Leadership of Mercedes-Benz - Essay Example

A critical evaluation of the structure and culture of Mercedes Benz, and the way in which its management takes strategic decisions” Introduction Mercedes Benz is not just another car in the market but a famous brand of luxury cars that is perceived as a status symbol in the market. Being a status symbol and brand name in itself, the company has always delivered superior quality and design. The company aims to give the best for customers. This essay would be focused on evaluating the Mercedes Benz’s organisational structure and culture along with the role of management and decision taking processes. Issues of decision making are related to strategic decision taking processes. Evaluation of Organisational Structure and Culture Organisational Structure The organisation structure of Mercedes Benz is “functional structure” where the company is divided into departments. In this structure the employees are responsible for their own task and through this structure the company is able to produce high volumes of products with low cost. Due to the efficiencies within the functional group, the company is able to reduce its cost and increase the employee’s performance. Being a form of centralised structure, the factor of flexibility is abolished and the employees have to do what they are told rather than doing what they prefer (Fierro and Sattar, n.d). The advantages of this type of structure are as follows (Dennis, 2010): The major strength of functional structure implemented by Mercedes Benz is increased performance and communication between the employees. Working for the success of the company, the employees within the same department communicates with each other and inform other departments as well regarding the information. Increased coordination among the different departments has eventually enhanced the knowledge and experience of each department resulting in saving cost and economies of scale. Working for the betterment and success of the company, the departments co-operates with each others in sharing information and expertise knowledge. This structure offers high level of specialisation as each unit or department is carrying out its specific duty. With the passage of time, the employees in the Mercedes Benz move up within the hierarchy and the company benefits from their expertise and experience. As each department is responsible for its success and failure, decisions are taken by the senior or leader of the department. This decision-making enhances the probability of the department to be successful as the leaders are more aware of the department than the top management. Organisational Culture Organisational culture is one of the factors that help in determining the failure or success of the organisation. In the case of Mercedes Benz, the company has realised that the company and the employees are more similar than different. To increase the motivation and performance of the employees, the company has strived to create an environment free from discrimination against people on the basis of color, gender, race, religion or national origin. The company has always been committed to treat every individual equally which has helped the company more than one ways. The culture of Mercedes Benz has greatly influenced the performance and the behavior of the employees towards the company (Mercedes-Benz, 2012). Each of the factors of culture is separately discussed below (Apfelthaler, Muller, and Rehder, 2002): As the organisational culture is shared among the employees of different demographics, it unites and binds them together. In other words unity is created among the employees of same department which to a great extent influence the employees to increase their performance. Competition is another factor among departments which is the result of shared organisational culture. Departments strive to perform their best to be appreciated and recognised by the senior management due to which the quality of work at Mercedes Benz has always been far above the standards. Organisational culture has always kept the employees motivated and loyal to the department as well as the management of Mercedes Benz. Being a healthy part of the organisation’s culture, the employees are more eager to contribute towards the company’s success. Being a part of a reputable department increases the employee’s spirit and the employees tend to work even harder for the success of the department and the company. Being a part of the department, each employee is individually guided and is provided with a sense of direction from the department’s manager or senior. These guidelines keep the employees on track as they are aware what is expected from them. Being a part of the department, employees are on the same platform which means that each employee is provided with equal attention and are guided individually which increases the performance and job-satisfaction level of the employee. This helps to boost individual’s performance which eventually leads to the success of the department and the company. Role of Management and Decision Taking Processes Role of Management Management plays a very critical role in the survival and growth of the business. For a company like Mercedes Benz, the role of management is to guide each department towards the accomplishment of goals and objectives. Implementation of functional structure means that managers and leaders are responsible to ensure the success of the department and the company (Fierro and Sattar, n.d). The role of management at Mercedes Benz is as follows: Enhance motivation and teamwork The first and the foremost role of management at Mercedes Benz is to constantly motivate the employees. The management is aware of the fact that without proper motivation of the employees, the company would not be able to achieve what the company has in mind for the future. To do so, the management offers exercises to develop relationship among the employees and encourages collaboration in order to achieve best results from the employees and each department (Nutt, 2002). Innovation to improve organisational success Innovation is the backbone of the company. Another role of management at Mercedes Benz is to constantly innovate. This constant innovation has helped the company to remain on top-of-the-mind of customers and has helped the company to make their luxurious cars safer, environmental friendly and superior to other cars in the market. Giving back to the society The management at Mercedes Benz is committed to give back to the community. The management has placed high importance to do something good for the society however and whenever possible. For the very same reason, the company hosted a bake-sale at the headquarter for Cancer organisations, the national dealer donated a total of $125,000 to local charities and the company has also brought into action a policy which requires every employee to volunteer at a non-profit organisation of their choice. Crisis management Mercedes Benz is a reputable company known for its crisis management. The management has done exceptionally well when the company launched Mercedes A class. The first ever Mercedes in compact car segment had some engineering fault due to which it rolled-over in the test. The management recalled all the A class cars in a relatively short-period and solved the technical fault. This was all done to deal with the crisis and to meet the expectations of the consumers (Dillon, n.d.). Globalisation Last but not the least function of management was to globalise the luxurious car all over the world. This function has helped the management to significantly reduce the time in designing and manufacturing the luxurious cars. The company has not limited itself to just one geographic region but the management aims to continuously expand throughout the world. Decision taking processes The strategic decisions of Mercedes Benz in India are taken at the senior or top level of management. This means that the strategic decision making authority lies with the top management. This authority could be seen when Mercedes Benz decided to enter the Indian bus segment with two-axle and three-axle coaches (Menon, 2012). This expansion in the bus segment was to continue their legacy of being the global leaders in bus business. The strategic decision process of Mercedes Benz when it decided to enter the bus segment in India consisted of following steps: Identification of the purpose The first step in strategic decision process entails the identification of the problem. When the company identified the reason that it wanted to continue being the leader in the bus segment all over the world, the company decided to enter the Indian bus segment to attract more and more people to travel in superior quality buses. Information gathering After the company identified the purpose, it started gather information regarding the people traveling in buses and the number of companies in the bus segment in India. Evaluation of alternatives After doing so, the company evaluated all the alternatives that it had to enter the market. These alternatives would be regarding the buses that the company could introduce in the Indian bus segment. Selecting best alternative After the evaluation of the alternatives, the company decided to introduce two-axle and three-axle buses in the Indian bus segment. The company decided to inaugurate the bus business with superior quality low-entry bus for the Indian market. Executing the decision To execute the decision, the top management appointed Markus Villinger as Head of the Buses for Indian market and executed the strategic decision immediately. One example of Strategic decision of Mercedes Benz would be regarding the increase in the level of prices to offset cost escalation (PTI, 2012). This decision regarding the price hike could also be said as a strategic decision for Indian market taken by the top-management of the company. Another example of Mercedes Benz’s strategic decision would include the replacement of managing director and CEO in India (Thakkar, 2012). This strategic decision was to replace Peter Honegg by Eberhard Kern on account of personal/family reasons. Conclusion Mercedes Benz has been one of the largest producer of luxury cars by innovating their products continuously and by making sure that the car they build is safe, environmental friendly and reliable. To do so, the company relied heavily on the organisational culture and structure. The organisational structure used by the company is functional structure; this means that the company is divided into departments. The employees in the department are only responsible to deal with the task that they are aware of. Organisational culture also plays crucial role in the success of the company. Through organisational culture, the company is able to create an environment that would treat each employee fairly and equally and would help in reducing the factor such as discrimination. Mercedes Benz’s management plays an essential role in the success of the company. The functions associated with management are enhancing motivation and teamwork, crisis management, innovation, social corporate responsibility and globalisation. The strategic decisions in the company are taken at the top-management rather than by the department’s manager. List of References Apfelthaler, G., Muller, H., and Rehder, R. (2002). Corporate global culture as competitive advantage: learning from Germany and Japan in Alabama and Austria? Journal of World Business, vol. 37, no. 2, pp. 108-118 Dennis, R. (2010). Intimacy at work: Playback theatre and corporate cultural change in Mercedes Benz, Brazil. Journal of Organisation Transformation and Social Change, vol. 7, no. 3, pp. 301-319 Dillon, P. (n.d.). Crisis Management in the 21st Century. Available from http://www.evancarmichael.com/Franchises/704/Crisis-Management-in-the-21st-Century.html [Accessed 15 December 2012] Fierro, K., and Sattar, F. (n.d.) Organization leadership analysis – Mercedes-Benz. Available from https://stonybrook.digication.com/farihah_naz_sattar/Organizational_Leadership_Analysis [Accessed 15 December 2012] Menon, J. (2012). Mercedes-Benz Forays low entry city bus segment in India, Inaugurates new facility at Chakan. Available from http://automotivehorizon.sulekha.com/mercedes-benz-forays-low-entry-city-bus-segment-in_newsitem_4146 [Accessed 15 December 2012] Mercedes-Benz. (2012). MBUSI Corporate Diversity. Available from http://mbusi.com/pages/corporate_diversity.asp [Accessed 14 December 2012] Nutt, P. (2002). Making Strategic Choices. Journal of Management Studies, vol. 39, no. 1, pp. 67-96 PTI. (2012). Mercedes-Benz India to hike price from January. The Economic Times. Available from http://articles.economictimes.indiatimes.com/2012-12-11/news/35749768_1_mercedes-benz-india-hike-prices-eberhard-kern [Accessed 15 December 2012] Thakkar, K. (2012). Eberhard Kern to replace Mercedes Benz India MD, Peter Honegg on December 1. The Economic Times. Available from http://articles.economictimes.indiatimes.com/2012-10-05/news/34279800_1_mercedes-benz-india-mercedes-benz-india-peter-honegg [Accessed 15 December 2012] Read More