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.
In order to integrate their many suppliers they reduced inventory, which helped them realise lower costs and gradually gain a market position. In the area of supplier diversity, minority-owned construction companies received $21 million, or 10-percent of the plants construction costs. Six out of the assembly plant’s 80 suppliers are minority-owned companies. They were paid $48 million in 1999, or about eight percent of the plant’s procurement budget (www. mbusi. com). BUILDING A STRONG WORKFORCE WITH EFFICIENT CORPORATE CULTURE As Mercedes developed themselves in the Alabama market they realised the need for an efficient workforce.
They required 650 workers and preferred them to be local citizens, which indirectly help the company develop a local image. The main emphasis made by MBUSI was nothing but the quality of the new sports vehicle. In order to attain this quality they required people of high calibre to work with them. This kind of an attitude by senior executives put the people working for Mercedes at ease. At the same time there was no discrimination between employees on the side of the company. At MBUSI every individual was treated equally. They strived to endorse a work environment free from discrimination and harassments against people.
This kind of culture adapted by MBUSI sets them apart and made them the leaders in quality. FACING INITIAL CHALLENGES Having come up with the idea of developing a global strategy, Mercedes was aware of the initial challenges that they would have to face. This kind of foreign investment could directly tamper their image in the German market. Alabama being their location of production was not a right destination as considered by many. This was because Alabama had a very low reputation as one of the bottom most states in the US when compared to the education and income factors. The industrial infrastructure was not commendable.
Alabama lacked sufficient water and power supplies. Productivity in the region was low. All these factors posed as challenges to Mercedes when they entered the US market. In addition to these factors the M-Class sports vehicle had to be competitively priced and of high quality for them to develop themselves in the US and international market. In order to nullify these factors, Mercedes could only capitalise on the human resources sector so that hard working people could work with the company and be able to reach goals. The people of the company did not have a fixed idea or a layout; they had to create a new plan from a new method.
Training was provided to every employee of the company and many of them were sent to Germany for the same. Mercedes also took care to provide environmental safety and conserve energy in the state. They were of the firm belief that energy conservation and environmental protection were rooted deep into their company history. OPINION OF PUBLIC OFFICIALS GOVERNOR OF ALABAMA I am very pleased to know that Mercedes has decided to invest in the state of Alabama. I am of the firm belief that Mercedes can contribute to the economy of the country and the state as well in a wide variety of ways.
Setting up a site in the state would help the local people in obtaining employment and at the same time contribute towards the upliftment of the state. Industrial infrastructure and technology innovations would follow likewise. The general condition of the society would improve drastically. From a German organisation, the people of the country as well as the state could learn more and help in developing a diverse community. The steps taken by the company in safeguarding the environment and energy conservation are highly commendable.
On the whole I personally believe that this experience with Mercedes, the biggest luxury car manufacturer would be interesting and informative. I once again thank the company and wish them a good experience in Alabama. GERMAN OFFICIAL I am very happy to know that Daimler-Benz has decided to set up a Mercedes-Benz plant in a new country. This decision would further improve bi-lateral relations with United States. At the same time there does exist a few drawbacks from this decision. Local people would loose employment, which reduces the income and worsens the economy of the country.
Foreign investment will definitely increase but at the same time spending within the country reduces and causes disturbances in balance of payments. This could result in prices of goods going higher than what is actually spent. Use of cheap labour in the US would harm the future of Germany as the company might decide to start whole scale development in the US itself. This is very economical to the company but adversely affects the entire country. I would kindly request the executives in charge to review their strategy and safeguard the interests of their home country and it’s people. EVALUATING MERCEDES BENZ IN ALABAMA.
Mercedes-Benz took a wise decision by starting a manufacturing plant in Alabama as it proved to be a huge success besides of facing so many risk factors like risk of entering a market, especially a country where they had no past experience and with an investment of US$300 million on the plant with the expectation that the vehicle would be a success. The automotive industry and customers were surprised in September when the starting price for the ML320 was announced at $33,950 much below expectation. About 3000 dealers were given franchises for $350. Because of the over whelming customer demand the production increased to 20%.
Currently the $300 million dollar plant is approximately one million square feet. After only three months on the market, close to 11,000 M-Class vehicles were sold in the U. S. and Canada. In addition to the great demand shown by customers, the M-Class has received critical acclaim from the media. Among some of its awards and accolades, include: Award/Accolade Source First Place “Hill and Gully” Comparison Car and Driver Top Cars for 1998 Robb Report Truck of the Year Motor Trend Best of What’s New Popular Science Best Buy Consumer’s Digest Top 10 Detroit News SUV of the Year Northwest Automotive Press Association.
Top Car over $25,000 AAA Car of the Year Automotive Journalists Association of Canada Best New Sport Utility Automotive Journalists Association of Canada Best New Utility Vehicle for 1998 Kiplinger’s Personal Finance 1998 Truck of the 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.
BIBLIOGRAPHY Beamish, P. , Morrison, A. , Rozenzweig, P. , Inkpen, A. (2000) International Management, fourth edition, Irwin Mc Graw Hill.Hill, C. (2002) International Business, third edition, Irwin Mc Graw Hill. INTERNET SITES www. mbusi. com (2002) www. mercedes-benz. com (2002) 1 Tend away from distinct national economic units and toward one huge global market. (Hill, C. 2002) MERCEDES COMES TO ALABAMA 2 Show preview only The above preview is unformatted text This student written piece of work is one of many that can be found in our GCSE Lawrence Ferlinghetti: Two Scavengers in a Truck, Two Beautiful People in a Mercedes section.