Case Study

1. 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 astrong 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.

2. 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

3. 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 baseor 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 easilyunderstand the significanceofa 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 acompany. '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 aproper 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.

4.  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 anew 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 challengesoif 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