Strategic Analysis of Mercedes-Benz (Case Study Sample)

Strategic Analysis of Mercedes-Benz Student Name University Course Professor Name Date Strategic Analysis of Mercedes-Benz Company Introduction Mercedes-Benz is one of the most popular vehicle brands worldwide. According to Wheelership (2021), the company is often associated with luxury cars. The company's history dates back to the 1880s, when two engineers, Gottlieb Daimler and Carl Benz, founded the company. A brief timeline for the company started in 1879 with Carl Benz’s two-stroke gas-driven engine and in 1884 with Daimler’s internal combustion engine (Mercedes-Benz of Chicago, 2019). Mercedes-Benz was founded in 1886 when the first car was patented (Nuttall, 2021). Today, the company has become a global icon in the automobile industry. Mercedes-Benz is based in Stuttgart, Germany, under the brand name Mercedes-Benz Group AG. The firm manufactures passenger vehicles and commercial vans, with the most common brands being AMG, Maybach, and Mercedes-Benz (PitchBook, n.d.). The firm is a pioneer in the automotive industry and seeks to continue this status through increased investments in electric vehicles (Mercedes-Benz Group AG, n.d.). Currently, the company employs over 173000 employees globally. Additionally, Mercedes-Benz is currently under the company Daimler AG, which owns brands such as Fuso, Setra, Thomas Built, Smart, Western Star, and Freightliner (Hughes, 2018). China currently holds the position of the company’s biggest market, with more than a quarter of the company’s sales being made in the country. Skills of Current Leadership Team Mercedes-Benz is led by a board of management headed by the chairman and CEO, Ola Källenius. Ola has had a long leadership career with the company. For example, he served as manager of company controlling in Tuscaloosa in 1995, senior manager of company controlling in Tuscaloosa in 1998, and senior manager of procurement at DaimlerChrysler in 2000 (Mercedes-Benz Grou, n.d.). His rise continued until he became a management board member in 2017, where he headed research and development. Other positions have focused on such areas as powertrain, operations, marketing and sales, and high-performance engines. Such positions indicate his functional skills, making him one of the most experienced individuals on the management board. As a leader, Ola believes in learning and adjusting to aid in growth within an organization (Moore, 2021). His adaptation to multiple positions reflects this ideology. His leadership skills reflect through his ability to form fellowships with other members and have a clear vision for the company founded on its history and the need to adapt to remain relevant in the future. Other management board members have followed a similar career path as the CEO by having served in several other positions with Mercedes-Benz. Dr. Jörg Burzer heads production and supply chain and is expected to serve until November 2024. His previous leadership positions in the company include executive vice president on the board for production and supply chain management in 2019, vice president heading quality management in 2016, director of product and production strategy and supplier quality in 2013 (in China), and director of production control and logistics in 2010 (in Tuscaloosa, USA) (Mercedes-Benz Group, n.d.). Like the CEO and other members, each of the positions served by Dr. Jörg Burzer reflect the set of skills possessed. Renata Jungo Brüngger has been a board member since 2016, heading the Integrity and legal affairs of the company. Her previous positions include executive vice president head of legal. Other positions were from different companies, and they all involved legal. She is a lawyer by profession, meaning her skills are built around the legal domains of a company. Sabine Kohleisen heads human resources and labor relations. She has previously headed executive offices, marketing and sales, change management and sales, sales training, and strategic planning. Markus Schäfer serves as the chief technology officer, development, and procurement. His past positions have entailed production strategy, plant management, president and CEO, vice president of manufacturing engineering, project planning, production engineering, and body shop training. Britta Seeger heads marketing and sales and has been a board member since 2017. Her skill set is reflected by her long career in such positions as sales and marketing, after-sales, service operations, vice president and CEO, product management, sales and distribution, CRM program management, and sales and branding training. Hubertus Troska is responsible for activities in China, a position occupied since 2012. He has served as president and vice president in the company, product marketing, project management, sales management, sales network management, and overseas sales organization. Lastly, Harald Wilhelm heads finance, controlling, and Mercedes-Benz mobility. His previous positions with the company have involved mergers and acquisitions from 1992 to 1998, moving from manager to senior manager in 1995 and vice president in 1998. Therefore, the current leadership team comprises individuals with a long career history with the company. Considering that Mercedes-Benz has a long tradition, hiring a leadership team from within the company makes the most sense since it helps preserve its traditions and core values. Additionally, the leadership team's skillset spans most of the company's core business areas, including engineering, sales and marketing, production, mergers and acquisition, research and development, legal issues, and labor relations. PESTEL and SWOT Analyses PESTEL Political Factors * Political stability * Taxation policies * Trade barriers Economic Factors * Inflation * Interest rates Socio-cultural Factors * Demography * Social and cultural norms Technological Factors * Innovation * E-commerce Environmental Factors * Renewable energy * Environmental laws Legal Factors * Employment laws * Consumer laws Globalization allows businesses to operate across borders and in countries will different political systems. Mercedes-Benz encounters political stability issues; for example, it announced its exit from Russia after the outbreak of the Russo-Ukrainian war (Times of India, 2022; McFall, 2022). Each country has different taxation systems, some of which are investor-friendly while others are restrictive. Trade barriers are deliberate efforts by a government to restrict a company’s operations in a country. For example, the government of Pakistan recently banned the importation of luxury items, including cars, to boost its economy (AFP, 2022). As such, the sale of Mercedes-Benz cars in the country is detrimentally affected. The political environment may also negatively affect economic factors. For instance, the Russo-Ukrainian war has caused massive inflation in most economies (Caldara et al., 2022). Inflation may also force central banks to adjust their interest rates, making loans and capital more expensive (Adrian & Natalucci, 2022). Therefore, the current political and economic climates worldwide are unfavorable for the company’s operations. The prospects for Mercedes-Benz are subject to further developments. As mentioned earlier, China comprises the largest market for Mercedes-Benz. However, the geopolitics involving China, the United States, and the Ukraine war may affect the company's future in China. The US and China are engaged in a trade war whose escalation is being fueled by China’s ties with Russia. Sanctions by the US and its allies may cost Mercedes-Benz its biggest market. The most critical socio-cultural factor is the global demographics, which dictate the company's markets. Luxury items are expensive, meaning Mercedes-Benz can only sell its products to the middle and upper classes. However, the rising middle class worldwide expands the company’s market. Such a market may suffer from economic factors, especially inflation and recessions. Technologically, innovation and e-commerce are the major factors affecting the company. Mercedes-Benz has a culture of innovation, which helps it succeed. The rise of e-commerce allows the company to streamline car shopping and access broader markets globally, including the Middle East (Glon, 2019; Godinho, 2021). The company can leverage its prospects on emerging technological developments. Most importantly, electric vehicle technologies are on the rise spearheaded by such companies as Tesla. If the future of automotive is all-electric cars, then Mercedes-Benz needs to improve its competition with EV producers. Environmental factors pose a unique challenge, especially when countries push for carbon neutrality and subsidize green renewable energy. The challenge emerges when companies attempt or fail to adapt to environmental laws. For instance, Mercedes-Benz was recently fined $1.5 billion for emissions cheating (Daily Finance, 2020). Legal factors affecting Mercedes-Benz majorly comprise consumer laws and employment laws. The company has faced lawsuits related to employment laws, specifically regarding working conditions (Scully, 2019). The external environment poses some threats and reveals opportunities that Mercedes-Benz can exploit. SWOT Analysis Table 1 below summarizes Mercedes-Benz’s strengths, weaknesses, opportunities, and threats. Positive Negative Strengths Weaknesses Internal * Brand equity * Research and development * Financial strength * Stiff competition * Constant lawsuits * Brand image * Vehicle recalls Opportunities Threats External * New alliances * Emerging markets * New technologies * Changing trends * Pandemics and crises * Substitutes Table 1: SWOT Analysis Table (Developed using MS Word). The SWOT analysis reveals the critical internal and external factors affecting Mercedes-Benz. The ...