Q1) How important was the Mercedes Benz distribution agreement to C & C?
The Mercedes Benz distribution agreement was important to almost everyone associated with C&C, including employees, customers, shareholders. However, since the question states ?how important', it is essential for us to define how Mercedes Benz is the most important and to whom in C&C. As seen from the case, we know that Mercedes Benz distribution agreement made up the largest proportion of profits in C&C due to its prestigious brand name. Thus, we feel that the shareholders were most concerned with the distribution agreement.
Based on the case, we can group the benefits that Mercedes Benz brought about to C&C into two main categories, namely tangible benefits and intangible benefits.
Tangible benefits ? Financial strength
- C&C car sales accounted for 80% of total revenue, while sales of Mercedes Benz accounted for 80% of the total profits.
Intangible benefits ? Reputation / Brand Value
- C&C was associated with Mercedes Benz in the minds of Singaporeans.
- Mercedes Benz cars were the ultimate status symbol in Singapore and Malaysia.
- The brand is so strong that even the demand for these cars was not affected by frequent and longstanding complaints of C&C's poor customer and after-sales service, as well as the high prices and waiting lists.
- Sales were also fairly resistant to broader economic conditions. Mercedes-Benz sales rose 6% in 2001 to 3457 units, despite Singapore suffering its worst recession in decades.
Based on the Porter's Generic Strategies, C&C's approach to owning Mercedes Benz's sole distribution ...