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BMW’s Strategic Management

840 words (3 pages) Essay in Marketing

30/05/17 Marketing Reference this

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Bayerische Motoren Werke AG (BMW) is a German manufacturer of automobiles and motorcycles worldwide. With the three brands, BMW, MINI and Rolls-Royce, the BMW Group has focused firmly on the premium sector of the international automobile market. BMW Group is committed to the very highest in quality for all its products and services. The strategic objective is clearly defined: The BMW Group is the leading provider of premium products and premium services for individual mobility.

As mention in the case by the mid 2000s almost all car manufacture provide good quality cars, so Quality was no longer issue for consumers and therefore quality was not issue for organisation also to achieve competitive advantage. But consumers found very few ways to distinguish among available automobile brands and car model. Most brands were established and reliable, where cars were well built with quality. For example- from the late 1990s, the overall quality of US automobiles had improved 24 per cent. ‘The quality gap between the best and worst US automobile, which was 212 defects per 100 vehicles in 1998, has reduced to 53 defects.’ Now consumers distinguish the automobile in terms of brand image, appeal and design. Now car manufacture had given attention to appeal of their brand and models. The automobile industry invests lots of money in high-tech design laboratories, art studio and top-level designers. Powerful brands made small gains, rather than losing market share. BMW achieve competitive advantage by brand building and established emotional connections between customers. BMW conveyed the image of the “ultimate driving machine”, even to those consumers who want a car with small engines. These models take advantage of connections between customers to its mother brand.

The PESTEL is a tool to analysis macro environmental influences in Organisation strategy: PESTEL stands for Political, Economical, Social, Technological, Ecological, and Legal factors. There are various global factors which have the significant impact on all organizations working in the automobile industry. In case of BMW as an international automobile player, PESTEL is very important tool to identify the structural tendencies, market situation and develop strategy to gaining competitive advantage in changing world. First – and most important – of all, the crisis in the gulf region, the unstoppable increase of oil prices and the decrease of global oil reserves show the industry’s limits. New technologies will be needed in the near future to substitute the oil energy. Toyota, DaimlerChrysler, Honda and Volkswagen are craving for renewable energy sources to make the automobile ecologically competitive with other means of transportation. The laws on exhaust fumes get tightened around the world to diminish the emission of carbon dioxide because of the increasing pollution. The legislative situation includes a lot of treaties and regulations by which manufacturers have to abide. Documents like the Kyoto protocol have worldwide impacts, e.g. on new engine-developments. Politically, in Germany for example, the Ecological Taxation System augments the gasoline prices which forces the consumers’ demand for renewable energy sources. High investments need to be made in Research and Development in order to find an effective and practical technology. The Hybrid Technology tends to become the futures’ solution to the problem and the first company that makes the technology applicable earns the profits of innovation. Socio-demographically, automobiles developed into lifestyle-products and status symbols, transferring an image and families owning two or more cars are no rarity.

BMW might be having different type of future challenges. It was series of factors behind of BMW success they combined to sustain competitiveness. BMW known for powerful, luxurious and reliable automobiles but it’s not exception, Mercedes and Lexus touch competitor for BMW. In term of technology BMW is not leader in innovation. Challenges from other company’s innovation will be very significant. Potential future automobile technologies include new energy sources and materials, which are being developed in order to make automobiles more sustainable, safer, more energy efficient and less polluting. Cars are being developed in many different ways. With rising gas prices, the future of cars is leaning towards fuel efficiency, energy savers, hybrid vehicles, battery electric vehicle and the fuel cell vehicle. Several alternative fuel vehicles might be used in future automobile, including electric cars, hydrogen cars, and compressed-air cars. May be in future people prefer eco-friendly automobile rather than powerful machine.

Economic recession leads to price competition which affects the whole industry. BMW is still more than a niche player, competing with a handful of models. Also, their size was still modest when compared with that of the big international player and left vulnerable to acquisition if the Quandt family were to decide to dispose of a sufficient amount of their shares. BMW still behind in some fast growing automobile market as India mercedes take lead, in future its might be difficult to BMW for take market share from their rivalry. In some market BMW behind Lexus. In some market segment competitors were volume producers with lower costs than BMW. Would BMW be able to reap price premiums large enough to maintain their profitability level?

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