The Brackley-based team has impressed with its single-lap form this year, securing pole position at the last three races.
However, it has struggled with its longer-run pace and both Nico Rosberg and Lewis Hamilton have endured frustrating slumps down the order in races.
Those struggles may not hamper the team as much in Monaco, because overtaking is so hard, but even so Mercedes says it would be foolish to believe it will easily hold on to any qualifying advantage.
Mercedes motorsport boss Toto Wolff said: "It is clear to everybody in the team that, while we have a strong car right now, we are not able to use that performance properly on Sunday afternoon.
"Although overtaking in Monaco is difficult, we cannot afford to be complacent in terms of tyre management and we will need to do significantly better than we managed in Barcelona in order to score a strong result.
"We have only scored points with one of our cars at the past three races and this is something we must improve quickly, beginning next weekend in Monte Carlo."
Hamilton believes that while qualifying is vital in Monaco, Mercedes must stay mindful of its race pace.
"Perhaps more than at many other tracks, qualifying and getting the best possible track position is crucial in Monaco, but we have to keep our focus on Sunday as well and keep working to improve our race pace," he said.
"Everyone is working really hard and I know we can get there. We just need to keep motivated and work it out together."
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