EXTERNAL

INFLUENCES ON
MERCEDES-BENZ

27 MARCH 2024
YOUSSEF HEIBA
 INTRODUCTION
This report explores the external factors influencing Mercedes-Benz, a
leading luxury automotive brand. Analysing aspects such as economic
trends, technology, regulations, competition, and global market
dynamics, the report aims to shed light on how these factors shape
Mercedes-Benz's strategies and performance in the dynamic
automotive industry.

CONTENT PAGE
Introduction –
Page…………………………………………………………………………….
………….1

Background of Mercedes –
Page…………………………………………………………………….2

External Competitive Environment –

Pages…………………………………………...………3 - 8

SWOT Analysis –
Pages………………………………………………………………………………..8 -
11

Porter’s Five Forces – Pages

………………………………………………………………………11 - 16

Competitive Advantage – Pages

…………………………………………………………………16 - 23

PAGE 1
Mercedes and The Business Environment –
Pages…………………………………..….23 - 28

Mercedes’ Response To Changes in The Market –

Pages……………………………. 28 - 34

BACKGROUND OF MERCEDES-
BENZ
Mercedes-Benz is a renowned automotive brand with a rich history.
The company was founded in October 1883 by Carl Benz, who
established the Rheinische Gasmotoren-Fabrik in Mannheim in
collaboration with businessman Max Kaspar Rose. In 1899, the
company was renamed Benz & Cie.

The origins of the Mercedes-Benz brand can be traced back to Daimler-

Motoren-Gesellschaft's 1901 Mercedes and Carl Benz's 1886 Benz
Patent-Motorwagen. These vehicles are widely regarded as the first
automobiles.

Throughout its history, Mercedes-Benz has gone through various

phases and developments. From 1886 to 1920, the company
experienced significant growth and innovation. In the years 1933 to
1945, Mercedes-Benz faced challenges during the Nazi regime in
Germany.

From 1945 to 1949, the company went through a period of

reconstruction after World War II. In the subsequent years, from 1949
to 1960, Mercedes-Benz continued to expand its product range and
establish itself as a leading automobile brand.

The years 1961 to 1983 marked a period of significant technological

advancements and the introduction of iconic models like the Mercedes-
Benz SL and S-Class. From 1984 to 1995, the company focused on
further innovation and the development of safety features.

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Between 1995 and 2007, Mercedes-Benz expanded its global presence
and introduced new models to cater to different market segments. In
2010 and 2011, the company underwent a restructuring process to
enhance efficiency and competitiveness.

Overall, Mercedes-Benz has a long and storied history in the

automotive industry, marked by innovation, technological
advancements, and a commitment to producing high-quality vehicles.

Purpose
According to their official website, the purpose of Mercedes Benz is ‘to
build the most desirable cars in the world.’

Values - Integrity, Openness & Respect, Financial & Social

Responsibility, Commitment to Excellence just to name a few.

EXTERNAL COMPETITIVE
ENVIRONMENT
PESTLE analysis is a strategic method used to assess the external
macro-environmental factors that can have an impact on an
organisation. The acronym PESTLE stands for Political, Economic,
Social, Technological, Legal, and Environmental factors.

Political Factors
This factor examines the influence of government policies, political
stability, trade regulations, and potential political unrest on the
business environment. Political factors hold great significance,
especially for multinationals, as their operations depend on global
political scenarios.

Political Stability
Mercedes is a very prominent name in the automotive industry. It has
its operations spread worldwide. Although this is considered a positive

PAGE 3
thing, it also has some drawbacks. For example, the operations of
Mercedes are highly dependent on political stability. For example, if a
country is going through things like conflict or war, Mercedes will also
observe disruption in its operations, leading to financial losses.

For example, due to the Russia-Ukraine war, Mercedes had to impose

sanctions on Russia. Such political instability resulted in major financial
losses to the company.

Taxation Policy
Besides the political stability, another political factor that would affect
Mercedes-Benz would be the taxation policy adopted by the
government. If a government adopted an investor-friendly taxation
policy, it would be suitable for Mercedes. Otherwise, it would result in
losses.

Mercedes-Benz should review the industry-specific taxation policies to

ensure that the company is not overburdened with tax expenses.
Currently, governments in developing countries in Africa are interested
in reducing corporate taxes to attract foreign direct investment.
Therefore, Mercedes should invest in such countries.

Trade Barriers
Being a multinational company, another political factor that would
affect the operations of Mercedes would be the trade barriers imposed
by different governments. For example, Pakistan’s government
recently imposed a ban on the import of luxury goods in May 2022.

Such government policies would affect the operations of Mercedes-

Benz since they would be unable to sell their products in those areas.

Economic Factors
Some of the critical factors that affect any business are economic
factors since businesses are directly connected with a country’s
economy. This aspect focuses on economic indicators such as inflation,
exchange rates, economic growth, and the overall health of the

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economy, which can affect consumer spending and business
operations.

Inflation
Mercedes has always been considered a luxury brand. This is because
during high inflation, people somehow manage to pay for necessities.
However, it is always difficult to pay for luxury goods in case of an
economic downfall.

Like any other business, inflation is one factor that creates problems
for Mercedes-Benz. High inflation changes consumer behaviour. Due to
the high inflation, people’s living standard worsens, leading them
having less disposable income therefore forcing them to save more
and spend less money.

Moreover, high inflation increases the cost of production for Mercedes.

Due to this, the price of each vehicle is increased. All these problems
caused by high inflation will discourage customers, and the sales of
Mercedes will fall.

Interest Rates
Businesses always look forward to investing in countries with low-
interest rates so that loans can be taken from local banks on good
terms. Similarly, the decision of Mercedes to invest in a country or not
would be based on the interest rate offered by that specific country.

Similarly, interest rate plays a very significant role in the sales of

Mercedes-Benz. If a country’s banks offered high returns on savings,
people would save more and spend less. Hence, people would prefer to
save in such countries instead of buying an expensive Mercedes
vehicle.

Social factors
Social factors encompass cultural trends, demographics, lifestyle
changes, and societal attitudes, all of which can shape consumer
behaviour and market demand, which ultimately affects an
organisation’s operations.

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Demographics
The demographics of different countries directly impact the growth and
development of businesses. Therefore, a high population growth,
primarily driven by an increase in the proportion of young people,
combined with an increase in this segment’s purchasing power, will
benefit Mercedes-Benz.

Moreover, Mercedes has to keep a close eye on the demographic

changes in the companies where it operates since it will have to adapt
its marketing strategies according to the changing demographic
trends.

Besides that, the company would have to hire employees from

different ethnic groups within a country to send a positive message to
the public.

Societal and Cultural Norms

A company that wishes to enter the market must conduct extensive
research to gain local consumer knowledge. This would allow them to
understand each country’s distinct cultural norms, values, and
traditions and adapt its offerings accordingly. Unfortunately, being an
international company, it can be difficult for management at Mercedes-
Benz to understand these factors.

For example, some advertisements for Mercedes may be considered

unacceptable in some countries while normal in other countries. Not
understanding the cultural and social norms can damage their brand
image. For this purpose, they can conduct extensive research to gain
local consumer knowledge and fully understand the specific norms of
each country of operation.

Technological factors
This factor evaluates the impact of technological advancements,
innovation, R&D, and digital disruption on the industry and
organisation.

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Innovation
Due to technological developments, innovation is taking place at a
very fast pace. Businesses are getting automated and shifting to e-
commerce. Moreover, they innovate to provide new and distinctive
products to their consumers.

Being in the automobile industry, Mercedes-Benz has to keep a close

eye on the upcoming innovation that is taking place. In addition, it has
to stay updated about what technology its competitors are using and
what sorts of products they are offering to its customers so that
Mercedes can match or exceed their level.

E-commerce
Over time, the e-commerce industry has emerged, and many
companies are practicing e-commerce to cut down their operations
costs. Similarly, Mercedes can also look into e-commerce and decide if
it is more beneficial for it to shift its operations online than to open a
physical outlet.

Technological developments similar to e-commerce can help

Mercedes-Benz minimise costs such as having retail shops and
maximise its profit.

Legal factors
Legal factors encompass regulations, laws, and compliance
requirements that businesses must adhere to, covering areas such as
employment laws, consumer protection, copyright, and health and
safety laws.

Employment Laws
Mercedes-Benz is a leading manufacturer in the automobile industry
with a strong brand image. However, it needs to protect its employees
with strong workplace legislation and have employment rights like
safety and fair treatment.

For example, if a company fails to implement employment law, it can

easily lead to lawsuits and defamation of the company. As a result, it
can lead to a negative image leading to reduced sales.

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To have a more positive reputation among employees, Mercedes-Benz
should have a clear and consistent overview of the employment law
enforcement in all countries it operates. It is also necessary to ensure
proper mechanisms are placed to discourage discrimination from
within or outside the company.

Consumer Laws
Mercedes-Benz depends on data protection laws to ensure consumer
privacy in its online transactions and other operations. It must strictly
follow the laws related to refund, discount, credit terms, quality,
misleading advertisement, and maximum pricing.

Proper analysis of these laws can help Mercedes-Benz management

better understand the local consumer protection regulations and
market concerns. Moreover, in case of violating any such law, strict
actions can be taken against Mercedes, resulting in financial losses and
a damaged reputation.

Environmental factors
This component is linked to environmental sustainability, climate
change, ecological factors, and corporate responsibility, which can
influence operational practices and consumer perceptions of a
business.

By analysing these external factors, organisations can gain insights

into the potential opportunities and threats in the external
environment, aiding in strategic decision-making and risk
management.

Environmental Laws
To improve the image of its brand on sustainability grounds and in
response to environmental regulations in many countries, Mercedes-
Benz has to adopt responsible production practices. Shifting to
environmentally friendly practices is no doubt costly, and this will
decrease the profit margins of Mercedes. However, little profit is still
better than heavy losses incurred through fines and penalties. For
more on environmental laws, see page 33.

PAGE 8
 CORPORATE SOCIAL RESPONSIBILITY

It is stated on the official Mercedes Benz website that ‘as a global

company and corporate citizen, we want to make a positive
contribution to society that goes beyond our worldwide core business
activities. In doing so, we focus on two areas: We support projects that
promote environmental sustainability and support initiatives that
strengthen social cohesion. In addition, we make relevant contributions
to disaster relief. For us, our corporate citizenship commitment is a
question of attitude: Our responsibility doesn't end at the factory gate.’

It is also stated that they ‘are committed to a sustainable and future-

oriented society. That is why we support a high level of education and
a high degree of economic and social stability. Mercedes-Benz
supports charitable projects in Germany and abroad.’

DECISION MAKING

STRATEGIC DECISIONS
At Mercedes Benz, major strategic decisions related to product
development, market entry, and long-term investments are made by
top management at the corporate headquarters in Stuttgart. This
ensures alignment with the company's overall vision and mission.

A few examples of factors included in Mercedes’s strategic

decision making includes:

• Research and development (R&D)

• Market research

• Manufacturing and supply chain

• Sales and marketing

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• Financial and investment decisions

• Sustainability and environmental initiatives

• Technological innovation

• Human resources

• Compliance and legal matters

• Customer feedback and quality assurance

ORGANISATIONAL STRUCTURE

MATRIX STRUCTURE
Given its global presence and diversified product lines, Mercedes Benz
uses a matrix organisational structure. This structure facilitates
seamless coordination across different business units, geographical
regions, and functional departments. For example, regional managers
might collaborate with product managers to align regional strategies
with specific vehicle models.

Mercedes-Benz and Daimler Truck AG are German stock corporations

and are based in Stuttgart. As required by law, the supervisory boards
of the two companies will each comprise 20 members, ten
representing the shareholders and ten representing the employees.

PAGE 10
Mercedes-Benz controls the global business of Mercedes-Benz Cars &
Mercedes-Benz Vans with approximately 175,000 employees
worldwide. Mercedes-Benz focuses on the development, production
and sale of cars and vans and on the provision of related services.
Mercedes-Benz is one of the largest manufacturers of premium
automobiles.

Mercedes-Benz Mobility is adapting its global organisational structure

following a strategic realignment. In the future, the 35 national
subsidiaries that manage the leasing, financing and insurance business
for Mercedes-Benz customers in these markets will be steered directly.
At the same time, there will be a new Board of Management function
responsible for Sales & Marketing. The new organisational structure
reduces complexity and will help to increase speed and efficiency in
implementing strategic initiatives that are part of the transformation
process. That applies especially to the expansion of digital services for
customers, flexible financial products and the transition to more online-
based contracting.

COMMUNICATION

PAGE 11
DIGITAL PLATFORMS
Mercedes Benz leverages digital platforms and intranet systems for
internal communication, enabling employees to access company news,
policies, and updates.

Mercedes employs more than 1,73,000 employees worldwide. On any

given day, the organization must publish internal news bulletins,
employee recognition messages, and post content for its internal
branding goals.

In 2019, the company introduced an eccentric mode of employee

communication through their 'One of Us' initiative. Under this initiative,
the organisation would showcase behind-the-scenes videos and
employee stories to foster an inclusive and enthusiastic workplace
environment.

LEADERSHIP STYLES

Mercedes Benz has developed its unique leadership style, which is

characterised by the incorporation of key elements of various
leadership styles under investigation. The company has managed to
find the perfect balance between democratic, laissez-faire, and
transformational leadership styles.

Democratic leadership – Letting multiple people participate in the

decision making process.

Laissez-faire - Takes a hands-off approach to leadership and gives

others the freedom to make decisions. While leaders still provide their
teams with the resources and tools they need to succeed, they remain
largely uninvolved in the day-to-day work

Transformational leadership - A leadership approach that causes

change in individuals and social systems. In its ideal form, it creates
valuable and positive change in the followers with the end goal of
developing followers into leaders.

ATTITUDE TOWARDS WORK

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Quality and safety – Mercedes Benz emphasise a commitment to
quality and safety, reflecting its dedication to producing vehicles that
meet the highest standards of engineering and safety.

Environmental Consciousness – With an increasing focus on

sustainability, the company's attitude towards work includes initiatives
to minimise environmental impact, such as the development of electric
vehicles and sustainable manufacturing processes.

WORKFORCE PERFORMANCE

Performance metrics – Mercedes Benz establishes clear

performance metrics for its employees, aligning individual and team
goals with the company's strategic objectives.

Professional development – The company invests in professional

development programs and training to enhance the skills and
knowledge of its workforce.

Collaboration – Encouraging a collaborative work environment can

foster innovation and cross-functional cooperation, contributing to
overall workforce performance thus improving productivity within the
business.

PAGE 13
 Mercedes-Benz SWOT ANALYSIS
STRENGTHS

•Mercedes Benz has a strong brand value and global leader in

premium cars

•Mercedes is a financially strong company and hence invests huge

money in manufacturing & brand building

•Mercedes-Benz is the world’s first automobile company that

introduced diesel engines, fuel injection, and anti-locking brakes,
making it a leader in innovation.

•Mercedes Benz has a partnership with Kempinski hotel which allows

the guest to drive the brand cars leading to the sales and growth of the
company. It invests billions of dollars in the marketing and promotions
of its vehicles like its use with Kempinski.

•Strong presence in motor sport under McLaren Mercedes in Formula 1

•The cars are manufactured and assembled in over 20 countries across

the world

•Mercedes holds patents on the majority of safety features which are

present for the safety of the customers

•The company has a significant presence in sports & motorsports

through sponsorships & participation respectively

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•Mercedes is a pioneer in advertising and marketing & creates brand
awareness through TVCs, print media, and online ads which easily
reaches its target audience.

•Mercedes has also invested in electric & hybrid cars for producing
environmentally friendly luxury automobiles.

•Self-driving or driverless cars are also built by the company which

makes it have very niche and unique products.

WEAKNESSES

Despite being a globally recognised and extremely well-selling brand,

Mercedes-Benz still has many competitors in the industry who are
equally as dominant if not more, this makes it harder for the brand to
gain more share of the market because the automobile industry is very
dense. Brands like Audi, Ferrari, BMW Group, and Porsche constantly
compete with Mercedes.

Lawsuits - In 2020, the parent company of the brand, Daimler came

under some serious criticism and issues when it was observed that
they had installed certain software in their cars that can cheat on air
pollution tests. 250,000 units of Mercedes-Benz had this issue for
which the company had to pay a total of 1.5 billion USD to the US
government who made the claims. It takes a few or sometimes even
one of such scandals resulting in lawsuits to completely tarnish the
reputation of even the biggest brands.

OPPORTUNITIES

NEED FOR LUXURY CARS

Need for luxury cars is growing rapidly and it can be a good
opportunity for automobile companies like Mercedes to expand their

PAGE 15
markets in underdeveloped areas e.g. Southeast Asia, Africa. The
company can increase sales and diversify its revenue sources by
focusing on these markets.

TECHNICAL UPDATES
Mercedes Benz is technically updated with hybrid features to bring
more reliability and comfort to their cars. The company can collaborate
with other leading manufacturers of electric cars to create new and
unique electric cars. Mercedes can develop electric luxury cars in the
future to reduce major consumption of fossil fuels as there is a limited
source of fossil fuel left.

RESEARCH AND DEVELOPMENT WITH E-COMMERCE

Research and Development (R&D) is a great tool in bringing new
features to their cars. The emergence of e-commerce and social media
marketing can create an opportunity for Mercedes-Benz if it can ensure
an online presence on different social networking sites. Enhancing
digital capabilities in online sales, virtual showrooms, and personalised
customer experiences can help Mercedes-Benz adapt to the changing
automotive landscape and meet evolving customer expectations.

PARTNERSHIPS AND COLLABORATIONS

Collaborating with technology companies, startups, and other
automotive manufacturers can help Mercedes-Benz access recent
technologies and resources, drive innovation, and improve its products
and services.

THREATS

FLUCTUATIONS IN FUEL PRICES

Fluctuation in fuel prices remains the deciding factor for its growth.
Increasing prices of steel and other raw materials may directly
influence the manufacturing cost and sales of Mercedes-Benz. Price

PAGE 16
war and the rise in inflation increases the cost of production and
affects the business of profitability

CHANGING TRENDS
Because more people have information readily available to them they
have developed a profound sense of consciousness. Nowadays, many
people have been giving importance to climate change and all that
they can do to prevent it.

Many choose to shift to organic, electric, or less harmful alternatives.

In fact, many countries are now coming up with laws that require
companies to comply with environmental standards. The future is
expected to be green so many cars may become obsolete in some
countries. However, Mercedes-Benz is adapting swiftly and has already
been mass producing its electric vehicles. For more information on
electric vehicles, see pages 32-33.

INTENSE COMPETITION
The luxury automotive market is highly competitive, with well-
established brands like BMW, Audi, Volkswagen, and Tesla competing
for market share. Increased competition can lead to price pressures,
reduced margins, and the need for continuous innovation to maintain a
competitive edge.

CHANGE IN GOVERNMENTAL POLICIES

Change in the government policies for the automobile sector all around
the world can heavily cost losses for Mercedes-Benz. For example, if
there are new laws implemented that will require things like
technology or Health and safety training for employees, it will cost
Mercedes to provide that training.

Porter’s Five Forces

Porter's five forces are used to identify and analyse an industry's
competitive forces.

Porter’s Five Forces are:

• Threat of new entrants to the industry

PAGE 17
• Threat of substitutes

• Customer Bargaining Power

• Supplier Bargaining Power

• Competitive Rivalry

The model guides businesses in determining the intensity of

competition and potential profitability within their market, helping
them better understand where power lies in their sector.

Threat Of New Entrants To The Automotive

Industry
The bulk of existing premium and luxury automobile firms are well-
established and old, the danger of new entrants into the industry is
low. The automobile business has high entry barriers, and any new
company intending to join the market would have to invest a large
amount of money and overcome legal and operational challenges
before becoming a well-known and popular company. Furthermore, the
industry's level of competitiveness is already high, and companies
invest much in marketing and R&D. Competing against such
formidable opponents would be practically difficult for a newcomer
lacking a global footprint and other advantages enjoyed by present
companies

While the automotive industry has high capital requirements, the

success of Tesla shows that new entrants can disrupt the luxury
segment. However, legacy carmakers like BMW, Ford, Mercedes still
benefit from scale advantages in manufacturing, established
distribution networks, and accumulated expertise. Mercedes Benz
should continue to improve its digital capabilities to counter other
technological car makers like Tesla. Accelerating the shift to electric
vehicles is also essential as barriers to entry slowly start opening.

PAGE 18
Additionally, the government policies within the industry require strict
licensing and legal requirements to be fulfilled before a company can
start selling. This makes it difficult for new entrants to join the industry,
therefore, making the threat of new entrants a weak force.

How Mercedes-Benz can tackle the threat of new entrants

 Mercedes-Benz can take advantage of the economies of scale it has
within the industry, fighting off new entrants through its cost
advantage.

 Mercedes-Benz can focus on innovation to differentiate its products

from that of new entrants. It can spend on marketing to build strong
brand identification. This will help it retain its customers rather than
losing them to new entrants.

So, the overall threat of new entrants into the industry is low.

Threat of substitutes
This occurs when businesses within an industry are faced with the
threat of a similar product from another industry.

Replacements for Mercedes Benz are more likely to come from rival
brands as well as other travel options available for people. There are a
variety of other options that compete with automobile manufacturers
like Mercedes Benz, such as public transportation and ride-sharing
service. The growth of ride sharing services like Uber threatens to
replace some private car ownership, especially in urban markets.
However, the desire for status and personalised luxury vehicles
remains vital for most wealthy consumers.

Replacements pose a moderate threat to Mercedes Benz. There is also

an increase in environmentally conscious people who would use other
more environmentally friendly options. Alternatives are mitigated by a

PAGE 19
number of factors, including brand image, customer experience, and
marketing

How Mercedes-Benz can tackle the Threat of Substitute

Products
 Mercedes-Benz can focus on providing greater quality in its products.
As a result, buyers would choose its products, which provide greater
quality at a lower price as compared to substitute products that
provide greater quality but at a higher price.

 Mercedes-Benz can focus on differentiating its products. This will

ensure that buyers see its products as unique and do not shift easily to
substitute products that do not provide these unique benefits. It can
provide such unique benefits to its customers by better understanding
their needs through market research, and providing what the customer
wants.

The threat coming from substitutes to Mercedes Benz's

products is moderate.

Customer Bargaining Power

The number of suppliers in the industry in which Mercedes-Benz
operates is a lot more than the number of firms producing the
products. This means that the buyers have a few firms to choose from,
and therefore, do not have much control over prices. This makes the
bargaining power of buyers a weaker force within the industry.

The product differentiation within the industry is high, which means

that the buyers are not able to find alternative firms producing a
particular product. This difficulty in switching makes the bargaining
power of buyers a weaker force within the industry.

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The negotiation power of vehicle buyers has continued to strengthen
as a result of many fundamental market movements during the
previous decade. Changing market dynamics, a growing focus on
customer experience and more market competitiveness have all been
linked to a growth in buyer negotiating power. Individual buyers may
have less bargaining power, but Mercedes Benz produces premium and
luxury vehicles, so personal purchases are significant. Furthermore,
fleet customers have more bargaining power. Overall, clients have
adequate bargaining power, and corporations like Mercedes Benz place
a priority on maintaining a positive brand image. Customers have a lot
of information about the product available in the market and compare
a lot of cars before purchasing. As the competition in the premium
segment is increasing drastically over the years, the brands are
focusing more on customer retention and engagement.

How Mercedes-Benz can tackle the Bargaining Power of Buyers

 Mercedes-Benz can focus on innovation and differentiation to attract
more buyers. Product differentiation and quality of products are
important to buyers within the industry, and Mercedes-Benz can attract
a large number of customers by focusing on these.

 Mercedes-Benz needs to build a large customer base, as the

bargaining power of buyers is not that strong. It can do this through
marketing efforts aimed at building brand loyalty.

 Mercedes-Benz can take advantage of its economies of scale to

develop a cost advantage and sell at low prices to the low-income
buyers of the industry. This way it will be able to attract a large
number of buyers.

Overall, the threat of customer bargaining power is moderate.

Supplier Bargaining Power

Mercedes suppliers have minimal negotiation leverage. Apart from a
few large suppliers with significant negotiating strength, Mercedes

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Benz suppliers have minimal bargaining power. Its suppliers are spread
out and lack forward integration skills as the suppliers don't have the
expertise and capital to establish such large firms, which limits their
bargaining power. Most suppliers rely on giant firms like Mercedes
Benz for a significant percentage of their revenue, and if these massive
organisations stopped buying raw materials from them on a regular
basis, their revenues would fall. The supplier's industry is not
dominated by a few companies and is not concentrated in the
automobile industry. The suppliers' products are not that
differentiated, so the switching cost is not that high for businesses in
the automotive industry.

The suppliers do not contend with other products within this industry.
This means that there are no other substitutes for the product other
than the ones that the suppliers provide. This makes the bargaining
power of suppliers a stronger force within the industry.

The suppliers do not provide a credible threat for vertical integration

into the industry in which Mercedes-Benz operates. This makes the
bargaining power of suppliers a weaker force within the industry.

How Mercedes-Benz can tackle the Bargaining Power of

Suppliers
 Mercedes-Benz can purchase raw materials from its suppliers at a
low cost. If the costs or products are not suitable for Mercedes-Benz, it
can then switch its suppliers because switching costs are low.

 It can have multiple suppliers within its supply chain. For example,
Mercedes-Benz can have different suppliers for its different geographic
locations. This way it can ensure efficiency within its supply chain.

Therefore, the bargaining power of suppliers is low.

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Competitive Rivalry
The luxury and premium automobile industry is very competitive. The
major competitors of Mercedes Benz include BMW, Audi, Porsche,
Jaguar etc. The level of competition in the automobile industry is very
high. It is one of the sectors that extensively invest in research and
development as well as marketing. The highly competitive nature of
the industry, as well as growing customer expectations from car
brands, are the reasons why companies invest so heavily in product
development and marketing. Premium and luxury vehicles are
produced by Mercedes Benz, BMW, Audi, Volvo, Jaguar, GM,
Volkswagen, Tesla, and a number of other automakers. While there are
many firms in the worldwide automotive industry, the bulk of them use
aggressive marketing and business development techniques. The
initial cost of investment in the automobile industry is relatively high.
The exit barriers are also increased due to high fixed cost and initial
investments.

The exit barriers within the industry are particularly high due to high
investment required in capital and assets to operate. The exit barriers
are also high due to government regulations and restrictions. This
makes firms within the industry reluctant to leave the business, and
these continue to produce even at low profits. This makes the rivalry
among existing firms a stronger force within the industry.

How Mercedes-Benz can tackle the Rivalry Among Existing

Firms
 Mercedes-Benz needs to focus on differentiating its products so that
the actions of competitors will have less effect on its customers that
seek its unique products.

 As the industry is growing, Mercedes-Benz can focus on new

customers rather than winning the ones from existing companies.

 Mercedes-Benz can conduct market research to understand the

supply-demand situation within the industry and prevent
overproduction.

PAGE 23
Overall, the competitive rivalry in the automotive industry is
high

COMPETITIVE ADVANTAGE
MARKET SHARE

Mercedes-Benz sold 57,600 new passenger cars representing a 5.68%

share of all new passenger cars sold in Europe in November 2022. This
is 2.05% more vehicles and a 0.856% decrease in market share when
compared to 2021. By comparison, in 2019, Mercedes-Benz's market
share was 7.37%.

As of February 2024, Mercedes-Benz stands as the sixth-largest

automaker globally, which is a result of its sustained market relevance
and sales success. The brand’s largest market is in China, contributing
significantly to its 37% share of total sales in 2021.

The pie chart below represents the market share of major automakers
in the European market

PAGE 24
PRODUCT STRATEGY
Focus on Durability and Quality
At the core of Mercedes-Benz's enduring success lies an unwavering
commitment to durability and quality. Since its inception, the brand
has set an industry benchmark by prioritising longevity and
craftsmanship. The pursuit of excellence is evident in every vehicle
bearing the iconic three-pointed star. Whether it's the classic elegance
of the S-Class or the sporty agility of an AMG model, Mercedes-Benz
ensures that each vehicle is a testament to enduring quality.

Innovations and Technological Advancements

Mercedes-Benz has consistently been a dominator in automotive
innovation. From the introduction of safety features such as
pretensioners and airbags to automatic braking systems, the brand has
been at the forefront of pioneering technologies. The 1886 Benz Patent
Motorwagen, regarded as the first automobile in history, is a prime
example of the relentless pursuit of excellence. In 2015, the unveiling
of the F015 visionary concept car showcased the brand's forward-
looking approach, incorporating futuristic features that redefined the
driving experience. Below is a picture of the F105 concept car and the
vision AVTR.

PAGE 25
Diverse Product Line
Sedans, SUVs, sports Cars, commercial Vehicles. Mercedes-Benz's
product strategy is characterised by diversity, catering to a broad
spectrum of consumer preferences. In the luxury segment, the brand
offers a range of sedans, including the iconic S-Class, the executive C-
Class, and the sophisticated E-Class. The SUV lineup, comprising
models such as GLS, GLC, GLE, and GLA, combines luxury with
versatility. Enthusiasts seeking a blend of performance and style can
explore the array of sports cars, while the commercial vehicle segment
underscores Mercedes-Benz's prowess in heavy equipment and light
commercial vehicles. This allows the company to appeal to many types
of customers in the European market.

Electric and Hybrid Car Investment

In alignment with the global shift towards sustainability, Mercedes-
Benz has embarked on a substantial investment of $11 billion by 2023
to increase its presence in the electric and hybrid car market. This
strategic move underscores the brand's commitment to environmental
consciousness and aligns its product offerings with evolving consumer
preferences. By embracing electric and hybrid technologies, Mercedes-
Benz positions itself as a leader in the pursuit of a greener automotive
future.

PAGE 26
COMPETITOR ANALYSIS
The 3 biggest competitors of Mercedes-Benz are Audi, BMW, and
Porsche. These 3 companies are competitors to Mercedes-Benz as they
target similar customer demographics. Audi and BMW are also main
competitors as they are both based in Germany like Mercedes is. Audi,
BMW, and Porsche are all prestigious and globally recognised
automotive brands. They compete for customers who value luxury,
performance, and brand reputation, making them direct competitors in
the high-end automotive market., especially to Mercedes-Benz as they
sell similar products.

BMW, Audi, and Porsche are considered competitors to

Mercedes-Benz in the luxury automobile market due to several
key factors:
Brand Prestige – All four brands, BMW, Audi, Porsche, and Mercedes-
Benz are prestigious and globally recognised automotive brands. They
compete for customers who value luxury, performance, and brand
reputation, making them direct competitors in the high-end automotive
market.

Product Range – Each of these brands offers a wide range of

vehicles, including sedans, SUVs, and sports cars, catering to similar
customer segments. This overlap in product offerings creates direct
competition for market share and consumer preference.

Performance and Engineering – BMW, Audi, Porsche, and

Mercedes-Benz are known for their commitment to performance,
engineering excellence, and technological innovation. They compete in
areas such as driving dynamics, advanced technology features, and
innovative engineering, aiming to attract discerning customers seeking
high-performance vehicles.

Design and Styling – These brands emphasise distinctive design

languages and styling cues in their vehicles. They compete in terms of

PAGE 27
exterior aesthetics, interior luxury, and overall design philosophy,
appealing to customers who value sophisticated and visually appealing
automobiles.

Innovation and Technology – BMW, Audi, Porsche, and Mercedes-

Benz are at the forefront of automotive innovation, consistently
introducing advanced technologies, connectivity features, and driver-
assistance systems. They compete to offer the latest advancements in
safety, convenience, and infotainment, aiming to differentiate
themselves in the luxury vehicle market.

Market Positioning – All these brands target similar customer

demographics, including people who seek high-end, luxury vehicles. As
a result, they fiercely compete for market share and brand loyalty
within this segment.

In terms of what makes them worse/better than Mercedes-Benz, it is

subjective and depends on people’s preferences. Each brand has its
unique strengths and characteristics that may appeal to different
customers. Some customers may prefer the performance-oriented,
sport like driving experience offered by BMW or Porsche, while others
may appreciate the elegant design and luxurious features of Audi or
Mercedes-Benz.

PRICING STRATEGY

In markets where demand for Mercedes-Benz products is high, the

brand uses a skimming pricing strategy. Initially, setting prices at a
higher level capitalises on the willingness of consumers to pay a
premium for exclusivity, luxury, and advanced features. As competitors
enter the market with similar offerings, Mercedes-Benz strategically
adjusts prices to maintain its customer base while potentially
attracting a broader audience. Recognising the diversity of global
markets, Mercedes-Benz adopts a competition-based pricing strategy
to support weaker markets. By aligning prices with those of rival

PAGE 28
brands in specific regions e.g. Audi, Porsche, BMW, the brand ensures
that its products remain competitive and accessible. This dynamic
approach allows Mercedes-Benz to navigate varied economic
landscapes while maintaining a strong market presence.

Additionally, the company designs targeted incentive programs to

stimulate sales and maintain market share. These programs include
special financing offers, lease deals, or loyalty incentives, which can
encourage repeat purchase and foster customer loyalty in the face of
intense competition from other luxury automakers in the European
market.

Pricing Strategies Applied by the Competitors

There is intense competition from the competitors of Mercedes-Benz in
the market worldwide. These competitions of global automobile brands
can impact Mercedes-Benz in terms of doing business. Here are a few
pricing strategies stated for BMW which is one of the main competitors
of Mercedes-Benz.

BMW Group’s Pricing Strategy

BMW group is one of the global leaders in producing premium cars.
This company has been successful in the automobile industry with the
help of its pricing and marketing strategies.

Value Pricing Strategy – This is one of the top pricing strategies

BMW uses. With a focus on assuring high-quality products to the
customers, BMW group charges a premium price. In this case, the
company tries to use this price-quality relationship to adjust the prices
of the products. This relationship points out that customers can get the
qualitative product according to the price.

Prestige Pricing Strategy – This is a strategy where the BMW group

can charge for the products based on the customers’ perceptions

PAGE 29
rather than the products’ actual costs. Customers are more lenient to
pay higher prices for their suitable products, not for the actual value of
the products. By using this pricing strategy, BMW can capitalise the
consumer perceptions against its competitors. It can also prove that
the brand, BMW, has more high-quality products than others in the
market.

Luxury Pricing Strategy – BMW sets up this pricing strategy to

categorise the company itself in the “Desirable” category of the
market. This pricing strategy also says that the company is not weak
yet in the competition and is still on top in the automobile market.

REPUTATION

Many people consider owning a Mercedes Benz a sign of success in life.

Despite having created the first production car, it remains a top
aspirational brand beating other top rival competitors.

Mercedes Benz’s reputation for reliability, quality, luxury, performance,

safety, and advanced technology sets it apart from many other car
brands. Its commitment to innovation and customer satisfaction makes
every car a statement of sophistication, style, and superior
engineering. Mercedes also provides extended warranty options that
cover major and minor repairs. They also age gracefully retaining their
performance and value over time with proper repairs and
maintenance.

RELIABILITY
Mercedes is reputed for producing cars that provide exceptional
performance and longevity. Its focus on quality manufacturing,

PAGE 30
precision engineering, and rigorous testing has helped it become a
household name in the automotive industry.

Among the reasons that contribute to its reliability include the

company’s commitment to using high-quality materials and
components. From the transmission to the engine, every part of the
Mercedes Benz is made to meet the highest standards of performance
and quality.

The rigorous testing procedure the car manufacturer uses ensures that
Mercedes Benz cars can withstand the harshest of driving conditions. It
tests the cars for high speeds, extreme temperatures, and other
challenging conditions. To give its buyers some peace of mind,
Mercedes Benz also provides a comprehensive warranty program that
covers a wide range of issues.

SAFETY
People who prioritise security and safety understand that Mercedes
Benz is a top contender compared to other vehicle manufacturers.

A key safety feature in Mercedes vehicles is the advanced driver

assistance systems that come standard or are available as options
across various models. These systems use advanced radars, cameras,
and sensors to monitor pedestrians, the road, and other vehicles and
provide real-time alerts to avoid potential accidents. These systems
include adaptive cruise control, blind spot monitoring, automatic
emergency braking, and pedestrian detection.

Mercedes is also equipped with advanced airbag systems that include

passenger airbags, side curtain airbags, knee airbags, and more. The
airbags are designed to protect vehicle occupants from any collision

PAGE 31
events. Most models also have seatbelt mechanics that reduce the risk
of injury while in a crash by tightening the seatbelts.

SERVICE AND REPAIR

Mercedes Benz vehicles are known for their high quality and long-
lasting reliability which is partly attributed to their ease of repair and
maintenance. Here’s what makes their cars easy to maintain.

Extensive network of authorised service centres – The company

has a vast network of authorised service centres spread around the
globe. This means that you can easily find a qualified and experienced
mechanic to repair or service your vehicle from where you are. The
service centres have the latest repair equipment and diagnostic tools
that make it easy to work on your car. This means that customers have
more accessibility in terms of their car maintenance which increases
their trust in the brand

Regular maintenance schedule – Every Mercedes Benz vehicle has

a recommended maintenance schedule that outlines all the services
and repairs needed at specific intervals. This ensures that vehicle parts
are regularly checked to avoid potential issues before they go out of
hand.

Quality parts – As a rule, Mercedes only uses genuine parts on its

vehicles. This ensures that the parts for service or repair are the same
quality as the ones in the vehicle. This helps the vehicle to perform
optimally and retain its value over time, which in turn increases a
customer’s trust and loyalty to the company.

Easy-to-read features – The cars come with easy-to-read dashboard

displays with clear warning lights that make it painless to identify
where the potential problems are. The manufacturer has also made it
easy for people to access service schedules and owner’s manuals
through its mobile app and website.

Mercedes And The Business

Environment
DEMAND, SUPPLY, AND PRICE

PAGE 32
Demand can be defined as the amount society is willing and able to
buy at a set price at a certain point in time. On the other hand, supply
is the amount of a good or service that producers are willing and able
to sell at any given price. The law of supply and demand combines two
fundamental economic principles describing how changes in the price
of a resource, commodity, or product affect its supply and demand.

As the price increases, supply rises while demand declines. Conversely,

as the price drops supply constricts while demand grows. The law of
demand holds that the demand level for a product or a resource will
decline as its price rises as the price drops.

Conversely, the law of supply says higher prices boost supply of an

economic good while lower ones tend to lower it.

An equilibrium price balances supply and demand and can be

graphically represented as the intersection of the supply and demand
curves.

The degree to which changes in price translate into changes in

demand and supply is known as the product's price elasticity. Demand
for basic necessities is relatively inelastic, meaning it is less responsive
to changes in their price.

The diagrams below show the correlation between demand and

supply:

PAGE 33
The diagram clearly shows that the lower the price and higher the
supply, the higher demand will be for that product.

PRICE ELASTICITY

AVAILABILITY OF SUBSTITUTES
Mercedes’ luxury cars have other substitutes in the market such as
Porsche, Jaguar, Maserati, and others. In this case, if the price of the
Mercedes’ cars is reduced to gain the market share, then it can be
clearly stated that Mercedes will be at loss. The reason is its target
customers who prefer high class branded products that are of
exceptional price levels and who prefer to flaunt expensive products.
Therefore, reduction in Mercedes’ price will divert these customers
towards more expensive aforementioned alternatives that can provide
them high class image and reputation.

PERCENTAGE OF CUSTOMERS BUDGET

The consumers of Mercedes have substantial budget for luxurious
products and, therefore, it cannot be suggestive to state that the
reduction in price would attract their attention towards Mercedes. The
initial euphoria can be there as some consumers might see it as
achievement to possess Mercedes however, those who understand
they can easily afford such cars and similar others – who being the
main target consumers – would rarely prefer to move towards
Mercedes.

TIME PERIOD OF ADJUSTMENT

For this factor, it can be stated that initially the reduction in price of
Mercedes cars will attract numerous buyers who had desire to ride the
vehicle and even the high class consumers who can easily afford the
other luxurious cars like Porsche and Audi would prefer to keep one
Mercedes brand at that time. However, it is possible that Mercedes
might lose its spotlight of being the costliest car brand as the main

PAGE 34
target audience will gradually shift to more expensive cars such as
Jaguar or BMW.

MARKET STRUCTURE

MONOPOLISTIC COMPETITION
This is when there are many firms in the market but there is some form
of product differentiation. A monopolistic competition is a type of
imperfect competition where there are many sellers in the market who
are competing against each other in the same industry. They position
their products, which are near substitutes of the original product.

A monopolistic competition usually has a very high level of

competition, as there are many sellers, especially in the automotive
industry. This means that the automotive industry has very high
barriers to entry, as a large amount of technology and capital is
needed to enter the market.

The European automotive industry is a monopolistic competition, which

Mercedes-Benz competes in. This is because all the brands sell cars,
however there is a significant difference in quality. For example,
Toyota sells cars that are less technological and luxurious than
Mercedes-Benz or BMW.

CUSTOMER DEMOGRAPHICS

Mercedes Benz has a diverse demographic when it comes to

their customer base. Here are some key points about the
demographic of their customers:
• Mercedes Benz targets middle-aged upper-class individuals as well as
young people in their marketing strategies.

PAGE 35
• Their target market includes consumers ranging from ages 20 – 45
years

• The target market for Mercedes Benz also includes style-conscious

young male and female drivers who care about design, technology,
and sportiness.

• The income level of the target audience can vary depending on the
price range of the car, attracting high-income earners. However,
according to a 2022 study by Kelley Blue Book (a well-known
automotive research company), the average salary of a Mercedes Benz
owner in the United States is $125,000. Which means that it is
€116,500 in Germany

When it comes to whether Mercedes Benz depends more on an

urban or rural population, Mercedes-Benz tends to rely more
on an urban population. Below are a few reasons why:
• Urban areas generally have a higher concentration of potential
customers who can afford luxury vehicles like Mercedes Benz.

• Urban areas often have better infrastructure, including well-

maintained roads and a higher density of dealerships, making it more
convenient for customers to access and service their vehicles.

• Urban areas also tend to have a larger population, providing a larger

customer base for Mercedes Benz to target.

However, Mercedes Benz still caters to customers in rural areas as

well. They have dealerships and service centres in rural regions across
most of their operating countries to ensure that customers in those
areas can also access their products and services.

PAGE 36
 USING TECHNOLOGY TO PROGRESS

ARTIFICIAL INTELLIGENCE
One vital thing that most automotive companies are adopting in their
processes is artificial intelligence. The automotive industry has seen a
surge in artificial intelligence (AI) technologies, such as machine
learning, deep learning, and computer vision. These are used to guide
self-driving cars, manage fleets and assist drivers for improved safety.
AI also plays a role in improving services such as vehicle inspections or
insurance. In addition, AI accelerates production rates and lowers costs
through robotic automation in manufacturing. AI is thus making the
automotive industry more efficient, cost-effective, and safe.

Mercedes-Benz, too, is looking into the opportunities that AI

applications provide for its customers and employees. Interlinked
navigation systems, smart voice assistants, and autonomous vehicles
are just a few examples of the potential that the company can
leverage through targeted analysis of vast quantities of data.

 AI can be utilised in the development of autonomous driving

technology. By incorporating AI algorithms and machine learning,
Mercedes Benz can enhance the capabilities of their self-driving
vehicles, making them potentially safer and more efficient.

 AI can also be employed in the manufacturing process to

optimize production and improve quality control. By using AI-
powered systems, Mercedes Benz can automate certain tasks,

PAGE 37
 analyse data in real-time, and identify potential issues or defects,
leading to more streamlined and efficient manufacturing
operations. It can also be used to enhance quality assurance and
quality control processes. Quality assurance is the guidelines,
policies, and procedures to make a high-quality product and
avoid defects. In contrast, quality control is the product's actual
review during production to ensure it is created to the highest
standards.

 AI can be integrated into the vehicle's information system to

provide personalised and intuitive user experiences. By
leveraging AI algorithms, Mercedes Benz can create smart voice
assistants and predictive features that adapt to the driver's
preferences and behaviour, enhancing the overall driving
experience.

 AI can be utilized in customer service and support. Mercedes

Benz implements AI-powered chatbots or virtual assistants to
provide instant and personalised assistance to customers,
answering their queries, providing information about products
and services, and even scheduling maintenance appointments.

 It can also be used in data analysis and predictive maintenance.

By analysing large amounts of data collected from vehicles,
Mercedes Benz can identify patterns and trends, enabling them
to predict potential maintenance issues and proactively address
them, leading to improved reliability and reduced downtime for
customers.

AUTOMOTIVE PRODUCTION
Automotive production and manufacturing play a crucial role in
allowing Mercedes-Benz to operate and progress. Automotive
manufacturing is the process of assembling components to build
automobiles, trucks, and other motor vehicles. This process is complex
and involves many stages, from designing the vehicle and its

PAGE 38
components to assembling the parts, testing the vehicle, and finally
delivering it to customers.

Efficient production – Through automotive production and

manufacturing, Mercedes-Benz can efficiently produce vehicles on a
large scale. This allows them to meet customer demand and deliver
their products to the market in a timely manner.

Standardisation and quality control – The manufacturing process

involves dividing tasks into sequential steps, ensuring standardisation
and consistency. This helps Mercedes-Benz maintain high-quality
standards throughout the production process, resulting in reliable and
well-built vehicles.

Cost optimisation – By optimising the production process, Mercedes-

Benz can reduce costs and minimise waste. This includes efficient
resource allocation, improved inventory management, and minimising
the risk of errors or defects. Cost reduction allows the company to
invest in research, development, and innovation, contributing to their
progress.

Continuous improvement – Automotive production and

manufacturing encourages a culture of continuous improvement at
Mercedes-Benz. By analysing the production line and identifying areas
for enhancement, the company can implement changes to increase
productivity and quality. This commitment to improvement helps them
stay competitive and adapt to changing market demands.

Technological integration – Mercedes-Benz utilises advanced

technologies in automotive production and manufacturing. This
includes automation, robotics, and artificial intelligence, which
enhance efficiency, precision, and safety. By embracing technological
advancements, Mercedes-Benz can stay at the forefront of automotive
innovation and progress.

PAGE 39
 Mercedes’ Response To Changes
In The Market
NATURAL ENVIRONMENT

On the Mercedes-Benz website, it is stated that ‘For us, sustainability

means permanently creating value for all stakeholder groups,
(customers, employees, and investors as well) as for our business

PAGE 40
partners and society as a whole. Economic, environmental, and social
responsibility go hand in hand — along the entire value chain. In order
to achieve long-term success, we need to live up to this responsibility.’

ELECTRIC VEHICLES
As of June 29, 2022 – Mercedes-Benz is aligning its global production
network to manufacture its reshaped product portfolio focused on
luxury electric vehicles and prepares to go all electric by the end of the
decade, wherever market conditions allow it. Thanks to highly flexible
structures, the plants of Mercedes-Benz can produce vehicles with
different drivetrains on a single production line. With the strategic goal
of shifting to all electric, the high degree of flexibility is a decisive
advantage. It makes it possible to adjust production at short notice
according to market demand.

Mercedes-Benz is leading the way by transitioning from an

“electric-first” to an “electric-only” strategy. Below are
Mercedes-Benz’ electric vehicle (EV) targets in the next decade
 Between 2022 and 2030, Mercedes-Benz plans to spend more than
€40 billion in EV research and development.

 As early as 2022, eight unique Mercedes-Benz electric cars and SUVs

will be produced across three continents. The brand’s assembly and
production facilities are also aiming to become carbon neutral by 2024.

 By 2025, three new electric architectures will lay the foundations for
the brand’s all-electric future. (Several future Mercedes-Benz EQ
models will use the scalable architecture of the EQS; others will be
based on these new platforms.)

 After 2025, all of the brand’s new architectures will be built

exclusively for all-electric vehicles.

PAGE 41
 By 2030, Mercedes-Benz will have the capability to deal exclusively
in electric vehicles wherever market conditions allow.

AMBITION 2039 AND OTHER PLANS

To protect climate and control their air pollution, Mercedes-Benz
launched the ‘Ambition 2039’ initiative, where they have set the target
of making their fleet of new passenger cars net carbon-neutral over the
vehicles’ entire life cycle by 2039. By 2026, they are planning to have
invested more than 60 billion euros on the transformation to achieve a
fully electric and software-driven mobility.

Since 2022, Mercedes-Benz's own vehicle production sites have been

net-carbon-neutral, and the company aims to cover at least 70% of its
production energy needs with renewable energies by 2030. This is to
be achieved through the expansion of solar and wind energy at the
company's own sites and by concluding further corresponding power
purchase agreements. By the end of 2023, solar plants with a capacity
of more than 140 MW are to go into operation. By 2025, Mercedes will
invest a three-digit million sum in the installation of energy systems. In
addition, investments in new power purchase agreements for wind
turbines worth one billion euros are planned by the middle of the
decade. The consumption of water in production is also expected to fall
by 33 percent by 2030 compared to 2018.

Mercedes-Benz is currently implementing a green power concept in

Germany with the energy supplier Enovos and the Norwegian energy
producer Statkraft. Since 2022, they have been purchasing electricity
that comes exclusively from renewable sources. A green power supply
contract ensures the purchase of electricity from renewable energies
at all times.

To facilitate this shift, Mercedes-Benz is unveiling a comprehensive

plan which includes significantly accelerating R&D. In total,
investments into battery electric vehicles between 2022 and 2030 will
amount to over €40 billion. Accelerating and advancing the EV portfolio
plan will bring forward the tipping point for EV adoption.

PAGE 42
View of factory 56 (large scale electric car factory)

OPERATIONAL ENVIRONMENTAL
PROTECTION
Mercedes-Benz pursues an integrated approach to environmental
protection. They examine the causes of possible environmental effects.
They also strive to minimise negative effects from their activities with
the help of effective environmental management systems and state-of-
the-art technologies.

Individual Plant Statements

All of Mercedes’ German production sites are required to write an
environmental statement which includes a plan/policy prior to a
decision to move forward with the environmental action. This is done
with participation in the European eco audit system (EMAS). It was
established by the European Union through the dedicated EMAS
Regulation, helping organisations enhance their environmental
performance, save energy, and optimise resource usage. It is a

PAGE 43
premium management instrument to evaluate, report, and improve
organisations’ environmental performance.

The Objective of EMAS

EMAS is a valuable tool within the framework of one of the main
building blocks of the European Green Deal. Its goal is to drive
organisations towards circularity and reduce their impact on the
environment. The overall environmental performance of the
organisation is improved and regularly verified through EMAS.

This is achieved by:

 Identifying their direct and indirect environmental impacts and
establishing voluntary objectives and targets to reduce them

 Establishing and implementing robust environmental management

systems with the identified measures

 Systematically evaluating their effectiveness and transparently

reporting on environmental performance

 Enhancing transparency by publishing their environmental statement

and engaging in open dialogues with the public and stakeholders

 Encouraging active employee involvement and providing training.

By embracing EMAS, Mercedes-Benz strives for continuous

improvement of their environmental performance and contribution to
an improving world.

Why is this good marketing?

Sustainable marketing strategies focus on long-term goals rather than
just short-term financial gains. Customers favour businesses with
forward-thinking, long-term objectives that give back to their

PAGE 44
communities. Additionally, by giving customers a cause, they can
support by buying products from the company or resharing a positive
message about the company on social media which can increase brand
awareness, thus strengthening their relationship with the company.
Sustainable marketing strategies combine action with truthful
messaging, appealing to the more conscious customers of today.

Mercedes’ sustainability plans can also attract investors and partners.

Sustainability initiatives can be attractive to investors and potential
business partners who are interested in aligning with companies that
prioritise environmental sustainability. This can enhance Mercedes-
Benz's reputation in the financial and business communities.

These initiatives can also support regulatory compliance. To launch

effective sustainable marketing campaigns, business leaders should
address their organisations' environmental and social effects. For
instance, an organisation can reduce its greenhouse gas emissions and
voluntarily disclose its emission levels before it engages in sustainable
marketing.

For example, in January 2023, the EU finalised the corporate

sustainability reporting directive, which expanded the number of
organisations required to publicly disclose their ESG (environmental,
social, governmental) data. Similarly, the U.S. security and exchange
commission proposed an expanded version of its reporting rules in
March 2022, which it may finalise by spring 2023. The expanded rules
would require large U.S. organisations to disclose environmental data,
such as greenhouse gas emissions, in regular reports.

IMPACT OF BREXIT ON MERCEDES-BENZ

The latest accounts of Mercedes Benz Retail Group reveal that losses
have increased to £35 million in 2022 due to Brexit concerns and the
resulting economic uncertainty. This indicates that Brexit has
negatively affected the financial performance of the company.
Additionally, according to Which.co.uk, Mercedes-Benz has stated that
its car prices will increase in line with the introduction of tariffs at the
end of Brexit. This indicates that Brexit has led to higher prices for
Mercedes-Benz vehicles and other car companies as well.

PAGE 45
In 2012, Mercedes-Benz joined the European Autmobile Manufacturers
Association (ACEA). ACEA was founded in 1991. In short, ACEA is an
advocate for the automobile industry in Europe. They represent
manufacturers of passenger cars, vans, trucks and buses with
production sites in the European Union. Members of the Association
include the national associations for the automobile industries, plus
most of the car, van and truck manufacturers.

After the events of Brexit, ACEA has said that the rules implemented
after it could cost carmakers up to 4.3 billion euros in tariffs and
overall trade. The CEO of Mercedes-Benz has said there is “no logic”
behind post-Brexit tariffs on European carmakers, echoing concerns in
the car sector that their burden could delay and negatively impact the
UK’s electric car ambitions.

Ola Källenius, who has led the German carmaker since 2019, argued
that both the European Union (EU) and the UK’s battery industry was
not ready for so-called “rules of origin” tariffs.

From January 2024, 45% of the value of an electric car must originate
from within the UK or EU in order for carmakers’ to qualify for tariff-
free trade. Failure to meet the standards will see a 10 per cent tax
imposed on electric car exports from both Britain and Europe.

Exchange rates:
 Since the Brexit vote in 2016, the exchange rate of the pound
against other leading currencies, such as the euro and the U.S. dollar,
has fallen significantly.

 This depreciation of the pound can have a negative impact on

Mercedes-Benz, as it may increase the cost of importing components
and materials needed for production.

 The fluctuation in exchange rates can also affect the pricing of

Mercedes-Benz vehicles in different markets.

PAGE 46
 It can lead to higher prices for consumers in countries where the
pound has weakened, potentially affecting sales and market
competitiveness for Mercedes-Benz.

Cost of negotiating new trade agreements:

 Brexit has required the UK to negotiate new trade agreements with
various countries and organisations, including the European Union.

 The cost of these negotiations, in terms of time, resources, and legal

expertise, can be extremely significant for Mercedes-Benz.

 The uncertainty surrounding the outcome of these negotiations can

create challenges for the company's supply chain and market access.

 It may result in additional administrative burdens and potential

disruptions to the flow of goods and services, impacting the efficiency
of operations.

Increase in costs for production in the UK:

 Brexit has led to increased costs for production in the UK for
automobile companies like Mercedes-Benz.

 Factors such as customs delays, excessive bureaucracy, and

regulatory changes can contribute to higher operating costs.

 Customs checks and paperwork can cause delays in the movement

of goods, affecting production schedules and supply chain efficiency.

PAGE 47
 Regulatory changes may require adjustments to manufacturing
processes and compliance, which can also add to the overall
production costs.

Bibliography

Background
1.
https://www.mercedes-benz.com/en/innovation/milestones/corporate-
history/

2.
https://www.mercedes-benz-mobility.com/en/what-we-stand-for/core-
values/

PESTLE Analysis
1. https://thestrategystory.com/blog/mercedes-benz-pestel-
analysis/#:~:text=of%20Mercedes%20Benz.-,Political,their
%20pricing%20strategy%20and%20profitability.

PAGE 48
External Competitive Environment
1. https://group.mercedes-benz.com/responsibility/society/corporate-
citizenship/

Porter’s Five Forces

1. https://group.mercedes-benz.com/responsibility/compliance/
business-partners.html

2. https://ivypanda.com/essays/mercedes-benz-companys-supply-
chain-strategy/

3. https://craft.co/mercedes-benz/competitors

4. https://finance.yahoo.com/news/makes-auto-industry-highly-
concentrated-140540290.html?
guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmN
vbS8&guce_referrer_sig=AQAAAN5Q6ToKdsTOXPoENQdt-
pyNIdvdLpZSNmqow2SE2hJEpPjOv-
ykx46pP9BSQ5lRsn84FjJc0ki6Cb1mu_BOvlDnxXfbrO-
yKJF3GPheXZ8RK-NwWu25i7jHrz1qFAK-HCazjmc_Y-S-
ITirbUN9ybx8z-vIRa4x-AY0mvdMx2X-#:~:text=The%20existence
%20of%20economies%20of,often%20becomes%20the
%20decisive%20factor.&text=There%20are%20heavy%20sunk
%20costs%20associated%20with%20exits

Competitive Advantage
Market Share
1. https://www.helgilibrary.com/charts/sales-of-mercedes-benz-cars-in-
europe-monthly#:~:text=Mercedes-Benz%20sold

PAGE 49
%2057.6%20thousand,Benz%27s%20market%20share%20was
%207.37%25

2. https://www.tradingpedia.com/2023/05/03/volkswagen-groups-eu-
new-passenger-car-registrations-rise-23-yoy-in-q1-2023-market-share-
increases-1/

Pricing strategy
1. https://thebrandhopper.com/2023/09/09/marketing-strategies-
and-marketing-mix-of-mercedes-benz/#:~:text=Premium
%20Pricing%3A%20Mercedes-Benz%20adopts,image%20and
%20commitment%20to%20quality

Reputation
1. https://www.mercedesbenzgreenwich.com/service/service-tips/
mercedes-benz-driver-assistance-package/

2. https://www.bartleby.com/essay/Mercedes-A-Competitive-
Advantages-And-Business-Factors-PJBN6D7AJU

3. https://www.derrickwells.com/2021/11/11/reasons-mercedes-
benz-are-reliable-cars/

Mercedes and the Business environment

Demographics
1.
https://kobedigital.com/mercedes-marketing-strategy-tips/#:~:text=M
ercedes%20Benz%27s%20marketing%20strategy%20has,targets
%20of%20the%20baby%20boomers

2.https://www.google.com/url?
sa=t&rct=j&q=&esrc=s&source=web&cd=&cad=rja&uact=8&ved=2a
hUKEwiA863d9LeEAxXNlP0HHX-mCJ4QFnoECA8QAw&url=https%3A
%2F%2Fwww.atlantis-press.com%2Farticle

PAGE 50
%2F125966282.pdf&usg=AOvVaw39RO52XJdI3BogQjNsRobz&opi=899
78449

Technology
1. https://group.mercedes-benz.com/responsibility/compliance/
digital/ki-guidelines.html#:~:text=Mercedes-Benz%2C%20too
%2C%20is,of%20vast%20quantities%20of%20data

2. https://group.mercedes-benz.com/innovation/digitalisation/
industry-4-0/article-4.html

Response to changes in the market

Natural Environment
1. https://www.madmarketingpro.com/blog/sustainable-
marketing#:~:text=Sustainable%20Marketing%20Keeps
%20Your%20Business%20Innovative&text=Sustainable
%20marketing%20strategies%20focus%20on,give%20back
%20to%20their%20communities

3. https://green-business.ec.europa.eu/eco-management-and-audit-
scheme-emas/emas-your-country_en#competent-bodies

4. https://group.mercedes-benz.com/responsibility/sustainability/
climate-environment/environmental-statements/

5. https://group.mercedes-benz.com/company/strategy/

Brexit
1. https://cardealermagazine.co.uk/publish/mercedes-benz-retail-
group-reveals-35m-loss-and-blames-brexit-fuelled-uncertainty/
216749#:~:text=Mercedes%20Benz%20Retail%20Group%27s
%20latest,2019%2C%20but%20losses%20stacked%20up

PAGE 51
2. https://www.reuters.com/business/autos-transportation/eu-made-
evs-would-cost-4100-more-uk-under-post-brexit-rules-smmt-
2023-10-17/

PAGE 52