International business in focus Essay Example | Topics and Well Written Essays - 3000 words

International business in focus - Essay Example Section B: Identification of the Challenges Pestle Analysis Pestle Analysis will help in understanding the macro environmental issues (Lorat, 2009) Political The road tax has directly been linked to the total amount of emission and MOT (Merchant Over Time) has been increased. The Government has held a meeting with the automobile sector to decide about the rules and regulations related to this industry. Economic Presently the global recession has resulted in the financial crisis and has decreased the consumer purchasing power all over the world. Due to this crisis, Mercedes and various other car manufacturers are finding it difficult in increasing the revenue and profit of the companies. It has even resulted in the closure of plants by many automobile manufacturers. In this global crisis, the exchange rate between Euro and pound has resulted in high price of the cars in United Kingdom. This has decreased the sales of the company even more. Social The social environment can mainly be c ategorized into the following categories: a) Age, b) Gender, c) Income. Mercedes products have been mainly targeted for the middle aged customers. The products are not popular to that extent among the youngsters because of high price of the cars. The overall high expenditure related to the Mercedes products is the reason behind targeting the middle and high income people. As the products do not offer different range of prices starting from high price to low price for covering all classes of the society, the products do not target low income consumers. In the present situation of economic recession, this strategy is creating various challenges for the company. Technological Mercedes adds advanced technological details like air bags, shatter proof windscreens, crumple zones, collapsible steering columns etc. Use of these technologies has allowed the company in manufacturing safer cars. The plant efficiency is increasing with time. Various new production methods have been introduced fo r improving the efficiency. The facility of e-commerce and Gizmos has helped in upgrading the technology advancement. Environmental The European Union has planned to bring a new legislation which states that the average carbon dioxide emitted from the European cars must not exceed 130 g/km by the year 2015. This might be a reason of increasing concern for the company. Legal The company has maintained good relationship with the government by following the legal framework of the country. The imposition of higher tax might increase the threat of the company. Porter’s Five Forces The industry analysis of Mercedes Benz will help in understand the competitive intensity in the automobile industry (Porter, 1980; 1985; Ahlstorm and Bruton, 2009) 1) Rivalry among the existing firms The rivalry among the companies in the market where Mercedes is operating is intense. The big competitors of Mercedes Benz are BMW, AUDI, JAGUAR, ALFA ROMEO, ASTON MARTIN. Thus all big players provide their best offerings to the customers to seek their attraction. The increased rivalry has resulted in all these firms producing similar types of products, and expanding their operations into other segments like offering financial services, various alcoholic products etc. Thus the rivalry from the existing firms is very high. 2) Threat of new entrants Presently the threat of new entrants is low in the market segment where Mercedes Benz is performing its business operations. This might be because of the