Mercedes-Benze- All Activity Vehicle

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MERCEDES-BENZE- ALL ACTIVITY VEHICLE

a) What is the competitive environment faced by MB as it considers launching the AAV? The competitive environment was that the company faced difficulty in controlling costs, material purchasing, and a fast changing market. The needs of the customer were changing and MB was facing monetary losses. With regards to the AAV market this was targeted at a segment that was expanding, the sports utility segment. Jeep, Fordand GM dominated this. Reinforce that Mercedes is a company that had never lost money. They simply built the best car their engineers could design and priced it above cost. Demand often exceeded supply. As a result, cost had never been a primary consideration. Changes include: cost competition; product innovation.

b) How has MB reacted to the changing world of luxury automobiles? MB has reacted by developing its own all activities vehicle that would compete in the fast growing sports utility segment. In addition, MB has moved its manufacturing facilities closer to the market that is the USA. Most, importantly it has become more customer oriented and has used customer opinions for developing almost every part of the car. It worked extensively with customers, suppliers and its designers to develop a car that would not only meet customer expectations but would also help MB make profits.

c) How does the AAV Project link with MB’s strategy in terms of market coverage? MB strategy in terms of market coverage is that it wishes to streamline its core business the AAV project helps MB to streamline its core business. MB strategy was that it should have additional market share, new segments, and new niches. MB started developing a new set of products like the C-class, E-class, SLK, A-class and M-class. To enter into the sports utility vehicle market MB has used the AAV project. In accordance with the MB strategy, AAV is expected to get additional market share with the help of AAV, it expects to enter a new...
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