Company Introduction
Mercedes-Benz is one of the most popular vehicle brands worldwide. According to Wheelership (2021), the company is often associated with luxury cars. The company’s history dates back to the 1880s, when two engineers, Gottlieb Daimler and Carl Benz, founded the company.
A brief timeline for the company began in 1879 with Carl Benz’s two-stroke gas-driven engine and in 1884 with Daimler’s internal combustion engine (Mercedes-Benz of Chicago, 2019). Mercedes-Benz was founded in 1886 when the first car was patented (Nuttall, 2021). Today, the company has become a global icon in the automobile industry.
Mercedes-Benz is based in Stuttgart, Germany, under the brand name Mercedes-Benz Group AG. The firm manufactures passenger vehicles and commercial vans, with the most common brands being AMG, Maybach, and Mercedes-Benz (PitchBook, n.d.). The firm is a pioneer in the automotive industry and seeks to continue this status through increased investments in electric vehicles (Mercedes-Benz Group AG, n.d.).
Currently, the company employs over 173000 employees globally. Additionally, Mercedes-Benz is currently under the company Daimler AG, which owns brands such as Fuso, Setra, Thomas Built, Smart, Western Star, and Freightliner (Hughes, 2018). China is currently the company’s largest market, accounting for more than a quarter of its sales.
Skills of Current Leadership Team
CEO
Mercedes-Benz is led by a board of management headed by the chairman and CEO, Ola Källenius. Ola has had a long leadership career with the company. For instance, he held the position of manager of company controlling in Tuscaloosa in 1995, was promoted to senior manager of company controlling there in 1998, and later became senior manager of procurement at DaimlerChrysler in 2000 (Mercedes-Benz Group, n.d.). His rise continued until he became a member of the management board in 2017, where he headed research and development.
Other positions have focused on such areas as powertrain, operations, marketing and sales, and high-performance engines. These positions demonstrate his functional skills, making him one of the most experienced members of the management board. As a leader, Ola believes in learning and adapting to foster growth within an organization (Moore, 2021). His adaptation to multiple positions reflects this ideology. His leadership skills are reflected in his ability to build relationships with other members and in his clear vision for the company, grounded in its history and the need to adapt to remain relevant.
Other Management Positions
Production and Supply Chain
Other management board members followed a similar career path as the CEO, having served in several other positions with Mercedes-Benz. Dr. Jörg Burzer heads production and supply chain and is expected to serve until November 2024. His previous leadership positions in the company include executive vice president on the board for production and supply chain management in 2019, vice president heading quality management in 2016, director of product and production strategy and supplier quality in 2013 (in China), and director of production control and logistics in 2010 (in Tuscaloosa, USA) (Mercedes-Benz Group, n.d.). As with the CEO and other members, each of the positions held by Dr. Jörg Burzer reflects the skill set of the individual.
Integrity and Legal Affairs
Renata Jungo Brüngger has been a board member since 2016, heading the company’s integrity and legal affairs. Her previous positions include serving as an executive vice president and head of legal. Other positions were with different companies, and they all involved legal work. She is a lawyer by profession, meaning her skills are built around a company’s legal domain.
Human Resources Manager
Sabine Kohleisen heads human resources and labor relations. She has previously headed executive offices, marketing and sales, change management, sales training, and strategic planning.
Chief Technology Officer
Markus Schäfer is the chief technology officer, responsible for development and procurement. His past positions have entailed production strategy, plant management, president and CEO, vice president of manufacturing engineering, project planning, production engineering, and body shop training.
Marketing
Britta Seeger heads marketing and sales and has been a board member since 2017. Her skill set is reflected in her long career in positions such as sales and marketing, after-sales service operations, vice president and CEO, product management, sales and distribution, CRM program management, and sales and branding training.
Chinese Branch
Hubertus Troska is responsible for activities in China, a position occupied since 2012. He has served as president and vice president in the company, in product marketing, project management, sales management, sales network management, and overseas sales organization.
Finance
Lastly, Harald Wilhelm heads finance, controlling, and Mercedes-Benz mobility. His previous positions with the company involved mergers and acquisitions from 1992 to 1998, during which he moved from manager to senior manager in 1995 and to vice president in 1998.
Summary
Therefore, the current leadership team comprises individuals with long careers at the company. Given Mercedes-Benz’s long tradition, hiring a leadership team from within the company makes the most sense, as it helps preserve its traditions and core values. Additionally, the leadership team’s skillset spans most of the company’s core business areas, including engineering, sales and marketing, production, mergers and acquisitions, research and development, legal issues, and labor relations.
PESTEL and SWOT Analyses
PESTEL
Political Factors
- Political stability.
- Taxation policies.
- Trade barriers.
Economic Factors
- Inflation.
- Interest rates.
Socio-cultural Factors
- Demography.
- Social and cultural norms.
Technological Factors
- Innovation.
- E-commerce.
Environmental Factors
- Renewable energy.
- Environmental laws.
Legal Factors
- Employment laws.
- Consumer laws.
Political
Globalization allows businesses to operate across borders and in countries with different political systems. Mercedes-Benz faces political instability; for example, it announced its exit from Russia following the outbreak of the Russo-Ukrainian war (Times of India, 2022; McFall, 2022). Each country has a different tax system, some investor-friendly while others are restrictive.
Trade barriers are deliberate government efforts to restrict a company’s operations in a country. For example, the government of Pakistan recently banned the importation of luxury items, including cars, to boost its economy(AFP, 2022). As a result, the sale of Mercedes-Benz cars in the country is adversely affected.
Economical
The political environment may also negatively affect economic factors. For instance, the Russo-Ukrainian war has caused massive inflation in most economies (Caldara et al., 2022). Inflation may also force central banks to adjust their interest rates, making loans and capital more expensive (Adrian & Natalucci, 2022). Therefore, the current political and economic climates worldwide are unfavorable for the company’s operations. The prospects for Mercedes-Benz are subject to further developments. As mentioned earlier, China comprises the largest market for Mercedes-Benz. However, the geopolitics involving China, the United States, and the Ukraine war may affect the company’s future in China. The US and China are engaged in a trade war whose escalation is being fueled by China’s ties with Russia. US and allied sanctions may cost Mercedes-Benz its biggest market.
Socio-Cultural
The most critical socio-cultural factor is the global demographics, which dictate the company’s markets. Luxury items are expensive, meaning Mercedes-Benz can only sell its products to the middle and upper classes. However, the worldwide expansion of the middle class is expanding the company’s market. Such a market may be affected by economic factors, especially inflation and recessions.
Technological
Technologically, innovation and e-commerce are the major factors affecting the company. Mercedes-Benz has a culture of innovation, which helps it succeed. The rise of e-commerce enables the company to streamline car shopping and access broader global markets, including the Middle East (Glon, 2019; Godinho, 2021). The company can leverage its prospects on emerging technological developments. Most importantly, electric vehicle technologies are advancing, and companies like Tesla are spearheading them. If the future of automotive is all-electric cars, then Mercedes-Benz needs to improve its competitive position against EV producers.
Environmental
Environmental factors pose a unique challenge, especially when countries push for carbon neutrality and subsidize green renewable energy. The challenge arises when companies attempt to, or fail to, adapt to environmental laws. For instance, Mercedes-Benz was recently fined $1.5 billion for emissions cheating (Daily Finance, 2020).
Legal
Legal factors affecting Mercedes-Benz are primarily consumer and employment laws. The company has faced lawsuits related to employment laws, specifically regarding working conditions(Scully, 2019). The external environment poses some threats and reveals opportunities that Mercedes-Benz can exploit.
Table 1: SWOT Analysis
The SWOT analysis reveals the critical internal and external factors affecting Mercedes-Benz. The company is over a century old and has built a strong brand, which can be leveraged for global expansion and entry into new markets. Research and development have been central to the company’s growth and success (Mercedes-Benz Group, n.d.). The company’s financial strength stems from its capital base and strong historical financial performance, as evidenced by earnings before interest and taxes (EBIT) rising 28% and revenues increasing 12% in 2022 (Businesswire, 2023).
Despite these strengths, the company’s internal environment presents various challenges. For example, constant lawsuits and vehicle recalls could damage the brand image (France-Presse, 2022; Australian Associated Press, 2022). Highly publicized errors and scandals erode consumer confidence and trust.
The external environment presents the company with multiple opportunities and threats. For example, globalization and new technologies help unlock new markets and products, including investments in electric and self-driving vehicles(Levin, 2023; Stern et al., 2022). Emerging trends, including substitute luxury brands, restrict the company’s growth (Perlas, 2022). Crises and pandemics also pose a critical threat, as illustrated by the COVID-19 pandemic and the Russo-Ukrainian war.
Strategic Changes
Investment in Promoting Electric Cars
Mercedes-Benz plans to go all-electric by 2030, a strategy that seeks to accelerate the production of electric cars. The strategy involves abandoning all diesel and gas-powered cars(Eisestein, 2021; Resevear, 2022). However, Tesla dominates the current market for electric vehicles (EVs), even though that dominance is expected to decline as cheaper alternatives emerge (Rapier, 2022).
Since Mercedes-Benz positions itself as a luxury or premium brand, its success in the EV market will depend on product promotion initiatives. Mercedes-Benz must demonstrate that it can offer luxury electric cars and promise superior quality to the current EV products. Currently, the company offers EQS 580 as a luxury EV to rival Tesla (Levin, 2022). However, the car has yet to enter the market fully and is mainly regarded as the future car. Promoting this and other EVs will help improve demand and accelerate the company’s goal towards its 2030 vision of going all-electric.
Updating Worker Skills in EV Production
Tesla excels in EV production and sales since its business model is built around the EV concept. On the contrary, Mercedes-Benz produces gas and diesel-powered cars and relegates the EV unit to a small operational base. To become a full-fledged EV manufacturer, the entire workforce needs to be overhauled and skills updated to allow the company to transition into EV production. The company uses automation and robotics in its manufacturing. Workers handling these systems will need new skills to handle the new equipment that manufactures EVs. All manufacturing jobs can be expected to be affected in this regard.
However, the company has committed to transforming into an EV manufacturer, meaning the workforce change is an inevitable tradeoff. Considering the company’s tradition of hiring from within, the manufacturing department’s current workforce can be expected to transition. However, the extent to which the company changes its workforce may depend on the skills needed and its ability to teach those skills. A tradeoff between training current employees and hiring new skills may need to be considered.
Managing Employees’ Reaction to Proposed Strategic Changes
The recommended strategic changes affect several departments and their workers. Across all manufacturing facilities, the new skills needed may challenge many workers. However, the company needs to manage worker expectations and assure workers of their job security. The company and the employees have several years to adjust before 2030. According to Malhotra et al. (2021), managing change in situations where societal logics conflict with workplace logics requires harmonizing both.
Mercedes-Benz’s success has been built around its fuel-powered engines. However, society is ready for electric cars, and the company needs to orient its employees toward the need to make the shift. The management can appeal to the employees’ sense of corporate citizenship and the firm’s sustainability efforts. However, the best approach would be to allow the workers adequate time to adjust.
References
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