MERCEDES-BENZ OPERATIONAL STRATEGY EVALUATION AND

ANALYSIS USING PESTLE, SWOT, AND PORTER'S FIVE FORCES

MODEL

BY

100693769

CPD & STRATEGIC MANAGEMENT

7ME502
COURSEWORK 1

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LIST OF FIGURES
Figure 1: Mercedes Benz Major Competitors.

Figure 2: Indicates the stiff competition among German vehicles.

Figure 3: Shows Mercedes' investment in R&D which strengthens its operations.

LIST OF TABLES
Table 1: Comparative Analysis of the Strategic Mission.

Table 2: Comparative Analysis of Customer Segmentation and Targeting Strategy.

Table 3: Comparative Analysis of Business Strategies.

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TABLE OF CONTENTS

1.0 INTRODUCTION 5

1.1 Mercedes-Benz Mission Statement 5

1.2 Mercedes-Benz Vision Statement 6

1.3 Mercedes-Benz core values 6

1.4 Major competitors 6

2.0 MERCEDES BENZ PESTLE ANALYSIS 7

2.1 Political Factors 7

2.2 Economic Factors 7

2.3 Socio-Cultural Factors 7

2.4 Technological Factors 7

2.5 Legal Factors 8

2.6 Environmental Factors 8

3.0 MERCEDES BENZ PORTER'S FIVE FORCES ANALYSIS 9

3.1 Threat of New Entrants 9

3.2 Competitive Rivalry 9

3.3 Bargaining Power of Buyers 10

3.4 Bargaining Power of Suppliers 10

3.5 Threat of Substitutes 10

4.0 MERCEDES BENZ SWOT ANALYSIS 11

4.1 Strength 11
4.2 Weaknesses 12

4.3 Opportunities 12

4.4 Threats 12

5.0 STRATEGIC IMPLICATIONS OF MERCEDES-BENZ AS PER ENVIRONMENTAL

ANALYSIS. 13
5.1 Strategic Mission of Mercedes-Benz 13

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 5.2 Strategic Market Orientation 13

5.3 Strategic Market Planning 13

5.4 Evaluation of the Implications of Strategic Decisions 14

5.5 Competitive Strategic Analysis and Evaluation Between Mercedes-Benz and BMW 14
PERSONAL STRATEGY 17 - 18

CONCLUSION 19

REFERENCE 20 - 21

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1.0 INTRODUCTION

Mercedes-Benz is a luxury car brand that is used by German automakers. Stuttgart, Germany is
home to Mercedes-Benz's corporate headquarters. The name debuted under Daimler Benz in
1926. Mercedes, along with BMW and Audi, are among the top three luxury car manufacturers
worldwide in terms of sales. Currently, Daimler AG and Daimler Chrysler own Mercedes.
Founders of Mercedes-Benz

Gottelieb Daimler Karl Benz

Source: (Mercedes-Benz Group, 2020)

Gottlieb Daimler, who developed the first internal combustion engine and the automobile, was
born in 1834. The high-speed liquid petroleum-fueled engine is credited to him.
German mechanical engineer Karl Benz was born in 1844 and created the first usable internal
combustion engine-powered automobile in the world in 1855.

1.1 Mercedes-Benz Mission Statement

We will inspire and create an exceptional place to work and to do business. One employee, one
customer, and one vehicle at a time. Through our transparent atmosphere, premium auto
inventory, and individualized customer care, we create the luxury shopping experience that our
customers truly deserve.

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1.2 Mercedes-Benz Vision Statement

Astorg Auto of Charleston holds a responsibility to foster an environment that empowers

employees and promotes innovation, relationships, and growth. We will continuously strive to
inspire consumer confidence by supplying a transparent atmosphere and offering a premium
automobile product with individualized customer care.

1.3 Mercedes-Benz core values

▪ Passion – The company has a passion for designing top-notch cars that are an emblem of
superior design and technology.
▪ Respect – Mutual respect and accepting diversity run through the organization, ensuring a
positive and healthy work environment.
▪ Integrity – The company fosters creating an environment of positivity, embracing diverse
ideas and ideologies.
▪ Discipline – Following the disciplinary approach in its work methodology has made the
brand stand ahead of the league.
▪ Excellence – Nothing, but the best, is what Mercedes stands for.

1.4 Major competitors

Figure 1: Mercedes Benz Major Competitors. (Retrieved from: https://hanhaa.com/parcelive-

used-to-monitor-transportation-of-german-sports-car/

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 External (Macro) Environment Analysis

2.0 MERCEDES BENZ PESTLE ANALYSIS

2.1 Political Factors

Mercedes-Benz faces challenges in bilateral trade and strategic planning due to the diverse
global politics and laws. Changing government policies, labour relations laws in the EU,
environmental regulations like market corruption, and so on are some examples of these (IMF,
2023). It depends on its ability to adjust to changing political environments, ride out the waves of
Brexit's influence on trade, and maintain its worldwide success.

2.2 Economic Factors

Mercedes-Benz's worldwide position is determined by economic factors such as inflation, taxes,

and interest rates. In regions with economic integration, like the EU, trading takes place. The
purchasing power of consumer durables is impacted by the cyclical nature of economic activity,
which in turn affects recruitment decisions and profitability in the auto industry (IMF, 2023).
Given how quickly the world economy is changing, setting an effective price for export goods
can be difficult and require careful planning.

2.3 Socio-Cultural Factors

The company works in a variety of international sociocultural contexts that consider people's
preferences for public transportation and subtle cultural differences. Understanding and adjusting
to different cultural customs, such as the formal business code of Japan, is essential for
successful cross-border trade (Schweitzer, 2015). Global market penetration requires navigating
and respecting socio-cultural environments, which is what this process entails.

2.4 Technological Factors

For Mercedes-Benz, technological agility is still crucial on a global scale, as evidenced by the
growth of the automotive sector, improved logistics, and higher-quality infrastructure (Jayender
& Kundu, 2021). Because of its high information sensitivity, enhanced port facilities, and

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 efficiency in international transportation, it can compete in the world market that is expanding
quickly.

2.5 Legal Factors

Due to its global reach, the organization must continue to adhere to international legal norms.
These include different government taxes and other regulations pertaining to the automotive
sector.

2.6 Environmental Factors

Road traffic is one of the factors contributing to pollution emissions worldwide. As a

manufacturer of automobiles, the company must abide by different environmental laws in
different regions for production and sales.

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 External (Micro) Environment Analysis

3.0 MERCEDES BENZ PORTER'S FIVE FORCES ANALYSIS

3.1 Threat of New Entrants

Its enormous market share places restrictions on new entrants, such as high capital requirements,
and stringent laws making it difficult for them to operate in the sector (Salman et al., 2022).
Conversely, potential competitors are strongly discouraged by the worldwide brand image.

3.2 Competitive Rivalry

The automotive sector, which includes brands like Volvo, BMW, Audi, and Porsche, is extremely
competitive. Nonetheless, Mercedes's unique attributes and judicious mergers protect the
company from competitors and bear witness to its quick rate of market expansion (Salman et al.,
2022).

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 Figure 2: Indicates the stiff competition among German vehicles. (Retrieved from:
https://www.youtube.com/watch?v=uGTVQBXv54E

3.3 Bargaining Power of Buyers

The bargaining power of buyers in the vehicle market has increased due to market changes,
customer experience focus, and increased competitiveness. Individual buyers have less
bargaining power, but Mercedes Benz produces premium and luxury vehicles, making personal
purchases significant. Fleet customers have more bargaining power. Companies like Mercedes
Benz prioritize maintaining a positive brand image, as customers have extensive information
about products and compare multiple cars before purchasing. As competition in the premium
segment increases, brands focus on customer retention and engagement. Overall, clients have
adequate bargaining power.

3.4 Bargaining Power of Suppliers

The automotive industry has many suppliers, the majority of which are small businesses.
Because the producers are very large, the suppliers have no power to negotiate or influence
prices. These manufacturers select the best suppliers who are willing to meet their stringent
requirements, having set very high standards for the raw materials. Mercedes-Benz's suppliers
include manufacturers of leather goods, designers of wood, and suppliers of interior car
electronics. These manufacturers' switching costs aren't always cheap. Being a supplier of this
brand is an honour for the Mercedes-Benz providers, who are numerous (Paolo, 2013). The
suppliers have little leverage in negotiations as a result.

3.5 Threat of Substitutes

Luxury and high-end vehicles are no longer used for transportation. They have an image of a
reputation as well as a self-notion of fulfilment and achievement. It can be replaced with
inexpensive automobiles or other forms of transportation like buses and trains. However, there is
little chance that Mercedes-Benz cars will be replaced if we just regard them as luxury cars.
Since Mercedes-Benzes are now more of a status symbol and are therefore necessary for the
wealthy, there is little chance that they will be replaced.

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 Internal Environment Analysis

4.0 MERCEDES BENZ SWOT ANALYSIS

SWOT analysis is a vital strategic planning tool that is used by Mercedes-Benz Managers to do a
situational analysis of the organization. It is useful to map out the SWOT and how MB is facing
its current business environment. and the advantage of the SWOT reveals those innovative
companies are and how competitive.

4.1 Strengths
Mercedes-Benz used economic tactics to manage the 2020 pandemic, which increased the value
of the company's shares. This suggests that the company invested about 19 billion euros in R&D
(Salman et al., 2022). Global brand awareness, intense marketing campaigns, and a customer-
centred strategy are necessary for building a strong market position. A greater number of access
points and a variety of raw material sources are offered by the 31 production sites located
throughout the world.

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 Figure 3: Shows Mercedes' investment in R&D which strengthens its operations. (Retrieved
from: https://www.statista.com/statistics/347150/research-and-development-expenses-of-
mercedes-benz-vans/

4.2 Weaknesses
Regarding scandals, Mercedes-Benz has experienced legal issues because of claims of using
software to cheat on emission tests, which proved to be costly (Gruszczyński, 2018). Due to
frequent car recalls addressing issues like wiring and faulty parts, the brand's reputation has
suffered, which has had an impact on profitability.

4.3 Opportunities

Cooperation and alliance-building with auto and electric vehicle makers can open doors to new
markets and improve innovation (Salman et al., 2022). A fresh chance for higher market sales
exists among developing markets' expanding middle classes. Ford's commitment to producing
electric and hybrid cars thus clearly aligns with the expanding green transportation movement.

4.4 Threats
Comparing annual revenues and net incomes from year-to-year entails risks related to the global
economic crisis, which are exacerbated by lockdowns, high petrol prices worldwide, complex
environmental regulations that are constantly changing, and resulting cost increases (Ghosh,
2020). Sustained strategic endeavours are necessary to maintain market leadership amidst fierce
rivalry from competitors like Toyota, Honda, Tesla, and Ford.

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5.0 STRATEGIC IMPLICATIONS OF MERCEDES-BENZ AS PER ENVIRONMENTAL
ANALYSIS.

5.1 Strategic Mission of Mercedes-Benz

Mercedes-Benz's mission statement, which outlines the organization's future mobility sustainably
and safely along with exceptional products and services and trend-set technologies, was made
possible by the proper internal and external environmental analysis. According to Daimler AG
(2014), the organization wants to lead the world in innovation and technology, motivate clients,
and expand its business by hiring people who are qualified and experienced.

5.2 Strategic Market Orientation

The strategic market orientation of the organization has both costs and benefits. Customer focus,
which drives the company to concentrate more on developing and producing goods that not only
satisfy customers' needs but do so quickly, is one of the key tenets of Mercedes-Benz's market
orientation strategy. According to Kumar et al. (2011), it aids in their ability to retain a
competitive advantage in terms of market responsiveness. One of the company's primary
objectives is to provide added value for its clients. Mercedes-Benz aims to become the industry
leader in all customer satisfaction metrics by utilizing innovative methods of customer
interaction. As a result, the business will be able to create new products that better reflect the
wants and needs of its clientele. To achieve this goal of maintaining constant communication
with its clientele and offering customized mobility and transportation services, Mercedes-Benz
has developed new interfaces for its sales and service procedures. Thus, it is evident that
Mercedes-Benz has a strong market focus (Daimler AG, 2014).

5.3 Strategic Market Planning

Boone and Kurtz (2011) define market planning as the process of evaluating an organization's
opportunities, strengths, and resources to create objectives, formulate plans of action, and set
rules of conduct that will assist the organization in minimizing threats from the outside while
removing internal weaknesses.

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5.4 Evaluation of the Implications of Strategic Decisions
In 2014, Mercedes-Benz debuted two new models in the Chinese market: the GLA Coupe and
the C-Class with an extended wheelbase. The company has expanded its network of dealers in
the Chinese market, built its largest training centre for dealership staff, and increased its local
activities in China, Brazil, and India to meet sales targets. The average CO2 emissions from
Mercedes-Benz vehicles that are newly registered in the EU have been successfully reduced to
129g/km by the company (Daimler AG, 2014). By broadening the range of mobility services and
increasing their innovative services through improved networking and digitization, the company
is examining the opportunities presented by digital technology (Daimler AG, 2014).

5.5 Competitive Strategic Analysis and Evaluation Between Mercedes-Benz and BMW

Mercedes-Benz has a close rival in Bayerische Motoren Werke AG (BMW). Established in

1916, BMW is a German automaker. Nearly 1,845,186 cars and 117,109 motorcycles have been
produced by this group. The company is among Mercedes-Benz's main rivals in terms of product
innovation, positioning, targeting, market segmentation, and marketing and sales tactics (Tay,
2003).

Table 1: Comparative Analysis of the Strategic Mission (Connaughton and Madsen, 2001).

Mercedes Benz BMW

The company's competitive strategy aims to
integrate cutting-edge technology into its
current product, in line with the organization's
mission. Both required and motivated, the
company will be introducing innovative
technologies along with superior products.
BMW's strategic mission also centres on
offering cutting-edge technologies in terms of
goods and services. In addition to this
competitive approach, the organization's
mission statement outlines its strategic goal
of becoming the world's foremost supplier of
high-end goods and services.

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Table 2: Comparative Analysis of Customer Segmentation and Targeting Strategy
(Connaughton and Madsen, 2001).

Mercedes Benz BMW

This car brand tends to divide and target its As with Mercedes Benz, BMW's strategy is to
clientele based on social class and income. find and attract wealthy customers who are
The company typically caters to an affluent well-off both socially and economically and
clientele. who are interested in the newest technologies.

Due to their competitive strategy, the In contrast, BMW primarily caters to

organization targets both male and female individuals with higher incomes.
middle-class and upper-class customers.

Customers of the company, who are diverse Their car offerings and designs primarily cater
in nature, have access to a large selection of to the fashionable and sporty needs of their
cars to choose from. customers.

The targeted consumers mainly consist of The targeted consumers of the organization are
the middle-aged population. mainly the young population and entrepreneurs.

Table 3: Comparative Analysis of Business Strategies (Connaughton and Madsen, 2001; Tay,
2003).

Competitive Mercedes Benz BMW

strategies

Innovation and The company has become the
product development industry leader thanks to its eco-
strategy friendly technology. Thanks to
this technology, the company can
now focus on its competitive
The company has concentrated on
creating M-division vehicles,
which enables them to launch
cutting-edge product lines. These
goods have successfully

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 strategy of manufacturing hybrid,
emission-free, and efficient
combustion engine vehicles. As a
result, they have been able to
increase the products'
sustainability and safety.
Improvement of Mercedes-Benz's competitive
efficiency strategy primarily aims to
introduce an efficiency strategy
and strengthen the company's
core business. The goal of their
competitive strategy is to
continuously update and broaden
their model offerings.
The company introduces products
for middle-class and upper-
middle-class consumers in
addition to targeting the premium
Consumer target and consumer segment. To draw in
pricing strategy younger customers, they have
also made the calculated decision
to lower the prices of some of
their product lines, like Class A.
Additionally, the company has
added new mobility ranges to its
product line, like car2go and
charterWay.
implemented their competitive
strategies to meet the demand for
cutting-edge, high-performing
vehicles.
BMW wants to boost its vehicles'
global efficiency through the
implementation of an efficient
dynamic strategy. With the help
of this tactic, the company has
been able to equip over a million
cars worldwide with fuel-efficient
features.
The organization's business
strategy exclusively targets the
premium consumer segment.
Typically, they are high-
performing vehicles for their
intended market. The company's
renowned and high-performing
products emphasize the better
lifestyle that its customers lead.
As a result, they provide their
customers with premium pricing
strategies.
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 Mercedes-Benz has used social
media and other digital media
platforms to communicate and
Market
interact with communities and
communication
potential customers. Customers
strategy
who have expressed little to no
interest in the products are
permitted to speak with
representatives of the
organization in person.
The company's business plan also
included increasing consumer
knowledge of its goods and
services through a variety of
conventional and cutting-edge
media. Additionally, the company
has globalized its showroom to
offer customers a distinctive
experience.

Market expansion The company is expanding its
strategy market share in emerging
economies across the globe
because of its competitive
strategies.
BMW's business plan also focuses
on growing its market share in
both developed and developing
nations worldwide.

PERSONAL STRATEGY

Skills, Preferences, Expectations, Aspirations, and Results, or SPEAR model, is a comprehensive

framework for assessing an individual's fit within an industry and organization. Let's use this
model to evaluate how well I might fit into the Mercedes-Benz industry.

Skills

My experience in Strategic Engineering Management has given me a solid foundation in

problem-solving, project management, technical expertise, and team leadership. In a company
like Mercedes-Benz, which needs to have experience in the design, development, and production
of intricate automotive systems, these abilities are extremely valuable.

Preferences

Having worked in Strategic Engineering Management, I might be more interested in positions

that let me manage the creation of new products or technologies, lead cross-functional teams, and

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foster innovation. It's possible that I also like working in dynamic settings that promote
cooperation and ongoing development.

Expectations

Using my background in strategic engineering management, I would probably expect to lead

teams at Mercedes-Benz in the creation and delivery of premium automotive solutions. It's
possible that you'll have the chance to support organizational talent development, product
development, process optimization, and strategic planning.

Aspirations

My career goals at Mercedes-Benz might involve moving up to more leadership positions,

spearheading technological advancements in the automotive industry, and significantly boosting
the company's profitability. I might hope to direct ground-breaking initiatives, impact industry
norms, and mold mobility's future.

Results

Considering my background in strategic engineering management, I believe I have a proven

track record of completing projects on time, leading teams well, and accomplishing strategic
goals. My ability to motivate and lead groups of people to achieve in difficult situations can be a
great asset to Mercedes-Benz.

Finally, It's important to determine whether my current career path aligns with your long-term
goals, even though my experience in Strategic Engineering management may be relevant to
opportunities within Mercedes-Benz. If my skills aren't being fully utilized, I consider taking a
different strategic route, like going for career advancement, getting more training, or looking into
other roles. Finding growth opportunities can be aided by keeping up with industry trends,
networking with other professionals, and asking seasoned leaders for mentorship. Even if i have
experience in managing engineering teams, it's crucial to regularly review my strategic direction
to make sure it aligns with my professional objectives.

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 CONCLUSION

Mercedes-Benz is a premium car brand that has managed to maintain its position despite the
financial crisis that has affected most of its major markets. Sales in the auto industry are
significantly impacted by the overall status of the economy. The company has maintained its
clientele and handled the risky situation by introducing innovative products, services, and
technologies. To stay in constant contact with its clientele, it carries out a great deal of research
and development on digital services and technologies. To expand into new emerging markets,
the company must continuously introduce new products, develop green technologies to guarantee
sustainability and safety, and leverage digitization to improve customer service.
Mercedes-Benz is negatively impacted by geopolitical shifts, such as how Brexit affects trade
surplus and the global recession in the automotive sector. Legislative actions, like environmental
regulations, necessitate ongoing modification. According to Porter's analysis, the brand is
dominant in its market, but scandals and recalls highlight its vulnerability. Ultimately, SWOT
identifies innovation and cost-effectiveness as strengths, but subpar legal reveals weaknesses.
Strategic options include continuing innovative efforts, market development plans, and
environmental requirements to guide the company through complexities for long-term success
considering economic downturns and regulatory challenges.

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