Benefits Of Abandoning Home Country Practices Essay

Benefits Of Abandoning Home Country Practices Essay

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Mercedes-Benz a German based automotive company and is one of the top three luxury automobile makers in the world, bested only by BMW and Audi. However, Mercedes did not become a great luxury car manufacturer by remaining confined to its German borders. The German car manufacturer expanded beyond its borders to compete in the international arena of automotive manufacturing. In order to succeed in this endeavor, Mercedes had to make calculated decisions regarding costs, location, marketing, organizational structure etc. The following paragraphs will detail the pros and cons of abandoning home-country practices, why the company decided to undertake FDI in the United States rather than build the vehicles in Germany, and why Mercedes decided to build a brand new manufacturing plant in Arizona rather than choosing an already-existing plant and modifying it.
Mercedes Benz took a leap of faith, when they decided to open a plant in the U.S. to tap into the market in a way they never have before. The pros of the company were to change their way of thinking and abandon the culture and some of its home-country practices where the company was able to achieve a more youthful and value conscious consumer market. It also fostered growth that would ensure a sustainable future and more presence and participation in the market. The company was able to reinvent itself in moves such as developing new models such as the M-Class Mercedes. This move made the company start investing in the SUV market where available which has definitely boosted sales; they have maintained being one of the top automakers in the world. Mercedes also understood they had to change the concept of “made in Germany”, if they were going to expand beyond their borders. The ...

... middle of paper ... plant from the ground up in Vance, Arizona for its new M-Class sports utility vehicle. The above paragraphs detailed the pros and cons of abandoning home-country practices, why the company decided to undertake FDI in the United States rather than build the vehicles in Germany, and why Mercedes decided to build a brand new manufacturing plant in Arizona rather than choosing an already-existing plant and modifying it. This was a bold move by the German company because it meant restructuring its rigid organizational structure to one that would work in a modern US work environment, and it meant having to educate foreign US employees about what it meant to “build a Mercedes” versus building a car. The decisions that allowed Mercedes to expand beyond its borders was an essential factor in making the company one of the top three luxury car manufacturers in the world.

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