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Mercedes comes to Alabama.

Extracts from this document...

Introduction

A CASE ANALYSIS IN 7021 GSM INTERNATIONAL BUSINESS MERCEDES COMES TO ALABAMA SUBMITTED TO: MR. BRIAN MERRETT Analysts: Christopher Vas, S2123281 Gaurav Jain, S2123652 Jayesh Janardhanan, S2122740 EXECUTIVE SUMMARY The world is heading towards rapid globalisation, with more and more companies transcending their national boundaries of operations thereby engaging themselves in international business. With the dawn of the millennium we have seen major business conglomerates spread their wings in order to become global organisations. The rationale of this report is to study the "globalisation strategy"1 undertaken by Mercedes Benz- a pioneer in the manufacture of luxury cars. The objective of the report revolves around the decision that Mercedes Benz took in 1993 to extend it's operations to the world's largest democracy- the United States Of America, as a part of it's internationalisation approach thereby transforming it into a fill line automobile manufacturer from an automaker known just for its luxury cars. This report analyses this shift in strategy of Mercedes Benz, evaluating the elements of shift and various risks involved in it. An effort has also been made to understand the various actions that followed Mercedes Benz's entry into Alabama. The study also briefly describes the challenges Mercedes had to encounter at Alabama and the way it successfully faced them. Opinions of public officials from both the countries have also been expressed in a personalised manner. Finally this new strategy is further scrutinised as a success or failure, after doing an exhaustive study of all the causes and consequences of this decision taken by the company. TABLE OF CONTENTS HISTORY.................................................................................4 THE NEW STRATEGY OF MERCEDES-BENZ................................5 ELEMENTS OF SHIFT..................................................................7 MERCEDES-BENZ U.S INTERNATIONAL, INC.................................8 RISKS INVOLVED WITH MBUSI...................................................9 THE INITIAL STEPS IN ALABAMA.............................................10 OPINIONS OF PUBLIC OFFICIALS...............................................12 EVALUATION OF MERCEDES-BENZ'S ALABAMA EXPERIENCE....13 CONCLUSION...........................................................................15 BIBLIOGRAPHY.........................................................................17 HISTORY Mercedes-Benz is the automotive division of Daimler-Benz AG, Germany's largest industrial group. Daimler-Benz had been created in 1926 by two of Germany's automobile pioneers, Gottlieb Daimler and Karl Benz. ...read more.

Middle

"We are committed to developing and producing the very best sport utility vehicle," said the CEO and President Andreas Renscheler. With new ideas and a strong determination they set out in developing their new company in the US. They were aware of the fact that the approach to be enforced in the US had to be very different from that they used in Germany. At the same time they understood the challenges they would face with new people in a new country and in developing their new product (www.mbusi.com). ACTIONS ON ENTERING U.S.A As the company decided to enter the US market to develop its M-Class sport vehicle it had to locate a potential site for its production. From the 50 states in the US, the company located its site in the state of Alabama. Once the site was located Mercedes took no more time to implement its actions. Their main focus was to produce a customer oriented product. This had to be of a very competitive price and definitely high quality. Simultaneously they also had to integrate their suppliers into promoting and selling the new vehicle. At the same time Mercedes also had to look into setting up a strong workforce with efficient corporate culture. This shows that Mercedes had a lot of tasks to manage at the same time in order to realise their idea. CUSTOMER-ORIENTED PRODUCT This was the most important step for Mercedes to work upon as their main idea revolved round the customer's perception of the new vehicle. In order to meet customer requirements they took keen interest in the design and development of the vehicle. Creating rough sketches and models, prototypes helped them in coming Closer to realise what their customer needed. Once the model was developed they then looked into supplying the vehicle to most segments in the market rather than relying on the upper class only. ...read more.

Conclusion

Year, Mexico Automovil Magazine 1998 Engine of the Year Wards Automotive Edison Best New Product American Marketing Association Source: www.mbusi.com Daimler-Benz's officials announced in August 2000 that $600 million will be invested for the expansion of Alabama site and 2000 jobs will be available. The new strategy can be called a success due to these reasons: * It improved the company's financial position. * It became a full line automobile manufacturer, with the success of its new models. * It helped in developing more job opportunities for the people in Alabama. Ever since the company produced its first M class vehicle in February 1997, it went on to constantly improve its situation through its years. The plant reached its peak output of 376M-class a day by March 1999, two years since its launch. CONCLUSION The report has been successful in evaluating the shift in strategy decided by Mercedes-Benz. Various reasons were responsible for Mercedes-Benz to opt for the new strategy. Mercedes lost its competitive advantage of cheap labour in Germany to the other developed countries during the early 1990's. The shift of strategy to Alabama proves the company's determination and the risk-undertaking factor, which lifted them to the top. The study also states the major risks it had to face during the shift in strategy. Mercedes had to enter a new market, which was saturated with existing models, new people, new market, and new working atmosphere. The study describes the actions Mercedes performed following its entry into Alabama, which was a remote state in the U.S. In spite of the risk involved, the company took for launching a production in Alabama; the strategy was a huge success, which is evident from the worldwide performance of its vehicles. The report shows that Alabama had lot of gains, both economically and socially due to the plant. To sum up we can say that the launching of Mercedes-Benz in Alabama created huge benefits to the company and especially to the economy of Alabama and the people there. ...read more.

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