In order to better understand the environment in which Daimler-Benz operates in it is crucial to perform the 5-forces analysis. This Strategic tool is used to investigate how the organization needs to form its strategy so that it can develop opportunities in its environment and protect itself against competition and other threats.
Porter's 5-forces model identifies five basic forces that can act on the organization and these are analyzed below:.
The bargaining power of suppliers:.
Daimler-Benz holds excellent relationships with all its suppliers this is due partly to the scale of operations and the total expenditure on suppliers. This is evident from the collaborative project they undertook with Bosch (the brake manufacturers) in the creation of the ABS (Anti-Lock Braking System). .
In the car manufacturing industry suppliers are usually large in number, and Daimler-Benz recognizes this which is why they manage an effective and friendly relationship with all suppliers. This can be seen by the economic downturn of the late nineties when Daimler-Benz had asked if suppliers could reduce their prices, which they all did. The reason for this is that Daimler-Benz has existed for over 100 years and has worked with more or less the same suppliers. .
Therefore they are reliant on each other in a sort of compromise that adds value.
The bargaining power of buyers:.
There are a very large number of buyers for Daimler-Benz. In general for the purchase of a Mercedes-Benz one must have some assets (as mentioned in the market segmentation) of reasonable wealth. Therefore it could be said that the selling price from the organization is unimportant to the total cost of the buyer. This has to do with the size of Daimler-Benz, which has massive manufacturing capacity and which also has thousands of distributors worldwide. .
The buyers do not pose much of threat to Daimler-Benz, within regards to their passenger car market which deals specifically in the luxury segment, you either can afford one or not, and if not too bad.