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Case Study: Mercedes-Benz

This case study was written based on Tan and Tan’s study published in the Journal of Business Ethics in 2009.

Ethics is vital to the practice of global public relations, but it is also “one of the greatest challenges facing practitioners in the 21st Century because it impacts on the management of strategic relationships within the complex dynamics and interrelationships of a global context.”

In the Chinese market, foreign car brands have a competitive advantage over domestic car brands because of their being associated with luxury and novelty. Thus, they have experienced tremendous growth in the high-end market, especially after China entered the World Trade Organization (WTO) in 2001 when the tariffs on imported cars were significantly reduced.

However, the strength of a strong brand being associated with luxury and novelty could also be its weakness—there are high expectations for their product quality and customer service in the minds of Chinese consumers.

In 2001, German auto-maker, Mercedes-Benz, was involved in a clash with the Wuhan Wild Animals Zoo when the zoo discovered problems with the quality and reliability of the vehicle. In December 2001, a Mercedes-Benz owned by the zoo was found to be dragging into the street by an ox. The act was considered a protest toward the problems with the vehicle’s performance and quality, resulting in numerous costly repairs.

After numerous attempts to request Mercedes-Benz to replace the vehicle and cover the costs of the repairs, the zoo was dissatisfied that the company had not repaired the car like it would in the United States.

Similarly, in 2002, a Mercedes-Benz owner performed a public act of destruction after numerous attempts to repair the car. The quality problems of the vehicles resulted in the formation of an anti-Benz organization, Association of Victims of Benz Quality Problems. In other words, a public-initiated public relations (PPR) problem arose as publics formed into active and activist groups to collectively solve the problem.

Their problem recognition was high as a result of the gap between their expected state and their experiential state. The following factors contributed to the perpetration of the problem:

Discrepancy between U.S. and Chinese laws: The Chinese consumers heard that the U.S. had a law which would require the company to replace the defective car with a new car after the third repair. They felt discontent to have been treated differently.

Class action lawsuits not allowed in China: The Chinese government actively suppressed class action lawsuits because they could cause social instability. Thus, individual consumers were not protected by the legal system and had to use other means to have their problem resolved.

Expectation of the adoption of Western principles: Because Mercedes is a Western company, consumers expected that it would favor the “customer is always right” principle.

Course of Actions

After numerous attempts to repair their vehicles and negotiate with Mercedes-Benz, the issue was escalated into a crisis as consumers attributed Mercedes-Benz’s lack of interests in resolving the matter as the result of “the arrogance of Western multinationals.” Thus, they responded by smashing more cars which resulted in extensive media coverage and hostilities against the company.

Mercedes-Benz responded by:

Declining the request: It did not offer explanations for the malfunctions and attributed responsibility to consumers for their use of Grade 93 gasoline instead of the Grade 97 gasoline recommended. Chinese consumers responded by saying that it was not written in the manual in Chinese.

Reasserting consistency in customer service: In a statement published after a widely publicized event of car smashing, it claimed that it dealt with all reasonable concerns and issues in the same manner all over the world. Chinese consumers had claimed that the way Mercedes-Benz treated its Chinese consumers caused them to lose dignity.

Condemning publicized acts of car smashing: The company described the highly publicized acts of destruction as “unreasonable and senseless” and requested apology for the public defamation of their reputation. They even threatened to take legal actions against acts of consumer protests.

Consequences

The activation of public sentiment through consumers’ smashing of their own cars showed that Chinese consumers were no longer seeking dialogue or negotiation. The issue became framed in the media as a matter of national dignity and resulted in Chinese consumers’ gaining a new understanding of consumer rights and responsibility.

In 2008, when Mercedes-Benz discovered a manufacturing error in its vehicles, it announced a massive recall in China and established a hotline for consumers to report their concerns. Mercedes’ announcement of product recall reflected its having learnt a lesson from its previous experiences.

Moral of the Story

Lesson #1 highlights the contestation of the adoption of a global vs. a local standard of ethical practices. It is problematic when there is a gap between Chinese consumers’ expected state and experiential state. On one hand, Chinese consumers expected that foreign companies would adopt the same principles as they would in other markets. On the other hand, they experienced that foreign companies were just like domestic companies. Public relations, as a relationship building function, should recognize that publics have different expectations for local and global companies. Although country-specific factors, such as political system, economic system, culture, media system and level of advocacy, are relatively static, publics’ expectations for companies could differ from one company to another. Instead of asking what country-specific factors should guide us in adopting one standard of ethical practices for one country, we should ask what standards are expected of my company. 

Discussion Questions

• What are the ethical problems in this case?
• What are the global ethical problems present in this case?
• How was public relations practiced in this case?
• How should public relations be practiced in this case?

Works Cited & Resources

Mercedes-Benz races into the cloud

• What Accenture Did
• Value Delivered
• Related Capabilities

Mercedes-Benz's leaders recognized that it had a fragmented and inefficient online presence, with multiple customer-facing views and online portals.  They set out to unify the environment and believed that the cloud would enable them to roll out new content, functionality and features—such as its car configurator and test drive booking app—more quickly.

"The Accenture AWS Business Group was formed to help customers like Mercedes-Benz.io transform their businesses and innovate faster than ever before." — NIKO MYKKANEN , EMEA Partner Lead – AWS

What Accenture did

The company worked with Accenture and Amazon Web Services to bring its vision of a unified online experience to life through a consolidated cloud-based solution in order to meet customer demands.

Mercedes-Benz now has one consistent platform for delivering engaging and relevant experiences to customers, with the ability to continually improve services.

"With its marketing and sales groups taking advantage of the security, scalability, and low cost of the AWS Cloud, Mercedes-Benz's digital service is set to become as legendary as its cars." — NIKO MYKKANEN , EMEA Partner Lead – Amazon Web Services

Value delivered

Mercedes-Benz had a fragmented and inefficient online presence. The company worked with Accenture and Amazon Web Services to bring its vision of a unified online experience to life through a consolidated cloud-based solution. Within a four-month period, the team deployed the new solution to 18 countries. That speed of implementation was unprecedented for Mercedes-Benz. Over three million unique visitors access the solution each month, and the number of happy customers only continues to grow.

"The solution's speed enables us to continually improve our customer experiences. By bringing out functionality or information as quickly as we now do, we are able to get timely feedback from customers and incorporate that feedback into our work." — THOMAS SEIBERT , Technical Lead Architect – Mercedes-Benz.io

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Case Study: Mercedes-Benz

Paris, March 2019: Birgit Klockenhoff, material research specialist, and Torsten Harms, heads of the lightweight construction team at Mercedes-Benz’ Hamburg plant, are first introduced to UBQ Materials at JEC World, an international trade fair for composite materials. They’re hooked and agree they want to test its new material.

Stuttgart, July 2019: Klockenhoff and UBQ Materials’ Sophie Tuviahu make a pitch as part of Mercedes-Benz “Startup Autobahn” innovation platform, where start-up innovations are tested, evaluated, rapidly implemented, and presented to a broad audience.

January 2020: Automotive giant Mercedes-Benz, parent company of Mercedes-Benz, announces it will test UBQ™ in the production of automobile parts.

Why Mercedes-Benz Group Research Chose UBQ as a Partner

For Klockenhoff, teaming up with UBQ seemed a natural fit. “I feel our common vision…is to encourage the use of recycled materials, to make a social contribution, and to develop economically viable technologies in the long term,” she says. And UBQ’s focus on a sustainable, circular economy fit perfectly into Mercedes-Benz’ own sustainable business strategy.

Working together, the manufacturer of bio-based plastic alternatives and the multinational automotive corporation aim to partially replace traditional materials such as polypropylene with UBQ’s climate-positive thermoplastic.

The Challenge

The team at Mercedes-Benz Group Research doesn’t expect a new technology to be at its highest level of development when it comes to them. Klockenhoff says the aim is to solve technical problems during an evaluation process and get to a place where they’re testing practical applications and envisioning which partners they might work with in supporting the offsetting of Mercedes-Benz carbon footprint across its supply chain.

Mercedes-Benz sustainable business strategy envisions reducing fleet consumption through lightweight construction . To that end, the company launched a pilot project to develop a sustainable cargo bay. Anton Kempel, calculation engineer for process simulation in lightweight construction, says at first they were laughed at for believing “banana peels and baby diapers” could be used as feedstock and that the material would withstand industry requirements. He admits, though, his team was surprised that the components really worked as they expected.

Development engineer Holger Kittler sees UBQ assisting Mercedes-Benz in moving step by step towards CO 2 -neutral production. Torsten Harms, who with his 15-member team promotes lightweight construction projects, says UBQ offers another positive environmental effect: the material comes from a mixed mountain of rubbish that, if sent to landfills, would result in a higher-level production of methane gas, which has a drastically higher global warming effect than CO 2 .

Harms and his team successfully tested UBQ™ under different conditions and the plastics experts now plan to use UBQ™ for new developments , a first in automotive parts manufacturing. The material has also been tested by processes and materials engineering manager, Dr. Frank Hirlinger, who set out to find how the UBQ™ material behaved under a wide variety of conditions, including extreme heat. UBQ™ has successfully passed the “heat test”, while moisture tests are expected to continue until the end of 2020. There’s also a media test, during which the material comes in contact with automotive fluids such as paint or engine cleaner.

These tests will continue into 2021 and Hirlinger says, if successful, he foresees a scenario where 25 percent of the plastics used in each vehicle will consist of recycled materials. As he points out, the company is already using a number of recycled plastics without anyone seeing or noticing. The greatest technical challenge, he says, is that bio-based materials should not be inferior to or more expensive than conventional ones. He believes UBQ Materials scores particularly well with respect to cost-effectiveness, even when compared to conventional polypropylene.

The Solution: Promoting a Circular Economy

Mercedes-Benz believes bio-based UBQ™ material is a promising contributor to a climate-neutral, sustainable world. Looking ahead, says Klockenhoff, the lightweight bio-based thermoplastic could be used by its commercial vehicles arm in the production of bus bumpers, load carrier boxes, and cable ducts. With its research on this new resource, the auto manufacturer is taking a further step towards a sustainable circular economy.

Klockenhoff is also excited to hear testers say it’s possible Mercedes-Benz might not have to limit the use of UBQ™ to auto parts alone. That possibility is a dream come true for UBQ’s CEO Tato Bigio who’s always aspired to having the UBQ™ material used in a Mercedes-Benz vehicle. It’s also fitting for the company as a whole, because turning sustainability dreams into reality has been its vision from the start.

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Client Stories   Retail

Mercedes-Benz: We found the 'holy grail' of communications platforms

Discover how Mercedes-Benz joined the digital operations revolution, informing all their employees with their all-in-one platform.  

• Operations Pro

Miscommunication

Dispersed operations

Informed employees

Increased company culture

AN INTRODUCTION

Mercedes-benz.

The automotive industry is known for being a frontrunner in technology and innovation. However, when you actually take a peek into their internal procedures, many auto operators still rely on manual processes. This includes piles of papers, files full of documents, and messy bulletin boards. And the result? Disorganization. Lost operational paperwork. Disconnection between employees across locations and departments. And finally. A lack of knowledge sharing.

This is exactly what Mercedes-Benz was experiencing. They needed to swap their intranet, PowerPoint presentations, and emails for an all-in-one communications and operations platform. Once they did, they found their employees were more engaged, and their sales figures skyrocketed.

Feeling disconnected

Mercedes-Benz was facing one major issue daily. Their mechanics, technicians, and salespeople had no access to a computer during their workdays. And as a consequence, most of their employees missed vital information and updates, weren’t aligned with the company’s KPIs, and felt detached from HQ, the core business, and their own colleagues. Everything changed when Mercedes-Benz launched their communication platform. 

When I saw the app for the first time, it was like I found the holy grail. I know it’s a strong word, but it encapsulated everything that I saw in front of me, that we needed to have.  Mikael Olsson CEO Mercedes-Benz FÖRSÄLJNINGS AB

The Solution

Accessible information, operations, and sales success.

To figure out how to address this issue, Mikael Olsson didn’t just follow his gut feeling or what he thought to be best. He knew he had to ask all non-desk workers and employees from HQ where they wanted to access all their information. The answer was resounding: on their phones. For this reason, the Relesys Platform was a natural fit. And the app has proved its worth. Mercedes-Benz has seen increased employee commitment and satisfaction amongst employees. Not only that, but productivity has increased exponentially thanks to the structured information flows, internal social groups, and gamification elements like points and badges.

The main ROI for us has been increased productivity just because of the gamification module.  Peter Magnell Business and Organizational Developer

Mikael Olsson really sees the positives of their platform and the impact of their employee engagement. Not only do workers have a higher level of satisfaction, but the business as a whole is more profitable. The platform is now an integral part of their daily operations and workflows.

We have measured things, and we have seen employee commitment and satisfaction skyrocket. The same development is seen in sales, revenues, and financial figures.  Mikael Olsson CEO Mercedes-Benz FÖRSÄLJNINGS AB

Close colleagues – both professionally and personally

Before their app, it was hard for their non-desk and garage workers to stay in the information loop due to the limited access to work computers. Plus, they rarely had time to actually check emails or information from HQ. The app has made the daily working lives of all their mechanics and technicians more meaningful as they are now:

• More well-informed about the company initiatives and activities from HQ, no matter time or place.
• Closer to HQ and the core administrative side of the business.
• Updated about their fellow coworkers through posts and comments on the social wall.

Mia Krogsböll, Mechanic on Personal Cars, and Amalja Omeragic, Rent Agent, are both really excited about the social wall feature. They now know what is going on amongst their colleagues, creating a much stronger community feeling.

The app has helped us to get the people and the business closer , especially the employees who normally are not close to the business, but also are a part of the business.  Mikael Olsson CEO Mercedes-Benz FÖRSÄLJNINGS AB 

Tiger of Sweden: A Modern IT-Solution That Supports Sales

It was essential for Tiger of Sweden to create an inclusive working atmosphere that involved everyone from HQ to their part-time sales assistants.

Bauhaus: A Communication Platform was the Perfect Solution

Get inspired by one of our industry experts to discover more best practices, related success stories, and how we can help you engage your workforce.

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FGC Group acquires assets of NSG Group in Russia

Date: 11 July 2023

The FGC Group has announced the successful acquisition of NSG Group's Russian assets, which include the Pilkington Glass Russia plant and STiS Group. The parties involved have not disclosed the details of the deal.

Pilkington Glass Russia operates a glass factory in Ramenskoye, Moscow Region, with a nominal production capacity of 800 tons of glass per day. The STiS Group consists of eight production sites located in Serpukhov, Vladimir, Saratov, Naberezhnye Chelny, Krasnodar, Stavropol, Voronezh, and St. Petersburg, specializing in the manufacture of double-glazed windows and specialized glass products.

With this acquisition, the FGC Group is expanding its assets in the glass industry. In 2022, the group became the new owner of the glass businesses previously owned by Guardian Industries, operating under the new brand name Larta Glass since September.

Following the purchase of NSG Corporation's Russian assets, the FGC Group's portfolio will include three flat glass plants and eight glass processing plants. The Pilkington Glass plant will operate under the Larta Glass brand, while STiS Group will continue its presence in the double-glazed window market under its current brand.

Vladimir Voronin, President of the FGC Group of Companies, states, "The FGC group of companies encompasses high-tech enterprises, including Larta Glass plants. The acquisition of Pilkington Glass assets strengthens our expertise and expands our market share. Furthermore, these new assets will significantly enhance our productivity and diversify our range of glass products."

Elena Rassudimova, CEO of Larta Glass, comments on the merger, saying, "Bringing together industry experts marks a new strategic chapter in the development of Larta Glass. The team at Pilkington Glass, along with their capabilities, experience, and motivation, align well with our corporate culture. Together, we will be able to offer customers a wider range of products, consistent high-quality service, and improved logistics. This will facilitate long-term partnerships and enhance our export potential, enabling us to provide consumers with innovative glass solutions for building facades and interiors."

Maxim Malikov, CEO of Pilkington Glass Russia, expresses enthusiasm for the merger, stating, "Combining factories under one brand allows us to leverage the expertise of two major players in the glass industry and advance glass production in Russia. This presents both business and personal growth opportunities for our team members. By complementing each other's competencies, we can elevate our products, services, and operations to a new level of quality."

Alexei Lyashko, General Director of STiS Group, comments, "Over its 25-year history, the STiS Group of Companies has become a leading player in the Russian market for translucent structures. We are delighted to have FSK as the buyer, as they share our values, possess strategic synergies with our existing business, and have the potential to enhance our operational capabilities."

The group companies will continue to produce high-quality products and operate as usual. The acquisition and subsequent integration of the companies are being overseen by the M&A team led by Pierre Polikarpov, who previously coordinated the acquisition of Larta Glass plants by the FGC Group of Companies a year ago.

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Former head of the Ramensky district Kulakov sentenced to 9.6 years in a murder case

The Podolsky city court has appointed the ex-head of the Ramensky district Andrey Kulakov 9 years 6 months in prison in the case of the murder of his mistress Evgenia Isaenkova.

“The court ruled that Andrey Nikolaevich Kulakov be found guilty and sentenced to 9 years and 6 months in a strict regime colony” , – says the decision of the judge Marina Levshina.

It is noted that the verdict has not entered into force.

On March 17, an Izvestia correspondent reported from the courtroom that prosecutor Diana Bogatyreva asked that Kulakov be sentenced to 9 years and 10 months in a strict regime correctional colony.

The guilty verdict was handed down to Kulakov by a unanimous jury on March 11.

Earlier, on December 23, 2021, the Moscow Regional Court overturned Kulakov’s acquittal and ordered that the case be sent for a new trial to the court of first instance with a new jury. The judges agreed with the prosecutors’ arguments that there had been irregularities in the proceedings.

On October 27, 2021, the jury decided that the former official was innocent of the murder and acquitted him.

The court found that on the night of May 1-2, 2019, Kulakov was in the car of his friend in the urban district of Ramenskoye, Moscow Region. During a quarrel, he strangled the woman, after which he fled the scene.

The body of 39-year-old Isaenkova was found in her own Mercedes car with signs of strangulation in May 2019. Law enforcement officers learned about her disappearance on the night of May 1-2, the search lasted for several days. On May 31, Kulakov was detained, after which he was in a pre-trial detention center for more than two years.

#Ramensky #district #Kulakov #sentenced #years #murder #case

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