Introduction:

The name Mercedes Benz needs no introduction for the car enthusiastic people. Ever since its
foundation this name has been associated with the world class brand of cars, trucks and buses.
The two founding fathers, one is Mr. Karl Benz who first founded this company in 1871 and the
two others Mr. Gottlieb Daimler and Mr. Wilhelm May Bach, who founded the division of
Mercedes Benz called as Daimler AG in 1890.The headquarters of the Mercedes Benz is located
at Baden- Wurttemberg and Stuttgart in Germany. Currently this company produces a wide range
of advanced luxury cars, trucks and buses in its manufacturing facilities, based all over the world
besides Germany.

Background

Mercedes spent £600 million researching and developing the 190 and subsequently said it was
'massively over-engineered'. The W201-based 190 was introduced in November 1982.

Local 'red tape' in Bremen (which produced commercial vehicles at the time) prevented Daimler-
Benz from building the 190 there, so production was started in Sindelfingen at a capacity of just
140,000 units per year. Eventually after just the first year, Bremen was cleared for production of
the 190, replacing its commercial vehicle lines, and there the 190 was built with the first running
modifications since release.

The 190E model has a super-efficient distributor pump injection system. This uses the air
entering the throttle body to adjust the air fuel mixture accordingly, eliminating the need for
complex computers. As a result, the 190E is well known for lasting well over 300,000 miles.

Product & Services:

There range of products - Fulfilling every vehicle financing need.

One of the cornerstones of their success is the wide range of vehicle financial solutions, they
offer to both dealers and consumers. Whether it's individual vehicle financing, providing
equipment or capital loans to there dealers, helping a school district acquire school buses or
getting a business a fleet of vans, it's all part of what they do.

Yet, with that there entire offer, they make sure doing business with them is simple. They
employ state-of-the-art technology supported by highly trained professionals committed to
seeing that each customer's needs are met. From online credit applications, account access and
payments to global credit processing systems and Internet-based commercial auction services,
They are putting the financial solutions dealers and customers want only a mouse click away.
With the right people and the right tools, things work right. And that's what they are all about.

Key Facts:

DAIMLER CHRYSLER APPOINTED new CEO-Dieter Zetsche, quickly realised the problem-misfit of
two companies and not focussing on main Mercedes Benz.A new plan announced today is
calling for the layoff of 13,000 workers till 2009. They are also planning plant closures in order to
reduce costs.He started working on demerger of the two companies which was completed in
2007 . Cerberus Capital Management(Equity firm)acquisition of an 80.1 percent stake in
Chrysler for 7.4 billion dollars

Key competitor:

The key competitor of Mercedes Benz is Audi or BMW.

MARKET SEGMENTATION I
The compact car sector is the leading revenue source for the German car rental market,
generating 40.7% of revenues. The intermediate car sector forms a further 27. 8% of Germany's
market value, while the rental of economy cars accounts for a further 16.6%.

Market Segmentation II
Germany dominates the European car rental market, accounting for 36.2% of the Regional
market's value. In comparison, France and the UK represent a further 19.3% and 16.7% of the
European market respectively. 2: Germany Car Rental Market Segmentation I: % Share, b

Main unique features of the Mercedes Benz:

One of the Mercedes Benz founders Mr. Karl Benz has invented the first internal combustion
automobile engine in the world. Also the credit of the revolutionary invention of the world’s first
single cylinder four stroke engine goes to Mr. Karl Benz.

Mercedes Benz has been producing technologically more advanced vehicles than its
contemporary competitors. Safety of the passengers has been the utmost important factor taken
in to consideration by this company while designing all category vehicles ever since it has started
production. Owing to this feature a genuine vehicle buyer in any part of the world gives first
preference to the Mercedes Benz make vehicles. Every year the Mercedes Benz makes provision
of a huge amount of money for the research and development work in its budget. As a reason
they always they have an edge over other renowned vehicle manufacturers of the world ever
since they have started manufacturing vehicles.

Moreover we can say that the Mercedes Benz has taught other vehicle manufacturers how to
manufacture technologically advance vehicles and at the same time passenger safety vehicles.
Mercedes Benz is the pioneer of featuring its vehicles with the Safety airbags, anti-lock brakes
and the traction control system, in the world. This company has introduced the first 7 speed
automatic transmission system in the world, called as 7g-Tronic. The credit of invention of the
passenger pre-tension seat belts for the first time in the world goes to Mercedes Benz. In the
event of vehicle crash this belt gets tightened almost instantaneously thereby saving the
passenger from the forward crash. Also many other types of passenger safety devices like the
brake assist and stability control are invented by Mercedes Benz for the first time in the world.
One of the greatest features of the Mercedes Benz is that it not only invented these safety devices
for the first time in the world but they also granted its license to the other vehicle manufacturers
all over the world from the point of view of overall safety of the passengers.

Analysis

1) What has been the source of Mercedes’ competitive advantage?

Competitive advantage occurs when an organization acquires or develops an attribute or

combination of attributes that allows it to outperform its competitors.Merecedes uses
DIFFERNTIATION STRATEGY to seek competitive advantage. Differentiation is
about charging a premium price that more than covers the additional production costs,
and about giving customers clear reasons to prefer the product over other, less
differentiated products.It gives customers high end quality luxury products and
customized .as per their needs

2) What seems to be the cause of its recent problems in operations?

The Main problem was not focussing on its main brand ”Mercedes” and trying too
many things(launching a small car division) which were not its core competency
.This resulted in lack of quality in its operations.Also , due to its merger with
Chrysler, it tried to replicate economies of scale model of Chrysler , and failed
miserably

3) Is it possible for the firm to simultaneously improve its performance in both

productivity and quality?

Yes, it is possible for firm to improve its performance in such a manner. Toyota
Lexus did this in such a manner, and this is explained clearly by The ‘sandcone’
model of operations excellence. The starting point, the base of the sandcone is
excellence in quality. On this should be built excellence in dependability, then
flexibility (which they take to include speed), then cost. They emphasize that efforts
to further enhance quality should continue whilst commencing efforts to build
dependability. Similarly, actions on quality and dependability need to continue whilst
building flexibility. Finally efforts to reduce costs take place alongside continuing
efforts to improve quality, dependability and flexibility.They claim that operational
capabilities developed in this way are more likely to endure than individual
capabilities developed at the expense of others

4) Where would you position Mercedes Benz on the Hayes and Wheelwright four-stage
model? Give your reasons I will put it in STAGE 4. Its core competency-High
quality products were used to provide a base for competitive advantage.