The used of faulty electronics ( faulty fuel pump made by supplier Robert Bosch ) to some models of Mercedes Benz which resulted to a great issue of poor quality problem, unstoppable increase in labor cost, downsizing the workforce resulting to high unemployment rate and the rising international competition among its rival manufacturer.
II. Potential Issues to Consider
Amidst rising international competition, German companies and banks have been unwinding their traditional cross-shareholding for several years, but the fraying of DaimlerChrysler partnership is a powerful signal that Germany’s once-cozy business culture is increasingly untenable. Now the path is very clear for any investor to take a large stake and push for restructuring. For now, fixing Mercedes has to be Zetche’s top priority regardless of whether the merged company is destined to stay together or split. That because Mercedes is beset by a swarm of problems, from poor quality to high labor costs and increasingly global competitive rivals. But it was the merger with Chrysler that diverted management attention from controlling cost and quality at Mercedes. Soon the Germans discovered that Chrysler, which has a long history of boom-and-bust cycle, was in much worse shape than they anticipated. It spun deeply into crisis in 2000, racking up $ 4.7 billion in operating losses the following year alone. Mercedes has to make the ultimate sacrifice, squeezing its own cost to pump out better profit for the group.
Mercedes is still reeling from a series of embarrassing recalls of prestige sedan, the E-class which starts at $50,000. In May 2004, the company suffers spate problems with its electronic brake control system and it recalled 680,000 cars for inspection. Way back 2005, in March; Mercedes announced the biggest recall in its history – $ 1.3 million cars with faulty fuel pump made by supplier Robert Bosch. Software bugs and the complex...