This case study focuses on the entrance of Daimler AG in form of their brand Mercedes-Benz Cars, in the following Mercedes-Benz, originally founded in Germany, into the Hungarian automotive market.
Mercedes-Benz is active in the field of passenger cars and this specific section will be addressed. Even though previous interaction with the Hungarian market was conducted in the past, the focus will lie on the successful engagement of Mercedes-Benz since 2008, when the decision to build a car assembly plant in Kecskemét was taken.
For its foreign engagement in Hungary, Mercedes-Benz used an offshore outsourcing strategy shown by strong engagement with local suppliers which produce many parts for the car manufacturer, in combination with equity investment in the final assembly plant. This makes Mercedes-Benz a fragmented MNE as it uses outsourcing, while at the same time it is an original design manufacturer. It's designs and produces are crucial parts of its cars itself.
The core business strategy is described for Mercedes-Benz with respect to four aspects: strengthening core businesses, growing globally, leading in technology and pushing digitalization. Regarding the strengthened core business and growing globally, this leads to further increase sales of high-tech cars, especially in China and Asia. With respect to leading in technology and pushing digitalization, Mercedes-Benz aims at expanding its technological leadership in the field of security, autonomous driving, connectivity and drive systems.
Inhaltsverzeichnis (Table of Contents)
- 1. Introduction
- 2. Type of MNE and Internationalisation of Mercedes-Benz
- 3. Daimler's core business strategy
- 4. FDI in Hungary
- 5. The Market Environment in Hungary
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This case study analyzes Daimler AG's (Mercedes-Benz) entry into the Hungarian automotive market, focusing on its strategy since 2008 when it established a car assembly plant in Kecskemét. The study examines Mercedes-Benz's internationalization strategy, its core business model, and the Hungarian market environment.
- Mercedes-Benz's foreign direct investment (FDI) strategy in Hungary.
- Analysis of Mercedes-Benz's multinational enterprise (MNE) type and internationalization approach.
- Evaluation of the Hungarian market environment using Porter's Five Forces model.
- Examination of Daimler's core business strategy and its relevance to the Hungarian venture.
- Assessment of the impact of FDI on the Hungarian economy.
Zusammenfassung der Kapitel (Chapter Summaries)
1. Introduction: This introductory chapter sets the stage for the case study by highlighting the surge in foreign direct investment (FDI) in Eastern and Southeastern Europe following the end of the Cold War. It specifically focuses on Daimler AG's Mercedes-Benz brand entry into the Hungarian automotive market, emphasizing the significance of the 2008 decision to build a car assembly plant in Kecskemét as a pivotal moment in their engagement with the Hungarian market. The chapter establishes the scope of the case study, clarifying the focus on Mercedes-Benz's passenger car division and its activities since 2008.
2. Type of MNE and Internationalisation of Mercedes-Benz: This chapter delves into Mercedes-Benz's approach to internationalization in Hungary, characterizing it as a fragmented multinational enterprise (MNE). It combines off-shore outsourcing with equity investment in the assembly plant. The chapter contrasts this strategy with existing theories on manufacturing firms' reluctance to establish wholly owned subsidiaries (WOS), highlighting Mercedes-Benz's extensive international presence, encompassing WOS in various locations and Joint Ventures (JV) and licensing agreements. The chapter further explores the rationale behind the choice of partially-owned subsidiaries in Asia, linking it to political regulations and cultural distance, and underscores the company's prior international experience, aligning with the findings of Padmanabhan and Cho (1999) regarding the benefits of leveraging prior market entry experience to reduce implementation costs.
3. Daimler's core business strategy: This chapter outlines Mercedes-Benz's core business strategy, structured around four key aspects: strengthening core businesses, global growth, technological leadership, and digitalization. It details the company's aim to increase sales of high-tech cars, particularly in China and Asia, and its commitment to expanding its technological leadership in safety, autonomous driving, connectivity, and drive systems. This section provides the strategic context for understanding Mercedes-Benz's investment in Hungary, framing the Hungarian venture within its broader global ambitions.
4. FDI in Hungary: This chapter analyzes foreign economic activity in Hungary, focusing on net FDI since 2001. It highlights the Hungarian government's success in attracting FDI, showing significant variations in investment levels between 2001 and 2012, with 2005 and 2006 showing the highest investments. The chapter observes a subsequent decline in net FDI, suggesting a decrease in Hungary's investment attractiveness. It also points out the peak of German net FDI in Hungary in 2010 and 2011, directly linked to the construction of the Mercedes-Benz factory in Kecskemét.
5. The Market Environment in Hungary: This chapter employs Porter's Five Forces model to analyze the competitive market environment in Hungary that Mercedes-Benz faced upon entry. It examines the threat of new entrants, the bargaining power of suppliers and buyers, the rivalry among existing competitors (Suzuki, Mercedes-Benz, and Audi), and the threat of substitutes. The analysis considers factors like government policies, capital requirements, product differentiation, the high export rate of Hungarian-produced cars, the established supplier network, and the substantial investment required for market entry. The chapter ultimately provides a comprehensive assessment of the competitive landscape, highlighting both the challenges and opportunities present in the Hungarian automotive market.
Schlüsselwörter (Keywords)
Foreign Direct Investment (FDI), Daimler AG, Mercedes-Benz, Hungarian automotive industry, Multinational Enterprise (MNE), Internationalization strategy, Porter's Five Forces, Off-shore outsourcing, Kecskemét, Global business strategy, Market entry.
Daimler AG (Mercedes-Benz) in Hungary: A Case Study - Frequently Asked Questions
What is the main focus of this case study?
This case study analyzes Daimler AG's (Mercedes-Benz) entry into the Hungarian automotive market, specifically focusing on its strategy since 2008 when it established a car assembly plant in Kecskemét. It examines Mercedes-Benz's internationalization strategy, its core business model, and the Hungarian market environment.
What are the key themes explored in the case study?
The key themes include Mercedes-Benz's foreign direct investment (FDI) strategy in Hungary; analysis of its multinational enterprise (MNE) type and internationalization approach; evaluation of the Hungarian market environment using Porter's Five Forces model; examination of Daimler's core business strategy and its relevance to the Hungarian venture; and assessment of the impact of FDI on the Hungarian economy.
What type of MNE is Mercedes-Benz characterized as in this study, and what is its internationalization approach?
Mercedes-Benz's approach to internationalization in Hungary is characterized as a fragmented multinational enterprise (MNE). It combines off-shore outsourcing with equity investment in the assembly plant. The study contrasts this with theories on manufacturing firms' reluctance to establish wholly owned subsidiaries (WOS), highlighting Mercedes-Benz's diverse international presence including WOS, Joint Ventures (JV), and licensing agreements.
What is Daimler's core business strategy, and how does it relate to the Hungarian venture?
Daimler's core business strategy centers around four key aspects: strengthening core businesses, global growth, technological leadership, and digitalization. The company aims to increase sales of high-tech cars, particularly in China and Asia, and expand its technological leadership. The Hungarian investment is framed within these broader global ambitions.
What does the case study reveal about foreign direct investment (FDI) in Hungary?
The study analyzes foreign economic activity in Hungary, focusing on net FDI since 2001. It highlights Hungary's success in attracting FDI, noting variations in investment levels, a peak in German net FDI in 2010 and 2011 directly linked to the Mercedes-Benz factory, and a subsequent decline suggesting a decrease in Hungary's investment attractiveness.
How does the case study analyze the Hungarian market environment?
The study uses Porter's Five Forces model to analyze the competitive market environment in Hungary. It examines the threat of new entrants, bargaining power of suppliers and buyers, rivalry among existing competitors (Suzuki, Mercedes-Benz, and Audi), and the threat of substitutes. The analysis considers government policies, capital requirements, product differentiation, export rates, supplier networks, and investment requirements.
What are the key takeaways from the chapter summaries?
The chapter summaries provide detailed overviews of each section, including the introduction setting the context of FDI in Eastern Europe and Daimler's entry into Hungary; a deep dive into Mercedes-Benz's MNE type and internationalization strategy; a detailed explanation of Daimler's core business strategy; an analysis of FDI trends in Hungary; and a comprehensive assessment of the competitive landscape in the Hungarian automotive market using Porter's Five Forces.
What are the key words associated with this case study?
Key words include Foreign Direct Investment (FDI), Daimler AG, Mercedes-Benz, Hungarian automotive industry, Multinational Enterprise (MNE), Internationalization strategy, Porter's Five Forces, Off-shore outsourcing, Kecskemét, Global business strategy, and Market entry.
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- Stefan Bömer (Autor), 2018, A Case Study of Daimler AG's Entry in the Hungarian Automotive Industry, Múnich, GRIN Verlag, https://www.grin.com/document/1166990
