Free «Innovation of Mercedes» Essay Sample

Innovation of Mercedes

Introduction

Over 120 years ago, German car engineer Karl Benz created what is widely believed to be the world’s first gas powered automobile, the Benz Patent-Motorwagen. Known today as Mercedes-Benz, the motor company have been ranked as one of the best worldwide. The Mercedes-Benz has come to symbolize flawless quality and unique engineering. Mercedes Benz is considered a trendsetter in the automobile industry (Stacy, 2007). The company is always coming up with new achievements, which is why it has been branded the leader of innovation; in line with words of co-founder Benz who stated, “The love of inventing never dies” (Crainer & Dearlove, 2003).

Mercedes-Benz Company’s most recent innovative rollout is the Mercedes-Maybach S600, which is a superior quality vehicle representing uniqueness, space and world leading refinement. The Mercedes-Maybach S600 has a high level of refinement and prestige in addition to the perfection that the S-Class family is known for. Its goal is to meet the customers’ rising desire for high luxury vehicles.

The Mercedes-Maybach S600 serves as an ideal case study due to the fact that it is the newest model being introduced by the S-Class family. In addition, it is making a comeback after being pulled by Mercedes-Benz two years ago. The aim of the study is to highlight the features of the Mercedes-Maybach S600, how it has been received in the market, how it is a culmination of the innovation spirit in the Mercedes-Benz company and how it differs from the standard Mercedes-Benz and why consumers would want to buy it (Cook, Cry Havoc Productions & National Geographic Society, 2014).

Methodology

The conceptual framework applied in this study involved investigating the development of a new brand of the Mercedes-Benz vehicles; the Mercedes-Maybach S600. It has been chosen as the underlying brand for this valuation due to the fact that it enables the researcher to analyze a company that is reputable in the highly competitive luxury motor vehicle market. This research focuses on Mercedes-Maybach S600 as the case study. This is principally a qualitative study that has been narrowed down to a specific company and brand but is still comprehensive enough to provide a broader picture of the study. Case studies are normally important in studying a change or a process and this is certainly the case with the Mercedes-Maybach S600 (Cook, Cry Havoc Productions & National Geographic Society, 2014).

The researcher settled on this design due to the fact that it covers a thorough investigation of a particular scenario, which is an analysis of the Mercedes-Maybach S600. It provides an efficient and reliable way of assessing the process and aids in the collection of data, analyzing information and reporting of the findings. The researcher will therefore have an in-depth understanding of the Mercedes- Maybach S600. This research strategy is also able to investigate a phenomenon that happens in real life, which other methods of study may not capture accurately.

 

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Several articles have been published concerning the motor vehicle industry, which focus on motor vehicle markets. The focus of the articles varies and is related to economics, motor vehicle designs, and motor vehicle value chains, among others. A significant number of them focus on the economical part in the development and sale of motor vehicles by the manufacturer. At the same time, innovation features prominently as a crucial way in which companies survive in the market by repeatedly re-adjusting their product to better suit consumers’ needs and boost sales. A large number of such articles touch on or describe the Mercedes-Benz Company in varying depths. On the other hand, the company itself also publishes articles for their customers. All these materials will be valuable in this study and will act as a secondary source of information. Secondary sources of information are crucial not only in that they reduce the cost of obtaining data but also because they enable researchers to have several points of views on the same issue. This enriched perspective by the researcher is useful in providing output that is further responsive.

The study will not merely focus on articles concerning motor vehicles’ design, sales and economics, but will also take into consideration articles that provide economic perspective of innovations. Continuous innovation that is done by the Mercedes-Benz Company is as economically-oriented as it is to engineering. Although the innovation may be based mostly on engineering laws governing motion, aerodynamics and occupants safety, they have to be economically sustainable so that the company can remain profitable. Economics here is not only important in keeping the company selling and running but also to assist the company achieve more growth and remain responsive to consumers’ needs (Crainer & Dearlove, 2003). For this reason, economic articles will be used as secondary sources of information. This will be very crucial for understanding various economic theories. This will also assist in analyzing innovation theories that have been utilized by Mercedes-Benz in the development of the Maybach S600. Similarly, they avail exhaustive understanding of Porter’s value chain. This is extremely essential for understanding innovation in the framework of the whole value chain.

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Innovation Theories

There are various theories that have been utilized in developing and governing innovation. The development and implementation of an innovation is a long process that needs proper and serious planning followed by close follow-up to ensure that it is a success. Similarly, with the global economy growing and changing at rates that were never imagined before, the current products are phased out very quickly and easily. Technology that was utilized a few years ago may become outdated in the very near future. Consequently, Mercedes-Benz Company needs to innovate not only to respond to the current consumer needs, but to innovate based on the projected trends in the future. Research shows that businesses started or managed to carefully respond to future demands for products have higher chances of survival than businesses that focus only on developing innovations for the current market demand (Crainer & Dearlove, 2003). This section will highlight and discuss innovation theories that are relevant to the Mercedes-Benz Company. These theories help in understanding why or how the innovations were developed and also how they can be managed to achieve the desired results (Crainer & Dearlove, 2003).

Disruptive strategy of innovation (Disruptive Theory) is among the most crucial in innovation. It describes a situation where a firm develops an innovation based on projections concerning future demand. This is usually a very bold move in business and may not pay off immediately but could in the long run. This theory, as the name suggests, describes an innovation that comes to disrupt or changes how things are done. An example of this may include attempts to develop telephony when the world relied on postal service, or attempts to develop the Internet while the whole world depended on wired telephony. The investors may not notice the opportunity and often shy from such innovations due to investors’ comfort in the status quo. According to this theory, these forms of innovation have four times the chance of success than incremental innovation (Crainer & Dearlove, 2003). The development of Mercedes-Maybach has always been disruptive such that new cutting edge technologies are applied. While this initially seems like product differentiation, it helps the brand to last long in the market.

Sustaining Innovation Theory refers to an innovation that is focused on meeting the needs of the established market. It focuses on the current customers and performs well with the existing business models. Due to the ease of convincing the investors with the current demands, they are often eager to invest in the Sustaining Innovation Theory. The returns are reaped over a very short period of time. At the same time, the innovation faces stiff competition in the market. The chance of success for new ventures begun based on this theory is very slim due to great competition from more established firms. The Mercedes-Benz Company is not known for engaging in sustaining innovation; instead the company focuses mostly on groundbreaking and futuristic technologies.

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The theory of diffusion of innovations asserts that no matter the driving force for developing an innovation, whether disruptive or sustaining reasons, an innovation has to be demanded by the market to have any significant benefit to firms. The theory seeks to expound how innovations spread. Various aspects of consumers through which innovation is meant to spread are considered, which may include culture. On the other hand, the term innovation in this light is broken down to constitute inkling or a technology. The term diffusion is used to illustrate that the innovation has to spread from the source where it is highly ‘concentrated’ to the market. In this situation, the characteristics of the population and time become very crucial. This is also controlled by how responsive the innovation is to the needs of the population. The culture of affluent Europeans and Americans to seek the finest in terms of technology and appearance no matter the price has driven the development of luxury Mercedes-Benz brands including the Maybach S600. The brand takes customers comfort, safety, speed and ostentatious needs to a future level, which has resulted in this innovation being purchased by wealthy consumers.

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Introduction to Mercedes-Benz Company

Mercedes-Benz Company is one of the top automotive manufacturers in the world based on the brand presence in the market (Schneider, Schüler-Hainsch, Ruhland, & Bach, 2014). However, the company is comparatively low on the number of units sold per year and only ranked 12th in the years 2011 and 2012. Afterwards, the company failed to improve on sales in terms of the units sold until mid-2013. It is still behind automakers like Toyota, General Motors, Volkswagen, Ford and several others. However, the company reigns in the manufacturing of high value luxury brands. It also specializes in the manufacturing of ultra-luxury brands such as Maybach, which was initially pulled out of the market in 2012 due to low sales.

 The official name for this automobile manufacturer is Mercedes-Benz Company and it is a division of the larger Daimler AG. Mercedes-Benz operates internationally and sets assembling and manufacturing factories in many regions of the world according to the specific demand of the specific region. In all the regions, the company specializes in luxury vehicles for the high end market and includes coaches, busses and sedans. The company is headquartered in the Stuttgart area in Baden-Wurttemberg region of Germany.

Aside from being among the top motor vehicle manufacturers today, it is also one of the oldest in the world. It is also among the last surviving automakers that begun before or at the turn of the twentieth century. It is also credited as the company that made the first engine-powered automobile. This is after its founder, Gottlieb Daimler mounted an engine onto his horse cart, enabling it to self-propel, hence the name automobile. Later one, Karl Benz designed and developed a machine that was powered by internal combustion engine, which used gas as a fuel. It was patented in Germany as the Motorwagen. This is widely accepted as the first vehicle that was designed and developed. It is important to note that the above named innovators jointly developed Daimler AG and later Mercedes-Benz Company as its subsidiary. For this reason, Mercedes- Benz is widely believed to have developed the first vehicle in the world.

 Since the turn of the 20th century, Mercedes Benz has evolved under different titles producing different types of vehicles in response to changing times. The initial company was Daimler-Motoren Gesellschaft and was used from 1886 until 1901. This had evolved from Benz Motorwagen. In 1926, the name Mercedes-Benz developed from Daimler-Benz and has continued to be utilized today. The company has worked to develop the best vehicles in the world. The popularity of the company has grown since the Mercedes-Benz brand of 1926. Currently, the Mercedes-Benz is the most successful luxury car known the world over for pioneering in innovation (Schneider et al., 2014).

 
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Innovation Efforts of the Mercedes Benz Company

The Mercedes-Benz Company was born out of innovation. Additionally, the kind of innovation that is seen with two co-founders was disruptive and very futuristic. It was built in an era where horse carriages were the key technology of the day and where a great number of innovators focused in improving the horse carriages to make them more comfortable to the occupants or reduce drag and therefore increase speed. Engine makers of the time were only focusing to using engines for lifting water or powering boats. However, Gottlieb Daimler saw an opportunity that had never been imagined before. At the same time, Karl Benz was independently working to develop a motorwagen. These are two people who took on the task of coming up with an innovation that would boost mobility of people and goods to ease trade and powered the global economy to levels enjoyed today (Schneider et al., 2014).

Over the years, the company has continued to provide innovative solutions to the market in order to optimize parameters such as speed, occupant’s safety, comfort and efficiency. In 2014 for example, Mercedes–Benz Company ranked fifth globally in pioneering significant innovation in the motor vehicle industry. The company was hailed for developing technology that enabled vehicles to drive themselves at low speeds, especially in instances of traffic jams and also pack themselves when the need arose. The technology was inspired by the fact that the most exhausting time for any driver is during a traffic jam. At the same time, even the most experienced of drivers may have difficulties while trying to parallel park. Mercedes-Benz Company is a pioneer at trying solving this problem. The technology was incorporated in about 70% of all the S-Class sedans in the luxury category. The technology was also incorporated in all Ultra luxury sub brands such as the Mercedes-Maybach. This semi autonomy in cars is an indicator of what will be available in the future as the company tries to develop totally autonomous vehicles (Schneider et al., 2014)..

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After the Mercedes-Maybach was initially discontinued in 2012, the same brand performed better after its reintroduction and saw a 10% increase in sales in 2013 (Schneider, Schüler-Hainsch, Ruhland, & Bach, 2014). This was followed by a similar increase the following year. The Mercedes Benz Company has produced two very competitive variants of the Maybach S-Class, including the S-Class 600 and S-Class Pullman which are designed and developed as ultra-luxury models for the top end consumers. The class of consumer that is targeted for these products includes heads of state, heads of government and the royal families from across the world. The reason for increased preference for this model is remarkably luxurious design coupled with sleek appearance and boosted efficiency for their large engines.

Both the Mercedes Maybach S-Class 600 and S-Class Pullman have very advanced and futuristic innovations which will be integrated into common vehicles in the near future. Some of innovations enable this large saloon car with V12 twin-Turbo engine to have reduced consumption relative to the engine size of 12.9 liters/100 kilometers and a carbon dioxide emission of only 299 grams/kilometer. The engine has a displacement of 5980 centimeters cubed and a total of 530 horsepower that is attained at 1900rpm. The car model is very sleek and aerodynamic and features a vis-a-vis seat arrangement in an off passenger cabin. Furthermore, May Bach has additional headroom of around 100 millimetres compared to others in S-Class family (Schneider et al., 2014).