the Swatch inventor, contributed its design philosophy while Daimler brought in the quality and engineering genius of Mercedes-Benz (Lewin 2004, p.248). Hayek had an idea of developing a new car using the same form of manufacturing strategies and personalization elements used to popularize Swatch watches (Metais & Pin 2001, p.1; Bidault & Despres 1997, p.2).

He strongly believed that the automobile industry had for long overlooked an area of potential customers who wanted a small and classy car. The partnership between Swatch and Daimler-Benz revolves around their respective knowledge about their areas of expertise (Metais & Pin 2001, p.1; Bidault & Despres 1997, p.2).

On one hand, Mercedes for its engineering ingenuity and, on the other hand, Swatch has a cutting edge for the plastic expertise (Bidault & Despres 1997, p.2; Hjorth 2003, p.103). The outcome of a combination of these features has been a superior brand whose competitiveness in the sophisticated metropolitan automobile market is remarkable and hard to beat (Lee& Carter 2005, p.198; Warren & Rhodes 2006, p.271).

However, the road to its current market position has not been smooth all the way. For example, in May 1998 (the same year when smart was put in the market for sale) its poor sales had rumours going round that the project would be terminated and that the city car was given an ultimatum of six months to prove itself (Derdak & Pederson 2000, p.103).

Fortunately, by year 2000, its sales started to increase and the company, in fact, achieved its goal of selling eighty thousand vehicles that year (Metais & Pin 2001, p.1).

This tremendous success has been attributed to ex-Swatch founding partner Hans Jurg Schar whose sparkling marketing vision culminated into the powerful brand distinctiveness that Smart is enjoying in today’s competitive metropolitan automobile markets (Lewin 2004, p.248).

Some observers argue that, it is the strength of the identity he created that has enabled the smart car to overcome various disasters with its repute to a large extent unspoiled (Lewin 2004, p.248).

Lewin (2004) posits that, Nicolas Hayek “was the inspiration and mentor behind the smart idea…Jurgen Hubbert…the project’s guardian angel” (p. 248). In a nutshell, each partner brought a fair share of material resources and the ideas needed to drive the project and make it a reality.

Who gained the most?

Both Swatch and Daimler-Benz gained equally from this strategic partnership. Hayek, rather than competing, he chose “to cooperate with another company in the automotive industry because he feared industry players would be threatened by his original idea of Swatchmobile” (Metais & Pin 2001, p.1). This choice relieved SMH of the cost of launching a distribution network and entering a new industry.

On the other hand, Daimler-Benz’s overall competitiveness in the industry was boosted by the new stylish city car associated with it since it was well known within the industry than Swatch.

In addition, Daimler Benz was also relieved off the costs of making its own idea of Mercedes City Car a dream come out true. Both companies created a platform through which each would safeguard its competitive advantage in a fast changing business world thanks to ICT and accelerating globalisation.

Conclusion

The success of any company in different industries, in a globalised world of business, is faced by various challenges that require decisive, quick, and responsible responses.

Hence, effective strategic management skills are critical for all corporate leaders as demonstrated by Swatch CEO, Nicolas Hayek, and Daimler-Benz executive, Jurgen Hubbert. Their unique ideas and strengths have lead to a superior brand that other competitors strive to beat.

Reference List

Atomic Dog Publishing. 2001. Fundamentals of Strategic Management. Web.

Bidault, F., & Despres, C., 1997. Innovation: The Race to Learn with Partners. Web.

Certo, S. C., 2000. Modern management: diversity, quality, ethics & the global environment. New York, NY: Prentice Hall.

Derdak, T., & Pederson, J. P., 2000. International directory of company histories. USA: St. James Press.

Griffin, R. W., 2011. Fundamentals of Management. New York, NY: Cengage Learning.

Hitt, I., Hanson, D., & Hoskisson, R., 2011. Strategic management: competitiveness and globalization. Melbourne, Cengage.

Hjorth, L. S., 2003. Technology and society: a bridge to the 21st century. New York, NY: Prentice Hall.

Lee, K., & Carter, S., 2005. Global marketing management: changes, challenges and new strategies. New York, NY: Oxford University Press.

Lewin, T., 2004. Smart thinking: the little car that made it big. New York, NY: Motor Books International.

Metais, E., & Pin, R., 2001. From subversion to normalization: from the Swatchmobile to the smart. Web.

Morden, T., 2007. Principles of strategic management. New York, NY: Ashgate Publishing, Ltd.

Parthasarthy, R., 2006. Fundamentals of Strategic Management. London: Houghton Mifflin Co.

Saloner, G., Shepard, A., & Podolny, J. M., 2006.Strategic management. New York, NY: John Wiley.

Warren, J.P., & Rhodes, E., 2006. Smart design: greening the Total Product System. In J. Sarkis (Ed.), Greening the supply chain (pp. 270-279). UK: Springer.

Wintzer, E., 2007. Global Competition and Strategic Management. New York, NY: GRIN Verlag.

SO (strengths-opportunities) strategies aim to take advantage of external opportunities by using the firms major positive sides. If we are speaking about Mercedes-Benz, we may single out several directions in terms of marketing and production processes:

1. The firm should launch a marketing campaign in China, emphasizing its reputable brand. There are several rationales for this policy. First, there is an emerging and expanding market in China as well as in other Asian countries (Law, 30). At present, it is not saturated with competitors, and the company will be able to find potential consumers. Moreover, Mercedes has always been famous for its excellence, both in terms of functional characteristics and design (Adler, 6). It should be borne in mind that Chinese car manufactures also try to raise their production standards, but at this stage, their vehicles cannot be compared to the cars, produced by Daimler. Therefore, some layers of the Chinese community would definitely take interest in these products. Additionally, Mercedes should implement this policy as soon as possible because other representatives of the automobile industry like Ford Motor Company, Audi also try to explore new Asian markets.
2. The firm has to continuously improve the channels of distribution to Europe in order to maintain a competitive advantage. At present, the European market is occupied by a great number of European, American, or Japanese firms. Mercedes-Benz has already established a well-developed network of distribution but it is crucial that the firm constantly works in this direction.
3. It is essential for Mercedes to invest in R&D (research and development), especially in such fields as alternative fuels. In the future automobile industry will have to adjust itself to new fuels (Law, 184; Domansky, 21). Nowadays it is primarily based on gas consumption. However, the situation may dramatically change in the next decades. Thus, a great number of models will be unsuitable for customers. The effects may be ruinous for many cars manufacturers; this is why Mercedes should be ready for any hypothetical changes.
4. Additionally, the management should improve open more dealerships in Europe, Middle East, and China. They need to showcase mostly fuel cell cars. There are several reasons why this strategy should be implemented. First, there is a growing demand for more eco-friendly vehicles in these regions and Mercedes has developed several models which can suit customers needs (Daimler, 42). Nowadays, more and more people in the UK, Belgium, Swiss, etc are extremely concerned with ecological problems, arising due to global warming. Many of them can afford fuel cell cars.
5. The management of the firm should use the increased profits to gain more ownership of Tesla Motors. Arguably, Tesla Motors is the only organization that develops and produces electric cars (Leitman & Brant, 67). In the long term, their models may enjoy considerable popularity. More likely, electric vehicles will become the only means of transportation. Overall, Daimler should establish close collaboration with Tesla Motors.

The main purpose of ST (strengths-threats) strategies is to use the companys strong sides to minimize probable external risks. It is possible to identify several tasks on which Mercedes-Benz will have to focus:

1. The firm has to create more luxurious models based on the use of smart car technologies. The experience of Audi demonstrates that strong luxury positioning in the market can bring results and increase profitability. So, Mercedes may adopt some of their practices. On the whole, the company should create products for various layers of the population, for people with different income levels (Puchan, 42).
2. Additionally, Mercedes needs to expand its smart car line. These models must be made more accessible to consumers. The new tendency shows that such vehicles are becoming more affordable, and their price gradually drops. As a result, the competition between leading companies like Mercedes, Ford, or Volvo becomes even more intense. To win this competition, Mercedes should create new products that better match the financial resources of the customers, who may be interested in purchasing smart cars (Puchan, 43).
3. Unify emission standards. Currently, the governments of many countries impose rather strict restrictions on the number of gas emissions. Hence, it is sometimes difficult for Daimler to sell some of its vehicles. Apart from that, consumers may even be reluctant to buy cars that emit large amounts of gas into the atmosphere. During recent decades the level of their awareness has risen and they pay more and more attention to such criteria as eco-friendliness.
4. Launch a new marketing campaign encouraging people to purchase the companys luxurious vehicles (T1, S1, or S3). Certainly, such a campaign is quite feasible especially in modern Germany as this country has gradually recovered after 2008 economic crisis.
5. The firm should consider the acquisition suppliers for alternative fuel components to minimize the heft costs and establish new supply chain. In the future, the company would have to manufacture engines using alternative fuels. So, it is very much advisable that they purchase companies specializing in this area. Naturally, Mercedes works in this direction; however, the most cost-efficient method is to acquire the firm which has already proved its reputation in this field.

WO (weaknesses-opportunities) strategies are directed at improving internal weaknesses by using external opportunities. At present there are several ways to make company more effective:

1. To reduce the number of employees who are on indefinite paid leave. Currently, this number is extremely large. Consequently, Mercedes has to incur significant expenses and these costs bring no dividends. However, the management should be very careful while delayering the personnel. Some of on-leave0 engineers may be highly-skilled professionals and Mercedes should not lose them.
2. Develop new marketing strategy. This strategy has to touch on such aspects as product development, pricing, advertising, etc. The major objective is to extend Mercedes target audience.
3. Use Tesla Motors to Increase the production of electric cars. As it has been noted before, Tesla Motors is the leading producer of electric cars. Yet, at first Mercedes has to gain more ownership in this firm.

The main goal of WT (weaknesses-Threats) strategies is to cope with internal problems of the enterprise and avoid external risks. Mercedes can make two important steps:

1. Publish road tests about the reliability of lithium-ion batteries. The key issue is that they can ignite or even explode. Although such cases are very few, Mercedes is frequently criticized for the usage of this technology. This is why it is essential that the management proves that lithium-ion batteries are quite safe.
2. Adapt already-existing business models to the changing conditions of global economy. This policy should include the change in production process, extension of supply chain, new marketing strategies, and increases role R&D.

Works Cited

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Adler, D. & Moss S. Mercedes-Benz: silver star century. MotorBooks/MBI Publishing Company, 2001.

Daimler. Official Website.

Daimler. “Innovation for Sustainable Mobility. Annual Report 2008”. Web.

Domansky, L.R. Automobile industry: current issues. Nova Publishers, 2006

Heike Puchan. “The Mercedes-Benz A-class crisis. ” Corporate Communications 6.1 (2001): 42. ABI/INFORM Global, ProQuest. Web.

Law. C. M. Restructuring the global automobile industry: national and regional impacts. Routledge, 1991.

Leitman. S. & Brant B. Build Your Own Electric Vehicle. McGraw-Hill Professional, 2008.

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Mercedes-Benz is a luxury car company that has led the market for premium transportation for almost a century. Its eye-catching yet straightforward logo, which consists of a three-pointed star in a circle, is synonymous with the company name and immediately recognizable to most people. The company is aware of this association and prominently features the logo in most of its advertising campaigns and car designs to further promote the brand and strengthen the psychological effects.

Logo Design

The design of the Mercedes-Benz logo is uncomplicated, which is characteristic of the car industry in general. The basic pattern has been used for the entire existence of the joint Mercedes-Benz company, and the brand has chosen to simplify its appearance over time (“History of the Mercedes Logo Design”). The background and laurels have been removed, and the star has been made slimmer to convey a more striking image. The logo represents the company’s dominion over the air, sea, and land (“Mercedes Logo”). The overall design makes the logo easy to remember and recreate, improving the recognizability of the brand.

Like many other highly popular companies, Mercedes has chosen to dispose of the brand name in its logotype. The striking appearance of the symbol and its simplicity combined with the premium appearance of the car makes a statement that the company does not need to advertise itself, as each vehicle is eye-catching enough to ignite interest in consumers who are unaware of the brand. The move is also enabled by the ease with which the logo can be described and recognized. Even if someone does not know of Mercedes-Benz and is interested in the logotype, he or she can quickly find out the identity of the company through word of mouth.

Mercedes-Benz has been using simple colors, primarily shades of black and white, since its foundation in 1926. The logo adopted in 2008 (Mercedes-Benz Logo, 2008) utilizes only black and white to create a striking image. Meanwhile, the design that is being used today (Mercedes-Benz Logo, 2011) depicts the symbol of the company as being made out of silver and reflecting light from an outside source, with corresponding shining and shaded segments. According to “History of the Mercedes Logo Design,” silver is used because it is the favorite color of the upper echelons of society, which are the brand’s target audience. The brand’s appeal is evident from its dominant position in the premium car market.

Use in Advertising

Despite making the statement that the company does not require advertising to succeed with its logo design, Mercedes-Benz continuously engages in promotion campaigns, as doing so is a sound business practice. The logotype is prominently featured in most imagery and promotional materials (“Campaign for the A-Class: Ready for a New Generation”). The effect is a feedback loop where the advertising promotes the popularity of the Mercedes-Benz symbol, and the image lends its persuasive power to the promotional efforts. The logo is the focus of the moments where the car displays its excellent performance, serving as a reminder of the quality and reliability associated with the brand.

However, Mercedes-Benz has been attempting to challenge this perception with specific innovative advertising campaigns. Burns describes a nearly-wordless advertisement that tries to rebrand the company’s cars as appealing to people who are curious and open to inspiration. Burns notes that the message in the commercial is that curiosity and inspiration let one work hard toward his or her goal and ultimately succeed, which the company associates with being able and choosing to purchase a Mercedes car. The overall message that the brand’s cars are intended for people with means is unchanged, but the company reminds its current and potential customers that they are successful because of their traits, which should also lead them to see the value in Mercedes-Benz cars and purchasing one.

Effect on Potential Buyers

As a consequence of the pricing of Mercedes-Benz cars and their design as well as advertising, the symbol is perceived by consumers as an icon of success as well as good taste and sense. Most vehicles made by Mercedes-Benz are expensive, but not overpriced to a degree where they are more of a luxury good than a car that can be used every day. Furthermore, they feature complex yet elegant designs that make a statement about the brand’s and the owner’s personality. The logo plays a significant part in this appearance, as it is often the centerpiece of the car’s front portion and attracts attention by design, so much that it is often the primary factor in people’s recognition of the brand’s cars.

Conclusion

The Mercedes-Benz logo is simple in both design and coloring, relying on its reputation and recognizability to promote the brand. It succeeds at the task, being well known around the world and prominently utilized in the company’s car designs and advertising. The overall image the company’s logo and machines convey to customers is one of success, means, and taste, which encourages potential buyers to aspire to possess a Mercedes-Benz.

Images

Works Cited

Burns, Will. “Mercedes Defines Its Brand of Success in Smart New Advertising.” Forbes. 2016. Web.

“Campaign for the A-Class: Ready for a New Generation.” Mercedes-Benz. Web.

“History of the Mercedes Logo Design.” Inkbot Design. 2018. Web.

Mercedes-Benz Logo, 2008. Car Brand Names. Web.

Mercedes-Benz Logo, 2011. Car Brand Names. Web.

“Mercedes Logo.” Famous Logos. Web.

Introduction

Mercedes Benz is a leading automobile manufacturer and marketer in the globe. The firm has established a powerful brand image that supports its position in the industry. The company’s brand image is associated with “perfection, fascination, and responsibility” (“Mercedes Benz: The Best or Nothing” par. 3). The company positions itself in the luxury car segment of the automobile industry. Mercedes Benz produces superior products that can address the needs of the targeted consumer. The firm’s brand image explains why it is impossible to produce cheap and low-quality products for its customers (“Mercedes Benz: The Best or Nothing” par. 2). The cars delivered to different consumers are of the highest quality. This image is something that will continue to support the firm’s future goals. However, the marketers in the firm should do more in an attempt to complete the positioning strategy for these products. This discussion offers powerful ideas to explain why a repositioning strategy is appropriate for maximizing the sales and profitability of the firm’s luxury cars.

Background and Problems

Situation Analysis

Mercedes Benz is one of the celebrated and recognized automotive names in the globe. The automobile manufacturer has its headquarters in Stuttgart, Germany (“Mercedes Benz: The Best or Nothing” par. 1). The current name first appeared in the year 1926 (“Mercedes Benz: The Best or Nothing” par. 1). However, the brand emerged in 1901 after the establishment of Daimler-Motoren-Gesellschaft. The German-based manufacturer is owned by the Daimler AG Group. Mercedes Benz is known for producing luxury automobiles such as coaches, sedans, buses, and trucks (Biebrach 17). Mercedes Benz’s focus on quality and comfort is something that supports the worth of its brand. The value of the brand has strengthened within the past four decades. Despite such aspects, some challenges such as competition, changing consumer expectations, and fuel prices will affect Mercedes Benz’s performance in the future.

Current Brand Challenge

The firm has been embracing the best strategies to remain a global leader in the industry. The car manufacturer is also “a leader in innovation” (“Mercedes Benz: The Best or Nothing” par. 2). Mercedes Benz was the first company to introduce anti-locking brakes, fuel injection systems, and diesel engines (Biebrach 14). Research and development (R&D) is also taken seriously to produce superior products. The company’s brand has remained strong within the past few years. However, some problems affect the firm’s competitiveness and performance in the luxury car segment. The first problem affecting the firm arises from the increasing level of competition. Different automobile brands such as Volkswagen and Volvo are producing superior cars (“Mercedes Benz at a Glance” par. 7). As well, consumer behaviors and preferences have changed significantly within the past decade thus affecting the company’s profitability. The company has always focused on a small market segment. These issues are currently affecting the company’s business gains.

Key Insights

Mercedes Benz originally targeted wealthy individuals who were after comfort and luxury. The manufacturer used modern technologies and ideas to produce competitive cars. This practice has been embraced to achieve the best goals. Towards the end of the 20^th century, Mercedes Benz realized that different manufacturers of luxury cars were embracing new business practices. The company decided to use “a powerful marketing segmentation in order to attract the younger less-affluent consumer” (Wheeler 23). Mercedes Benz has been targeting a younger customer base while at the same time retaining its brand image and prestige. However, the implementation of these strategies has failed to deliver the best results.

New purchasing trends have been recorded in different parts of the globe. For instance, the younger consumer appears to have higher income levels. Such potential consumers have been focusing on specific car brands such as Toyota, Chrysler, Ford, and Nissan. These automotive brands have also been associated with comfort and performance (Biegas and Neto 419). The brands are also cheaper thus making them affordable to more customers.

Solutions

New solutions are needed in order to continue supporting Mercedes Benz’s business model. Most of the aspects associated with the firm have been critical towards producing the best results. Innovation, customer support, research and development, and marketing ideas have been embraced in order to produce quality results (Wheeler 44). However, some competitors such as Volkswagen (VW) have dominated the luxury car segment. The major VW sub-brands such as Audi continue to offer similar promises to more customers (Wheeler 45). Companies such as Ford and Toyota are also attracting more customers in Mercedes Benz’s niche.

Mercedes Benz can use various strategies and business approaches in order to increase its competitive edge. The first recommendation should focus on the best approaches that can make Mercedes Benz a preferable brand. For the past decades, Mercedes Benz has positioned itself as the most relevant brand in the global market. The affluent members of society have been the primary targets of the company. The concept of brand relevance vs. brand preference should be used to outline the best approaches that can result in better performance (Wheeler 48). A preferred brand has the potential to attract more potential consumers and eventually make Mercedes Benz successful. A powerful marketing strategy targeting more potential customers will ensure the company positions its products in a professional manner (Wheeler 39).

The company has established a powerful brand image in the global market. More people believe that firm markets perfect and superior luxury cars. The repositioning strategy should, therefore, identify new geographical locations and attract more customers. In 2010, the team “used a powerful campaign team known as Generation Benz” (“Mercedes Benz: The Best or Nothing” par. 9). The purpose of this team was to sensitize more people about the relevance of the brand. Similar initiatives are critical towards supporting the firm’s business goals.

Experts believe strongly that Mercedes Benz produces uneconomical cars that consume much fuel in comparison with its immediate competitors. The R&D department should work hard to reduce the fuel consumption of the company’s cars. As well, the brand has been associated with high maintenance processes and costs. However, the company does not have an effective distribution of spare parts in different parts of the world. This malpractice makes it impossible for more people to maintain or use their cars (Loewe and Dominiquini 26). A new business approach focusing on the distribution of different spare parts will, therefore, encourage more people to purchase its cars. Maintenance costs will also reduce significantly because various spare parts will be readily available and cheaper. This transformation will make it possible for the firm to achieve its business potentials.

The emergence of new luxury car brands explains why cultural innovation is needed for this product. Many analysts believe that the days when Mercedes Benz used to have an eternal business model are gone (Biebrach 109). The emergence of new cultural expectations and social foundations are things that should be examined carefully. The cultural innovative approach can promote better business practices and strategic directions that have the potential to support the company’s performance. Mercedes Benz should be aware of the emerging middle-class to build new marketing strategies and leverage the existing opportunities.

Results

After implementing a powerful cultural strategy, the firm will focus on both regional and international opportunities. Mercedes Benz has been known to market its brands in different regions across North America and Europe. Most of the Mercedes Benz cars driven in other parts of the world are usually marketed by middlemen. More people are willing to purchase luxury cars in different parts of the world. That being the case, Mercedes Benz should diversify its operations and market its luxury cars to more people in different parts of the world. The issue of competition should also be addressed using a powerful business model. A powerful marketing approach will ensure more people are informed about the superiority of this brand (Loewe and Dominiquini 27). These strategies will make it easier for the company to attract more customers.

Conclusion

Consumer preferences and expectations continue to change due to the availability of diverse products. People have access to information and ideas regarding the effectiveness of different car brands (Biegas and Neto 421). A new positioning strategy will inform more people about the strengths and advantages of the Mercedes Benz brand. Reduced car prices, effective distribution of spare parts, and the use of innovative strategies to minimize fuel consumption will ensure more people select Mercedes Benz as the luxury car brand of choice.

Works Cited

Biebrach, Carolin. Mercedes Benz: How A Great Campaign Can Almost Kill A Company. Munich: GRIN Verlag, 2009. Print.

Biegas, Sandra and Pedro Neto. “Innovation in marketing strategy process: an integration and empirical examination.” Rebrae 8.3 (2015): 417-433. Print.

Loewe, Pierre and Jennifer Dominiquini. “Overcoming the barriers to effective innovation.” Strategy & Leadership 31.1 (2006): 24-31. Print.

Mercedes Benz at a Glance 2015. Web.

Mercedes Benz: The Best or Nothing 2016. Web.

Wheeler, Jill. Mercedes Benz. Edina: ABDO Publishing Company, 2004. Print.

Introduction

The modern world could be characterized by the blistering development of various sorts of firms and companies. The fact is that society has shifted its priorities promoting the development of small and large businesses in order to satisfy its demands and be able to choose the needed good. Under these conditions, companies should try to align its efficient functioning in order to be able to compete with some other actors who also tries to win the rivalry and take the market. In terms of this competition, all aspects of the functioning of the company obtain great significance. That is why, the thought through supply chain can guarantee a great advantage for a company.

Choice of the given company

Cogitating about the issue of supply chain and its management, it is possible to take Mercedes-Benz as the background for the discussion. The choice of the given company is predetermined by several facts. First of all, it is one of the most powerful and popular international companies in the world which incomes are about €129 billion (Daimler, 2015). It is obvious, that the success of the company could be taken as the great evidence of the attention given to the slightest details. Being one of the key factors of the success of any company, the efficient supply chain is of great priority for Mercedes-Benz. Due to this fact it is possible to start the analysis of the given issue.

Traditional supply chain

It should be said that traditional supply chain involves several canonic points.

These steps describe the whole process of production, starting with the materials needed for the manufacturing of certain details and ending with the ready product. However, every ring of this chain has a great number of various peculiarities which determine the level of the companys performance. Under these conditions, one realizes the fact that design of an efficient supply chain is the most important task for any company which tries to guarantee its prosperity and profitability. Mercedes-Benz is not an exception and it is possible to analyze every point in order to understand the pattern according to which an efficient supply chain could be designed.

The analysis

First of all, it should be said that the company gives a great deal of attention to this issue. For example, it invests about €90 million to make the given chain more efficient and reorganize it in accordance with the new conditions (Donati, 2015). Mercedes traditionally uses only high-quality materials for the manufacturing of its cars, that is why the suppliers are chosen very carefully, taking into account their image and the quality of their products. Being the first point of the supply chain, it creates the basis for the functioning of the whole company and helps to achieve high standards appreciated by the company.

Every car, created by Mercedes, consists of many components which should also be of a good quality and promote the improvement of the image of the company. Mercedes manufactures many various components which are used in its cars. However, there are still details which are bought from some other suppliers. In these terms, the company makes a contract, outlining the number of the needed details and fixing the price (Suppliers to the 2015 Mercedes-Benz C class, 2014). Moreover, requirements to the quality should also be outlined. The components supplied by some other manufacturers are used in the final products created by Mercedes and their price influenced the cost of the car. It could partially explain traditionally high price on Mercedes cars.

However, it should be said that Mercedes remains the main manufacturer of its products. That is why, this point of the supply chain is under the full control of the company. To maximize the customer value all stages of the car assembly are controlled by many various specialists who investigate various showings and assures that products meet the standards introduced by the company. This practice could help to achieve several purposes. First of all, it helps to avoid various spoilages in the production of cars which, in its turn, could help to save the image of the company and promote its development. Secondly, careful examination of goods could help to avoid the procedure of recall when the whole line has to be returned to the manufacturer.

Logistics in one of the most important aspects of the whole supply chain. The fact is that about 20 percents of the cars value are determined by this very issue (Hetzner, 2015). That is why, Mercedes is interested n the creation of the efficient pattern according to which the cars could be distributed. There are several ways to do it. The first one implies the creation of plants in regions with the high level of demand for the cars. It could help to save money spent on the delivery and make it more efficient. The second way means the introduction of the company’s representative offices in countries or regions which are expected to demonstrate the high level of interest towards the products of the company. These two ways are used by Mercedes in order to curb spending and make the cars cost lower, which could lead to the increase of the customers interest towards the products.

Finally, another important aspect of the efficient supply chain is the sales process as it has a great impact on the functioning of the whole company and customers attitude to its products. That is why, Mercedes gives a great deal of attention to this very process, controlling the main steps and suggesting certain recommendations that could help to increase the level of sales (Piotrowicz & Cuthberston, 2015).

First of all, the company is open to its customers and provides all information connected with a certain car or line. Besides, the practice of test drives is also introduced by the company in order to insinuate customers into its confidence and improve the image. Finally, Mercedes provides a guarantee on all cars manufactured by it, underlining the outstanding quality of its products and its care about the customers. The company uses it centers situated in various countries, in order to increase the level of sales and improve the level of performance of the company.

Conclusion

Having analyzed the given facts, it is possible to make a certain conclusion. The supply chain is extremely vital under modern conditions as it creates the basis for the further development of the company and has a great impact on the functioning of all its departments. It consists of several important aspects which could not be ignored. Being and outstanding company, Mercedes-Benz has an efficient strategy which is used to control and organize its supply chain. The main goal of the company is to improve its image and maximize customer value, that is why it devotes great attention to its supply chain.

References

Daimler. (2015). Interim Report 2015. Web.

Donati, M. (2015). Mercedes-Benz invests €90 million to rev up supply chain. Supply Management. Web.

Hetzner, C. (2015). Mercedes revamps supply chain, logistics to trim costs. Automotive News. Web.

Piotrowicz, W., & Cuthberston, R. (2015). Supply Chain Design and Management for Emerging Markets. New York: Springer.

Suppliers to the 2015 Mercedes-Benz C class. (2014). Web.