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Mercedes Benz : Competitive Forces Essay

802 words - 3 pages

Mercedez BenzAyodele SamaiyeHawaii Pacific UniversityAbstractThe intensity of competition in an industry is neither a matter of coincidence nor bad luck. Rather, competition in an industry is ill rooted in its underlying economic structure and goes well beyond the behavior of current competitors. The state of competition in an industry depends on five basic competitive forces i.e. entry, threat of substitution, bargaining power of buyers, bargaining power of suppliers, and rivalry among current competitors. (Porter, 1980) Daimler Chrysler's strategy rests on four pillars: global presence, strong brands, broad product range, and technology leadership. The objective of this analysis is to investigate how the organization needs to form its strategy in order to develop opportunities and protect itself against competition and other threats.Company IntroductionMercedes Benz is firmly established as an independent brand within one of the world's leading car companies- DaimlerChrysler AG. DaimlerChrysler is a product of Daimler and Chrysler companies. Daimler motor company however came into existence as a result of the creation of a recognized internal combustion vehicle by Gottlieb Daimler. Daimler Chrysler's strategy rests on four pillars: global presence, strong brands, broad product range, and technology leadership-Daimler being the first man to create a recognized internal combustion vehicle and the first to incorporate a practical transmission system. The company has a super network that ensures the flow and exchange of information from various departments within and between the company and it's strategic partners.Competitive ForcesThe strength of the competitive forces in an industry determines the degree to which this inflow of investment occurs and drives the return to the free market level, and thus the ability of firms to sustain above-average returnsThe five competitive forces-entry, threat of substitution, bargaining power of buyers, bargaining power of suppliers, and rivalry among current competitors-reflect the fact that competition in an industry goes well beyond the established players. All five competitive forces jointly determine the intensity of industry competition and profitability, and the strongest force or forces are governing and become crucial from the point of view of strategy formulation. The bargaining power rivalry is what keeps Mercedes-Benz on the run, as such that it can keep ahead of BMW and others, who are always there and always threatening their market share.Power of CustomersBuyers compete with the industry by forcing down prices, bargaining for higher quality or more services, and playing competitors against each other-all at the expense of industry profitabilityDifferentiationDifferentiation of product has enabled Mercedes Benz to...

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