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Overview of Mercedes Benz


Overviewof Mercedes Benz

Strategyand strategic management of Mercedes Benz

TheMercedes Benz Company is the oldest motor car company in the world.It began in 1886 however, its first brand name vehicle wasintroduced in 1926. Currently, it has over 20 branches in variousparts of the world, with its headquarters in Germany. Mercedes Benzis a highly recognized brand of luxurious vehicles. In fact, it isrecorded as the leading company in production of prestigiousvehicles. This means that the company targets the upper and middleclass population. This is because people associate Mercedes Benzproducts with luxury, comfort, and prestige. In turn, this has placedthe company in a competitive edge (MerecedesBenz, 2014).

MercedesBenz has no specific mission and vision statement however, the mainvision is to produce the best vehicle that can ever be. It believesin the power to perform and satisfy customers with prestigious car.Mercedes Benz aims at producing at least one unique and moredeveloped model each year in anticipation to the demands of themarket. It aims at becoming the best automotive company in the world.

Settingup goals and being able to accomplish them is not always smooth inthis hyper competitive business world. As such, Mercedes has come upwith various strategies to ensure that it achieves all its goals andobjectives. First and foremost, the company employs some of the mosttalented and qualified personnel. It achieves this by creatingawareness on its recruitment processes in various parts of the world.Due to competition, the most talented engineers and other work forceare in high demand in other companies. Therefore, the companies thatoffer the best pay and security will always be considered first byemployees. Mercedes Benz is aware of this fact and offers itsemployees the best pay possible. This motivates employees and reducesthe rates of job turn over in the long run. The other notable thingabout motor car industry is that it is growing in the light oftechnological advancements. This means that motor car companies haveto keep up with the recent innovations in the automobile industry.Mercedes Benz has not been left behind either. It is widely known forits great innovations and improved models, which it introduces eachyear. Mercedes Benz has allocated a substantial amount of money inresearch and development something that has placed it in acompetitive edge over other motor car companies. Research anddevelopment is an area that aims at creating new knowledge andinnovations, which are obliviously needed in motor car industries. Inturn, this has enabled it produce some of the most luxurious cars inthe world. Although there is a great competition in the motor carindustry, and there are upcoming companies that constantly produceluxurious cars, Mercedes Benz has remained the leader in productionof premium cars. It has consistently applied innovations inproduction of unique and more developed models thus, winning theloyalty of customers. This is an indicator that Mercedes Benz Companyhas a good leadership. If this trend continues, there is a highlikelihood that the company will remain on top of other motor carcompanies.

Externalenvironment and competitive position

MercedesBenz companies operate in a volatile and diverse environment. Thereare several external factors or driving forces that threaten the wellbeing of the company. This company operates in a very competitiveindustry, where technological changes and innovations are paramount.Technology and innovations are the most important driving forces inmotor car industry. Due to heightened competition in the motor carindustry, many companies have come up with more innovations using themost recent and best technology available. In fact, the mostessential factor that keeps motor car companies on top of the gameare their innovations and technological advancements application. Themore a motor car is technologically innovative, the better it is overother competitors. This realization by several companies has keptMercedes Benz Company on its toes. Other luxurious motor carindustries such as Ferrari use hyper innovative technologies thathelped them to sell their cars at a higher price than the famous andwell reckoned, Mercedes Benz.

Thevarious types of competition facing Mercedes Benz include threat ofnew entrants, bargaining power of customers, threat of substitutes,bargaining power of suppliers, and the intensity of competitiverivalry. Motor car industry provides a profitable market thatattracts new firms. Although there are limitations of entrance due tohigh capital requirements, there are several companies that haveemerged since the inception of Mercedes Benz. Companies such asFerrari, jaguar, BMW, and Lexus among others jeopardize theprofitability of Mercedes Benz greatly. It is notable that thesecompanies are constantly producing highly regarded motor vehicles,which have taken some customers of Mercedes Benz.

Withregard to threat of substitute products, there are severalsubstitutes in the modern technology. Other motor car vehicles areconstantly producing cheaper and luxurious cars, which substituteswith the expensive Mercedes Benz vehicles. Although the company iswell known across the world, people are constantly looking forsubstitutes in these hard economic times. There are many otherluxurious vehicles produced by other companies that act as a goodsubstitute. Even the upper class populations are constantlysubstituting their cars with the new brand names such as Ferrari,Porsche, and Jaguar.

Thepower of buyers and suppliers has effect on Mercedes Benz. Suppliershave a great trust with the company due to its good prices andloyalty. Although there is high competition from other motor carcompanies, this has minimal effects. On the other hand, buyers areassured of the quality of Mercedes Benz products. However, due to theavailability of substitutes from competitors, Mercedes Benz is underpressure to sustain and gain new customers. Competitors areconstantly occupying the markets of Mercedes Benz due to productionof quality products.

Theintensity of competition is very high for Mercedes Benz Company.Unlike in the past where Mercedes was the only widely acceptedluxurious motor car company, today there are so many luxurious motorcar companies in the market. The competition is so intense such thatit is difficult to differentiate the best company in terms oftechnological innovations. Companies such as BMW, Ferrari, jaguar,Porsche among others are competing with Mercedes Benz intensely. Itis common for customers to be torn in between a BMW and a MercedesBenz because they are all perceived as prestigious cars. Further, thenew names in the car industry seem to have a greater influence on thepopulation.

However,there are so many strategies that Mercedes Benz Company can utilizeto beat out its rivals and remain highly competitive globally. Beinga highly recognized brand, Mercedes Benz is in a better position toremain more competitive over other upcoming luxurious companies. Toachieve this, Mercedes Benz must invest a significant amount of moneyin marketing. Although there are several marketing strategies in thecompany, there is need to intensify marketing using promotionalmethods and advertisements. These adverts should be appealing andshould inform the customers on their effectiveness. Likewise, some ofthe most remarkable and highly regarded celebrities should be used inadvertisements and influencing customers. The company should alsohold shows more often to showcase their new inventions.

Additionally,Mercedes Benz Company should stay ahead of other competitors in termsof technological innovations. It is worth noting that its competitorsare where they are because of their innovations that seem to outdoMercedes Benz in the market. As such, Mercedes Benz should strategizemeans of becoming more innovative in this hyper competitive market.It can achieve this by investing in better means of finding newtalents, and emphasizing on new innovations. Those who come up withgreater innovations should be awarded as a means of motivating them.The realization that technology is the only way out of the greatpressure is one step of ensuring that the company remains as theleader with great margin in production of luxurious cars.

Internalenvironment and competitive positioning

SWOTand value chain analysis

MercedesBenz is a well recognized brand, which is currently a global leaderin production of prestigious or premium cars. This highly valuedbrand has made the company to be highly regarded by consumers.Typically, a good and well reckoned brand name places a company in avery competitive edge. As a result, the company is able to sell itsproducts at a considerably higher price and still dominate themarket. Automobile companies have a great trust in Mercedes Benzproducts because of it has a good history in production of some ofthe most luxurious cars. It produces high speed sport cars that havea good rating in the market.

Theother strength of Mercedes Benz is its strong financial support.Being in the industry for a long time, it has been able to acquire astrong financial base. This enables it to expand its marketing aswell as expand in various parts of the company. Likewise, a goodfinancial base helps the company in employees some of the mostqualified and talented engineers because it can afford it. Being ableto offer a good salary to employees is one thing that improves theperformance of a business because it motivates employees greatly.Further, it has been able to expand to various parts of the worldhence, bringing products closer to customers. This has helped inreduction of transportation costs and other expenses required whentransporting products in a foreign country.

Alsonotable about Mercedes Benz Company is its ability to apply superiortechnology in production of vehicles. Mercedes Benz has always beenproducing superior cars using emerging technologies. This has helpedit greatly in sustaining its customers in this competitive world ofautomobile industry. Each year, the company produces a new model thatis greater and more improved than the previous ones. For thiscompany, there is no turning back. The company has been a significantamount of money in research and development thus, enabling it tocreate and come up with new innovations essential in production ofcompetitive and more advanced and unique car models.

Despitehaving much strength, Mercedes Benz has share of its weakness andthreats. Due to the nature of automobile industry, the company facesa lot of competition from other emerging companies. The competitorsseem to have caught up with the advanced technologies and producedmore expensive and luxurious cars than Mercedes Benz. Currently, themost expensive and more advanced cars come from companies such asFerrari and Porsche. Automobile companies are aggressively utilizingthe modern technologies and innovations to produce some of the bestcars in the world. Each and every luxurious motor car industry istrying harder to beat other sin innovations and production of thesome of the best car models that there is. Some of the majorcompetitors of Mercedes Benz include Porsche, Ferrari, jaguar, Volvo,BMW, Aston Martin, and Audi among others. Although Mercedes Benz isstill the leader in the market of prestigious cars, many upper classpopulation are reconsidering purchasing products from other companiesthat seem to be ahead in production of some of the most superior andunique cars in the world (Puchan,2001).

Thetough economic times coupled with increases in fuel prices are havinga major negative impact on the Mercedes Benz Company. Inflation hasdriven people away from purchasing expensive and high energyconsuming vehicles. This is because some of the targeted middle classpopulation may no longer afford these cars that are not expensive tobuy, but also to maintain. As such, people who have been hit hard bythe hard economy may opt for other cheaper cars that are stillcomfortable.

Forthe company to remain competitive in the industry, it must be in thefront line to apply innovate technologies (Barksdale &amp lund,2006). The motor car companies that wish to remain competitive inthis business world must invest in technology and a good marketingstrategy. Thus, Mercedes Benz, despite its good brand name, must comeup with hyper technology and invest in good marketing strategies.


MercedesBenz uses a differentiation strategy to gain a competitive over othermotor car companies. This strategy involves having making productsmore productive and different from others. Mercedes Benz company mainfocus is to produce as unique cars as possible to remain competitivein the industry. To achieve, this is why the company invests asubstantial amount of money in innovation, research, and development.One of the reasons why the company dominates the market of luxuriouscars is its ability to employ super technology and innovation inproduction of motor cars. This is possible because the companyemploys a team of the talented and qualifies personnel who work hardto ensure that they produce unique and more improved car models. Thecompany strives to produce a more advanced model each year. Eachmodel is more improved than the latter as it uses more advancedtechnology. Due to the great competition of luxurious cars from othercompanies with the same generic strategy, Mercedes Benz needs to putmore effort in innovation and research. It should persistentlyencourage the employees to do their best to produce the best carmodel to beat out some other competitors, which seem to be ahead intechnology and innovation.

Strengtheningcompetitive position

Whenthe generic strategy is not enough, there is great need to come upwith complementary strategies to strengthen the competitive strategy.It would be futile for a company to produce unique and super cars butfail to inform customers. The Mercedes Company is aware of this factand has employed a team of personnel of marketing. The marketingtakes place in form of advertisements in the internet and othercommon media. These adverts are intended to inform people about carmodels and their effectiveness. They are made in such a way that theyattract upper class customers. As such, they use some of the mostreckoned people to advertise their products so as to attractcustomers. They explain the advantages of their products and ensuretheir customers that the products are worth their money.

Theglobal market place

MercedesBenz Company has branches in various parts of the world. It was ableto enter internationally since it was the first company in the worldto produce motor vehicles. Currently, it has over 20 branchesinternationally something that has made it to dominate the market.Being a premium car producing company, having 20 branchesinternationally is recommendable. It has always maintained a goodmarket share internationally. In fact, it is still the leading motorvehicle company that produces prestigious cars. It takes advantage ofits reputable brand name to market its products. To further gain acompetitive advantage, the company has adopted god marketingstrategies to keep customers well informed. The most common form ofmarketing that the company uses is internet. It has made use ofinternet in various parts of the world to advertise its productsinternationally. It is always ahead of technology to ensure that itgains a competitive advantage of other luxurious motor car companies.

Corporatestrategy: business diversification

MercedesBenz uses concentric diversification. This type of diversificationfocuses on adding new products by improving the existing technology.It focuses on increasing the market share to help a company inincreasing profits or gaining a competitive advantage. The MercedesBenz seeks to improve its technology and diversify the differenttypes of models it produces. Currently, the company has producedseveral types and classes of Mercedes Benz, some of which target therichest in the society and others that target the middle classeconomy. Improvements in car models through innovative technologieshave given Mercedes Benz a good brand name. This has made customersalways eager to see the next new model each year. Thisdiversification has given Mercedes Benz an opportunity to gain a goodshare in the market.

Alsonotable with regard to concentric diversification is that MercedesBenz considers entering the heavy, medium, and light commercialvehicles industry. Currently, it has introduced passenger cars andbus chassis for the luxury base segment. This is diversificationensures that the company targets a larger population hence,increased profits.

Ethics,social responsibility and sustainability of the environment

Thecompany of Mercedes Benz has its own governing codes of conducts fordifferent parts of the country. So far, there are no incidences inwhich the company was found to violate the practice of ethics withinits operations. Mercedes Benz is a key player in socialresponsibility. It spends a substantial amount of money in supportingvarious nonprofit institutions and other projects that are beneficialto the society. The company goes beyond normal business operations tocreate projects that add value to the community, while at the sametime helping to overcome inherent social challenges. The companychooses the organizations that it funds using a transparency mean toensure fairness.

However,with respect to environmental sustainability, Mercedes Benz has notbeen keen in environmental sustainability. Although the companyconfirms that it has been improving their cars to conform tosustainable management, the engines of Mercedes Benz products are notefficient enough. Mercedes Benz cars consume a lot of energy thus,high environmental pollution and utilization of exhaustibleresources. This is unsustainable for the environment in an era whereenvironmental sustainability draws much attention fromenvironmentalists and the general public. There is great need for thecompany to innovate more energy efficient engines to conform to theneeds of environmental sustainability. This is achievable if thecompany combines all the available technology to produce quality butenergy efficient engines.

Strategyexecution: building the capacity to execute strategy

MercedesBenz is one company that recognizes the value of employing talentedand qualified personnel. It stands as one of the best companies towork in. The company emphasizes on employee performance as theresults are conspicuously visible thus, the need for qualifiedpersonnel. The recruitment process considers all applicants detailsand a thorough interview so as to recruit only the most qualifiedpeople. The new recruits are trained by other personnel under them toensure that they get equipped with the necessary skills formanufacturing of high technology motor vehicles. In every branch,there are chief, senior, and junior engineers, all of whom must showgreater capability in motor car production. It is possible for juniorengineer engineer to rise to higher levels by showing greater talentand innovation capabilities in the production of cars. The structureof the company is formulated in such a way that each and every personhas a chance to showcase their talents and innovations, which areessential in producing super luxurious cars. The company can tap moretalents in the society by training their own students who show muchpotential and interest right at a reasonably younger age. This wouldensure that a person grows in an environment that broadens theirthinking, which can lead to greater technological innovationsnecessary in the production of cars. It would be a great potentialfor the company to nurture young talents for the future of thecompany.

Strategyexecution: managing internal operations

Employeesatisfaction is imperative for a successful company. Mercedes Benzhas been a keen player in ensuring that employees are well cateredfor. It is one of the best paying motor car company in the worldhence, meeting the financial needs of employees greatly. There usgreat cooperation between the mangers and the junior employees, whichhas helped employees in developing positive attitude towards theirjobs. The rates of job turn over in the company are lower becausemost employees are comfortable working for Mercedes Benz Company.Further, the company uses a variety for communication systems tomanage and foresee the management of the work performance. Thecompany aims at maximizing the use of information systems as a onestep of moving ahead.

Simerson(2011) claim that one of the most important aspects of maintainingemployees and ensuring job performance is motivating employees.Mercedes Benz knows this too well and has put strategies to motivateemployees. These include bonuses each year, promotions for those whoshow great effort in their works, and awards of those who perform thebest in the company. This gives employees morale to work hard becausethey are assured of great returns. In addition, there are executiveallowance bonuses. They are given some privileges some as houseallowances, cars, and other allowances such as entertainment. Thismakes the company highly rated compared to other companies in thesame industry.

Althoughemployee management and compensation package is admirable for theMercedes Benz Company, the company can still improve its internalmanagement for maximum performance of the company. The managementshould have a program where young talented engineers showcase theirtalents, and those that come up with the best applicable ideas areawarded generously. This would encourage employees to invest much ininnovative ideas that consequently propels the company forward.

StrategyExecution: Leadership

TheMercedes Benz is a company with a great and bright future with regardto production of cars. It aims at producing so e of the mosttechnologically innovative cars offering a great luxury for users.The company has progressively responded to technological advancementsin the light of the needs of customers. Likewise, competitive has putthe company on its foot towards being the most innovative motor carcompany. The rival competitors are tirelessly working hard to beatout Mercedes Benz Company. Therefore, the company should stay alarmedof this competition and come up with strategies to remain on top.

TheCEOs of the company should put adhesive measures to ensure that theyremain on top. They should find means of finding the best talents inmotor car engineering. This may include nurturing young talents ininstitutions with an aim of identifying the best work force ever.With the rate at which technological advancements are sprouting up,it is essential to come up with the best methods possible for theidentifying the most innovative strategies (Grimm,2003).

Likewise,the CEOS should emphasize on production of more energy efficient yetquality vehicles. This is in response to the environmental outcrythat cars are one of the greatest polluters of the environment. Thiscan be achieved if the company puts heads of the most innovativemotor car engineers.

Thecompany should also diversify its vehicles to cover up a wide market.Apart from production of private cars, it should produce heavy andmedium vehicles including tracks and buses. Due to its good brandname, it is possible to venture in the market if customers areassured of the quality of the quality of the products.


Amidstthe great competition that the Mercedes Benz Company faces, it isstill the most recognized brand of premium cars worldwide. Thecompany has had a good management since its inception in 1886 andsince when it introduced the first Mercedes vehicle in 1926. It hasprogressively improved its products by responding to the needs ofcustomers and advanced technology. Although the competition isintensifying as more luxurious and innovative motor car companiessprout up, Mercedes Benz Company is doing its best to remaincompetitive. It has invested a substantial amount of money inresearch and development to beat out its rivals. It is on the righttrack towards production of the best car globally.


Barksdale,S., &amp lund, T. (2006). 10steps to successful strategic planning.Alexandria, Va, ASTD Press.

Grimm,K. (2003). &quotSoftware technology in an automotive company: majorchallenges.&quot Proceedingsof the 25th international conference on Software Engineering.IEEE Computer Society.

MerecedesBenz. (2014). Learning through innovation. Retrieved fromhttp://www.mbusa.com/mercedes/benz/innovation

Puchan,H. (2001). &quotThe Mercedes-Benz A-class crisis.&quot CorporateCommunications: An International Journal6, 1, pp.42-46.

Simerson,B. K. (2011). Strategicplanning: a practical guide to strategy formulation and execution.Santa Barbara, Calif, Praeger.