Today, students from Stetson University Executive MBA‘s Cohort 9 focused on the automotive and manufacturing segment for the group’s last business visit in Istanbul before heading to Budapest. Students Joe Chatterjee, John Huang, Brian Smith, Bonnie Spivey and Brad Schoeneberg led the Mercedes-Benz questions and answers for the cohort through their extensive pre-meeting company research.
During the cohort’s three-hour visit and factory tour, students learned all about the Mercedes-Benz mission: engage in the sale, service, manufacturing, and marketing of Mercedes-Benz and Maybach products. The company offers sedans and coupes, sport utility vehicles, convertibles and roadsters, super cars, wagons and crossovers, as well as parts. The Mercedes-Benz cars division set a new record with sales of 1,381,400 vehicles in 2011 (2010: 1,276,800). Mercedes-Benz posted record unit sales with an increase of 9% to 1,279,100 vehicles. In 2011, Germany had 21% of unit sales; other markets include Western Europe at 24%, the United States at 18%, and China at 16%.
Dr. Michael Nicklas, CFO, shared the history of Mercedes-Benz, which started in 1886 in Stuttgart, Germany. He shared that Turkey’s diversity in lifestyle, transportation habits and employment varies greatly. He added that the young population in Turkey definitely drives future business strategies in the country.
Mercedes-Benz employs more than 500,000 people (51% are engineers, 28% are female, and 81% speak a foreign language). It is the 11th top provider in Turkey and the 15th-biggest employer. Turkey is considered as having a strong economy and in 2011 was among the top producing countries in Europe, ranking #6. Daimler is the largest shareholder at 67%.
According to Nicklas, there are many cost advantages in terms of engineering, labor and access to the already existing qualified suppliers. Additionally, Mercedes-Benz can leverage the facts that every brand is in Turkey, infrastructure is in place, and it has a strong educated base to pull from.
Goals are to be in the Top 10 in total product sales in the world, Top 3 in total products in Europe, and Top 3 in research and development. Currently 20% to 30% of the company’s sales are domestic. Chatterjee said he was fascinated by the fact that manufacturing costs are 40% cheaper to produce vehicles in Turkey vs. Germany.
Brad Schoeneberg asked the CFO about taxation. Nicklas pointed out that Mercedes-Benz has modified products based on the tax situation. Different size engines in a vehicle drive the tax cost. This further challenges the company to deliver a smaller engine vehicle but keep the same high quality standards of the brand.
Dealer facilities all over the country have exclusivity with control over their operation; however, they make their money through service, parts and maintenance and a bonus from the headquarters if targets are met.
Mercedes-Benz remains competitive and productive because of its low sick leave, aggressive hourly wage, paid vacation and legal working-hour limits, all which keep the production cycles extremely flexible.
The students asked about the loss of market share in city bus sector. Nicklas explained that this loss is because of competitive bids based on price only, driven often by elections, and the fact that there is more local competition in this category.
Nicklas said the most important thing is to listen to the customer needs and how much they will pay, and build products that align with those findings. An example would be the new A class that has a smaller engine.
“Mercedes-Benz gave us the confidence that it will continue to create innovative products to be responsive to local and national trends,” said Wendy Lowe, coordinator for the Stetson Executive MBA program. “That was evidenced by our factory tour, where we witnessed different versions of the company’s buses being manufactured. Mercedes-Benz uses fishbone, real-time and kaizen processes to create efficiencies. It has a straightforward, uncomplicated sales model. Deals are not complex, and dealers are motivated to secure you as a buyer.”
Cohort 9 student Nelson Silva was extremely impressed by Nicklas’ wealth of knowledge. “It was my favorite visit so far,” said Silva. “His mentality from working in different countries and corporate connections give him skills that he can leverage in Istanbul.”
Student Crystal Koepke said she enjoyed the innovative business practices which gave Mercedes-Benz a framework, efficiencies and cost savings to build products of longevity.
Change in transportation habits is driving the company’s production; Spivey noted the significance of such change. Smith said he was impressed by the manufacturing plant tour and the fact that the Mercedes-Benz flagship bus takes 23 days to build. “Mercedes-Benz runs a very lean process and is focused on quality and results,” said Smith.
“After we finished the manufacturing tour, Mercedes-Benz invited us to its corporate canteen for lunch,” said Lowe. “The entire corporation made the Stetson Executive MBA students feel welcome, and their stimulating conversation created lifelong memories for our cohort.”