SWOT and PESTEL analysis for BMW

Introduction: BMW Gerrick Jackson BMW builds and sells more than one million vehicles every year, employing approximately 110,000 people worldwide. The company begun during the Second World War and built it’s first motor vehicle in 1928. BMW is the only German automobile manufacturer to have shown a consistently positive balance sheet over the last 30 years, by focusing on engineering excellence and delivering consistently popular, in-demand products to a discerning customer base. BMW Mission statement BMW’s aim is to be the most admired and respected service company in the UK. Company purpose: BMW (GB) limited and its subsidiaries from a sales and marketing organization dedicated to adding value to the products of its parent company BMW AG. Together with the BMW dealer network, the company seeks to promote brand values and customer service.

The authentic BMW and Mini brands with their clear profile, distinctive quality, superior Technology, high reliability and commitment to the products fully deserve their market positioning as “The ultimate driving machine.” The company was started in Germany in 1916 building aero engines and currently has a 97,275 strong work force operating in America, Europe and Africa. 1. Business environment in the car industry Consolidation in the global automobile industry moved forward at a breath-taking place in 2001.The six leading groups General Motors, Ford, Toyota, Daimler Chrysler, Volkswagen and Renault accounted for almost 70% of the worldwide production of 563 million vehicles in 2001.

Mission of BMW:

“The mission statement up to the year 2020 is clearly defined: the BMW Group is the world’s leading provider of premium products and premium services for individual mobility.”

(www.bmweducation.co.uk)

Vision of the company:

Company’s vision is efficient dynamics vehicle that preview tomorrow’s driving pleasure using today’s technology.

Ref: http://www.bmw.com/com/

en/insights/technology/efficient_dynamics/phase_2/bmwvision

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SWOT Analysis of BMW:

Strength:

BMW is the only German automobile manufacturer to have shown a consistently positive balance sheet over the last 30 years.

Their business has been spared in all over the world.

Currently has a 97,275 strong work force operating in America, Europe and Africa.

They have sufficient capital to innovate more for future competition.

BMW have adopted after learning the need for defensive as well as aggressive marketing and strategies.

BMW has become the leading premium car brand

BMW has mastered the manufacturing fine art called mass customization.

Union representatives generally rate BMW a good employer.

BMW has become the leading premium car brand.

Weakness:

“BMW’s main weakness is that life is getting ever narrower in the premium segment, and it needs volume growth.

Most of cars are expensive. Everyone cannot effort money to buy.

Parts are not available in everywhere.

BMW isn’t as ruthlessly efficient as Toyota in some respects, including the number of cars produced per worker per day.

Opportunities:

The company is planning to expend the business more as they have enough capital to do so.

Three new model families are in the works, including a luxury sports car.

BMW is expanding its production capacity in Britain.

Threats:

Toyota’s Lexus is starting to make inroads into BMW’s European turf, while at home, rival Audi is turning up the heat, and Mercedes.

Germany is still far from being a freewheeling economy, which is a fact for the company as well.

Other companies are trying producing comfortable cars for the customer for chipper price then BMW.

Ref: http://www.time.com/time/magazine/article/0,9171,1640398-3,00.html#ixzz12Xq80Et0

Background Note:

The Munich (Germany) based Bayerische Motoren Werke AG (BMW) was founded, as an aero-engine manufacturing company in 1917. After World War I, the company faced problems due to the severe restrictions that were placed on the aircraft construction business in the country. BMW then decided to move into the production of motorcycles and passenger cars. The company undertook a series of acquisitions and joint ventures with various motorcycle and car companies. In 1923, the company launched its first motorcycle model, BMW R32. In the early 1920s, when the government eased the restrictions, on the business, BMW once again entered the aircraft construction business. However, the company continued to focus on the automobile business. (http://www.icmrindia.org/casestudies/catalogue/Business%20Strategy1/BMW%20Innovation%20Strategies.htm)

In October 2002, the world-renowned automobile manufacturer from Germany, BMW Group AG (BMW) was awarded the ‘Outstanding Corporate Innovator (OCI)’ title for 2002, by the Product Development & Management Association (PDMA).

This innovation management system enabled BMW to exploit various path breaking technological innovations, right from the idea generation stage to the market introduction stage. This system enabled BMW to develop a continuous stream of new products and brands. Company sources admitted that by focusing on new product development practices using the innovation approach, BMW successfully withstood competitive pressures and held on to its market position. (http://www.icmrindia.org/casestudies/catalogue/Business)

About Marketing Mix:

Price: The price of the car- particularly the price compared to the competitors – is a vital part of marketing. There are two possible pricing techniques:

Market skimming – pricing high but selling fewer.

Market penetration – pricing lower to secure a higher volume of sales.

Product: BMW is very updating about their product, as well as they are concern about their competitors. Targeting the market and making the product appropriate to the market segment you are trying to sell into.

Promotion: This may take the form of point of sale promotion, advertising, sponsorship or other promotions. Almost every month they do promotional offer via advertisement.

Place: This part of the marketing mix is all about how the product is distributed. Current trends are towards shortening the chain of distribution.

People: This stresses the importance of people in the marketing process; often the first point of contact with any business is a human being – the impressions given by this initial contact may be very important. In addition, the role of human beings in developing customer relations is seen as increasingly important especially in a knowledge driven economy.

Physical Environment: This refers to the importance in making the physical environment related to the product or service as welcoming and as reflective of the business as possible – for example, look at the showrooms of car dealers – many are very well lit, stylish in terms of furniture and decoration and include seating areas, coffee making facilities, newspapers and children’s play areas.

Process: The process by which the product is either manufactured or passed on to the final user. This might include the extended use of ICT facilities to speed up ordering, delivery, etc.

Micro & Macro environmental factors:

Macro Factors:

There are some issues in Macro factors. Those are

Political

Social

Economical

Technological

Political:

Motives and the action of government and the way that affects businesses are considered

Government legislation and can impact negatively on businesses

It is extremely important that organization understand the role of the government in the market place be it regulator or a participator

Role of the government ,regulator or participator

Political ideology

Economical:

Gross domestic product

Government polities-fiscal and monetary

Industrial-structure ,growth and distribution

Income-current, growth and distribution

Wealth- distribution effect on the buying power

Employment- structure, FT/PT ,male/female ,regional disparity

Social:

Aspect most difficult to understand , product and quality

Because it does deal with human behavior

Check lists to look for as indicate are culture/sub culture group -X’tics growth, decline

Demographics- socio economic groupings, home ownership, geography, family structure, family life cycle, and usage rates etc.

Natural segments- characteristics, differentiation, growth / decline/change

Psychographics- preferences, benefits, attitude and belief systems

Social trend- changes personal value system, structure of the society, morals and ethnical positions and belief system.

Technological:

Information technology in the use of computer and computerizations are considered

Effects on the cost base of increase IT automatic is also worthwhile considering

Checklists to be considered under technological facts

Rate of technology change

Organization able to keep up with customers acceptance

Research and development – cost of investment , control

Production technology – patents, copy rights

Universal availability of technology- rate race of technological age.

Micro factors:

Customer environment:

All companies need to have a good understanding or their customers: who and what makes their market, we can identify five types of market.

Competitor Environment:

Competitor forms a major part of the environment in which companies operate. Few do not have competitors, and where monopoly have existed government has sought to force organizations back into competition arena, e.g. in the UK the cola industry, telecommunication, gas and electricity.

With shortening product lives, effective planning must be carried out in the light of the competitive situation in which the company finds itself. The competition should be assessed in several ways, such as:

Direct competition – those companies that produce the same type of product or service and sell to the same customers.

Industry competition- those companies that operate in the same broad product areas, but do not necessarily serve the same market.

Indirect completion: companies who make different product or services, but which may attack the resource or compete for the disposable income of the markets you wish to serve. Good examples of this include the purchase decisions to buy a car or go on holiday, to move house or pay school fees.

Supplier environment:

This is very much more linked today to quality management and relationship marketing, in which a partnership is forged with the supplier in the same way as that with the customer. Suppliers are essential to the company for it to produce its goods or services. For example, the Ford Motor Company must obtain steel, motors, types, fabrics, glass and other components, in order to make cars. It also requires labor, equipment, power, etc. in order to full scale production.

Supplier developments or changes in relationships can seriously affect marketing. Developing a close relationship with suppliers can help prevent disruption to production and can make operators much more effective through the use of such scheme as JIT (just-in-time)

The micro environment is closer to the company and consists of the forces, people and organizations which operate within the immediate environment of the company. Usually the effects of changes are easier to see and to forecast. That does not automatically make the changes easier to deal with, but it does mean that the marketing manager can have some hope of influencing some of the micro environment factors.

Company resource:

The environment within which marketing management must work involves the resources of the company, and they are not endless. There are always likely to be conflicting opinions about how resources should be use, and one of the managing directors is often to make the difficult choices between equally deserving departmental managements.

Resources are often thought of as they appear in the company accounts, in terms of money- either actual money in the bank or the estimated values of the buildings and machinery that the company owns. These resources are important, and if the opportunity arises to earn some extra profit the company may be able to acquire extra resources .That is what expansion is all about.

Physical resource is a valuable asset, and the company which has access to adequate resource can take advantage of opportunities whenever come up.

The other type of resource is , of course ,people – of all grades and types , doing demanding or menial jobs , all of which add up to achievement of the objectives given in the mission statement.

One final resource is more difficult to define – the management skill that makes all difference between a successful company and a loser, with apparently equivalent other assets and resources.

Ref: 2.Amanda Shaffer, et. (2007) “Fresh & Easy’s Environmental and Food Access Commitments”, A Report of the Urban & Environmental Policy Institute, 2007

Conclusion:

BMW’s business growth is going more and more. Their business strategies and their tactics is the important key of their success. On the top of that the company’s internal customers are very satisfied with the company. This is very important for every business to being their business in success.