Background Of Mercedes Benz

Published Date: 02 Nov 2017

Pages

Introduction

Task 1

Task 2

11-15

Task 3

16-17

Conclusion

18

Bibliography

19

Task:

Select and organization of your choice and present critical internal and external environmental analysis based on the following tasks:

Give a meaningful definition of the contexts of business strategy and discuss a company’s external environment using porter’s 5-force analysis and PEST analysis. (LO 1)

Discuss the company’s internal environment using value chain analysis and SWOT analysis. (LO 2)

Review the existing strategy or strategies practiced by this company and propose a better strategy for this company based on available options. (LO 3)

1.1 Introduction

Business environment is both of the internal and external environmental factors related to a business, this is with the aim of finding out what are the factors that’s affect the business and the effect of such environmental factors may either be positive or negative. In the business environment it has two components, that is internal environment and external environment. Internal environment culture in place in the organization and the corporate structure and the external environmental factors include the competition, consumers, and location and government regulations. And what is the important of business environment? All of the successful management must be capable of adapting to the environment, the knowledge of the environment helps in capitalizing emerging opportunities, activating management, image building, and basic of strategy, intellectual stimulation and continuous learning.

1.2 Background of Mercedes Benz

The organization of my choice is Mercedes Benz. Mercedes Benz is the first of petrol powered car, the Benz Patent Motorwagen and its patented in January 1886. The first Mercedes-Benz brand name vehicles were produced in 1926. (http://www.centralcontracts.com/news/a-history-of-mercedes-benz-2335)

Task 1

1.3 Definition of context of business strategy

To get a better services and product we need a business strategy, business strategy is a document that clearly express the direction of a business will pursue and the steps it will take to achieve its goals. Basically business strategy can divided into two types that are strategic analysis and business planning. Strategy analysis is PEST analysis, porter 5-force and SWOT analysis and the business planning process is planning, evaluation, selection and implementation. The strategy analysis we will discuss in following task and now I will briefly explain what the business planning process is.

Planning

The first is planning, if we want to purchase a new car, we have to plan before we buy the new car, because it has many different types of brand in the market. Besides that, we have to plan what car we want to buy, in the market got four wheels car, saloon car and many more and we also need to plan for what the price of car we planning to buy. For example, Abu is planning to buy a new car and he is planning to buy a saloon car. This is the first planning of purchase a new car.

Evaluation

After planning is the evaluation. Evaluation is analysis of data in order to assess the strengths and weaknesses of programs, policies and organizations. Example of evaluation is if Abu want to purchase a new car between Mercedes Benz and BMW, he has to evaluate the weakness and strengths between the two brands of car and Abu also need to decide what he more prefer to use and which is more useful for him. This is about the evaluation.

Selection

After evaluation, the next is selection. Selection is after evaluating the product individual will select the best products and services of them. For example, after Abu evaluated the two different type of car, the selection of Abu is purchase the brand of Mercedes Benz. Because Abu is needed Mercedes Benz more than BMW and Abu also more prefer to the shape of Mercedes Benz.

Implementation

After the evaluation, the final is implementation. Implementation is the carrying out, execution or practice of a plan, method or any design for doing something. For example, after Abu had selected the Mercedes Benz, he had to implement his selection, so he needs to prepare money and go to the Mercedes Benz workshop to purchase his new Mercedes Benz.

1.4 Porter five force analysis

The porter’s five forces tools is a simple but powerful tools, its use for understanding where power lies in a business situation.( http://vectorstudy.com/management-theories/porters-five-forces) This is very useful, because it can help you to understand both the strength of your current competitive position and also the strength of a position you’re considering moving into. With a clearly understanding of where power lies, you can take fair advantage of a situation of strength, improve the situation of weakness and avoid of taking wrong steps. This makes an important part of your planning toolkit. This tool is use to identify weather new products, services or businesses have to potential to be profitable.

Threat of substitute products

The next is the porter’s five - force analysis for a company’s external environment. The first is the threat of substitute products. ( http://vectorstudy.com/management-theories/five-forces-of-competition) The buyer will propensity to substitute products for example BMW or Jaguar, because they are the same grade of car and BMW or Jaguar maybe will be more choice compare with Mercedes-Benz. Besides that, other same grade substitute products will be cheaper compare with Mercedes-Benz. They can get the cheaper price in the same quality of product. People will wish to get a better quality of product with a cheaper price. Thus, comparison will occur between several firms to get a better product and service.

Threat of the entry of new competitors

The next is the threat of the entry of new competitors. The threat of the entry of new competitors is means that the entry of the new firms, this will effectively decrease the profitability. In the auto-mobile industry, other auto-mobile company is started changing their target to the same market with Mercedes-Benz Company. The changing of other company will affect the sales of Mercedes-Benz Company. Other auto mobile is trying to get the new market, in order to get good sale’s to gain more profit. This case will affect the sales of Mercedes-Benz in the market because of market new entry. For example, in the past few years, Volkswagen is changing their target to high income group, the qualities of the product of Volkswagen Company are comparable to Mercedes-Benz Company, but their price of Volkswagen is cheaper than Mercedes-Benz. Although the price of Volkswagen is lower than the Mercedes-Benz Company but the quality of Volkswagen is comparable with Mercedes-Benz.

Bargaining power of customers

Furthermore is the bargaining power of customers. The customers will bargain the price with us because they want to get a lower price of car. This will make the profit of Mercedes-Benz Company reduce. Why the buyer will bargain the price and here have some possibility. The first is the buyer knew that the people that’s want to purchase Mercedes car is less and the buyer power of purchase is stronger, so they will bargain the price with seller. The next is the buyer knows that in the market there are still have many of seller that’s selling the Mercedes-Benz Car, because of this they will bargain the price with the seller. The last possibility is maybe the buyer purchase more than one car in the same time and because of this they will bargain with the seller. These are why the buyer will bargain the price with the seller.

Intensity of competitive rivalry

Besides, the intensity of competitive rivalry is also one of the forces of competition. As we know, the competitors are the major determinant in the industry. This means that the competitors will offer aggressive challenges to our industry will actually help to improve our industry indirectly. If we can survive over the challenges, it means the overall performance of the company will improve. The number of competitors and rate of industry growth is a big problem to our company.

Bargaining power of supplier

Lastly, the bargaining power of suppliers will be the forces to industry. The suppliers of raw material, components and services to the firm will be the source power over the firms. This is because the suppliers may refuse to cooperate with the firms by charging extremely high charge for some resources. Thus this in affect the company’s cost of production due to the expensive raw material. Why the supplier will bargain the price with the Mercedes-Ben Company? This is because the suppliers have the fixed customers in the market and also they are strong basis in the market.

1.5 PEST analysis

The PEST analysis is a useful tool for the understanding of the market growth or decline and as such the position, potential and direction for a business. (http://www.mindtools.com/pages/article/newTMC_8.htm) A PEST analysis is business measurement tool. PEST is Political, economic, social and technological factors.

Political

After that is the PEST analysis. PEST analysis is used to identify the external forces affecting an organization. The simple analysis of PEST is Political, Economic, Social and Technological. Why political will affect Mercedes-Benz external environment? This is because in Malaysia law, every import car must pay the tax to the country, our organization are also same that is need to pay the tax for every car import from other country. The Mercedes-Benz company is selling the car that’s import from other country and every car that import from other country to our country and it will be tax by our country government. After affect by the tax, the price of the car will be increase, it will be more expensive. This will indirectly affect the sale of Mercedes-Benz Company. For example, a Mercedes E-class the original price is RM180 thousands, and affect the sale of Mercedes-Malaysia tax is 100% and after the tax, the car price will be increase to RM360 thousand. This will made many people can’t afford to buy the car.

Economic

The next is economic. Economic will affect our auto- mobile company this is because when the economic growth, income of the consumers will be higher. This will make them able to undertake the burden and they will have more money to get a better car. Besides that, when inflation it will affect the rate of sales. This is because the inflation will make the entire price of daily necessities increase. In this case, there will be many people are no able to purchase a new car because they have no more spare cash to purchase the new car. For example, a family monthly income is RM 5000 and their expenses are only RM2000 per month, they still have the ability to purchase a new car. But, after the inflation, the expenses of the family increase until RM 4000 a month, this will make the family have no more spare money to purchase a new car. Through the inflation, the sales of the Mercedes-Benz company will be drop.

Social

The third of PEST analysis is Social. Social factors relate to population growth, consumer behavior and lifestyle and population attitude towards job, quality or life. The growth of population will affect the Mercedes Company because the population are growing become higher and in the same time the demand of Mercedes- Benz will also become increase. For example, if 10 people the demand of Mercedes- Benz are 5, than if the population increase to 100 people the demand of Mercedes- Benz will also increase at the same time. So, if 10 peoples demand is 5 and 100 peoples the demand will increase until 50, the demand of the car obviously increase from 5 to 50. This is the population growth will affect the demand of cars.

Technology

The last of PEST analysis is technology. The technology is playing an important role in promoting and producing auto-mobile. Because of the advance of technology has make the company to reduce the labor force, this will help the company to save cost. Besides that, they can produce more cars in a shorter time. Besides, the technology helps to promote the company product. The Mercedes- Benz Company can promote through the internet, Mercedes- Benz can make the advertising in the internet because nowadays everyone will approach the internet and everyone also can see advertise though the internet.

Task 2

Value chain analysis

The value chain is a systematic approach to examining the development of competitive advantage. It was created by M.E Porter. The chain consists of a series of activities that create and build value. They culminate in the total value delivered by an organization. (http://www.marketteacher.com/lesson-store/lessonvalue-chain.html)

Value chain analysis we got inbound logistic – Operation – Outbound logistic – Marketing and sales – Service.

The first is the inbound logistic. Inbound logistics is the goods are received form a company’s supplier. They are stored until they are needed on the production or assembly line. The goods are moved around the organization. Mercedes-Benz Company will purchase their raw material from all around the world with different supplier. In order to maximize their availability of the supply of the raw material, Mercedes-Benz Company has to maintain the good relationship between the Mercedes-Benz Company and the supplier of the Mercedes-Benz Company. Mercedes-Benz use JIT (just in time) approach for handling of raw material.

The next is Operation. This is where goods are manufactured or assembly. In the individual operation it might include the room service in all the hotel, packing of the books, videos or video games by one of the online retailer or the final tune for the new car’s engine. Mercedes-Benz Company is using this to make new car and the final tune for a new car’s engine. The next is the outbound Logistics. Outbound logistics is the goods are now finished, and they need to be sent along the supply chain to wholesalers, retailers or the final consumer. The Mercedes-Benz Company manage will manage their own car show rooms in the different countries around the entire world. Mercedes-Benz Company can make their product easily assessable.

The second last is the Marketing and Sales. In true customer orientated fashion, at this stage the Mercedes-Benz Company is prepares the offering to meet the needs of the targeted customers by the Mercedes-Benz Company. This area is focuses strongly upon the marketing communications and the promotions mix.

The lastly is the services, this services include all area of services such as final checking, final checking is after the Mercedes-Benz company will produced a car from the factory, they will done the first checking before they send it to the branch in the different place. And after the buyer purchase the car, the branch will did the final checking for the buyer to make sure that there is no problem in the car. And besides that is the after sales service, after sales service for the Mercedes-Benz Company is the warranty for the car spare parts for two years and warranty one year for the car stolen, in this one year warranty if your car was stolen by people, the Mercedes-Benz Company will make the compensation with the new car. Furthermore is the complaints handling, the Mercedes-Benz Company have a special departments to handle all the complaints of the customers, this is to make sure all the complaint from the customers is settle in the time. The last is the employees training. An employee training is to make sure all the employees’ works in the Mercedes-Benz Company are professional. All of this service is because the Mercedes-Benz Company is value their customers.

SWOT analysis

SWOT analysis is a very useful technique for understanding your strength and weaknesses and for identifying both the opportunities open to you and the threats you face. In a business context, a SWOT Analysis can help you to carve a sustainable niche in your market. In the personal context, it helps you develop your career and takes best advantage of your talents, abilities and opportunities. (http://trinitywebworks.com/blog/swot-analysis-overview.html)

The internal environment analysis for Mercedes-Benz Company, the first is strength. Strength is the qualities that enable us to accomplish the organization’s mission. Mercedes-Benz is a well know brand, everybody in this world is know the brand of Mercedes-Benz even though they never see it before but they also heard it before and this is the strength of the Mercedes-Benz. Besides that, Mercedes-Benz also has a high technology to build their car, all of the Mercedes-Benz cars are running board. Through the board we can know what the problem in the car, it will inform when the tire of pressure is low or the front light can’t function, all the problem in the car will be inform through the board and the car owner will be more safety because they can know their car problem immediately. Now the Mercedes-Benz company main selling point is safety, the safety of Mercedes-Benz is very good they got more than 4 airbags in a car.

Weakness

The next is the weakness of the Mercedes-Benz. The first is the price of the entire Mercedes car is very expensive even through there is a small car also needs a huge amount of money. Many well-off families will not have the ability to purchase the car. This will make the Mercedes-Benz Company loss a lot of profit. The next is the service charge of Mercedes-Benz is extremely high, one times of servicing it may cost RM600 and more sometimes its needs one thousand more. Besides that, the accessories and the spare-parts of Mercedes-Benz car is also very expensive, every parts of the car also cost more than a thousand. Furthermore, the Mercedes car consumption of petrol is very high and nowadays the price of petrol is increasing. This is all the weakness of the Mercedes-Benz car.

Opportunities

Opportunities are what are the Mercedes-Benz Company can improve. The first is Mercedes-Benz Company can release more economic car, they can reduce their prices. This will attract more people to purchase their car. The second is the fee for servicing, although the service is good, but the fee for service is too high. Furthermore, Mercedes-Benz Company also can do some research about what the demand of the society, the company can produce more type of car what are the society need. This is the opportunities of Mercedes-Benz Company. For example, because of the increase of the price of petrol, Mercedes-Benz Company can produce a hybrid car.

Treats

The last is threat, threats is the changes of external environment that’s will affect to the company. The first treats of the Mercedes-Benz company is the shift of the consumer taste, the consumer maybe will shift their taste to BMW or Jaguar and this will affect the company sales. The next is the increasing of the new competitor, the increasing or new competitor will also increase the substitute of the consumer and this will affect the Mercedes-Benz Company. The next is the price war in the market. This will decrease the profit of the Mercedes-Benz Company. For example, BMW is release a new model of car that is same with Mercedes-Benz and the price compared with the Mercedes-Benz the BMW will be cheaper.

Task 3

In our country, Mercedes-Benz Company is almost known by everyone that’s live in the country, even though the people didn’t see before they will also know the name of Mercedes-Benz Company and the good quality of the Mercedes-Benz car’s is also know by everyone in the country. This means that the Mercedes-Benz Company is in the stable situation in Malaysia market, Mercedes-Benz Company have the fixed buyers in the Malaysia’s market. The target of the Mercedes-Benz Company is the high-income population. The aim of the Mercedes-Benz Company is to provide the best quality of products and the best service to all the customer of Mercedes-Benz Company.

The branch of the Mercedes-Benz Company is all in the town area, this is because the demand of the Mercedes-Benz car is all in the town area. The Mercedes-Benz Company can grow from the small company until nowadays the big and strong Mercedes-Benz Company that’s know by everyone, there must have a good marketing target and good strategy to support it. Nowadays, the strategy of Mercedes-Benz Company using is the stability strategy. Stability strategy is the aims to continue offering the same products and services to the same type of customer. All of the products that are produce by the Mercedes-Benz Company are all targeting the high-income population in the market.

But, nowadays the brand awareness of the other auto-mobile company is growing very fast. This will makes the customer have more choice of cars in the market. As we know, nowadays there are many different brands of car in the market and the brand awareness is very high, we got Volkswagen, Audi, Honda, Toyota, Jaguar, and Lexus and so on. Many of the customers of Mercedes-Benz are switching the brands to the other brands in the market. Besides that, nowadays the economics of the world is also unstable, this is also one of the reasons why the populations are switching their car to another brands.

As I mention just now, Mercedes-Benz Company is using the stability strategy. In order to avoid the market of Mercedes-Benz cars reduce, Mercedes-Benz Company has to switch their stability strategy to the growth strategy. Growth strategy is talk about the aims to increase the amount of business undertaken by expanding the range of product, service and also the markets it serves. Based on my research, the Volkswagen, Audi, Honda, Toyota, Jaguar, and Lexus this few auto-mobile company is targeting the high income population and also the medium income of the populations. In this case, they have to expand their range of target that’s target the medium income population to avoid the reducing of the market of Mercedes-Benz.

To target the medium income population, the first thing that’s Mercedes-Benz Company can do is they have to produce more model of car that’s the price can afford by the medium income population. Besides that, to attract the customer to purchase Mercedes car, the expanding of the warranty, the times of free service and also reduce the service fee will achieve the purpose of attract. Furthermore, Mercedes-Benz Company has to know what the populations’ needs are and aims for the populations need to produce the car. For example, nowadays the problem of the price of petrol increase is very serious. Mercedes-Benz Company can target at this point and produce the hybrid car to increase the range of market.

Conclusion

I can sure that’s after the changing of the strategy of the Mercedes-Benz Company will help them to increase their profit. This is because Mercedes-Benz Company is targeting the different type customers in the market and also satisfies what’s the populations need in the market. In this strategy, the profit of the Mercedes-Benz Company can increase to another higher level.