Smart Car Case Study

The Smart car is a product of Daimler Mercedes and serves a customer base searching for an economical solution to vehicle cost and gasoline consumption. To understand the impact this vehicle has made against the impressive portfolio of Daimler’s other vehicles, it is important to review the company’s social responsibilities and assess the decisions made by the firm in support of the Smart car.

Economic Responsibility

Daimler Mercedes is a company with a strong record of economic performance and corporate citizenship, but how well does the company’s Smart car stack up against the rest of the corporation’s impressive portfolio? According to the case study, the Smart car has struggled in the US market against similarly sized cars and electric vehicles (Pride and Ferrell). While the price of the different Smart car models was inexpensive compared to the price of other new cars, the price is immaterial if no one is buying. In this, Daimler has shown economic responsibility in producing a quality vehicle with a specific demographic targeted, however, Daimler has failed its investors by misreading the US market and subsequent lackluster sales.

Legal Responsibility

Daimler understood that a car built for the European market would have different requirements than one built for the US market. In this, Daimler took the legal responsibility of reconfiguring the car to meet US safety standards. To meet these requirements, the redesigned Smart car included airbags, anti-lock brakes, a collapsible steering column and a slightly longer frame (Pride & Ferrell).

Ethical Responsibility

Daimler has shown great ethical responsibility with the introduction of the Smart car. There is no question that environmental concerns impact every consumer purchase and by designing a fuel-efficient vehicle at a modest price point, Daimler gives the opportunity for the average consumer to be part of environmental conservation efforts. The original version of the Smart car was adapted to the US market with a 71 horsepower engine that earned 40 MPG on the highway (Pride and Ferrell). In addition, Daimler introduced an electric engine in 2010 to continue to reduce the dependence on fossil fuels and lessen the impact of driving on the environment (Pride and Ferrell). Unlike other automakers that continue to produce massive, gas-guzzling automobiles, these modifications show that Daimler takes its ethical responsibilities to consumers' human rights and the global environment seriously.

Philanthropic Responsibility

Daimler Mercedes is a well-known company with tremendous brand recognition. Daimler Mercedes’s activity in the community includes a teen driving academy, support for autism and outreach through sports programs for underprivileged youth (“In the Community”). Daimler Mercedes supports communities and fulfills their philanthropic responsibility. One example of a time that automakers came under fire for irresponsible corporate governance was in 2008 when the ‘Big Three’ automakers were in dire financial straits. The executives of Ford, GM, and Chrysler were desperate for a government bailout to save their businesses but when heading to Washington to plead their case, they each took their own private company jet (Levs, CNN). "There is a delicious irony in seeing private luxury jets flying into Washington, D.C., and people coming off of them with tin cups in their hand, saying that they're going to be trimming down and streamlining their businesses," said Rep. Gary Ackerman (Levs, CNN). In this case, these three companies showed irresponsible corporate governance and did not take actions that were in alignment with their promises of responsibility.

Decision Evaluation

Overall, Daimler Mercedes has proven to be a socially responsible company. Legally, the company did all that was necessary to modify the Smart car to US specifications and even went above and beyond to modify the engine to go 40MPG on the highway. Ethically, the company has fulfilled its responsibility by focusing efforts on a vehicle that reduces carbon emissions and is affordable to the average consumer. Philanthropically, the company supports the communities that purchase its vehicles through various programs designed to give back to the community. The only area of social responsibility where the company has experienced some limited failure is through the economic responsibility of expending company resources on a vehicle that will generate an appropriate return for the company. The Smart car has fallen short of those expectations because the company either misread the US market’s openness to driving a mini car or failed to design the vehicle in a way that would appeal to US buyers.

Recommendations

Although Daimler Mercedes showed sufficient adherence in the areas of legal, ethical and philanthropic responsibility, there is always room for improvement. While the company improved the safety features of the vehicle to conform with US regulations, Daimler could take the safety requirements further and build a sturdier frame, increase the number of airbags or add an On-Star feature to help in case of an accident. This could also help alleviate the concern that the Smart car is just too small to be safe on the road and increase the company’s sales. Ethically, the company has introduced a product designed to reduce emissions and improve the global environment. Daimler can take this focus one step further by ensuring that every step in the manufacturing of the vehicle is done in a sustainable manner with local sourcing of materials and operating LEED certified factories. In addition, more research into new hydrogen engines as a replacement for electric engines would put Daimler at the forefront of environmental innovation. Philanthropically, the company could make a commitment to donate 10% of all profits to charitable organizations or the company executives could join Bill Gates and Warren Buffet in the Giving Pledge and donate all earnings to charity in their wills. All of these suggestions would add to the positive image of the company and positively impact the sales of the Smart car.

Works Cited

“In the community.” Mercedes-Benz.com. n.d. Web. 1 December 2013. <http://www.mbusa.com/mercedes/about_us/mbcommunity >

Levs, Josh. “Big three auto CEOs flew private jets to ask for taxpayer money.” CNN.com. 19 November 2008. Web. 1 December 2013. < http://www.cnn.com/2008/US/11/19/autos.ceo.jets/>

Pride, William M., and O. C. Ferrell. Foundations of marketing. 5th ed. Australia: South-Western, Cengage Learning, 2013. Print.