Strategic management and competitiveness

Posted: September 10th, 2013

Strategic management and competitiveness

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Strategic management and competitiveness

Mercedes Benz USA is an international wing of the German car producer Daimler AG that manufactures comfort trucks, coaches, buses and automobiles. The company has its headquarters in Stuttgart, Germany. Over a period of five years, Mercedes Benz has recorded a bottom line improvement, but in reality, it has been struggling to survive the turbulent environment that is marked by fierce competition from BMW and evolving technological advancements. In 2012, it was announced that the profit margins for 2011 would not be replicated in the next year. These and other issues have dropped the profit levels for Benz and form part of the debates in their boardrooms.

Impact of globalization and technology on the operations of Mercedes Benz

The phenomenon of globalization in business involves the merging of different unrelated industries into one networked society. Technology plays a crucial role in fusing the different aspects of these industries by improving communication and transport systems as well as refining the way in which employees work in the office. Apart from Mercedes-Benz, other major companies such as Mercedes-Benz and AT&T have also embraced globalization as is witnessed by their need to explore new niches and territory on the international scene. The World Bank and the IMF were responsible for initially promoting globalization in Europe and the rest of the economies as well as facilitating the installation of different financial regimes, such as the Euro and the dollar conflict in Latin America among other financial developments. The creation of an assembly plant in Alabama revealed the true effect of globalization where Mercedes Benz received a subsidy of about $253 million from the government for their effort at developing rural areas.

Globalization has an undesirable impact on the manufacture and sales of Mercedes Benz automobiles. First, the uncertainty that is triggered by fluctuating commodity prices has affected the production of Mercedes vehicles, as they are slightly more expensive when compared to BMW and other rival companies. Secondly, the high price of Mercedes automobiles that was set by customer preferences and high manufacturing costs is a disadvantage for the company during the recession. Therefore, the combination of high cost of production and low purchasing power as well as accruing debts were responsible for the dismal performance at Mercedes Benz.

Organization models for realizing above-average returns for Mercedes Benz

The industrial organization model seeks to clarify the outer environment’s main control on a firm’s planned actions. The model denotes that the industry chosen by a company to operate in has a stronger impact on the firm’s performance than the influence of the decisions made by managers inside the companies. Mercedes Benz stands to realize above average profits if it follows the principles of the industrial organization model. The model assumes that most companies challenging each other in an industry or a certain subdivision of an industry control related resources and seek similar approaches to acquire these resources. Benz can therefore diversify and differentiate their products to avoid the pressure of struggling after similar limited resources. Mercedes Benz can also discover and eliminate the external pressures that limit their profit margins from rising significantly.

The model also assumes that the resources allocated for implementing strategies are mobile across all the companies. Therefore, any resource disparities that might surface between companies should not be considered long term, valuable or important to the firms. Mercedes Benz should therefore lower their budget to a more realistic level and compete with BMW in other more significant sector. The company should consider other factors that influence its performance such as economies of scale and product differentiation (Reuters, 2010).

The effect of the vision and mission on the operations of a company

            Mercedes Benz is made up of a collaboration of different subsidiaries spread out in different continents. However, the parent company that is situated in Stuttgart, Germany is the focus of this section. The mission statement is subdivided into six values that serve the purpose of an official mission statement. The six values are as follows: the ingenuity to surpass expectations, the vision to remember every detail, the forethought to take liability, the dedication to honor a heritage, the boldness to snub compromise and the intuition to defend what is important (Moffett, 2010). While these values are lengthy, they have contributed greatly to instilling a sense and tradition of quality and professionalism within Mercedes Benz that is rarely witnessed elsewhere. Both of these aspects can assist in driving Mercedes Benz towards approaches that foster consistency, loyalty and growth. However, companies also need to adopt follow through programs that would ensure that their employees implement the aspects contained in the vision and mission.

It is very essential to keep the communications lines open. There should also be a check-in process with the employees to ensure that they comprehend that their proposals, ideas and opinions are valued. In the example of a conference, every employee receives his or her own issue of the company’s vision and mission statement immediately. The company should also take the chance to appreciate the staff for their input and reinforce the importance of both statements. Additionally, an inter-company communication program should be implemented to ensure that the fundamental communication that developed both documents is propagated. The result is an increased consciousness of the company’s expectations and a simultaneous increase in employee productivity. Employees feel that they own a part of the company.

Impact of categories of stakeholders in Mercedes Benz

Mercedes Benz has two key categories of stakeholders: Daimler Chrysler and other minor stakeholders. However, Daimler Chrysler is the most dominant influence in the financial decisions for Mercedes Benz. Since 2005, Daimler has taken the front seat in determining the success path for the company. Perhaps the biggest decision was the introduction of the AMG series of Mercedes automobiles. Apart from Mercedes Benz, Daimler Chrysler has also invested heavily in other automobile firms such as Jeep and Dodge that indicates the experience and ambition that the stakeholder has in ensuring that Mercedes succeeds (Moffett, 2010).

Mercedes Benz forms a minor part of the Daimler AG groups of investments that contains more than 90 different truck, bus and cars models. Daimler AG is present in more than 210 countries and creates jobs for over 217,030 people. In late 2009, the income level for Daimler AG reached over 75.2 Billion Euros (Moffett, 2010). Daimler AG has focused on the Germany, and USA as the focal points of their European and American enterprises as these two countries are some of the most active economically. In terms of the adoption of technology, Daimler AG has created two crucial virtual portals that serve the online community as well as handle the customer social responsibilities. This is the reason why there are two websites: one in German, the other in American (Hawranek, 2012).

Daimler has typically focused Germany as the main manufacturer but has also ventured into other production plants in China, United States, France, Vietnam, South Africa, India, and Indonesia. Globally, there are 16 production plants those manufacturer Mercedes-Benz vehicles. By the end of 2012, Daimler had completed the decision to install a plant in Hungary to cover any surplus in demand.

References

Hawranek D. (2012). Daimler Struggles to Regain Its Spark. Spiegel. Retrieved from http://www.spiegel.de/international/business/mercedes-falling-behind-competitors-despite-strategy-changes-a-858260.html

Moffett S. (2010). Daimler, Nissan, Renault Set Small-Car Cooperation. Wall Street Journal. Retrieved from http://online.wsj.com/article/SB10001424052702303591204575169883829785858.html

Reuters (2010). Daimler’s Settlement in Bribery Case Is Approved. NYTimes.com. Retrieved from http://www.nytimes.com/2010/04/02/business/02daimler.html?_r=0