Many industries around the world compete in globalization. Participating in the international market, organizations develop and manufacture goods and services to achieve profitability. This market can be difficult for industries, as they must maintain sales and meet objectives for business sustainability, continuity, and create a competitive advantage. While some organizations fail or stabilize in the market, Mercedes-Benz has developed into a leading contender of its class. Therefore every organization develops and maintains continuity as it best suits their market and industry. While one market may achieve profitability through services such as Fed Ex who provides services in shipping and delivery, other organizations gain profits through manufacturing and selling of goods. The industry that will be focused in this analysis is the luxury car industry. This is an industry that is competitive in the global market and presents unique opportunities and challenges. One such industry includes Mercedes- Benz. As a leader and number one contender in the luxury automobile industry, Mercedes-Benz provides an excellent model of how continuity and innovation can be used to achieve organizational success.
Mercedes-Benz is recognized globally as a luxury vehicle in the top of its class. The company motto provides an example of their approach to marketing luxury vehicles, “all or nothing”, (MBUSA, 2012). Unsurprisingly, Mercedes-Benz is recognized as the “best in innovation, performance, design, safety, and environmental needs”, (MBUSA, 2012). The organization has set the standard in innovation technology that has helped it reach the current success evident today. In 2011 the company witnessed its all-time high in unit sales, revenue production, volumes, and earnings, (Diamler, 2012). As a result Mercedes-Benz earned the most in sales and profits when compared to other organizations in the industry, becoming one of the top industries in the world. Various organizations have recognized Mercedes-Benz as a leading competitor and innovator within its industry. The organization sold 1,381,400 vehicles worldwide and gaining €57.4 billion in profits in 2011 alone, (Diamler, 2012). Sales and revenue rose significantly from the previous year in 2010 by 7% gaining an additional € 5 billion in profits. These numbers verify Mercedes-Benz as a leader in the luxury car industry and a top competitor in the global market. Mercedes-Benz USA (MBUSA) made up a substantial margin of the increase of profits observed in 2011. Sales from MBUSA made up 17.5% of last year’s net growth selling more than a quarter million cars in this region alone, (MBUSA, 2012).
Mercedes-Benz did not grow over night. It took more than 4 decades before the automobile was patented, marketed, distributed, and sold. In 1886 Karl Benz of Germany patented a pedal free motor wagon. By 1901 he partnered with Gottlieb Daimler and introduced the automobile to the market. Twenty-five years later, in 1926, Mercedes-Benz was produced and sold to the public, (Short, 2012). Since then, Mercedes-Benz has become a brand known worldwide for quality performance, design, and technologically innovative luxury vehicles. Mercedes-Benz began operation through its parent company, Daimler Group Corporation of Stuttgart Germany. Gaining success and popularity throughout Europe, in 1957 Mercedes-Benz was in the position to expand its market to America. Three years later Mercedes-Benz had found its way to the United States eventually creating Mercedes-Benz USA in 1965, (MBUSA, 2012). In 1998, to better secure business continuity and reduce manufacturing cost, Daimler merged with Chrysler Corporation creating Daimler-Chrysler which improved manufacturing and development of luxury vehicles. As a result, these executive decisions pushed the organization to reach its full potential, through branding, image, performance, and marketing.
Utilizing the approach, “all or nothing”, Mercedes-Benz is recognized as, “the world’s most valuable premium automotive brand and Europe’s most valuable brand”, (Diamler, 2012). The organization continues to achieve various awards from organizations across the world for their high performance and quality. Not only is the organization recognized as a leader in goods, they are also recognized for quality manufacturing and production. A brand with an image of prestige, heritage, and honor, they market to members of high society. Therefore, Mercedes-Benz is an industry popular throughout the industrialized world. Mercedes-Benz products and services can be found around the world. They have manufacturing plants and dealerships across continents through Africa, Asia, Europe, and the Americas. The relative countries include: Bangkok, Beijing, Singapore, Brazil, Argentina, Hungary, Turk, Russia, and Slovakia.
The drive for strategy, innovation, and corporate success can be observed in the company motto of “all or nothing”. All or nothing represents what the organization stands for. Mercedes-Benz will stop at nothing to maintain its reputation of high quality status and brand name. Not settling for anything better than the best, they strive to impress. They continue to amaze consumers across the globe with creative designs, style, performance, topped with the conveniences and innovations of today’s technological advances. Daimler Group, parent of Mercedes-Benz mission statement allows the organization to maintain business continuity. The mission is to: “work closely with our automobile colleagues and be the first choice provider of financial and mobility services for our customers and dealers”, (Damler, 2012).
Mercedes-Benz dealerships develop a mission statement and vision that best suit their perspective regions. However, throughout the industry core values are implemented known as the “Six Values that Drive”, (Mercedes-Benz, 2010). These are:
- Audacity to reject compromise
- Instinct to predict what matters
- Commitment to honor a legacy,
- Vision to consider every detail
- Foresight to take responsibility
- And ingenuity to outperform expectations, (Mercedes-Benz, 2010).
Communicating and implementing these values has allowed the organization to meet consumer needs in their related market. In America, MBUSA promises to deliver the best in quality through its motto “all or nothing”. To do this, American dealerships created a mission that validates and coincides with parent Daimler and other dealerships around the world. As a result they thrive to reach the best in technological innovation, automobile engineering, creativity and style, security and safety, and satisfying the need to reduce fossil fuels through CO2 emissions, (MBUSA, 2012). Without these core values, the organization would struggle to sustain a competitive advantage. The luxury car industry has infiltrated the industrial world providing high performance and design standards not found in other business. Setting its self apart is pivotal to stay ahead of competition and drive home the excellence that many associate with this familiar brand.
Part of the Daimler framework is to maintain its social responsibilities to the community and greater society. They recognize this as part of their identity and work to enforce this into corporate culture throughout Mercedes-Benz dealerships and manufactures. Occurrences of these social responsibilities are being met in organizations throughout the world. They do this in different ways like giving back to the community and respecting the environment. To meet government regulations and community concerns on fossil fuels and CO2 emissions, Mercedes-Benz has develop products to satisfy both the government and the community. Abiding to public concerns, the organization has taken measures to create a safe environment by developing eco-friendly products. “Our new environmental engines, ECO start-stop technology and new and extremely efficient models enabled us to reduce the average CO2 emissions of the cars we sold”, (Daimler, 2012). Not only has the organization reached this social responsibility in vehicle emissions, they have also made changes in manufacturing. The organization has continued to make strives to improve air quality and become environmentally friendly. They accomplished this by reducing energy consumption and fuels emitted from factories and manufacturing plants,
Steps to improve the community can be observed throughout America that demonstrates their drive to give back and do what they can to improve the world. In California, the organization has established the Mercedes Benz Driving Academy certified through the State’s Department of Motor Vehicles. The program teaches safe driving to teens to minimize accidents and deaths associated with young and inexperienced drivers, (MBUSA, 2012). Other dealerships have programs that vary such as employing people with disabilities and donating to foundations that serve the disadvantaged. The large variety of community outreach is due to a program created throughout this region called, 125 Acts to Give Back. The program encourages Mercedes-Benz dealerships and manufactures to develop strategies to improve the community and achieve the goal of 125 occurrences of outreach and social responsibility. To accomplish this Mercedes-Benz affiliates created, Cookies for Cancer, safe driving presentations, raised money for fundraisers like Down Syndrome Association, Anti-Defamation League, the Laureus Foundation, families facing pediatric illness, and local school drives, (MBUSA, 2012).
Establishing and maintaining ethical and moral codes of business is fundamental for business continuity and profitability. Mercedes-Benz has done this, implementing clear ethical codes and guidelines throughout the organization. Daimler explains, “Standards of Business Conduct are composed of several documents and polices and are based on company values”, (Daimler, 2012). This information provides the organization with an appropriate model of behavior to maintain honesty and integrity. Not only can this be achieved through their products and services but also through their relationship with employees, the government, and greater society. The organization has a board of managers that monitors ethics. This demonstrates a commitment to follow regulations set by government associations and moral obligation to the people and environment. They monitor, “conduct in international transactions, anti-corruption, environmental protection, conflicts of interest, equal treatment … and principals of the UN Global Compact policy”, (Daimler, 2012). Following the code put in place by the UN, the organization is doing much more to meeting its social responsibility to maintaining high ethical standards. All Mercedes-Benz facilities establish the same standards of ethics, ensuring equal rights across genres such as human rights and employee rights like pay standards, forced labor, and employee safety.
One such measure to maintain business ethics is observed in data protection. Protecting consumer, employee, and manufacture information is imperative to maintain the integrity of the organization. Without this there are limited standards of trust. Considering the market base for the product –which includes the upper class- Mercedes-Benz must do everything to ensure consumer information and assets are protected such as information technology. As a result Mercedes-Benz, “offers our customers and business partners… conformity with the legal requirements and globally accepted principles of data protection”, (MBUSA, 2012). Furthermore, to better ensure quality standards in ethics and morality throughout the company, Daimler organizes workshops. Workshops provide assistance through examples, increased understanding, and implementation of ethical standards. This way, business standards and ethics is part of organizational culture. The goal of workshops is to, “contribute common knowledge and understanding … that demonstrates provable integrity and ethics consciousness, which are priorities of Mercedes-Benz business approach”, (MBUSA, 2012).
Mercedes-Benz produces an array of automobiles made available to the public for purchase. The organization “manufactures full size sedans, hardtops, convertibles, coupes, and sports cars” to name a few, (Short, 2012). These automobiles are then segmented into their perspective series or class. These classes are distinguished by their style and special considerations. The A-Class are a class of cars that are generally compact and small size vehicles while the M-Class are SUV’s and large sized vehicles equipped to carry an excess of five passengers. However, the class of luxury vehicles that will be analyzed is the S-Class. The S-Class is a series in the sedan family and represents the larger variety of sedans that is both roomy and stylish. Vehicle reviews called the S-Class “state of the art”, with luxury and safety features developed through innovations in modern technology, (S-Class Review, 2012). This Class is a popular brand that helped the organization maintain a successful leader of luxury. The S-Class generated more than 40% of its profit margins within its category, (Larsson & Falkemark, 2006). The popularity and distinction of the S-Class has cemented the organization as the number one organization in in this market.
“The S-Class is the largest and most expensive sedan that is offered by Mercedes-Benz”, (Larsoon & Falkmemark, 2006). Currently, the lowest asking price for this vehicle exceeds $90,000, which only adds to the quality of performance, style, and safety Mercedes-Benz is known for. However, this high price is well worth the expense. It is the only Class that can accommodate a variety of engines not available in other vehicles. Weather a customer wants a V12 engine or an electric engine, the S-Series can adapt to the needs of the consumer. It was first produced in the 1970’s offering a large sedan with features only found in luxury vehicles. The 2nd generation of the Class was created in the 1980’s. The Class included a diesel engine that is, “known for their incredible longevity” with “mileage exceeding 300,000”, (S-Class Review, 2012). The next generation was released at the turn of the century. It resembles the modern style that we see today. It is both sheek and innovative. The contemporary S-Class now reached a 5th generation. It features the S-350 BlueTech, S-400 Hybrid, S-550, S-600, S-63 AMG, and S-65 AMG, (MBUSA, 2012). The S-Class has all the amenities required of luxury vehicles that range in variety, diversity, capability, and use of technology. The Class includes brake locks that apply automatically when sensing a collision or accident. It also comes with 600-watt surround sound, memory induced climate control, cruise control that brakes and accelerate automatically according to traffic flow, music memory features, as well as vehicle control through mobile applications. With the S-Class, owners can control and gain access to their vehicle through their mobile device. They can track their vehicle location through GPS, plan trips, gain access to 24 concierge, as well as start, lock, and unlock their vehicle, (MBUSA, 2012).These features are distinct, separating them competitor in terms of advanced technology, performance, and innovation.
To better understand Mercedes-Benz as an organization, it is best to analyze and assess its core strengths, weaknesses, opportunities, threats, and competitive advantage. It allows an understanding of company continuity and sustainability. As a result, the organization faces various strengths within the luxury car industry. Some of these strengths are seen in the previous sections of this analysis including business morality, products and services, and increased revenue. However, the organization has other strengths yet to be noted. These include longevity, image, and innovation.
Daimler Group is a business in operation for more than a century, manufacturing luxury vehicles for public consumers. The longevity of Mercedes-Benz has allowed time to polish their name, image, and brand. Mercedes-Benz is a familiar and recognized name worldwide. They are firmly established in the industry. This includes a financial position unmatched by their competitors. Business longevity has allowed them to manufacture goods within the global market for decades, predating other luxury car industries. Their longevity can also account for image sustainability. Many recognize Mercedes-Benz as a vehicle driven by high class society. The car represents with wealth, honor, and notoriety. This image continues to survive. The organization is able to “capitalize the name and exploit muscle” through “logo and trademark”, (Short, 2012). Lastly, innovation technology is also a strength. It has encouraged sales and profitability. Owning a vehicle that has the top amenities available provide the organization with pioneering technologies uncommon in other luxury cars. These strengths make Mercedes-Benz a staple trademark.
Despite its strength, weakness can be found. There is only one weakness of Mercedes-Benz and that includes cost, (Short, 2012). Many people cannot afford to purchase a Mercedes-Benz. In some cases, these cars cost twice as much as non-luxury vehicles in the market. Due to their high prices, the organization can only market and gain sales from those who can afford the product. This includes members of high society, the upper class and upper-middle class households. The high prices associated with Mercedes-Benz limits the marketing range to those that can manage a $100,000 financial obligation. This target market limits their marketing base. Competitors such as Lexus and BMW are able to take advantage of this, offering luxury vehicles at an affordable price. Some people are ignored by Mercedes-Benz marketing strategy such as young people, families, and middle income and upper-middle income households. Therefore, this weakness creates an advantage to competitors within luxury car industry.
Opportunities in business growth, marketing, and manufacturing allow organization to develop and implement strategies for business continuity. If organizations do not take advantage of opportunities as they present themselves, Mercedes-Benz will no longer be a leading pioneer. There are various opportunities observed. As the economy increases and more people rise above poverty and enter new income brackets, it increases the demand for luxury vehicles, (Weihrich, 2011). This is seen throughout the Pacific and other growing industrialized worlds. As countries gain control of their financial systems and a stable middle class, those who acquire wealth and access to luxury items seek luxury vehicles. As demand increases in these areas, Mercedes-Benz must secure its place as leader by taking advantage of this unique opportunity. Other opportunities include expansion. While the organization has remained stable throughout Eastern Europe, they must stay above the competitor, (Daimler, 2012). This means reestablishing their brand name, resilience, and quality performance in these markets. It will ensure that the public is aware of the organization and consumers choose Mercedes-Benz. Expansion is also an opportunity for growth in new regions such as India, (Daimler, 2012). As India continues to industrialize and sustain a growing middle class, the organization as its eyes set for this region to generate growth in popularity, sales, and revenue.
Despite their competitive advantage, Mercedes-Benz faces possible threats from their competitors. Their competitors include other industries that manufacture and sale luxury vehicles in the international market. These include Volvo, Jaguar, BMW, Audi, Lexus, and Infinity, (Weihrich, 2011). Not only do these competitors need to be monitored here in the States, they must also be monitored abroad. This is seen in countries throughout Asia. However, threats associated with competitors are minimal when considering the threat to the economy. Recently, the United States was struck by a recession, which reduced profit margins and negatively affective business continuity. The organization must strategize to discourage these threats. While the threats of recession have reduced in America, Europe now faces economic recession. This is seen as “worsening sovereign debt increases in the euro-zone and the resulting turbulence in financial markets”, (Diamler, 2012). A weakening economy can definitely have negative effects on sales produced from middle and upper middle class households. This will stimulate loss in profits as well as loss in customers as they choose a competitor who is more affordable.
Mercedes Benz continues to be a top competitor in the luxury car industry. While Lexus, Acura, and Infinity continue to compete in revenue, profits, and marketing, BMW continues to be a major competitor for Mercedes Benz. Both compete in the global market and quality European luxury vehicles. They are considered the safest cars in the industry. Despite these similarities and a threat to their competitive advantage, Mercedes-Benz continues to remain number one in quality performance, services, and style. In terms of product portfolio, “Mercedes-Benz is longer than BMW” with a larger variety of vehicles with dynamic innovation, (Larsson & Falkemark, 2006). The organization has a Class of cars that is not available at BMW that is both compact and environmentally safe described as “an expensive city car for just two people”, (Larsson & Falkemark, 2006). Although advantages are present, BMW continues to a top competitor in regions that may threaten organizational success like Eastern Europe and Asia. However, as Mercedes-Benz continues to develop technology and vehicles unavailable by their competitors they are able to sustain success.
Objectives and Strategies
To maintain organizational success, Mercedes-Benz be forward thinkers. This will ensure business continuity and set the framework for future innovations, expansions, and achievements. The plans set in place will be implemented into the framework as a model for success. A strategy that has continued to be paramount in brand, image, and corporate success is developing automobile standards through innovations technology. This strategy is to maintain a “pioneering role with ongoing development of mobility automobiles that set standards in the areas of design, safety, comfort, value, reliability, and environment capability”, (Diamler, 2012). Manufacturing vehicles that are the best in the industry is fundamental to offer products and services unique and outstanding compared to competitors. Without this, Mercedes-Benz will not be distinguished from the others or known for its quality performance and design. This includes, fighting to “achieve and maintain the leading position in all our businesses, inspire customers with brand products and services, and lead in green technology development concepts and services”, (Daimler, 2012). Developing leads in innovation and technology is necessary for continuity and future success. Without establishing goals and objectives, the organization may never realize their full potential in the future market.
To achieve these objectives the organization developed strategies to combat against competitors and maintain an advantage. To increase sales throughout parts of Asia, the organization wants to infiltrate the Japanese market by creating an alliance with other vehicle distributers and manufactures such as Mitsubishi. Establishing a relationship with these markets will allow Mercedes-Benz to capitalize on sales and profits lacking in this region. The company also has developed a strategy to increase profits throughout Eastern Europe. To do this, the organization will “develop new models to compete” in this market, to better defend this region, (Weihrich, 2012). New models will create a competitive advantage offering unique quality and style not yet developed by others. Therefore, by implementing strategies in new technology, develop new models, and establish relationships with other vehicle manufactures, Mercedes-Benz can meet the demands of luxury vehicles and a strong consumer base across the world.
People around the world are familiar with Mercedes-Benz, both the rich and the poor. It is known for its high quality luxury vehicles. Many celebrities and athletes are Mercedes-Benz owners including politicians, business owners, corporate executives, mothers, fathers, and students and educators. No matter what continent one lives, Mercedes-Benz is a brand to be reckoned with. Many can associate the symbol with the brand name, and recognize it for its innovations in technology, style, comfort, accessories, services, safety, and commodities. Mercedes-Benz is more than just a vehicle, it lives by its motto “all or nothing”, becoming the most desired vehicle for many across the globe. Despite their image, longevity, innovations, and ingenuity, the organization must do what it can to remain on top. Although they have reached organizational success, Mercedes-Benz must work diligently to keep competitors at bay. As a result, Mercedes-Benz is a vehicle unmatched in its class, recognized worldwide, and a top of the line organization within the luxury car industry.
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