Strategy and Structure Case: Mercedes-Benz

4049 Words May 15th, 2012 17 Pages
Harvard Business School

9-394-084
November 30, 1993

Mercedes-Benz
Mercedes-Benz, world-renowned as a manufacturer of luxury automobiles, was the automotive division of Daimler-Benz AG, Germany’s largest industrial group. Daimler-Benz was created in 1926 by two of Germany’s automobile pioneers, Gottlieb Daimler and Karl Benz, each of whom had been active in early designs of motorized vehicles. Following World War I, with Germany’s economy in shambles and with Ford Motor Company establishing itself as a world leader in passenger automobiles, Daimler and Benz agreed to merge their firms. As the German economy revived during the 1930s, Daimler-Benz prospered. Over the next years, Mercedes-Benz established a reputation as an automobile
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The Passenger Car Division offered three levels of luxury cars in 1991: S-Class Sedans and Coupés, including the prestigious 500
SEC and 600 SEC S-Class Coupés, Mid-Series cars including T-models, and the Compact Series, which included the popular Mercedes 190. The Commercial Vehicle Division manufactured trucks and buses, and had production broadly distributed around the world, with manufacturing sites in
Mexico, Argentina, Turkey, and the United States. The U.S. operation included Freightliner, a leader in U.S. heavy-duty trucks. In 1992, fully 112,800 commercial vehicles were produced outside of
Germany. Recent performance figures for Mercedes-Benz are presented in Exhibit 3.
Mercedes-Benz’s automobiles competed at the high end of an industry that was increasingly characterized by global competition. The world’s leading automobile companies included U.S.,
Japanese, and European firms, as shown on Exhibit 4. Many firms, including General Motors and
Ford, had long ago set up manufacturing plants overseas, and tended to build their cars close to the point of sales. Other firms, including the leading Japanese automakers of Toyota and Nissan, had for decades pursued an export strategy, building autos in large Japanese factories and shipping them across the oceans. In the 1980s, many of these firms began to establish manufacturing plants in the
United States and Europe. Automobile manufacturing depended on inputs ranging from steel to auto parts, which could

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