Introduction
Gottlieb Daimler made a significant contribution when he came up with the internal combustion vehicle. This is the vehicle that formed the foundation stone for the now world-famous brand known as Mercedes Benz. Chrysler and Daimler are the mother companies that gave rise to Mercedes Benz as an independent brand. The brand is highly respected for its superior quality. People strive to drive this brand as a mark of achievement given the prestige that is associated with it.
With all the class and prestige that is attached to Mercedes, the normal business climate is experienced with all its elements such as bad times when business is low, good times when sales are high, challenging times when competition from other industry competitors make strides that threaten the position of Mercedes and dull moments when the business climate cannot be characterized as either good or bad. Other brands that are closely related to Mercedes that will feature in this paper are the Maybach and the Smart.
Industry Forces for Mercedes
The five forces that Mercedes, Maybach and Smart have to be aware of are the same for any industry. These forces determine the direction of the individual company. They include the bargaining power of buyers, the bargaining power of suppliers, the possibility of new players joining the fray and therefore threatening the company through competition, the rivalry among the competing companies within the industry, and the threats that are posed by existing competitors in the industry (Porter, pp. 97-115). Mercedes produces quality cars but this does not mean that there are no competitors.BMW is just one example of a potential competitors whose presence cannot be taken for granted by the leadership of Mercedes.
The Nine Cell Matrix Analysis for Mercedes Benz, Maybach, and Smart
Mercedes Benz as a company employs the four principles of being technologically savvy, producing superior brands, having a powerful global presence and being able to have a wide variety of products for the market. It is for the last principle of having a variety of products for the market that Mercedes finds itself in a position where some products do well in the market while others do not.
The new brands of Mercedes S-Class and E-Class had sold 39% more in May 2010 compared to the figures of 2009 (BenzInsider.com).This simply tells us that these two brands are to be found in the top left box of the nine cell matrix or within the green zone. Generally, they give the company an opportunity to not only grow but also invest without hesitation. Maybach on the other hand is not a hot brand. In 2008, it sold 300 units. This is a 50% drop from the 2002 launch figure of 600.
Smart is another brand that is on the downward slope. At the time of launch, Smart sold 1916 units in a period of 2 months. This has since dropped by 66% to an all time low of 278 units in the month of January.
High Attractiveness: High sales or improved sales for the company as shown by the above figures are an indication of high attractiveness. In the event that the company is not making any losses or profits, the company is said to be medium in terms of attractiveness or in the yellow zone. Here, any kind of action has to be done with caution. Then there is the red zone within the nine cell matrix which is made up of two bottom boxes of the right-most column and one right-most box of the bottom row which indicates low attractiveness and at this level instead of investing, the leadership is advised to divest the remaining resources and exit the industry. Once again with Mercedes making progress in sales, it is not in this part of the nine cell matrix.
The Matrix for Mercedes Benz
The Maybach position indicates that it is dangerous to continue to do this kind of business because the losses are prohibitive. It is in the red zone. The Smart is even more risky because it is in the red zone and therefore going by the data given above, abandoning this brand may be the best option.
Works Cited
- “ Double-digit sales increase for May puts Mercedes-Benz on track for 2nd quarter” BenzInsider.com. 2010.
- Heinrich, Gunnar.“Maybach Lives! Forbes Reveals US Sales Figures”. 2010.
- Loveday, Eric. “Smart For Two Sales Drop Dramatically, Can Electric Version Lift The Brand? “ 2010.
- Porter, Michael. Competitive Strategy: Techniques for Analyzing Industries and Competitors. New York: Free Press, 1980.Print.