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MN5F13FB Level 4 Porters 5 Forces Analysis Of Mercedes

1955Downloads1 I Published: 24 Apr ,2020

Introduction

Present study is based on Mercedes, it is the global brand that offers high quality premium auto mobile products to consumers globally. Current assignment will explain porter's five forces of Mercedes (Rothaermel, 2015).

Task

Porter's five model

Porter's five forces is the strategic analyses tool that helps in analysing competitive forces and identifying strategies of the firm in effective manner. It focuses on five main competitive forces that influence overall working of industry significantly (Yunna and Yisheng, 2014). These forces are: competition, threats to new entrants, power of suppliers, power of customers, threats to substitute products.

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Application of model

Supplier bargaining power

Auto mobile industry is the big industry where power to suppliers are between low to medium. Mercedes requires many kinds of raw material such as hardware parts etc. in order to manufacture a quality cars (Pisano, 2017). In this respect cited firm makes connection with mass suppliers. There are many suppliers those which provide these raw material to the Mercedes. If one supplier offer raw material at high cost then entity can move towards other suppliers. Thus, power of suppliers is slow. Mercedes has developed strong relationship with its suppliers that helps the cited firm in conducting its operations in smooth manner.

Competition

There are many competitors of Mercedes such as Audi, Toyota etc. All these are global brand and are offering high quality products to consumers. Ion such condition rivalry among existing competitors is high in the Mercedes (Sölvell, 2015). Cited firm has to face huge competition that creates difficulty for the entity to sustain in the market for longer duration. In order to face this competition cited firm has to make modification and have to implement the latest technologies so that it can gain competitive advantage in the market.

Bargaining power of buyers

Power of consumers is medium to high, consumers have variety of choice and they can buy smilier products from other firm (Ortega, Jalón and Menéndez, 2014). Though, Mercedes offer high quality premium products as per the needs of consumers thus, people are very satisfied with the brand. They are enjoying services of the business. But if they do not get their required auto mobile products in Mercedes then they can move toward other car manufacture firm easily. This can influence overall operation of the business (A Porter’s Five Forces Analysis of the Luxury Cars Industry, 2017).

Threat to substitute products

Mercedes has high threat to the substitute products because there are many firm those which are offering luxurious cars to the consumers. Though company conducts market research and analyses needs of the customers. Cited firm offer products and services to them as per their requirements so that they feel satisfied and like the products of the business (Rothaermel, 2015). BMW, Toyota, AUDI offer same products in the same market that can influence mind of consumers. Thus, Mercedes has high threats from substitute products.

Threat to new entrants

It is considered as another major force that influence overall strategic decision of the industry. Mercedes is the luxury car manufacture firm that is performing well in the global market. Auto mobile is the sector in which new entrants can not come easily because it requires huge investments. Apart from this, new firm is required long term experience in the market in order to conduct operations well. If any new entity enters into the business then there is high chance to face huge loss thus, threats to the new entrants for the Mercedes is low (Yunna and Yisheng, 2014).

Ethical issues

It is responsibility of the Mercedes that to take care of ethical aspects and conduct the business in ethical manner. If cited firm fail to carry out the business in ethical manner then it may create difficultly for the business to great extent and it may fail to sustain in the market for longer duration (Pisano, 2017). Cited firm is required to advertise its cars in ethical manner. There should not be any kind of words or images that hurt to any culture. If it damages any culture then it may impact negative on the brand image of the business and entity may get failed to carry out its business in effective manner.

Mercedes treats its employees well and behave with them properly. It treats its staff members as assets (Ortega, Jalón and Menéndez, 2014). That is the reason that cited firm is able to retain its skilled labour in the organization for longer duration. Company fulfil its responsibility towards the workers and provide them healthy environment. This is considered ass one of the most essential ethical concern. If entity fails to do the same then it may impact on profitability and sustainability of the organization to great extent (Yunna and Yisheng, 2014).

Benefit and challenges of working as team

Team working is considered as one of the most effective tool in the corporation. If all workers are working as team in the Mercedes then it will help the firm in minimizing error and completing the task within stipulated period of time. Team working help the manager in managing activities well and resolving issue related to the business. On other hand it creates difficulty for the firms as well because all employees belong from different culture thus, thee is issue of language (Sölvell, 2015). Thus, they fail to communicate with each other well. In such condition working of team get affected, if one person do not perform well then it will impact on other;'s performance as well. Team working creates misunderstanding in the organization. If all people perform their own task then it will help in minimizing confusion but team working creates difficulty because all have to be depended on each other (Rothaermel, 2015).

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Conclusion

From the above study it can be concluded that porter's five forces help the Mercedes in identifying five major forces that can influence the business. By this way entity can make effective strategies to deal with these forces and gaining competitive advantage in the market. 

References

  • Ortega, A. G., Jalón, M. L. D. and Menéndez, J. Á. R., 2014. A strategic analysis of collective urban transport in Spain using the Five Forces Model. Investigaciones Europeas de Dirección y Economía de la Empresa. 20(1). pp.5-15.
  • Pisano, G. P., 2017. Toward a prescriptive theory of dynamic capabilities: connecting strategic choice, learning, and competition. Industrial and Corporate Change. 26(5). pp.747-762.
  • Rothaermel, F.T ., 2015. Strategic management. McGraw-Hill Education.
  • Sölvell, Ö., 2015. The Competitive Advantage of Nations 25 years–opening up new perspectives on competitiveness. Competitiveness Review. 25(5). pp.471-481.
  • Yunna, W. and Yisheng, Y., 2014. The competition situation analysis of shale gas industry in China: Applying Porter’s five forces and scenario model. Renewable and Sustainable Energy Reviews. 40. pp.798-805.
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