ASSIGNMENT 1

Name: G Alpha Rani Kachhap

PGDM No: 21016

Subject: International Business

Topic: Mercedes Benz Case Study

Q1. Evaluate the advisability of Mercedes Benz’s announced shift in strategy. How might
this shift in strategy improve Mercedes Benz’s competitiveness in the global auto industry?
What are the risks?

Producing a number of new vehicles from small to medium-sized car buyers to SUVs was
also said to produce a low-powered, electric-powered city car that would lead to competition
from existing giants such as GM, Ford, Toyota.
Mercedes-Benz has announced that the company will transform itself from a luxury car
market to a leading manufacturer of luxury cars in all segments of the market to sustain
business life, as it no longer has a large luxury car market.
Werner has announced that Mercedes will move away from the traditional reliance on
German automotive manufacturing and increase its overseas production and production of
sports cars in the U.S. In sports utility vehicles the plant was acquired by General Motors,
and this will help save resources and set time. This comes with a risk from competitors like
Nissan, Toyota as they also have equal opportunities.
Mercedes-Benz has donated a range of luxury C, E and S models with different prices this
was a strategy taken to improve the company's performance but instead affected competition
in the American market due to luxury cars. and the European recession.
The relocation of the Mercedes American factory to Alabama was an exciting one as the
government provided them with resources and provided them with a $ 200 million grant and
labor costs were low, but the risk was that Alabama had 0f 250 people and was ranked low in
education, income and and productivity that will add to it as the cost of hiring managers and
competent foreign power.
The Department's move from Germany to overseas, will lead to increased profits as lower
wages in other countries such as the Czech Republic and higher technology due to greater
infrastructure and more experienced workers in countries such as France and Britain, will
help them easily dominate Europe. and reduce export costs
Newly appointed Helmut Werner Chairman has announced the ‘full line manufacturer that
provides state-of-the-art vehicles in all segments of the market’. This could improve
competition in the global market as some firms will be excluded from the market if they
spend a lot of money on engineering. This has led to the development of new car cell phones
aimed at in-market consumers, further informing the lifestyle. This poses a risk to total
investment in engineering, marketing and the risk of new product launch and stability.
• New S-class series in 1992, turning to Toyota's Lexus Japanese
• 1992, A new factory is abandoned in Ahrensdorf, Germany
• Changes from “luxury car manufacturer to cars in every segment”
• Overseas production: Ruling European Market, Alabama insecurity, Competition
Advantages of a global competition strategy
> Cost Reduction: The main reason for the change in strategy was to get cost savings.
Japanese manufacturers such as Toyota and Nissan were delivering almost the same quality
at a very competitive price.
> Increase Product Availability: Mercedes has developed new car parts keeping in mind all
consumer components.
> Bringing production closer to POS.
Risks:
> Unusual Plant location: Alabama ranks bottom in 50 states in terms of education,
income, and productivity. In addition, the rural Tuscaloosa Province had little industrial
infrastructure and was far from international airspace, harbors, canals, or energy and water.
This can be a major factor in money laundering.
> Reduced Brand Image: German-manufactured vehicles made a high-quality design
statement in the eyes of customers and acted as the USP for the premium segment. This may
lead to reversal due to changes in plant location.
In my opinion the strategies taken by the management of Mercedes Benz are commendable
given the continued decline in sales and the number of shares. These strategic changes can
bring benefits to the company due to Cost Competitiveness, timely delivery and growing
options offered to customers.

Q.2 The legal structure of Mercedes Benz’s worldwide organization is presented on Exhibit
2. For managerial purposes (as opposed to legal purposes) what organization design would
you recommend for Mercedes Benz’s passenger cars Division? What are the implications for
the global distribution of activities and decision-making processes?

Mercedes owned three categories of luxury cars and was launched in 1999. S-class sedans
and coupes, 50 SEC and 600 SEC S-class Coupes, then mid-range cars including T- models
and integrated series comprising the popular Mercedes 190 model. The organization has a
wide range of products available in a wide variety of sizes and prices as it exports its vehicles
and has different product strategies the organization should consider the following points.
• Organizational Structure: It is important to have a good organizational structure with
good leadership within the organization, the structure should be such that it allows for good
communication and better transfer of power with the staff and employers of the organization
as a result of good decision making.
• Departmental structure: The company should have a good department as it has to deliver
a lot and have good communication skills to avoid the chaos in the organization in the various
departments that will perform their own functions for example HR. department, IT
department etc.
There are some decisions that the organization should take to light on Exhibit 2 regarding the
passenger car category.
While watching the exhibition it can be noted that in 1991 the revenue from some units was
poor and sales were relatively short compared to other units. For example, Mercedes-Benz
Italia offers a negative 298 negative revenues with a total of 2927 while a unit of companies
like Espana offers 21 revenue while sales are only 1814.
• It is advisable to close such corporate units that bring in negative profits and even good
sales as the firm can reduce costs and may consider plans to open more corporate units in
different parts of the country if needed.
• There should be a structure in the organization where headquarters can communicate with
other corporate units that operate in this way, will be able to identify the weaknesses and
strengths of each business unit and will assist the organization in making decisions. as
needed.
• As the company is committed to global trade it is important to monitor the efficiency of
corporate units, low return units need to be closed as this will result in cost and operational
efficiency, it will be advisable to hold meetings with these corporate units and a system
where these corporate units can communicate alone. a interdependent framework for
corporate units that will contribute to the functioning of these units.

Q3. Consider the person in charge of Mercedes-Benz’s new SUV activities in Alabama.
What job description would you propose for that person? By what measures.

Alabama Job Description:

Requirements and duties
1. Degree in Engineering / Supply chain Management. should have well knowledge about the
operations and how easily to export since the ports were far away from Alabama. He also
should have good knowledge and understanding about the sports car industry
2. 10 or more years of plant management experience and a proven track record of effective
management of employees and He must have at least a few years of experience of previously
worked with German people so that he can understand better what the top management wants
to communicate.
3. Innovative communication skills. Doing well and following budget.
4. Problem Solving Skills
5. The person in charge of the SUV should a person who will be capable to communicate
properly to the potential consumers in Alabama and will also be able to carry out the
activities properly and efficiently.
6. You are responsible for overseeing all activities of the institution, including managing
staff, guessing meetings, and ensuring quality.
7. It should work in both plant and office spaces and should easily switch between the two.

Q4. Assume the role of Mercedes-Benz’s new chairman, Helmut Werner. Suppose that
following your recent announcements you have come under vocal criticism by several
elements of German society. One critic argues that Mercedes-Benz’s leadership in the world
automotive industry has been due in large measure to the German educational system
(supported by German taxpayers), the German transportation and communication
infrastructure (also paid for by public funds), as well as by the enduring loyalty of German
workers. A firm which has benefitted from these public goods, he maintains ought a
reciprocal obligation to include ways to contribute to a high national standard of living, rather
than to export jobs, since the export of jobs will inevitably lead to an erosion of the social
system that Germans have worked hard to build. How would you reply?

Mercedes-Benz has its headquarters in Germany. Although Mercedes-Benz has taken major
steps to change the markets and shift its manufacturing industries, foreign exchange earnings
will be calculated in Germany. As Chairman of a world-renowned company, we will be
aware of the negative effects of outsourcing. In the proposed criticism, there are reasons why
there has been a change of staff as staff numbers have been very high in Germany compared
to others and have been a significant factor in the organisation's production costs, however, to
monetize the company. and reducing operating costs are both important to keep the company
efficient and competitive in the market. We can make our cars more affordable and sell more
units in the market because we can find cheaper workers in other parts of the world. To avoid
this problem, we recommend that the national government come forward and set normal
working hours per hour, and provide for industrial economic development through subsidiary
companies. In the proposed criticism, there are reasons why the dismissal of workers as the
level of staff was very high in Germany compared to others and was a significant factor in the
production costs of the organization. The organization has benefited from public assets and it
is the responsibility of the firm to repay these benefits in the form of good productivity and
productivity of employees but it can be seen that the company incurred losses for another
year and if it will. further it will have a negative impact on GDP growth and the overall
outlook for the economy and organizations in this sector it is important for the organization to
think outside the box and separate itself in order to develop the organization and the country.