I. Strategic Profile and Case Analysis Purpose

            Porsche is an automobile company which is highly successful in the manufacturing of high quality sports cars. In 2010, the organisation of Porsche faced a major change after a hostile takeover by Volkswagen Auto Group (VW). It also owns other companies such as Audi, Bentley, and Lamborghini making it the third world’s largest automobile manufacturer in the world. Volkswagen plans to gain the top position using a platform called Strategy 2018. To achieve this, VW plans to increase the limited production of Porsche through the development of new product lines such as sedans and SUVs aside from sports cars. It also wants to absorb the technology and innovation of Porsche and apply them to other automobile brands owned by VW. However, these plans represent a potential risk for the brand image of Porsche since these can negatively affect the perception of quality and loyalty among Porsche customers. Thus, Matthias Mueller, the new CEO of Porsche, needs to make a significant strategic decision. Muller has to decide effectively whether Porsche should diversify its production or focus on delivering its core competency which is the production of sports cars. In addition, Muller also needs to create a strategy that will prevent the potential brand dilution of Porsche.

II. Situation Analysis

General Environment

            The economic environment where the automobile industry operates is highly unstable and volatile. This is a result of the financial crisis and economic recession emerging in different countries. This situation can greatly affect the purchasing decision of customers.

Industry Environment

            Sports cars are a specialised segment in the automobile industry with a very specific target market which are the affluent race car enthusiasts. Even though there is a small market for this segment, each purchase constitutes very high profit margin. For this reason, a lot of automobile companies are also designing and manufacturing sports cars. This led to the increased competition for this segment in the industry. Porsche is the leading brand for sports cars in the world. On the other hand, Sedan and SUVs are also generating increased demand from the global market. This represents an opportunity that differentiated car manufacturers can take advantage. However, this segment already has numerous competitors. In general, there is increased competition in the automobile industry since buyers incur low switching cost as a result of high availability of various automobiles.

Competitor Environment

            Volkswagen Auto Group is facing intense competition from Toyota and General Motors in terms of market share and revenues. These companies also have their own high end sports cars and luxury cars which directly compete with Porsche and other sports cars owned by VW. This requires VW to design effectively and market their products in a superior way compared to its competitors.

III. SWOT Analysis of Porsche

Strengths

            Porsche is the world’s strongest sports car brand which denotes high loyalty and high quality perception among its customers. It also has a strong culture for technology and innovation which makes its cars highly reliable. In effect, Porsche consistently experiences very high sales from all its models of sports and race cars.

Weakness

            Although Porsche has proven itself in the market for sports cars, the company has not yet gained a strong reputation for manufacturing other segments such as sedans and SUVs. This makes it difficult for Porsche to position itself effectively in the new market segments.

Opportunity

            There is an increased demand for SUVs and Sedans in the global market. This is an opportunity for Porsche to increase its revenues by diversifying its product lines for a broader market segment.

Threat

            T he plan of the Volkswagen to let Porsche manufacture a new product lines aside from sports cars can lead to a risk of brand dilution for Porsche. There is a possibility that the perceived quality and high differentiation that Porsche was able to position to the market will be reduced. There is also a risk that the loyal customers of Porsche will shift to other automobile companies which are solely committed in the manufacturing of high quality and unique sports cars.

IV. Strategy Formulation

Strategic Alternatives

1. Diversification

            The new CEO of Porsche can choose to take advantage of higher revenue opportunity by developing new product lines other than sports cars to support the goals of the mother company Volkswagen. This will require a transition of focus from the sports car enthusiasts to a broader market segment.

2. Product Differentiation

            The new CEO can also choose to focus in the production of high quality sports cars for its original target market to prevent brand dilution and retain customer loyalty. Alternative Evaluation

Alternative Choice

            Based on the analysis of the advantages and disadvantages, product differentiation is the most appropriate strategic action of Porsche. By focusing on providing high satisfaction to its loyal customers, Porsche can still experience high profitability in the automobile industry. Moreover, it can prevent the dilution of the strong brand image of Porsche among its target market. Since high quality brand is the most valuable asset of a company, it is very significant that Porsche will protect this competitive advantage.

Strategy Implementation

            To increase the differentiation of its sports cars, Porsche will continue to study latest technology and apply it to its models. It will also study the latest trend in car racing in order to efficiently respond to the needs of its target market. Since Porsche will ensure that all its models are a product of rigorous study, Porsche will continue to release limited models of quality and highly reliable sports cars. This will ensure superior customer satisfaction and increased profitability.

Strategic and Non Strategic Decisions

Strategic Decisions

For companies looking to expand, the Ansoff business matrix has four alternatives that involve market expansion, market growth, diversification and product development (Kipley et. al., 2012). The creation of products is a technique that is marked by the launch of new products into developed markets. Samsung seems to have thoroughly accepted this policy.

Samsung is renowned for supplying computer goods and cell phones to a wide degree. Although the firm has diversified into other markets, it is still working hard in its core industry to retain market leadership. According to market share, it placed first in the television industry. In comparison, thanks to its expenditure in smart phones, the organisation enjoyed comparable scores in the smartphone market. Given all this, competitiveness in the telecommunications industry has put Samsung under extreme financial stress. It could be the industry leader, but it has lost some market share after cable providers joined the touchtone cellular, Telev, and PC

Industries (See Appendix 2 for the Situational Analysis).

Any of the company’s latest technologies are more adaptable than prior products. For eg, the Samsung edition of the Android smartphone is more consistent with the market’s current software. Since their goods lack the same capabilities, industry leaders like Apple are nervous about this capability. In addition, to fix the vulnerabilities that were present in older goods, the business now utilizes second mover advantage. To make its devices stand out, it has focused on features such as stability (Reed, 2013).

Across emerging and current product categories, the company has a reputation for creativity. It hired many scholars and innovators in the year 2012. This resulted into more than 5,000 patents being licensed that year. As a consequence of these considerations, the corporation came in second place among the largest proprietary firms in the United States. For its outstanding results, Samsung has won a number of awards. It won four awards in Europe from EISA, which is a recognition scheme for players in the audio and video industry (Samsung, 2013).

Theoretically, corporations can often follow a green strategy alternative that relies, among other factors, on infrastructure, carbon consumption, and customer recycling habits (Kipley et. al., 2012). Samsung was called the 9th best global brand in the market by the Best Global Brands portfolio. The latter achievement emerged through its funding of the Olympics in London 2012. Other corporate funding programs have also been prioritized by the company. The company’s contribution to corporate social responsibility is undeniable. It has a recycling policy in operation at its production plants. This change is aligned with existing environmental preferences for clean development (Refer to appendix 5 on PESTLE analysis). It has also dedicated itself to preserving the atmosphere by eliminating PVCs and other hazardous products (Guardian, 2012). This methods can also offer an organization ecological benefit according to green strategy theories.

Output is also something worth mentioning inside the group. Because of its range of manufacturing centers, Samsung is able to hold its development costs down. Since the organization is headquartered in Asia, it is in a rare place to choose low-cost manufacturing countries. As a consequence of its low manufacturing prices, it has been able to reach comfortable profit margins. The company’s multinational presence leaves it poised to make such a decision. The organization’s good negotiating ability has also helped hold running expenses down. In the semiconductor, cell phone, and television set markets, the company wields tremendous clout over its vendors. This makes it easier to bargain with those labels and thereby create profitable strategies to work with the discrepancies.

Cost leadership can be described as the above step. Michael Porter described several generic tactics that firms should indulge in, and one of them is cost leadership (Porter, 2008). Organizations here lower their cost of output, enjoy better profit margins, and thereby preserve their competitors’ competitive edge. Thus, philosophy approves the business judgment of Samsung.

Non Strategic Decisions

Marketing efforts have also been impressive for the company. The value of the Samsung brand is constantly improving. It is now at $33 billion, which was an increase of 40% from the previous year (Interbrand, 2012). This company has been targeting top technology markets like the US for its products. Branding is not a strategic but an operational decision. Marketing is only one of the ways in which companies implement their grand plan, so it cannot be categorised as a strategic decision.

Employees usually collaborate with human resource personnel in order to give their ideas about certain occurrences. (Refer to appendix 9). This is a non strategic decision because it occurs on a daily basis and is only one of many options to achieve the company talent management strategy. For reference on how the company manages talents strategically, refer to Appendix 1. This was an illustration of the vision that the company has for itself in an attempt to become the best place to work. The image in Appendix 9 also has details about the company’s approaches to achieve a certain vision by 2020. The plan governs operational decisions

 Samsung unveiled its prestigious 3D TV brands globally in the major countries like US, UK, Australia and China. The product was launched in all the major stores like John Lewis, Curry’s etc (Refer to appendix 6). This was a non strategic decision owing to the fact that it was operational. Product launches are a manifestation of the company’s strategy for innovation, but are not an actual long term plan.

Risks

In risk analysis, one must look at three key aspects that include risk capacity, risk tolerance and risk required (PWC, 2013). Risk capacity entails all the financial aspects of a client’s business and they include net worth, balance sheet, and revenue inflows. These figures give a brief history of the nature of risks taken by Samsung. In the next segment in this report, details of Samsung’s financial position can be found. The company appears to have strong cash flows (Also refer to appendix 4 on SWOT analysis). This implies that it has the financial backing needed to invest in new ventures.

 After looking at risk capacity, one must follow through on risk tolerance. This parameter is a measure of the company’s willingness to take risk. For this aspect, one must look at the frame of mind of the company and establish whether they are capable of handling such risks. Samsung is one of the most aggressive organisations in the smart phone industry. The firm is currently competing with companies that consider it its suppliers. The organisation recently entered into the Android market thus causing ripples across Apple’s and Google’s market share. The firm decided to name its new innovation the security-enhanced android. Such a label has the implication that other organisations offering the same product were not secure. The company had worked with Apple and Google for a relatively long time. However, this latest move has caused the two companies to rethink their strategy.

Google is now using a different supplier – Motorola to create its version of the X-phone. Conversely, Apple has decided to partner with other organisations for its android market. The two new competitors have realised that they cannot keep being a market to an organisation that threatens their very existence. As a consequence, most of the buyers have terminated their relationship with Samsung. Such responses pose serious problems for Samsung in the future. While entry into new technology markets may boost its revenue at the onset, some questions may arise on the sustainability of the practice (Reuters, 2013). The company may lose the partners that it had worked with for a long time. Therefore, for every two steps it makes in such new markets, the firm must encounter a backward step with regard to its older partners. This undermines its profitability in the long run (Iwatani and Sherr, 2011).

These actions indicate that Samsung has a high risk tolerance. Interactive strategies in business refer to those approaches that depend on a competitor’s moves (Heifetz, 2012). Sometimes, this may manifest as a form of cooperation or it may be explained through game theory. This appears to be the path taken by Samsung. The method may generate unwanted reactions from rivals. Despite obvious indications that using game theory is a relatively high risks scenario, Samsung appears to be willing to take the plunge. It may be necessary to moderate these risks in the future.

Lastly, businesses must look at risk required when making strategic decisions. All companies have their own goals, which involve risk to a certain extent. The timeline that they must operate in prior to completion of the strategy is also worth noting. Samsung needs to expand the sale of its 3D television sets. This must occur within the next few years. International brands like Sony, Sharp LG, Philips and Panasonic have more than a quarter of high-end market segment for 3D television sets (Refer to appendix 6). By the year 2014 3D sets will have a market share of 39% and a value of more than $117billion. The company must take risks by considering different market segments.

Overall, Samsung has a huge financial base, which implies that its risk appetite is relatively high. Furthermore, the company has a contingent of loyal employees who are likely to stick by it even in tough times. The brand name is solid and has even garnered a reputation for entering into uncharted territory. Acquisitions have also been a common occurrence. Therefore, the company has a high risk appetite, which is likely to be manifested in new ventures aligned to the business.

Financial Overview

The firm has enjoyed increased income over the last three years. In 2010, it had a net income of KRW 16,147 billion. This reduced to KRW 13,759 billion and then increased to KRW 23, 845 billion. The corresponding operating profit for these same years was KRW 16,147 billion, KRW 13, 759 and KRW 23, 845. Cash flows from operating activities also followed the same pattern. They increased, decreased and then increased again between 2010 and 2012. These figures stood at KRW 23, 827 billion, then 22, 918 billion and finally increased to KRW 37, 973 in 2012. The annual report for 2013 is yet to be released but is poised to be quite positive.

Shareholders’ equity rose steadily within this period of analysis. In 2010, it stood at KRW 89, 349 billion. Subsequently, the figure became $101, 314 billion and finally in 2012, it stood at KRW 121, 480. Investing activities took a toll on the company as the income from these activities was negative throughout the three years under analysis. In fact, expansion activities are the number one reason behind its relatively low profit margins.

Overall, the most recent sales revenue are KRW 201 trillion. This is approximately, double the amount from the previous year. Additionally, the organisation has a stable capital and liability ratio. The latter figure is 49.1% while the capital adequacy ratio is currently at 79.5%  (Samsung 2013)

Income Statements 2010 2011 2012 2012

Sales 154,630 165,002 201,104 220101,104

Operating Profit 17,297 15,644 29,049 290499,049

Net Income 16,147 13,759 23,845 23,845

Balance Sheets

Assets 134,289 155,800 181,072 181,072

Liabilities 44,940 54,487, 59, 59159,591

Shareholders’ Equity 89,349 101,314 121, 480 121,480

Cash Flows

Cash Flows from Operating Activities 23,827 22,918 37,973 37,973

Cash Flows from Investing Activities (23,985) (21,113) (31,322) (31,322)

Cash Flows from Financing Activities (152) 3,110 (1,865) (1,865)

(in billions of KRW)

Recommendations

Samsung is in a place to develop and raise its marketplace share by becoming a worldwide resource of telecom services. In the strategic decisions, it was shown that the company has lost a lot of market share to rivals. It can reclaim these aspects by adopting a more proactive approach.

Under the strategic decisions, it was shown that the company has a tendency to become a cost leader. It needs to expand this strategy in all its core business. The strategic decision of diversification must be rethought in order to dwell on televisions sets.

Samsung is a global brand, so it can easily step in both the high and low end market segments owing to its overall resources and experience in the market. Samsung must be a part of a big upgrade of the novel 3D Telev system that will take place across the globe.

Samsung may have to rethink its aggressive strategy of competing with most of its consumers. The latter companies always have the option of selecting other suppliers as they have a high bargaining power. In order to cub patent infringement, it can consider partnering or merging with its competitors. If this is not tenable, then it may need to do more legal research concerning its new products.

Conclusion

Samsung seems to be making waves within the electronic industry. However, its sustainability in the industry can be put into question if it does not reverse its current strategic choices. The company prefers to use game theory in order to make its strategic moves. This has brought some legal and corporate challenges. Instead, the company should dwell on entering the high segment market for the sale of 3D televisions. It should use cost leadership to achieve this goal by selling high-quality televisions to the new target market. A risk analysis has shown that the company has a high risk appetite. Samsung has a supportive employee base as well as a sound financial position. Therefore, the company should take risks that enable achievement of its strategic goals.

Appendix

1. Strategy at Samsung from the Annual Report

2. Situational Analysis

The rivalry in the telecom business has put Samsung in intense financial stress and the business faced a great loss in marketplace share when cable firms presented complete resolutions to its clientele that enclosed touchtone phone, PC and TV services. Samsung is in a place to develop and raise its marketplace share by moving its objective of becoming a highly money-making worldwide resource of telecom services into realism.

3. Gap Analysis

An association should think about all possible reasons to solve matters and make the best choices. By enhancing decision process, knowledge administration, worker requirements and synchronization, work place infrastructure has a considerable effect on managerial presentation. First companies depend upon the capability of people to organize their individual work endeavor toward a universal objective. Samsung is experienced with financial pressures. They team up to organize plans to streamline the corporation. Through the plans they are trying to put into practice, Samsung is having complexity communicating the details to their workers. Samsung is known for treating their workers well, so they do not want to damage that standing for the reason that their employees are very important part of the business.

4. SWOT Analysis

Strengths

• Customers of the Samsung are reliable and supporting the brand.
• Samsung is currently enjoying difficult position against its rivals.
• Samsung is keeping very good business relationship with their vendors and suppliers.
• Samsung electric company is financially sound and stable.

Weaknesses

• Samsung is facing furious competition by its rivals.
• Trade unions in South Korean are tactically links and they are very strong while negotiating and bargaining.
• Marketing executives required improvements in all the essentials of marketing strategies.

Opportunities

• The economic situation in Seoul (Korea) apparently looks positive.
• The government is giving consistent policy to Samsung.
• Samsung is rationally equipped to be careful of the changes in technology.

Threats

• The law has been passed very often in relation to the industry sector.
• Technological changes are taking place frequently in the industry.

5. PESTLE Analysis

Political Features: These features have a great power on the ruling of firms that consists of laws enforced by the governmental body in which firms should function. As indicated by the study, the political setting in UK seems quite stable and steady. Regulations planned by the novel conformist regime like taxes, cutting the communal expenses and judgment to increase gasoline price will have strong effect on the purchasing power of customers. In addition, the business policies of Korea also plays crucial role for supporting worldwide competitiveness to relocate expertise in exchange for marketplace admittance.

Economic Features: The financial Features plays very critical and significant position in marketing the 3D TV. Financial depression or decline of financial system decreased the spending power of people. U.K market is in danger of extinction by the economic slump. As the redundancy rate rises, customer’s excitement for novel technology may be tangential. Sale volumes have been incessantly decreasing in value and the exchange rate is all time low that will boost the import cost.

Social Features: Current age band of people has strong zeal and mania for innovative tools and expertise. Electronics market plays very important function in satisfying this passion. A young person watching late nighttime programs and getting enthusiastic to television programs that decreases their attention towards games and studies is an imperative societal feature.

Technical Features: The electronics market has been well thought-out as one of the largely rising with low product life stages that have demonstrate the approach to worldwide earnings. A 3D television set is a special viewing television device that utilizes 3D techniques of manifestation that projects a television program into a rational 3 dimensional domain. Technical expertise is brand new to television market that further decreases people going to Cinemas. Samsung is leading the market with another landmarkoforiginal and ground-breaking expertise

Ecological Features: Customers are having more consciousness towards ecological and expecting increased power effectiveness, inconsequential or no release of hazardous energy.

Lawful Features: Intellectual possessions are turning out to be a critical and imperative in the market. There are huge odds of disagreements can take place like the recent famous Apple’s disagreement with Google’s Nexus One regarding a copyright matter. Samsung itself won a heated discussion recently in opposition to Sharp on the subject of a copyright matter that was started in the year 2007. Legislation concerning neighboring worker civil liberties, taxes and Intellectual possessions will out influence on Samsung’s tactical choices.

6. Marketing Mix

In modern marketing, marketing combination is an important term and it is rationally referred to as a convenient method that the enterprise combines to elicit the response it wants in the intended market, because it focuses on all the items a corporation may do to convince the demand for its produced products (Kotler and Armstrong, 2004). Marketing is about offering the best commodity to the right consumers at the right price in the right manner. It’s how that gives meaning. Getting a product to market necessitates a cautious mixture of several primary ingredients, recognized as the Marketing Mix’s 4Ps: Product, Price, Promotion, and Place.

Product: The next-generation 3D television is a novel device. In basic words, to deliver real entertainment to its consumers, the product comprises of all features of creativity. The 3D TVs is expressed as the best breakthrough in the history of television with the blend of highest efficiency and trendy style. The user would have the prospect of viewing 3D TV shows seated at home with the Samsung 3D Screen, and watching TV will never be the same when the viewer would be able to admire and witness the sensation of their favourite sports, film and TV stars jumping from their TV into the living room right before them. Samsung sells a variety of 3D-capable LEDs, LCDs and Plasma TVs (www.samsung.com, 2010)

Price: Pricing is principally fixing a particular price for a services or product presented. In simple words, Kotler and Armstrong (2004) make clear the awareness of price to get the manufactured goods. Fixing a right price is not as simple as it looks. Usually in common regulation, populace asserts that a small cost will draw additional clientele. The argument is not accurate because clientele not only look for cost alone. Clients look forward to an appropriate service and value for the funds that he pays. They take action in reaction to value so a lesser cost does not fundamentally indicate stretched volume of sales if the services or item for consumption is not fulfilling the hopes of the customers. The expense starts from £ 1600 to £ 2000 for the 3D brands. The price is not that fair.

Placement: In big countries such as the United States, the United Kingdom, Australia, and China, Samsung launched the prestigious 3D Telev brands. The item is released in all major retailers, such as John Lewis, Curry’s, etc (Jobber and Fahy, 2003).

Promotion: The promotion captures the type of a new “Starter Kit” that presents United States costumers the opportunity to get pleasure from 3D movies in their own homes, rather than going to the cinema house to enjoy 3D movies. Samsung used the FIFA World Cup to advertise many value-added packs as well as the latest 3D Telev versions (Bradley, 2005). Bundled 3D film, home theater setups, and Blu-ray players were sold to potential customers. The Bonus 3D package will be accessible to people who buy those Samsung 3D TV models from retailers around the world. Samsung also introduced a strong marketing campaign for its collection of 3D TVs in addition to these bundled promotional deals. The promotional plan for television is worth £ 8 million over 3 months. It has now released £7 million print media ads in comparison to the TV advertising.

7. Market Segmentation

• Demographic by age:

1. Middle age groups
2. Teenagers
3. Executive class

• Behavioral segmentation
• Technological segmentation
• Designing the new products on the latest trends
• Affordable prices for all income groups of the society

8. Target Market

Samsung would approach both the high-end marketplace segment and the low-end marketplace segment since there are opportunities in both regions. Major labels such as Sony, Panasonic, LG, Philips and Sharp hold more than 75% of the high-end consumer segment worldwide. As a global product, Samsung can effectively reach into both the high-end and low-end marketing markets owing to its general awareness and willingness to invest in the market (Chang, 2008). According to industry analysis company Generator Research, a significant upgrade of the novel 3D TV platform is anticipated by 2014, with the market share for 3D sets expected to hit over 39 percent and a market valuation of more than $117 billion (Samsung.com, 2010).

The 3D TV industry is expected to rise from $902 million in 2008 to $22 billion in 2018, with regard to another market analysis company, DisplaySearch (2010). In particular, the 3D TV market is estimated to expand to $17 billion and the amount of units anticipated to be sold would rise from 200,000 units in 2009 to 64 million in 2018. (Samsung.com, 2010).

Globally, about 4.2 million 3D TVs are projected to be sold in the year of 2010, as all major players such as Samsung, SONY, Panasonic, LG and sharp are joining the market. According to recent market reports, the valuation is projected to triple to $12.9 million in the next year. The above figures appear massive, but the truth is that the above figures are just a fraction of the initial selling of LCD TVs. In the other side, it is estimated that by 2012, 27.4 million 3DTelevisions would have been sold worldwide, with 78.1 million units sold by 2015. This reflects an enormous 80.2 percent composite annual development between 2010 and 2015. The numbers reveal that 3D televisions are on the rise and will eventually supplant all other televisions.

Samsung, on the other hand, is geared up to direct in this Information and Technology era as it will use its power in semiconductor, telecom sectors and customer electronics know-how to develop ground-breaking multicapable products and generate dominant network that will empower the consumer for anytime, anyplace infrastructure and a higher quality of lifestyle. The 3D TV products launched by Samsung will reach the complete audience and entertain all the generations. Samsung will hope for a huge market share with its new product launched and beat the competitors (Mullins and Orville, 2013).

9. Cultural Web of the Samsung

Employers today are faced with the need of having stake in the growth of its employees which ultimately contributes to organizational success. Here, people expect that the employer contributes to their development and gives them a sense of ownership and pride in what they execute. Samsung Electronics, a leading company, ensures that it is able to have a culture which acknowledges human power and invests in employees accordingly. This investment in building the core competencies and winning the trust of the employees has a direct impact on organizational success and competitiveness. For this, the company promotes a flexible work-life culture which helps the employees keep a balance in their lives and be dynamic members of Samsung. The following paper elucidates the organizational culture and cultural web at Samsung.

Time Management: Samsung Electronics not only looks for giving a balanced work environment to its employees, but also works towards the improvement of productivity by giving flexible work schedules to the people which helps in elimination of unnecessary overtime, and maximization of work performance through channeled time management (Choi &Roh, 2009). Samsung believes that people should start taking responsibility of their time and focus on their jobs.

Involvement of the people in Work decision: Samsung has developed a culture that encourages employee involvement and suggestions in major organizational decisions where employees share knowledge, ideas and expertise to bear fruits in the future. Not only this, employees receive incentives for their active participation in knowledge sharing programs at the company (Choi &Roh, 2009).

Welfare programs: Samsung ensures that all the employees are in the best of their health, and their children are living a good life where they receive educational and health benefits. This continues after retirement where the employee is attributed to receive post retirement fringes as well.

Diversity management: With Samsung getting global, it has developed opportunities for the employees in which they can work under a creative atmosphere and enhance their skills. It has become increasingly essential for the company to understand that it works as a global organization, and diversity must be reflected in its processes. Here, every employee is given a chance to have a voice regardless of their cultural backgrounds (Sustainability report, 2009). The number of female employees has also increased dramatically as the business has expanded.

Samsung has continued to encourage the employees to work towards better work outcomes and embrace diversity as advantageous. For this, it raises awareness through cultural webs and links where people are encouraged to work together by embracing the values and behaviors of others (Choi &Roh, 2009).

Samsung enhances its operations through management of its efficiency where the HR systems are aligned properly and measured through the position evaluation system. There is a global help desk where employees who are not aware of the languages and cultures of their host countries are provided with important information and help is provided. This help involves everything from VISA processes to settlement in the host country. The global code of conduct guides the behavior of the people at Samsung which involves discrimination, transparency customer relationship management and collaboration where everyone in the framework contributes developing relationships and maximizing the outcomes. Therefore, it is evident that Samsung with time has made contributions to improve its cultural links by accepting diversity and cultural differences, and acquires the most reasonable assets i.e. employees for sustainability.

References

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• Iwatani, K. and Sherr, I., 2011. Apple: Samsung Copied Design. The Wall Street Journal, [online] 19 April. Available at: online.wsj.com/article/SB10001424052748703916004576271210109389154.html [Accessed 5 November 2013]
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• Porter, M.E., 2008. The five competitive forces that shape strategy. Harvard Business Review, 18, pp. 79–93.
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Section 1: Challenges and Objectives

1a. Challenges

A non-profit corporation exists without a profit incentive and involves itself in numerous social service programmes. Examination of the strengths and limitations of the enterprise (see SWOT table in appendix) contributes to the interpretation of the strategies by which the corporation will be able to cope with existing problems. It is crucial to analyse the opportunities facing the organisation and the threats that appear in the path of its growth. The management of the company gets a good picture of the potential directions in which it might use the possibilities and effectively cope with the risks on the basis of the results of this study. There are several main distinctions, but this study is identical to the analysis made by every other profit corporation. Any of these challenges are often faced by the Oxfam NGO. The effect of variables such as voluntary workers, fundraising, volunteer staff and long-term goodwill need to be addressed by administrators of a non-governmental organisation (NGO). As these organisations do not depend on profit for their sustainability, the factors listed above play a major role in achieving long-term performance (Turkishweekly, 2013).

From the study (see SWOT table in appendix), it was observed that companies are experiencing a range of difficulties in the NGO industry while undertaking marketing contact activities. Below, several of the notable problems are briefly addressed.

Priorities Identified

Challenge 1: Need to identify the loopholes that require immediate attention and allocate resources accordingly. Fund should be allocated on priority of the programs for which expenditure is undertaken. University students can donate a portion of their savings or pocket money on a monthly basis for funding Oxfam.

Challenge 2: Utilization of online networking sites is very important. Socially responsible corporate firms, as well as university students, have to be approached for volunteering in the NGO’s activities.  

Challenge 3: Offline communication is required in order to make a real impact on the university population. This would supplement the image of the NGO created in the virtual world of internet. Representatives would have to reach every campus in the cities in which the NGO has its physical presence and explain its causes to the target population.

1b. Objectives

The key objective of the organization is to fight poverty, since it is an impending evil, in the world that is developing fast. Therefore, new objectives towards developing its digital communication methods would be:

Section 2: Techniques and Requirements

2a. Critique

Digital communications approaches cast significant impact on the factors which are the key challenges to the organizations.  These factors as has been identified earlier are lack of funds, poor governance, absence of strategic planning and poor networking.

Oxfam uses various strategies to deal with the problem of fundraising (Oxfam, 2012). Some of the strategies currently used by the firm are advertising on the television and websites of various partner companies and sending mails to various individuals and organizations that intend to provide financial support to the NGO (OUP, n.d.). It also maintains good relationship with the individual donors that have both the capacity and the intention to donate large amounts to the NGO and directly approaches them through face to face interviews (OAAF, 2013). However, Oxfam faces the problem of lack of funds in the post financial recession period. The existing digital marketing methods fall short of collecting the necessary amount of funds for supporting all its activities (Oxfam, 2013b).

Website:

Oxfam has a good website that provides detailed description about the organization, its priority areas, the areas that it has worked upon in the past and its workshops. These details are updated from time to time. However, the website is not very user friendly. The links presented in the website to visit its photo galleries or list of past workshops are often found to be outdated. Replies are not made to comment or query mails sent by interested people that visit the site. For collection of funds, the management posts too many advertisements, which crowd the website.

Social Media Sites:

The NGO has a company page on the social media Facebook. This page is created with the aim of increasing its popularity among the Facebook users. Although the page has almost 3000 fans from different parts of the world, the activities and workshops are concentrated only among the existing members. There is an Oxfam forum in which new people can join only after the request is approved by the administrator. This delays the process of new joiners in the group. Besides, the Facebook contains too many theoretical facts and figures about the current situation of poverty and malnourishment. It requires more attractive contents so as to inspire more users to visit the page.

50% of Oxfam’s activities are restricted to specific websites and social networking channels which are popular in European countries and South Africa (Oxfam, n.d.). The NGO lacks identity in several South American countries and developing countries in East and South-Asia. This makes the connections of the organization location specific.

2b. Proposal

On the basis of the discussion presented in this paper, several new approaches can be recommended that would allow the organization to take their digital communication methods to higher levels of success. Since the organization aims at alleviating poverty and involving the university students in its activities, the new strategies have been formulated keeping in mind the new objectives.

• Video ads:

Video ads depicting the various activities of the organization to alleviate poverty and improve basic living condition of under-privileged population are effective in gaining mass attention (Edelman, 2010).

• Sponsored Contents:

Sponsored contents on various company websites, for example, gaming sites, online music channels or social networking sites are highly effective in attracting the attention of the university students.

• Search Engine Optimization (SEO) Techniques:

Marketers in Oxfam should regularly monitor the performance of the organization’s website. The website should display keywords related to the general interests of the target population and matches with the key words typed by them in the search engines. They should use Google trends to graphically asses the rate of appearance of the website’s in total volume of searches.

• Emailing:

Mass emailing is one of the most popularly used methods in the modern marketing contexts. It allows the individual to save the received message directly in their inboxes, which they can save for viewing at a later point of time.  

• Online Workshops:

The university students represent a highly active generation. They are students with enough spare time to enrol in various activities. Oxfam would be able to attract their attention though online workshops. They might take part in these workshops from their home or even university common room during free periods.

• Mobile Messages:

Messages can be sent to the target population in mass numbers. Oxfam endeavours to reach 40% of its beneficiaries and volunteers through mobile messages (Oxfam, 2013c).

• Company Pages in Social Networking Sites:

Promotions though social sites is highly effective. The company should develop a company profile in these sites and actively promote the web page so that more potential clients might visit their page (SPRI, 2011). Additionally, the link to the company webpage can be promoted on university websites.

2c. Critical Success Factors (CSFs)

Performance of the company with respect to all the four factors can be affected and improved though proper implementation of digital communication approaches. The critical success factors of these new marketing communication methods should be measured and rated (Merisavo, 2006).

2d. Key Performance Indicators (KPIs)

There are certain indicators that are crucial for understanding the market performance of the company (Bach, 2010). The KPIs are chosen according to the objectives developed by the organization for improvements in the near future.

Section 3: Communications Planning

Communication is an important factor that affects the activities of an organization and determines the level of performance that the firm might reflect in the market. Right selection of key words is a very important task in digital marketing. Since, responses of the audience depend on the results that are provided to them by the search engine on placing a particular search, proper match of keywords is essential. Effectiveness of conveying the subject matter depends on the manner of its conveyance and the audience to which the message has been communicated (Ashley-Roberts, 2011).

3a. Integration

3b. Media Planning

3c. ROI

The company should use more advanced and attractive methods of marketing that would attract the younger generation. University students either already have a source of income or going to enter the work force very soon. The company should aim at attracting the youth since if the feeling of social service can be imbibed into the minds of this population, it would be easier to attract higher volume of funds in the near future.

The return on investment that Oxfam desires to receive, involves increased engagement of the donors as well as beneficiaries along with a bettered understanding of the needs of the beneficiaries. Investment is measured as an average of the cost incurred by the organization on its staffs and the maintenance of external agencies.  

Figure 1: Monitoring report graph

(Source: Oxfam, 2013b)

A baseline performance of the variables is set against which the actual performance of the variable is compared. According to the indicators, monthly change in performance of key variables such as number of people attending workshops, monthly inbound traffic, number of feedback comments and enquiries about Oxfam services, are measured.

To calculate whether ROI is negative or positive, one has to consider both the value generated by the changing performance of the variables and the cost incurred in moving away from traditional methods of marketing and adopting the modern methods of digital marketing communications.

Reference List

• Ashley-Roberts, A., 2011. Writing a Digital Marketing Communications Plan. [online] Available at: < http://www.simplydigitalmarketing.com/writing-a-digital-marketing-communications-plan > [Accessed 29 October 2013].
• Bach, D., 2010. Why Going Social Is So Crucial. [online] Available at: < http://socialmediatoday.com/index.php?q=provoke/240702/why-going-social-so-crucial > [Accessed 29 October 2013].
• Edelman, D., 2010. Four Ways to Get More Value from Digital Marketing. [online] Available at: < http://www.mckinsey.com/insights/marketing_sales/four_ways_to_get_more_value_from_digital_marketing > [Accessed 29 October 2013].
• Merisavo, M., 2006. The Effects of Digital Marketing Communication on Customer Loyalty: An Integrative Model and Research Propositions. [pdf] Helsinki School of Economics. Available at: < http://epub.lib.aalto.fi/pdf/wp/w400.pdf > [Accessed 29 October 2013].
• Ngoconnect, 2009. NGO Marketing. [pdf] Capable partners program. Available at: < www.ngoconnect.net/documents/592341/749044/External+Relations+-+Marketing+Part+1+-+Communications+Plan > [Accessed 29 October 2013].
• OAAF, 2013. Who We Are. [online] Available at: < http://www.oaaf.org/who-we-are.htm > [Accessed 29 October 2013].
• OUP, n.d. Not-For-Profit Marketing. [pdf] Oxford University. Available at: < http://fds.oup.com/www.oup.co.uk/pdf/he/bfpinsights/chapter-16.pdf > [Accessed 29 October 2013].
• Oxfam, 2012. Oxfam Annual Report & Accounts 2011/12. [pdf] Oxfam. Available at: < http://www.oxfam.org.uk/~/media/Files/OGB/What%20we%20do/About%20us/Plans%20reports%20and%20policies/documents/Annual-report-2011-12.ashx > [Accessed 29 October 2013].
• Oxfam, 2013a. Oxfam Welcomes Commission on Poverty’s Setting of official Poverty Line. [online] Available at: < http://www.oxfam.org.hk/en/news_2265.aspx > [Accessed 29 October 2013].
• Oxfam, 2013b. Our Strategic Direction. [online] Available at: < https://www.oxfam.org.au/about-us/assessing-our-performance/what-we-plan-to-achieve/our-strategic-direction/ > [Accessed 29 October 2013].
• Oxfam, 2013c. The Power of People against Poverty. [pdf] Oxfam. Available at: < http://www.oxfam.org/sites/www.oxfam.org/files/oxfam-strategic-plan-2013-2019.pdf > [Accessed 29 October 2013].
• Oxfam, n.d. Development. [online] Available at: < http://www.oxfam.org/en/development > [Accessed 29 October 2013].
• Penkenya, n.d. Summary of Challenges and Opportunities facing NGOs and the NGO Sector. [pdf] n.p. Available at: < http://www.penkenya.org/UserSiteFiles/public/challenges%20and%20opportunities%20facing%20NGOS.pdf > [Accessed 29 October 2013].
• SPRI, 2011. Corporate Communication and Public Relations Practice Monitor 2011 Report. [pdf] Swiss Corporate Communication. Available at: < http://www.spri.ch/fileadmin/medien/dokumente/Fachartikel/2011_Observatory_Report_Web.pdf > [Accessed 29 October 2013].
• Turkishweekly, 2013. Organizational Problems of Non-Governmental Organizations (NGOs). [online] Available at: < http://www.turkishweekly.net/article/159/organizational-problems-of-non-governmental-organizations-ngos.html > [Accessed 29 October 2013].

Appendix

SWOT Analysis 

Table of Contents

• Abstract
• Introduction
• Vision Statement
• Mission Statement
• Goal
• Objective
• Market size
• Position
• Competition
• Product life cycle
• Distribution channels
• Environmental forces
  • Porter’s 5 forces model
• Macro-economic factors
• Market Forces
  • Market Size and Growth Rate
  • Buyer Power and Customer Loyalty
• Competitive Intensity
  • Number of Competitors
  • Price Rivalry
  • Ease of Entry Substitutes
• Market Access
  • Customer familiarity
  • Channel Access
  • Sales Requirement
  • Company Fit
• Competitive Position
• Strategic market plans
• Biggest Roadblocks
• Issues in Tactical Marketing Strategy Development
• Process for Developing Next Marketing Plan
• Conclusion
• Recommendations
• References
• Appendix

Abstract

Mercedes Benz is a premier segment car which caters to niche market. Presently Mercedes Benz is facing a tough competition from other luxury car segments like BMW, Audi etc. Recently sales of Mercedes Benz have been increasing because of new demand from markets like China and India. With the increase of market size of luxury car segments, Mercedes Benz has increased their profit margin across the world. But tough tariff regulations and high input cost of the raw materials have led to increase in price of the cars. It is true that the organization is considered as one of the leading organizations within the luxurious automobile industry. Mercedes Benz needs to revise its marketing plan and objectives as the market demand is changing at a rapid pace. Introduction of fuel efficient cars in reasonable price will help the organization to develop potential client base. The organization mainly focuses on urban market. The organization cannot increase its business network all over a specific country if the organization does not increase its supply chain network.

Introduction

Mercedes-Benz is a German automobile manufacturer company. In the fall of 1998, Mercedes-Benz and Chrysler merged forming Daimler-Chrysler AG. This made Daimler-Chrysler the world’s third largest car manufacturer in terms of sales. Daimler-Chrysler is best known for making luxury sedans.  The company also manufacture commercial vehicles, aerospace products and sports utility vehicles. Today Mercedes-Benz USA is a wholly owned subsidiary of Daimler-AG. Presently Mercedes-Benz has their headquartered in Stuttgart, Baden-Württemberg, Germany. Mercedes-Benz cars were first sold in United States in the 1950s.These cars were mainly known as a symbol of status for high class consumers (Mercedes-Benz. 2013).

Vision Statement

The vision of the company is to become the number one in quality, Image and Profitability in the Automotive Sector (Mercedes-Benz, 2012)

Mission Statement

The mission statement of Mercedes Benz is to delight their customers in everything the company does. The company also want to make a continuous improvement in their Quality Management System and in their business processes. It follows an open minded corporate culture in their company where the employees will work in a team oriented approach and the company will have to accept their responsibility and perform to their optimum level. The company want to improve their quality of products and services. Another mission of Mercedes Benz is to be aware of the external environment and act accordingly. The company must maintain a professional relationship with their business partners who will help them in increasing more revenues and creating strong corporate connection worldwide (Mercedes-Benz, 2012).

Goal

The Goal of Mercedes Benz is to achieve a sustainable profitable growth and by doing that increase the value of the company. The company strive to achieve the leading position in their business through their operational excellence and efficiency. The company want to achieve this with the help of their high-performing and inspired set of employees. Another goal is to minimize the impact their cars have on the environment and climate. Their focus is to provide comfortable driving experience through alternative fuels (Daimler, 2011).

Objective

The objective of Mercedes Benz is to meet and satisfy the consumer demand which is growing worldwide. But the company also want to achieve this through the production of safe, fuel-efficient and low-emission vehicles. The objective is to have top quality cars with appealing design to it. The company want to increase their traditional strengths, while maintaining safety at the same time. The company also want to reduce their CO2 emissions more quickly than their competitors. Improving customer relationships is also important. This whole process will ultimately improve the efficiency (Daimler, 2011).

The following factors will affect the market position of Mercedes Benz:

Market size

Mercedes-Benz has shipped 126,421 vehicles this October, which is 15.3% more than any October of previous years. In passenger car segment the company have achieved another record of selling a total of 1,189,059 passenger cars in the beginning of this year which is a rise of 10.7% than previous year. Sales have picked up momentum mainly in the NAFTA region which includes United States, Mexico and Canada. Along with it the regions like Turkey and Japan has also contributed to its sales growth. In the Europe market, Mercedes-Benz has sold a total of 55,235 vehicles in the month of October with 6.9% growth. Strong growth was seen in the premium brand cars in UK, Turkey and Russia. In Home ground Germany Mercedes-Benz was able to sell 22,758 units which almost equalled previous year’s level. In October 2013, Mercedes-Benz has gained a market share of 9.5% and still remains the star player in the premium segment in its home market (Kotler and Keller, 2011).     

            In United States, the sales figure reached over 30,069 units, and thus recording a growth of 25.4% as compared to last month. With this it became the market leader in premium segment. In Brazil it recorded an increase of over 40% in sales figure since the start of the year 2013 (Daimler, 2013). In Asia and Pacific region there was an increase in the market share primarily through its record sales in Japan. In Japan, the brand has achieved a sales figure of over 42,580 units which is more than three times than that achieved in the same period previous year. In India also it was able to increase its’ sales figure by a third. Same case was followed in the Chinese market with its sales unit up by 9.1% to 17,348 vehicles (Daimler, 2013). Presently in China the locally produced E-Class and C-Class and the imported S-Class are in High demand (Usunier and Lee, 2012).            

Position

            Mercedes-Benz is known for its premium car segment category like E-Class, C-class, and S-class etc. The Target market is middle aged people who have middle to high incomes. The brand is not much popular with young people as it very expensive to buy and they don’t have enough money to buy it. Mercedes cars cater to both males as well as females as the company include both male and female specifications in their design. It has a Classy distinctiveness and elegance to its style. It doesn’t have a sporty look like BMW or Porsche (Best, 2013). This has been shown in (Figure 1 in the appendix.)

Competition

The main competition that Mercedes Benz faces is from BMW of North America, Porsche Cars, Audi and Saab Automobile USA. The competition between BMW and Mercedes-Benz is intense with each challenging the other head-on. Each other trying to come up with a car which would compete each other like C-class vs. 3-series,1-series vs. A/B-class, SL vs. 6-series , X3 vs. GLK, 5-series vs. E-class, Rolls-Royce vs. Maybach, Mini vs. Smart, S-class vs. 7-series, M division vs. AMG. Similarly the rivalry between Mercedes-Benz and Audi is fierce. With many successful launches of new cars like A3, A5, A7 and Q5 it has increased its market share from 4.5% in 2006 to 8.0% in 2011. But Mercedes-Benz has also increased from 13.0% to 16.6% (Hooley, Nicolaud and Piercy, 2011). Hence the competition is intense between them. (Figure 2 of the Appendix)

Product Life Cycle

Mercedes-Benz is now in the maturity phase of the Product life cycle. At this stage the company are clearly going for new innovations with newly launched cars like C-Class, CL-Class, CLA-Class, CLS-Class, E-Class etc. The market share is also more or less constant with no new markets available to capture (Besanko, Dranove, Shanley and Schaefer, 2013).

Distribution Channels

Mercedes-Benz is now investing across the country to expand their reach globally. For example in India the company have opened two dealerships, one at Surat and another at Goa with two more to come up. Similarly in China Benz has two distribution channels, one is Mercedes-Benz China, which sells only imported cars. The other is Beijing Benz, which sells China-made cars. These two distribution channel works to promote branding.

Environmental Forces

Porter’s 5 Forces Model

1. Bargaining Power of Buyer

The bargaining power of buyers in luxury car segment is high. In 2012 Mercedes-Benz was offering heavy discounts to some buyers in their premium category cars to maintain its lead over BMW in the U.S. These included a discount of $750 for C-Class segment, $3,000 for GKL-Class, $5,000 for GL-Class and $2,250 for E-class (Lamm, 1997).

2. Bargaining Power of Supplier

In the US the auto unions have tremendous power hence the company can easily demand more price from the company and so the bargaining power of the suppliers is high (Kapferer, 2008).

3. Threat of new entrants

Mercedes Benz targets niche market segment. For any new player to enter into the market, it has to set up their prestige of being a luxury car, and it will take several years to do it. Again luxury car market is at saturation point; hence growth is not as high as the rest of the market. Also the setup cost of such an industry is very high. Hence it will require huge capital base. Again the consumer base of this segment already has developed their taste for a particular brand of their choice. Hence it will be difficult for new players to enter into this segment. This shows that the threat of new entrants is relatively low as compared to car segments targeting the middle income group (Adler, 2006).

4. Threat of Substitutes

The threat of substitutes is medium-moderate. The sales of luxury automotive have increased with rise in consumers who are looking for cars that give them value. Hence more number of people are moving towards the luxury car segment though there will always be competition for brands catering to middle level people like Honda (Ahlstrom and Bruton, 2009).

5. Degree of Rivalry

The degree of rivalry within the industry is high. The luxury car industry is well established with companies like BMW, Audi engaging in turf completion with one another (Saxena, 2005).

Macro-Economic Factors

The social, political and legal forces that exist in the macro environment have to deal with by all the auto manufacturing companies. The company has to adhere to the changes like high import tariff of auto parts brought from abroad which can necessarily raise the cost of the car. Again the foreign exchange movement can affect the prices with depreciation in the local currency will result in high cost of body parts which have to be imported from outside.

The factors which shape market attractiveness are as follows:

Market Forces

Market Size and Growth Rate

The market size of the luxury car segment is increasing globally. The auto car sales have jumped 31.5 per cent, which is almost double the 17 per cent gain of the overall auto industry last year in the same month (Gupta, 2011).

High-End Rides in August

Buyer Power and Customer Loyalty

In the present world the customers are more informed than ever before as the company have all the information at their fingertips. This fact is critical because the company are associated with many social media sites which can give user reviews and the company can themselves do the research to find out which brand is giving more reliability and durability. Hence it is a serious threat towards potential buyers.

The Substitutes can also be a threat. Customers who go for luxury cars know that the company are looking to buy the best car their money can buy. With so much available options, Buyer power is considerably high here and can easily switch to other options to get the best value for their money (Ferrell and Hartline, 2011).

Competitive Intensity

Number of Competitors

Mercedes Benz mainly faces competition from luxury car segment like BMW, Audi, Lexus, and Cadillac etc. So there is large number of competitors which the company have to face.

Price Rivalry 

The price rivalry is intense between the competitors which each other trying to give high discounts to a section of their customers. The company offer more or less same comfort and quality so the one giving more discounts win.

Ease of Entry Substitutes

The threat of new entrants is relatively low. This is because of high initial investment required to set up the firm with majority of the capital invested in R&D. Again the economies of scale achieved by the established players are also quite high which enable them to give discounts or lower the cost without affecting their profitability.

Market Access

Customer Familiarity

Nowadays majority of the customers are familiar with luxury car segment and the company can easily search for their choice of car in the Internet. Hence customer knows what features the company need to comfort them and what extra to look into the features to buy them. It has a relative importance of 35% with attractiveness of 3. Hence it gets overall score of 105 (Albaum, 2006).

Channel Access

Luxury cars have gained channel access with majority of them opening the distribution channel across the world. The company are opening new Showrooms across the developing countries to access the market. It has a relative importance of 20% with attractiveness of 5. Hence it gets overall score of 100 (Brooklands Books, (2004).

Sales Requirement

Sales requirement of luxury car segment are giving discounts during period of slump growth in sales. Leasing of vehicles can also pick up sales. The company can also target the young customers buy reducing the price a little a giving a sporty look to it like BMW has done. It has a relative importance of 35% with attractiveness of 5. Hence it gets overall score of 175.

Company Fit

Company fit is also a major criterion for the sales to pick up. The Company has to follow appropriate strategy which will fit their objectives and goals. It has a relative importance of 10% with attractiveness of 6. Hence it gets overall score of 60.

(Figure 3 in the appendix.)

Competitive Position

Luxury car segment has a high competition in them.  Their competitive position with respect to intensity within the industry is very high and no player can afford to lose their position in the market because there’s a high cost associated with each product the company sell.

Strategic Market Plans

Luxury car industry is highly competitive and has high market attractiveness. Hence the company must go for offensive Strategy. The company must go for adaption of their sales organization as per changing customer wishes. The company must consolidate on new approaches in marketing, sales and after-sales service to offer customer a consistent premium-brand experience. The company must cater to newer, modern and younger groups through modernization of their brand, innovation and differentiated sales formats (Grewal, 2010). (Figure 6 in the appendix.)

Biggest Roadblocks

Mercedes Benz is one of the leading global automobile manufacturing and distributing organizations headquartered in Germany. The organization has significantly expanded its business operation in several global areas in order to develop potential customer base and increase market share. The organization developed employee and customer oriented mission statement. On the other hand, the vision of the organization is to increase brand image and profitability of the organization by improving product and service quality. It is one of the oldest and traditional vehicle manufacturing organizations (Henning-Thurau & Klee, 1997). Throughout many years the organization maintained its competitive market position in global market place by implementing several unique and innovative marketing and business operation strategy.

According to the corporate goals and business objectives, Mercedes Benz always prefer tries to implement offensive marketing strategy based on its leading competitive position in global marketplace. The organization always looks from its own point of view, does not consider customer’s point of view in the development of pricing strategy. The organization’s major corporate goal is to offer innovativeness and high quality products to the target market. The organization does not compromise with the quality of products. Therefore, the company have to implement several operational cost strategies in order to manufacture the vehicles. This strategy cannot be considered as realistic strategy as the organization always tries to achieve significant growth rate right after the introduction of a new vehicle. The company implement several offensive marketing and distribution strategy in order to gain rapid business growth rate through these new products. It is quite difficult to do so as the organization does not target the customers of all income and demographic segments (Barnes, 1997). This strategy and business goal can create huge problem for the organization due to low sales growth rate of the new products. It is true that Mercedes Benz has adopted quality-cost analysis structure in order to position each and every product. From this analysis, it is clear for all that the organization always try to maintain quality above the operating cost. Therefore, it is impossible to achieve business and corporate goals within quick period of time as the organization always targets high-income group customers.

Maintaining high quality in the vehicles is another major business operation strategy of the organization. In spite of its commitment, some customers are dissatisfied with the after sales service and quality aspects. Burning of oil issues, leaking of oil issues and technological problems in cars are affecting the brand image of the organization. The organization always tries to implement advance technology in vehicles to offer modern technological features and accessories in cars. In addition to this, the organization is trying to introduce fuel efficient and green vehicles to maintain the environmental sustainability (Baker, Walker, Mullins & Boyd, 1996). Unfortunately, the above mentioned issues are affecting the brand image of Mercedes Benz. Therefore, the organization is losing its prime and potential customers to the competitors. The process of rapid adoption and implementation of strategy in luxury automobile segment is making it difficult for the company to justify its vision and mission. Too much automation in the business process can create several problems for the organization, such as unexpected breakdown of vehicles and customer dissatisfaction.

Sales objective of Mercedes Benz is to maximize sales of products from initial point product introduction time. Several risk factors are associated with this strategy. First of all, it is important for an organization to introduce differentiated products after conducting an intense marketing research. The organization needs to give time behind research works in order to identify and determine the market demand and behaviour of customers. Aggressive sales growth strategy can result huge loss for the organization in near future due to lack of appropriate market research.

Issues in Tactical Marketing Strategy Development

            The goals and objectives of Mercedes Benz can become the key issues in the tactical marketing strategy development. Major goal of the organization is to become leading organization within the global automobile industry in terms of profitability. On the other hand, the objectives of the organization are to provide vehicles maintain high quality band safety aspects. It is discussed earlier that the organization does not compromise with quality of vehicles. Recently, the organization is trying to experiment new things in vehicles in order to ensure competitive advantages.

            These goals and objectives can make it difficult for the marketing managers to develop effective marketing strategies. As it is mentioned that the goal of the organization is to become most profitable organization within the luxurious automobile segment, therefore it is impossible for the managers to develop customer centric market strategies. It is true that recent economic slowdown has affected the purchasing behaviour of people. It is known to all the luxurious vehicles are considered as highly fuel consuming cars (Bowen, 1990). On the other hand, the customers are shifting from luxurious car segment to fuel efficient small cars segment in order to support their reduced disposable income. However, the organization has developed vision 2020 in order to target these segments of customers. According to this vision 2020, Mercedes Benz is trying to introduce several differentiated fuel efficient vehicles in different countries to gain market share growth (Juin, 2000). The organization is trying to cover a vast global market through this plan. In addition to this, the organization is trying to increase the number of inter-city outlets in order to capture more market share. The competitors of Mercedes Benz are adopting slow and steady business differentiation strategy due to change in market demand. It is important to consider the pricing factors along with other marketing aspects. It can help the distributors and marketing department of the organization to develop effective and tactical marketing strategy according to the market demand and customers of different income segment.

            It is discussed earlier that the organization is losing its brand image due to lack of effective quality control in the cars and other modes of transport. Rapid differentiation strategy is creating pressure on the quality control department. The organization needs to give time to the customers to accept a single product. Too much aggression can affect the brand image of the organization.

Process for Developing Next Marketing Plan

            Mercedes Benz is considered as one of the leading manufacturers and distributors of luxurious vehicles. The organization always tries to implement unique business strategies in order to maintain its competitive position in global market place. Mercedes Benz always tries to ensure the quality of vehicles. In addition to this, the organization also implements advanced technology in order to make cars and vehicles with modern and innovative accessories.

            However, it is discussed earlier that too much aggression and automation is associated with several risk factors. First of all, it can make it difficult for the organization to fulfil market demand in a quick period of time. In addition to this, the customers’ needs and market demand is changing at a significant rate due to change in social and economic environment (Fahy & Smithee, 1990). Several people around the globe are focusing on the consumption of fuel efficient small but attractive cars. Competitors like BMW and Audi have introduced small MUV in the market place considering this change in market needs and consumer behaviour. It is clear from the perceptual map that the organization introduces variety of luxurious models, but lack of fuel efficient cars can motivate the potential customers to switch over other brand name (Homburg & Giering, 2001).

            First of all, it is important for the organization to review each goal and objective that has been developed by the organization. At the same point of time it is necessary to monitor the business performances and sales margin of all the distributors in a given city or a specific location. It will help the management of the organization to identify real issues and problems that are associated with the development and implementation of business strategy. Mercedes Benz strongly depends on its product differentiation strategy (Zeithaml, 2002). Therefore, it is important for the organization to use marketing mix strategy in order to improve the performance of a specific product by adopting effective product, promotion, and pricing and distribution strategy. On the other hand, according to the product life cycle strategic tool it has been identified that the vehicles of the organization has reached to the maturity stage of the life cycle. Therefore, it is important to adopt reposition strategy or new product differentiation strategy. Here product differentiation means target new customers based on their several needs, such as social, economic and demographic needs.

            Mercedes Benz effectively implemented rapid business expansion strategy. This strategy is considered as one of the major business growth driver. The demand and needs of people in different countries cannot be similar. For example, people in countries like India and China always demand for fuel efficient and economic priced cars. In an addition, these people prefer low price cars due to inadequate quality of roads. Honda and Suzuki effectively understood the needs of customers. The company have implemented diversified business strategies in various countries depending on various external environmental factors of a particular country. It is important to maintain a balance between price, demand and quality based on external environmental factors of a specific nation (Smith, 1998).

            It is important Mercedes Benz to integrate price sensitivity aspect with the marketing plan. The management of the organization needs to develop research and development centre in all the countries in order to focus on quality of products. In addition to this, it is important to maintain effective customer service as several competitors of Mercedes Benz are trying to grab its market share by improving customer service (Morgan & Hunt, 1994). Promotion of the newly developed products is highly important to create effective customer awareness beside of the product development strategy. The marketing managers in each and every country need to target the potential group of customers by creating advertisements which can cover the necessity of the target customers. Social needs of people used to differ from a country to another country. Therefore, it is important to focus on the promotional strategies (Wakefield & Blodgett, 1999).

            In terms of product development strategy, it is important for the management of the organization is to introduce products of various segments. In addition to this, it is the responsibility of the research and development team of the organization to introduce fuel efficient cars or the cars that could run by substitute energy resources (Table 2). Mercedes Benz always ensures the quality of vehicles (Sherman, Mathur & Smith, 1997). Therefore, effective quality and green energy resource can increase the brand value of the organization. In addition to this, it can help the marketing managers to develop significant tactical marketing strategies.

            The organization is planning to increase the number of its distribution stores as limited presence in a country can affect the profitability and sales margin of an organization. Now-a-days, the organization introduced discounted pricing strategy for specific vehicles due to lack of sales and economic downturn. This discounting strategy can reduce its brand value. The organization can implement reposition strategy by reducing business operation cost (Lovelock, 1998). In addition to this, lack of effective relationship with suppliers is making it difficult for the organization to expand number of outlets within a country. The organization needs to target the people of middle class income group in several emerging economies by introducing fuel efficient small and attractive cars. It can help the organization to fulfil its goals and objectives according to the newly developed marketing plan.

Conclusion

Mercedes Benz is one of the top ten most recognised brands around the world. The company have attained high brand success and marketing success over the years. It is the world’s oldest automotive brand that still exists today. People are looking for value of their money and hence the company are willing to buy premium cars. The competition between the luxury cars is intense and Mercedes is lagging behind a little. Only by formulating appropriate business strategy and implementation of it the company can improve their global ranking.

Recommendations

            It is clear from the above discussion that the manufactured vehicles of Mercedes Benz have reached to the maturity stage of the product life cycle. Therefore, it is necessary to bring some innovative ideas in next marketing strategy in order to meet business goals and objectives. Following recommendation plan will help the organization to bring its competitive position in market place.

• First of all it is important for the management of the organization to review present business goals, marketing strategy and objectives to determine the effectiveness of developed strategy and real business outcomes.
• Mercedes Benz should try to increase its supply chain and distributor networks. It is true that the organization is ailing to meet current market demand due to limited product supply. The management of the organization needs to motivate the dealers or the distributors to increase the number of outlets. Direct selling and online promotional strategy can help these dealers to create effective customer awareness (Meenaghan, 2001). In addition to this, the dealers or the distributors should organize promotional rally of cars or vehicles to attract the target customers. Several potential competitors are using this specific promotional strategy to increase customer awareness.
• It is true that the organization has global presence, but limited manufacturing plants in each and every country are affecting the organization’s profitability. Now-a-days, the value of foreign currency is changing at rapid fluctuation rate due to economic downturn in several developed countries. Therefore, the organization is finding it difficult to maximize business profit in the developing and third world countries. It is important to increase the number of manufacturing firms inside the countries. It can help the organization in several ways. First of all, it will help to generate employment (Fisher & Wakefield, 1998). Secondly, this strategy can help the organization to reduce overall business operation cost.
• The management of the organization should try to introduce small segmented cars as the demand for these types of vehicles is significantly increasing among the target customers. The competitors of Mercedes Benz are trying to enter in this specific market segment to tap the potential market. It is important for Mercedes Benz to adopt this product diversification strategy to foster sales growth rate.
• Mercedes Benz has to adopt competitive pricing strategy in order to become most profitable organizations within the competitive global automobile industry. Continuous hike in fuel price and high maintenance cost of luxurious cars pushing the global customers to consume hatchback and fuel efficient small segment cars.
• Last but not the least; the organization needs to develop strong quality control team and research and development team in every operating country. It will help Mercedes Benz to meet its commitment to target customer, mission and vision. Lack of effective quality and customer service can result lose of client base which can affect the sales growth of the organization.

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Appendix

Figure 1: Perceptual Map

Figure 2: Competition between Mercedes Benz, BMW and Audi

Figure 3: Factors that Shape Market Attractiveness

Figure 4: Indexing the Market Attractiveness of a Market

Figure 5: Indexing the Market Attractiveness of a Market

Figure 6:   Portfolio Analysis and Strategic Market Plans

Table 1: SWOT analysis

Table 2: 4Ps Matrix

Corporate Culture

The organization is committed to become the leading employer in the global automobile industry. The organization always tries to integrate innovation and creativity in order to maintain its business values. The organization believes in high quality customer service in order to develop strong relationship with the customers.