Mercedes Cars Company in Doha Market - Case Study Example

Id: Mercedes Cars Company Contents Mercedes Cars Company Contents 2 Introduction 3 Market Data 3 Competition3 Recent developments 4 Sales estimation with motivation 7 Balance sheet 8 Profit and loss account 8 Conclusion 9 Works Cited 10 Introduction Mercedes Cars Company is eyeing to open a new venture dealership in Doha. It is a German based company. The company was founded in 1926. Founders of the company were Karl Benz and Paul Daimler. Headquarter of the company is in Stuttgart. The organization can use two types of methods for starting their venture in Doha market. It can create its own new venture or it can take over any existing automobile company of Doha. The organization has chosen for its own new venture creation in Doha market. This report will discuss about the total market scenario. It will present competitions that Mercedes Cars Company may face in the market. With the help of this report recent developments are also going to be discussed. This report will present the state of the organization into the market. Different financial facts and figures are going to be discussed regarding the new venture of Mercedes Cars Company. It is step by step report which will help the organization to identify different factors regarding their new venture creation in Doha market. At the end of the report a detailed conclusion will be drawn. Market Data Competition There are almost 60 automobile dealers in the Doha market. Being the capital city of the state of Qatar, Doha the market is very highly competitive in nature. Different top manufacturing automobiles companies are having their dealers in the market. It has been noticed that the market has registered impressive growth in automobile sectors. This is the reason that each and every automobile manufacturing companies are competing very hard with the aim to increase their market shares. Demands of BMW cars are rising in the market. BMW has registered high selling figures. The year to year sales have increased by 30% in its BMW 5 series model. BMW 7 Series model also registered higher sales in the market. It is very clear from the above facts that Mercedes Cars Company faces main competition from BMW car dealers. Apart from that people of the city are greatly attracted with mini brand cars also. Competitions in automobile industry are ever increasing. There are lots of options in Doha market. It is a very attractive market for all top automobile manufacturing companies in the world. Bargaining power of the customers is very high in the market. The industry has recorded almost 20% growth in 2013. High industry growth is making the industry more and more competitive in nature. Different big players of the industry around the world are investing more and more money in Doha market. Different dealers of the country are trying to provide state of the art facilities in terms selling and servicing cars. Dealers are competing very hard to create customer’s loyalty (Irawati 134). Apart from BMW, Toyota and Nissan are also very famous automobile brands in the market. It is very evident that Doha market is a famous destination for different automobile companies around the world. Competitions in the market are very fierce and cut throat in nature. There exist serious competitions among the luxurious car brands of the globe. Recent developments In 2010 the Government of Qatar urges for more and more green automobile products. The government of Qatar has fixed their focuses to reduce their carbon emission percentage. In 2012 Porsche and Volkswagen announced that these two organizations will open joint test centre for manufacturing light weight automobile materials in Doha. Recently the industry has undergone a good growth in the sector. Market has registered 15-20% growth in the year 2012. In 2012 a grand motor show was held in the city. Most of the top famous brands of the world participated in that motor show. The market under consideration in this paper took the steep rising curve in terms of developments along with the markets of the GCC region. Total Middle East market is doing very good in Automobile industry. Rest of the world is facing severe challenges. Doha market is simultaneously doing well with their other Middle East counter parts. In the first half of 2013 Toyota brands were occupying first four places of highest selling cars in Doha market. In the fifth place of highest selling car’s list Nissan’s D22 had its footprints. Hyundai is the leading bus sellers in the market. Toyota sold 15,346 vehicles in the market. Toyota’s market share was 36.2% in 2013. Nissan had 16 % percent market share in the same year. It occupied 2nd place in the industry (Plunkett, 124). Hyundai occupied third place with 9.1 % market share. Mitsubishi is in fourth place with 4.5 %. Kia motors places itself in fifth place. All these five companies are sharing 70% share of total market among them. In 2013 the market has scored all time record and obtained 7.6% growth in light weight vehicles. Recently the industry is facing some issues like salary of employees; rents in the city are increasing. Dealers are not getting enough spaces for car servicing. They are facing problems in after sales services. Demands of cars are growing in the market. Recently India based Tata motors has launched PRIMA trucks in Doha. It is very clear from above developments that the market has great potential. Developments are very decisive and significant in nature. The above chart is showing number of car sales in 2013. The abaove chart is giving an idea of market share. Sales estimation with motivation Sales estimation of this market is very high. Different dealers of the country are expecting 100 % growth in new vehicle sales in upcoming 2-4 years. It is being estimated that number of sales will increase over 200,000. The Government of Qatar is spending lots of money for upcoming 2022 FIFA world cup (Dijck and Gerrit 145). Government is spending lots of money for construction purposes. It will certainly increase sales of different vehicles in the country. Population of the country is also on the rise. Increasing population is also a great motivation factor for Mercedes Cars Company. Global automobile industry is going through a tough phase. Problems are very evident within different countries. This is a very critical situation for automobile industry. But markets like Doha have weathered the storm very well. The market is coming up with consistent growth in the industry. It is a huge motivation for the organization. Different global players are finding great potential in this market. Being one of the richest nations (in terms of GDP) the market has significant potential. People of the country have sound disposable income. Maximum numbers of people have more than one car. It is a great motivation for Mercedes Cars Company (Peck 117). The market will become an automobile hub in near future. The market has huge natural gas reserves which will help the industry immensely in terms of growth. It is also a very great motivational factor for the company. The market has very cheap fuel rates. Cheap fuel rates are huge motivators for the company to open their new venture in Doha. Balance sheet All amounts are in Qatari riyal. Projected balance sheet on 1.1.2015   Assets 250000 Furniture cost 300000 Cash 1233378 Sundry debtors 340000 Add on 1345600 Property 2566689 Machineries 21457890 Less Depreciation Accumulated 2145789 Net, Equipments 19312101 Total Assets 25347768     Capital & liabilities   Loans 2000000 Fund of share holders 20000000 Borrowings for loan terms 2047768 Payables 300000 Retained earnings 1000000 Total 25347768 The above balance sheet is showing the financial condition of Mercedes Cars Company (Spurga 119). The company will source its funds with suitable combination of both equity and debt. Mercedes Cars Company will raise 20000000 Riyal from share holders. Profit and loss account Profit and loss statement projected on 1.1.2015       Revenue 4500000 Cost of goods sold 220000 Gross Profit 4280000 Maintenance cost 60000 Cost of marketing 30000 Starting cost 450000 Cost of overhead 22000 Net profit 3718000 It is very evident from the above statement that the company will register 3, 71, 8000 riyal as net profit at the end of the first year. Gross profit of the organization will be 4, 28, 0000 riyal. Total operating expenses in the first year will be 5, 62,000 Riyal (Hanif 101). The company will earn 4500000 riyal as revenue for the first year. Conclusion Modern business world is ever-changing. It is very important for Mercedes Cars Company to be very proactive and the company must monitor all different activities in Doha market. The organization must be very clear about their objectives. It is very important for the organization to maintain all rules and regulations created by the local government. Doha automobile market is very competitive. Existing players are very experienced and famous. The organization has to be very much creative and innovative in nature. The organization has chosen new venture creation in place of taking over. All the above financial statements are indicating that the decision is very much suitable for the company to start up new venture in Doha market. Works Cited Dijck, Pitou. and Gerrit Faber. Developing Countries and the Doha Development Agenda of the WTO. New York: Routledge. 2006. Print. Hanif, Mohammed. Modern Acc. Vol I, 2E. New Delhi: ata McGraw-Hill Educatio. 2000. Print. Irawati, Dessy. Knowledge Transfer in the Automobile Industry: Global-Local Production Networks (Google eBook). New York: Routledge. 2011. Print. Peck, Malcolm. The A to Z of the Gulf Arab States. London: Scarecrow Press. 2010. Print. Plunkett, Jack. Plunketts Automobile Industry Almanac 2008: Automobile, Truck and Specialty Vehicle Industry Market Research, Statistics, Trends and Leading Companies. Houston: Plunkett Research, Ltd.2007. Print. Spurga, Ronald. Balance Sheet Basics: Financial Management for Nonfinancial Managers. New York: Penguin. 2004. Print. Read More