Porter’s 5 Five Forces Analysis of Mercedes-Benz
Key Facts
| Name | Mercedes-Benz Group AG |
| Industry | Automotive |
| Founded | 1886 |
| Headquarters | Stuttgart, Germany |
| CEOs | Ola Källenius |
| Revenues | US$178.9billion,2021 |
| Profit | US$27.2billion, 2021 |
| Competitors | BMW , Toyota,Volkswagen,Ford,Honda |
Company Overview
Headquartered in Stuttgart, Germany Mercedes-Benz operates in Automotive, offering luxury cars,vans. It was founded in 1886 officially by registering first patent by Carl Benz. Its reported revenues are US$178.9 billion with net assets valued at US$295.5 billion as of December, 2021.Mercedes-Benz Group ranked on 41st in the Forbe’s World’s The Global 2000 Companies list, in Year 2022, while Fortune 500 ranked it on number 38th respectively.
Porter’s Five Forces Analysis
Porter’s Five Forces Analysis guides business managers to better direct their Company’s operations by strategizing their business reference to their industry to charge high margins and expose to less competition, developed by Professor Michael E. Porter at Harvard Business School, in 1979.
Mercedes Benz Rivalry among Existing Competitor
- Mercedes Benz Business Segmentation: Mercedes Benz offers vehicle segment including Mercedes-Benz Cars & Vans (Included Daimler Buses and Trucks) and Mercedes-Benz Mobility including Financial Services related to Leasing, carsubscription, insurance brokerage and mobility services and others.
- Mercedes Benz Revenue Generation Business Segmentation: The revenue contribution by Mercedes-Benz Cars & Vans in FY 2021 is 109.64 billion euros which is increased from 98.57 billion euros, change of 11% compared to FY 2020, while Mercedes-Benz Mobility contributed 27.94 billion euros only 1% increase from prior year, in FY 2021.Other continued and discontinued operations also contributed 30.38 billion euros in the Reconciliation Segment with a 8% increase compared to previous year
- Mercedes Benz Revenue Geographical Segmentation: The highest revenue generated from Europe with a record revenue contribution of 65.92 billion euros (only Germany contributed 24.42 billion euros) , North America Division 47.56 billion euros and Asia contributed 45.43 billion euros (only China contributed 25.43 billion euros) and other markets contributed 9.04 billion euros. So the revenue contribution as a percentage of total revenue is Europe contributed 39%, North America 28.31%, Asia 27% and other markets contributed 5% of the total revenue geographically.
- Mercedes Benz Units Sold Biggest Market Segmentation: The biggest market in terms of units sold is China with a record sales of 734,700 units, second biggest market is Europe which sold 662,300 units and USA with a record sales of 251,400 units in 2021.
- Mercedes Benz Brands Portfolio: In the category of Luxury cars they famous brands Mercedes-Benz offered are Mercedes-AMG, Mercedes-Maybach, Mercedes-EQ and Mercedes me while in the category of Mercedes-Benz Mobility are Mercedes-Benz Bank, Mercedes-Benz Financial Services and Athlon.
- Electric Cars by Mercedes-Benz – UK Market: UK is the hub for Mercedes Benz Electric Car production and design offered exclusive advantages in buying and driving Mercedes-Benz Electric Cars in UK with cost saving in car parking, taxes, ease of charge (either home charging, station charging facility and as well charge in on the go, with a CO2 reduction impact).
- Battle of the Brands: The rivalry competition in Automobile Industry is very close Even Mercedes-Benz have a record brand value of 30.35 billion U.S. dollars in Year 2022.While Toyota holds a brand value of 33 billion U.S. dollars is ahead of Mercedes-Benz, while Tesla holds the top position by capturing the brand value of 75.9 billion U.S. dollars. Meanwhile BMW holds a brand value of 24.8 billion U.S. dollars.
Mercedes Benz Threat of New Entrants
- High R&D Cost For competing such established sophisticated brands high budgets are only required for research and development to understand the customer requirement and design production. Mercedes-Benz spent 7.7 billion euros in R&D category for passenger car division in FY 2021, declared by Statista.
- Economies of Scale: Reaching economies of scale to compete in the market in a short span of time is difficult so chances of entry of any new entrants are minimal.
- Brand Image: Mercedes-Benz holds a very strong brand image and brand loyalty, competing for market share in such scenarios is very challenging even for exiting brands or impossible for new entrants. Mercedes-Benz also ranked 70 in a survey “Most Valuable Brands Ranking worldwide”.
Mercedes Benz Bargaining Power of Suppliers
- Automobile Supplier’s Industry – Non Concentrated: The Supplier Industry is nor specialized neither concentrated so Purchasers like big companies including Mercedes-Benz are dictating the terms for Suppliers. All Mercedes-Benz suppliers need to follow strict Code of Conduct and Standards .
- High Expertise and Capital Investment – Forward Integration: The threat of forward integration is minimal as it required high investment budget for expertise development and infrastructure.
- Mercedes-Benz’s Brand Attraction As Mercedes-Benz is an established brand so suppliers are keep attracting to be on it’s supplier’s portfolio. The present Mercedes-Benz Supply Chain consists of 40,000 supplier specially from North America, Europe and Asia, mentioned by Mercedes-Benz.
- Mercedes Benz Special Protocols for Suppliers –Digital Products: Mercedes-Benz designed special protocols for Suppliers in the following areas: Purchasing, Quality (Production Process and Product Approval PPA) ,Logistics ,Production Creation Process (Testing & Exchange of Digital Products) ,Sustainability and Environmental Protection.
Mercedes Benz Bargaining Power of Buyers
- Excessive Information Availability: As due to excessive information available about features prices and other details, more over the switching cost is also higher as after sales services and availability of parts are also attached with purchase decision so buyers possess bargain power at least in terms of purchase decision.
- Competition in Luxury Cars Sector –Social Media Trends (Twitter, Facebook): As Luxury Car sector is becoming competitive, especially with a focus on Electrification and Environmentally Friendly Luxury Cars which further gives a buyer a bargain power with the loads of options and knowledge.
Additionally customer’s purchase decisions are influenced by Social Media usage and trends, which further empowers and gathers scattered customers at one place. Any complain or controversy can be spread easily.
- Customer Satisfaction & Retention: Mercedes Benz scored 78 in Customer Satisfaction with Mercedes-Benz in the United States from 2006 to 2021.
Mercedes Benz Threat of Substitute Products or Services
- New Trending in Usage of Public Transportation or Environment Friendly Alternatives: Any new trending in the usage of Public Transport like new life and travelling pattern introduced during COVID may play the role of substitution.
- Fuel Prices or Any Macro Changes (Environment Level or Economic Level): Any global development in this area also give popularity to other alternatives like two wheelers etc can play the role of substitution.
Electrification in the car industry is one of the important factor as it is a new trending specially going on a large level may be a game changer for the industry at any point of time, adversely or positively both.
More over the natural balances of the planet is getting out so any non-routine changes in the oil reserves, gas-reserves, sea-level etc can be impacted the current automobile industry.
Tesla is also one of new players who captured the market exponentially and re-directing the trends of the traditional car industry, as the new methods and technology is never tested before and new moves of Tesla are not expected may also change the automobile industry dynamics.
References
- Mercedes-Benz Annual Report
- Forbes, Profile,Mercedes-Benz
- Mercedes-Benz, Corporate History, Available at Mercedes-Benz
- Statista (March 11, 2022) Mercedes-Benz Car’s vehicle sales in FY 2021,by key region (in 1000 units).Statista.Availableat.Statista.
- Mercedes- Benz, The Benefits of Buying an Electric Car, Available at Mercedes-Benz
- Statista (March 11, 2022) Mercedes-Benz Cars & Van’s R&D expenditure from FY 2011 to FY 2021 (in billion euros) Available at. Statista
- Statista (December 13, 2022) Mercedes-Benz’s global brand value from 2006 to 2022 (in billion U.S. dollars) Available at.Statista
- Statista (September 13, 2022) Toyota Motor Corporation in the United States – Statistics & Facts (in billion U.S. dollars) Available atStatista
- Statista (June 16,2022) Most valuable brands within the automotive sector worldwide as of 2022,by brand value (in billion U.S. dollars).Available at Statista
- Statista (July, 14, 2021) BMW’s global brand value from 2010 to 2021 (in billion U.S. dollars)| Statista. Statista.Availableat Statista
- Our Integrity Code Available at
- Daimler Business Partner Standards Available at
- Mercedes Benz Special Terms for 2020
- Human Rights in Supply Chain, Available at
- Statista (September 28,2022) Customer Satisfaction with Mercedes-Benz in the United States from 2006 to 2021 (index score) Available at .Statista