SUBMITTED BY:

Ajai Josy
21121
SECTION C

SUBMITTED TO:
PROF.CHANDAN PALAKSHA
INTERNATIONAL BUSINESS

Assignment - International Business

Case analysis – Mercedes Benz

Overview
 Mercedes -Benz is a world-famous manufacturer of premium automobiles.
 Gottlieb Daimler and Karl Benz German automobile pioneers are the inventors of
Daimler- Benz brand
 Over the years after the world war – 1 Mercedes Benz created great reputation in
terms of their technological advancement in the automobile sector
 Even after the world war – 2 strong demands in the automobile structure helped
Mercedes Benz in their fast recovery This also enabled them to remain in the top
during oil crisis of 1970’s
 Success story of Mercedes continued to 1980’s
 Later technological expertise became an inevitable and they acquired AEG and
Deutsche Aerospace
 Company shares consisted foreign subsidiaries who were responsible for the major
sale and service operations
 Mercedes had 2 divisions passenger cars and commercial vehicles
 Company faced strong competition with global automobile brands which includes
Japanese manufactures Toyota and Nissan
 Toyota luxury brand Lexus was giving a strong competition to the Mercedes the s
class introduced by the Benz was criticized as bulky and faced negative opinions from
MIT
 In 1993 new chairman came up with innovative ideas to improve the company
 Product diversification was one among those innovations creating models in all
segments
 But passenger cars sales came down irrespective of the efforts
 New plant plan at Alabama was welcomed by the government and received great
support but situation at Germany was different they faced odds as the salary was too
high for the employees also cost structure of Benz was always their challenge.
1.Evaluate the advisability of Mercedes Benz’s announced shift in strategy. How might this
shift in strategy improve Mercedes Benz’s competitiveness in the global auto industry?
What are the risks?
It was in the beginning of 1992 Mercedes Benz made a sharp turn in their strategy they
changed their plans for new assembly plant for the trucks but when we evaluate there were
structural problems with the European truck industry so with this issue persisting
implementing the assembly plant with high cost of machinery and employees will be like a
taking a huge risk, also taking account of the overcapacity at the existing plants
concentrating on new plant will lead to losses so the decision taken was apt at the time.
During 1989 Toyota came with their luxury brand Lexus, which was strong competition to
Benz, so they came up with their S- Class, which was a result of 5 years, but it was perceived
as a bulky design which was against the lean design and efficiency also their new model
criticized by the MIT. Even though there was R&D for 5 years it was inefficient to bring up
competitiveness in the market
German workers are the high paid workers so providing high pay with low working hours
was one of issue faced by the company. Company’s HR policies should have improved to
have a balance on this issue. Also, there should be proper system to ensure workers are
optimized for their job
Transformation from luxury cars to all segment’s vehicles manufacturer: Mercedes
diversified into every segment after following the innovative decisions taken by the
chairman, but the diversification could have done earlier because the customers will feel
different opinions about the sudden diversification but at the same time this transformation
will attract new range of customers but providing these customers awareness should be
given more importance or else diversification is incomplete.
Overseas presence: By the time Mercedes thought of implementing their plants overseas
competitors were far ahead they already captured market and were dominant so the
company could have thought about their overseas plan earlier rather being late
Company choose Alabama to have their plant but Alabama lacked proper facilities to set up
the plant even though company received subsidies rural area was located faraway from
international nodes so plant location should has chosen wisely.
2.The legal structure of Mercedes Benz’s worldwide organization is presented on Exhibit
2. For managerial purposes (as opposed to legal purposes) what organization design
would you recommend for Mercedes Benz’s passenger cars Division? What are the
implications for the global distribution of activities and decision-making processes?

A divisional structure is always needed for an organization when we analyze the Exhibit, we
can see the major subsidiaries of the company also we can observe sales , net income and
employment at the subsidiaries there are among those whose net income is very under
performing in the year 1991 so that subsidiaries should be redesigned with optimization of
human capital and other related needs adopting proper hierarchy with proper organization
design will contribute to the company as a whole

Organization design: Any building's structure is determined by its base or foundation. To

make a building strong, it must have a solid foundation and a basic structure. Even if a
building can be redesigned and restructured, if the foundation is weak, the entire structure
will be unstable.

We can easily understand the significance of a solid foundation. Furthermore, foundation

and design are inextricably linked. Similarly, from an organizational standpoint, the basis is
the 'Organizational Structure,' which depicts various functions, hierarchical levels, terms,
and conditions within a company. 'Organizational Design' refers to the process of
reorganizing and restructuring jobs, hierarchy levels, terms, and conditions to meet the
needs of the business or organization. The organizational structure also defines the flow of
information between different levels of an organization, the clarity of each employee's job,
and its fit in the overall system, which motivates employees to work efficiently by
maintaining their morale, thereby increasing an organization's overall productivity. Here in
this case, we can follow partially decentralized structure So that senior management
delegates day-to-day work and decision-making processes to supervisors at the middle and
lower levels to make quick and effective judgments and enhance efficiency. Top
management can focus on other critical issues by allowing intermediate and lower-level
executives to participate in the decision-making process. Employees' responsibilities and
accountability are also increased because of this.

There should be a proper R&D department so that company would have made a proper
design for their S class and surpassed their competitors. Employees should be allocated with
sufficient training in their respective departments

A proper customer relations should be implementing, and they should be taking feedbacks
periodically. All these departments working together can enhance market share and
productivity ensuring no chances of under productivity

Benz should adopt a proper export strategy like their competitors such Toyota their proper
production and exporting strategies which made them successful overseas faster compared
to Mercedes

3.Consider the person in charge of Mercedes-Benz’s new SUV activities in Alabama. What
job description would you propose for that person? By what measures.

Ideal Qualities for the person in charge

 Negotiation and budget management skills.

 Respond to enquiries from dealers, regions, and other departments as the
department's contact.
  Negotiation, persuasion, information, and budget management skills.
 In responsibility of overseeing all factory operations, including employee
management, forecasting, and quality assurance.

 The person in charge should be a great influencer he should have good

persuasive qualities adding to the person should have good academic
background to support his responsibility
 prior experience in the same field can make value creation. Minimum work
experience of 5 years will be appreciated
 The person should be aware of the external polices adopted by the government
and other related organizations
 Suppose if a new plant Is to start, he must be trustworthy so that no risk is
involved

4.Assume the role of Mercedes-Benz’s new chairman, Helmut Werner. Suppose that
following your recent announcements you have come under vocal criticism by several
elements of German society. One critic argues that Mercedes-Benz’s leadership in the
world automotive industry has been due in large measure to the German educational
system (supported by German taxpayers), the German transportation and
communication infrastructure (also paid for by public funds), as well as by the enduring
loyalty of German workers. A firm which has benefitted from these public goods, he
maintains ought a reciprocal obligation to include ways to contribute to a high national
standard of living, rather than to export jobs, since the export of jobs will inevitably lead
to an erosion of the social system that Germans have worked hard to build. How would
you reply?

One of the major problems in the company was its cost structure. German employees were
high paid irrespective of their working hours that was one challenge so if I were in the
position of, I’ll be putting my efforts to optimize the work cycles

More efforts will be put on research and development and will be working on export
strategies to implement effective overseas development. Taking account of the situation of
Alabama more emphasis will be given on location selection for the future plant and
operations.

Organization design will be designed properly giving proper job description following the apt
hierarchy. We will keep the flaws happened earlier in the design and production and will
ensure they won’t be repeated in future. Brand will remain as the favorite brand satisfying
the customers