BMW Group is well known and significant player in its market, was founded in 1916 in Munich in 1916 as aircraft -engine factory, in 1923 BMW built the first Motorcycle and then in 1929 bought car factory to built first car DIXI 315,
After that BMW journey started to satisfy its customers with providing high quality products. In 1980s, established itself in the luxury/ performance segment of the global automotive market
1994- 2000, Rover Group work with BMW Group.
1998- BMW Buys Rolls Royce
2001- MINI brand is launched
Company profile :
Nowadays, BMW Group Company is a powerful international company represented all over the world with more than 106,000 employees, in 150 countries and over 1 million vehicles sold every year.
Today the BMW Group consists of three primary business segments. The BMW Automobiles Segment develops, manufactures, assembles, and sells automobiles. It includes off-road vehicles, spare parts, and accessories.
The main driving force behind the decisions of BMW to turn to globalization is competition.
Organizations micro environment can be analyzed by using PESTEL analysis, a tool which is used to predict the scenario for the future, because the external environment affects the strategies of an organization , when there prevails high level of dubiety due to risk changes,
These are government laws and regulations, security measures and restrictions that can be apply to automotive industry at whole
Car manufacture had to take care of the environmental issues during manufacturing of cars , political laws revolves around environmental norms
Taxes and government foreign policies are critical for automobile industry.
Government stability, and employment laws are also under consideration
With the threat of legislation looming ”BMW has shown that even premium car makers can”
Seriously reduce CO2
Cost of Oil to go up, might effect the buying behavior of customers.
Economic factors relates to exchange rates, as Economic down turn in US car market.
Lowest Interest rates effect the consumers savings.
Social Factors: It includes changes in demographics and culturally apart from change in the buying behavior and capacity of the consumer, It have impact on auto industry as
Changes in the customer prediction from car being a status symbol to fuel efficiency and low emission cars
Environmental issues and awareness of the harmful emission through automobiles.
Changes in buying pattern and behavior of consumer in recession in mature markets.
Spending on research for competitive advantage
Constantly changing environment , BMW efficient dynamic technology try to stay one step ahead that is BMW idrive.
New discoveries , developments, and product innovations
Focus on technological efforts
BMW may have to suffer natural resources that why hybrid cars are introduced.
World widely approaches to cut down co2 emission
Greener life style now
Legal Factors :
Health and safety test on all the cars
Road tax brackets
Industry Structure and Competitive Environment
Porter’s five forces : use for analyzing the competitive environment of an organization.
Threats of substitutes: ( Very low)
BMW has a brand name of being powerful and luxurious, It is positioned in exclusive car range, where there are too many substitutes exist, like Mercedes, GM and Toyota is high threat for BMW
Available substitutes includes other sources of transportation
Bargaining power of Buyer :(Medium)
BMW and its competitors are positioned as in exclusive product range , here bargaining power of buyer is high because consumers can decide the product according to the price and buy product accordingly.
Suppliers Bargaining Power:( Medium )
BMW had a good supply chain management system and had long relationship with supplier.
Bargaining power of supplier is high in auto industry as supplier can dedicate the price tag for new material.
Threat Of New Entrants:(Medium)
BMW has very low threat of new entrants, because in automobile industry a large capital cost is required to set up a manufacturing plant and assembly liner
The new business takes time to get a place and reputation in the minds of the consumers.
Competitive Rivalry: (extremely high)
BMW competitive rivalry has very high, because the industry has cut throat competition for its product .
Major manufactures of luxury car market such as Toyota and Honda are head to head with their luxury segment in terms of quality and reliability.
The strategic group of BMW set a direction up to 2020. The BMW Group intends to strengthen its position within global premium automobile market by increasing sales more than two million units per annum. The BMW Group will also engage in new and profitable areas of activity throughout the automotive life- cycle. Same time BMW will invest in future technologies, new trend of vehicles and pioneering drive system.
The mission statement of BMW clearly defined ” To be the most successful premium manufacturer in the industry.” The new strategy has been given the name Number ONE, standing for ‘New Opportunities’ and ‘New Efficiency’. That is by using new opportunities efficiently to ensure BMW Group’s lead over competitors shape the company’s future.
Customers, Market and Market Segmentation
BMW does never create cars for individual neither it fulfills all the needs of each and every customer but what BMW does do is that it generates an idea of the status of owning a BMW differentiate that it is built for your own comfort Design & Security which makes a special bond between BMW & their customers.
BMW use three steps to identify the market choices, market segmentation and the positioning of the product in the market.BMW collect most of information through demographic, geographic and socioeconomic characteristics of the society, geo graphically BMW has a market share more than 60% in usa, Europe, because heavily industrialized location and residents financial positioned in buying luxury cars. demographically
3) RESOURCES AND CAPABILITIES:
Resources are the inputs to any industry production process such as cash, resources are of two types,
Tangible: Financial and intangible : Reputation
BMW has ability to raise or borrow funds internally from financial institutes due brand name, and fame in auto industry
BMW Financial resources offers the warranty products and safest insurance
Controlling and coordination
BMW have access to raw materials
Plant, machinery, equipment
BMW differentiate from competitors as in trademarks, copyrights, patents and secrets.
BMW superb control in Managerial capabilities, trust and knowledge
Skilled employees, and trained staff are the assets of BMW.
BMW R&D department is recruited with latest technology.
New ideas and scientific capabilities capacity to innovate new product.
BMW reputed with brand name, perceptions in the mind of customers about the product quality and reliability
BMW offers efficient and effective partner/supplier relations.
BMW is a worldwide automobile company, have some capabilities which give a clear competitive advantage over competitors. These are as fallow
BMW has a larger logistics and supply chain management.
BMW have showrooms and franchises globally
BMW empowers and motivates the employees
BMW retain quality personnel by giving bonus and other facilities.
BMW is rich in well trained staff with design and production skills.
Also reliable in product quality,
recruitment department of BMW selected those people which deserves and are exploring new ideas helpful for industry.
BMW’s employees in R&D department use the most advanced techniques and technologies to systematically transform ideas into innovations for traffic system and vehicles.
Bmw nowadays using hybrid technologies for R&D.
BMW’s segmentation and targeting and positioning are very clear.
Diversified product range as mini to trucks.
Capabilities are core competences:
Rare : BMW not possessed too many competitors in reliability and flexibility.
Hard to imitate: BMW has a power full and unique brand name.
External resources and value adding networks:
The decision are required about distribution, price, product or promotion in both intra-organizational as well as inter-organizational skills. Market of BMW is using direct marketing channels to approach the target audience, in this type of distribution channel, marketer on the BMW website was to perform the facilitating function, where contact is made with buyers to know their needs, and match needs of buyers with the product ,is an ideal communication strategies to ensure the effective information transformation.
BMW External resources involves with external agencies that make connection between point of production and point of sale.
BMW has a number of distribution channels which includes franchiser, show rooms, most part of total sale of BMW depends upon the independent distribution.
Retailers: the company has strong relation with small and larger automobiles companies to enhance the sale. As MINI retailers represents the BMW Group across the country in Canada, Vista BMW is the retailer of BMW in Southern Florida, whohas been awarded the “Certified Pre-Owned (CPO) Dealer of the Year Award”.
STRUCTURE, CULTURAL AND ORGANIZATIONAL KNOWLEDGE:
BMW is committed to free and openly competition to achieve the economic success adhering the fair competition in automobile industry.BMW does not accept the activity, which effect the position at the market. for example Agreements for the purpose of price-fixing or other sales conditions. In its work BMW is governed by a strict compliance with all provisions of antitrust legislation,
there are 6 areas where the BMW divide their social responsibilities are as under;
Economics; BMW Group presented its new corporate Strategy Number ONE. It is the vision to be the leading provider of premium services and premium products as individual. To achieve the target, the company needs to focus on growth and profitability; and develop new technologies; to guarantee access to relevant customer groups; most importantly, to actively shape the future. These key fields of action are the four pillars of Strategy Number ONE.
Product Responsibility. BMW’s aim is to make individual mobility sustainable. BMW responsibility starts with developing vehicles that are safe and fuel efficient for both the road users and the drivers and that will one day run completely emission-free. It includes high-quality customers services, friendly production processes as well as environmentally-friendly recycling concepts.
Employees. The BMW Groups communicates with the people with the web pages to ensure that company is made for people. Therefore, the company investing in the training and education of its employees, guarantees workplace safety and reducing the risk of occupational accidents and help employees lead a healthy lifestyle, the BMW Group’s board of management and works council confirmed their commitments with the rights of labor for the international labor organization.
Society. The BMW Group claims to possess the obligation to become a reliable partner for the society. The social commitments of BMW focus on health and education and road safety for people . BMW are committed to a wide range of initiatives to promote sports, art and culture across the world.
Environmental Protection. It does not matter whether BMW ,Rolls-Royce or Mini when manufacture built a resource to protect the environment firmly at every stage of production. BMW reports to avoid waste and solvents – and reduce emissions wherever possible. Moreover, the BMW Group supports the Kyoto targets and has been working intensively for years to reduce its fleet’s fuel consumption. (BMW Group, 2010)
The BMW Group’ targets are clearly defined: to reduce resource consumption and emissions by 30% between 2006 and 2012.
Sustainability Management. BMW’s sustainability management includes regularly discussions and meetings with stakeholders. The goal is to integrate sustainability throughout the entire chain and all the underlying processes which are creating an added value for the company, the environment and for the society.
Structure of the organization:
BMW operates three segments of the business namely:
Automobiles, 2) Motorcycles and ,3) Financial Services.
Automobiles: BMW is the parent company of Rolls-Royce and Mini and previously ‘Rover cars’ BMW company produces, and markets, a wide range of a higher end sporty cars . BMW has also manufactured the first passenger car running on hydrogen Gas ready for common use, although the production figures are not too much by the lack of respective filling stations. BMW Group comprises of many segments within its vast portfolio, BMW Group comprises of many segments within its vast portfolio, but only concentrating on Automobiles.
Motorcycles: In addition to cars BMW also manufactures motorcycles-
Financial Services :
BMW group is focusing on a variety of tangible products, and also has many intangible financial services. BMW is supported by 11 different model series.BMW also finance in different form like sponsorship to sports activities by providing their logo.
BMW has a high level of competition in the automobile industry, the direct competitors in luxury car makers are US, Japan, and other European countries. In US ford and Lincoln are the biggest competitors of BMW, in Japanese market Honda and Lexus, furthermore some European and German local competitors like JUGER, AUDI, Mercedes Benz
BMW strengths: BMW worldwide growth and with best brand quality empowers the company to face its key competitors in automobile company.BMW also maintain its portfolio of successful expansion of products;
If we look at BMW opportunities, then BMW can further expand the product range and can work to find out alternative fuel developments .
The following is the summary of company’s strategic situation
BMW is promised that in 2012 he will sell 108 million vehicles and sees increased the rate of selling and improved profitability. To get all of these goals,
BMW has confirmed plans for an X1 crossover, new Gran Tourism, SUV and new Rolls-Royce Coupé over the next five years.
Marketing is very important for consumer business but to take advantage of the growing economy BMW need improvements in operations and logistics. This will expand BMW competitive advantage and also create barriers to entry.
A new BMW concept vehicle is also in the works. BMW will also be focusing on improving its g green credentials with the announcement of a further â‚¬6 billion investment in its Efficient Dynamics program.
Before moving further first I indicate the difference between strategic option and strategic choice. A set of options make a potential strategy. Such as developing a new product or entering in a new market and choice in process of selecting an option that is more suitable for your business means taking an option or not.
Ansoff Strategic Direction Matrix
Market Penetration: (existing product, existing market)
BMW can penetrate into market through increasing a acquisition of other company.
BMW spend on Promotion to create awareness among the customers effectively.
Encourage non buyers to buy.
Product development: ( existing market, new product)
New product will be introduce according to Needs and desires of customers like, fuel cost a going up, customers demand the alternatives of fuel vehicles.
Market development: (new market, existing product)
Opportunities to introduces the products in new place for development like most of the countries have no access to’ Mini ‘
Internal research helps BMW to develop the existing market.
Diversifications: (new market, new product)
The company entering new markets where it had no presence before like BMW has no currently existence in Asian market fully.
Evaluation of strategic choice:
Above evaluation shows that option 3 has greater score than other options. As we can see that all the options have a positive
According to my research on BMW I found that competition in the ASIAN market is increasing and consumers buying behavior is also changing. BY considering all factors I recommend that company should follow market penetration and product development strategies. BMW main focus should be on its product development. Some other strategic decisions and actions that required for the betterment and long term growth of the company are discussed as below .
The following strategic recommendations for BMW are the result of careful evaluation of multiple options regarding suitability, sustainability and the ability to fulfill stakeholder expectations
BMW can focus on different brainstorming ideas, like build up the relationship with other dealers to get sale goal per year. Because the relationship of BMW dealers are not very good.
BMW has not enough funds as compared to Japanese ,and they are ahead from BMW, we will reckon BMW take competitors advantage.
BWM foremost objective is to maximize shareholder value. The following proposed business strategy is based on the assumption that BMW will continue to maintain its current marketing-focus by taking advantage of identified trends in the automobile industry and maintaining relationships with customers and their changing needs. As concerned to marketing BMW should adopt new technologies and strategies. The phased strategy is recommended future core competencies and to ensure future in competitive advantage.
It is very important for BMW to implementation new strategies for execution under the shadow of competition. This allows BMW to quietly establish multiple bases for future threats and risks, this will strengthening market position. And highlights the importance of maintaining a visible marketing strategy, not only as a value adding of the overall strategy but also as a distraction, while building new strengths.
In the first phase, BMW will upgrade all dairy old models to optimize their cost structure. To streamline logistics process, BMW will reduce transportation distances and improve geographic coverage through further acquisitions. BMW will strengthen relationships with leading international auto industry such as Toyota, FORD to achieve optimal operations processes, low costs, reliable supply and geographical coverage throughout Russia. Marketing will complement these steps by increasing service and delivery quality and product diversity for the consumer. Finally the implementation of this option will secure margins by exploring the opportunities for synergies along the entire supply chain and through additional buying power.
BMW will implement the second phase of its strategy. To further increase its top-line luxury and sporty cars, BMW will enlarge the premium space it occupies with its brands by developing strategic partnerships with mini and SGL group ,where appropriate or necessary, offer its product lines as own label brands to the new partners. In addition, BMW will build new demand for its product ranges by becoming the supplier of choice in UK .
Besides the need to improve operations before being able to supply strategic customers, a simultaneous implementation of both parts of the strategy would over-extend the available resources and competencies within the organisation. A phased approach allows BMW to build up competencies in one area while phasing in the second one.
As BMW implements the recommended strategy and gains market share, it may increasingly become a target for political manipulation and interference. To avoid this risk while enabling further growth and geographic expansion, a long-term strategy could be to merge with or sell out to a large multinational company such as Toyota , ford, juger . The recommended strategic steps will serve to increase the value of WBD as a possible takeover candidate should this option be chosen at a later date.
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