BMW
BMW
BMW
Strategic Management 2
concerning SWOT (strengths, threats, opportunities, weaknesses), and give future strategic
alternatives. According to Johnson and Scholes (1998): “The aim is to identify the extent to
which the current strategy of an organisation and its more specific strengths and weaknesses are
relevant to, and capable of dealing with, the changes taking place in the business environment”
Automotive industry is one of the leading industries in the world. The aim of
automotive industry is to maintain the level of service and product quality and develop
by different factors of environment which have a great influence upon it. This is called the
microenvironment (or the competitive environment), because it is within this sphere that
BMW competes, both for resource inputs and to sell its product outputs. BMW is owed by
Quandts (46% of the group), which turnover was about “UERO 35 bn, with BMW
Automotives accountong for about UERO 25bn, achieving over 10 % operating profit”
(Lenciani, 2001). As well as any other company, BMW tries to get and keep a customer
proposing higher quality at lower price than its competitors. In general, BMW Group is a
An examination of how strategy is formed gives useful insights into the nature of
strategy itself. SWOT is normally associated with more rational approaches to strategy
formulation, but perhaps its greatest contribution lies in providing the management strategist
a broad framework for analysing the position of a firm at a particular moment in time. It can
also be useful in the development of a number of strategic options which attempt to tackle
opportunities and threats, build on corporate strengths and avoid weaknesses. An important
consideration is that for most management there is a choice of strategy. Strengths and
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weaknesses of the company are internal factors, while opportunities and threats are
The strengthens of the company are based on strong market position and strong brand
image. Today, BMW obtains a very competitive position on the market. The company is
ruled by the team who is able to raise the price level and gain more or less strong market
position. At the very beginning the strengths included high potential to growth and
profitability of the company, and professional management team, customer loyalty and
excellent service. “In business terms, strategy of adhesion to BMW’s core values had been
vindicated by the bottom line with the 3-series saloons continuing to be especially in
demand”( (Lenciani, 2001). BMW has a hard core of loyal supporters. It develops lines of
product mix and constant technological innovation. “BMW had traditionally taken great pride
of the quality of its engeneering, higher than was usual in most production vehicles”
(Lenciani, 2001). The strength of BMW target is that it is based on innovations and new as
any other businesses. They care more about reliable service and confidence than about the
lowest price. They don't want to rely solely on their own expertise, so they choose instead to
deal with us with our promise of service and support when needed.
passion to deliver best-of-breed customer solutions, BMW creates products for specific target
market. The product positioning is based on personalization strategy. This strategy helps
BMW to appeal to the consumers' minds with offerings. Positioning of the brand can be
This strategy is supported by the buying process and the pricing. Also, the positioning
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strategy of BMW helps the customers to have product within their minds. To address the
target market BMW creates customers' trust to make them willingly follow the company.
Internet and e-commerce creates great opportunities for automotive industry (and customers)
to hasten the process of purchase. Internet “shortens the lead time for the production of an
automotive, which was 60-100day. Today, “customers could be brought into a Web-driven
relationship with an automobile supplier” ordering directly form the supplier (Lenciani,
2001).
consumers’ needs and ideals. This approach helps BMW appeal to particular needs of every
client. Product differentiation and price competition creates a likely for most automakers.
In BMW group, price competition, backed by improved efficiency, are likely to feature
highly as it fights for survival in markets faced with over-capacity. Within rapidly changing
environment this kind of development ensures that long-term survivors are those firms who
are more competitive and are better able to satisfy consumer needs and adapt to the new
customers and product innovation strengthen the BMW’s image. “The BMW brand also
acquired a distinctive identity as a symbol for young, affluent European professionals: most
2001). BMW relies chiefly on an efficient market system and product improvement. The
traditional auto market is not in maturity one, and today it offers a limited opportunity for
high profits, so it sets about developing products, that are both distinctive and could be sold at
market. The original mission had made it clear that it was in the relatively unexploited 'adult'
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sector that BMW saw its clearest opportunity for innovation. BMW set out to create a range
BMW has several options for addressing the problem of price competition. The
choices are dictated in part by product and market competition. In Europe, BMW is
forced to switch to offshore sourcing of certain components to keep costs and prices
competitive. In particular, the Far East and Asia are emerging as attractive markets for
turn resulted from decisions on its market policy, which in turn resulted from its
competitors. This is the process of designing quality into the service. Sales strategy is on a
one-to-one basis.
The weakness of the company is that automotive market is not very fragmented, and
includes such giants as GM and VW, Fiat, Peugeot. The majority of businesses offer services
to a big geographical area. Also, the weaknesses of BMW are high competition among world
leaders. Globally, BMW has many competitors, and only a new direct-marketing strategy
help the company to compete. Automotive market is charac terized by high fixed costs is
always under pressure to keep production at full capacity to cover the fixed costs.
The weakness of the company is closely connected with legislation and government
regulations. Recent years, there is a tendency towards environmentally safe “green car”
which forces company to find alternative solutions: hydrids or hydrogen fuel cell vehicles.
and Kyoto Protocol on global warming, which requires ecologically safe solutions.
Another tendency, influenced BMW Group and automotive industry, is “mergers and
acquisition activity with emphasis moving from automobile manufacturers, already highly
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consumer is able to replace a product with a different type of product performing the same
service or satisfying similar needs. The situation suggested that Asian competitors (Toyota
and Nissan) increase competition which can cause the decrease in prices. Competitive rivalry
among European and American competitors is strong which, on the one hand create
barriers to entry, but on the other hand, create fierce competition in the industry. BMW
faced strong competition form Daimler-Clrysler’s C-class and from Audi’s new A-class,
launched late in 2000” (case study). In general, the outlook of the industry does not present
BMW with attractive perspectives for profitability. The fall of Euro against other major
currencies becomes a great threat for BMW. Financial data of Rover and Toyota showed
profit decline.
In spite these facts, economic analysis shows that BMW is one of the most successful
automakers today. “Its brand’s popularity is still rising, with eager buyers joining long
structure which will substantially reduce the total markups required to achieve
marketing operations.
Strategic moves can be made towards new technology achievements and safety.
Overall business strategy, potential and capability to support high performance environments
are the key elements for the next years. The policy of safety adopted by BMW is the main
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has the global resources and certainly has the technological capability. Clearly, some
companies in the same industry are more successful than others, lending support to the view
danger of ignoring the environment, as customers and their needs, competitors, changes in
The strategy towards a “green car” should be the main priority of the company today
in order to compete in future. Conceptually new Car is the future of the industry. For BMW,
consolidation in its present products presents adequate opportunities, and requires a search
for alternatives which build upon the company's present knowledge and skills. In the case
of product development BMW will maintain the security of its present markets while
There may be many reasons why BMW should have a preference for product
continually introducing new products; and local authorities need to shift their pattern of
particularly good at R & D, and because it has structured itself around product divisions.
When product life cycles are short (or consumers demands are changed) product
New product development will open new markets for BMW and allows attract new
target audience. BMW will become more market focused than less successful firms in
needs. It will also concentrate on developing the products which build on core competences
and skills. Today, BMW are good at communicating the desirability and requirements of
product development internally so as to avoid the disruptions that new developments can
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bring. So, a new conceptually new car is the market need and BMW can be the first
Another strategy concerns existing products. In the case of Asian market development
BMW will maintain the security of its present products while venturing into new market
areas. Asian market development can include entering Indian and South Korean, China
markets exploiting new uses for the product or spreading into new geographical areas. Of
course, market development and product development may go hand in hand, since the
move into a new market segment may require developments of variants to the existing
product range.
Recent years, Chinese market (as a part of a global market) shows the highest rate of
economic growth around the world. The opportunities of BMW include: high potential to
growth and profitability of the company; promotion to other divisions; increased revenue
from success in Chinese market, continue a global expansion and penetration into
To conclude it is possible to say that business processes will help to satisfy requirements of
different clients. It will help to meet the needs of a particular customer and provide specific
personal service for every supplier and customer of BMW. In the infrastructure of BMW
goods quality is the major question. It is evident that global strategy should include the
determination of the basic long-term goals concerns the conceptualization of coherent and
attainable strategic objectives. Because the market has moved on, there can be a gap between
the skills required to compete in the market and those possessed by the firms. In these
situation BMW will be faced with four distinct options: to build up the resources required to
compete in the market by closing the gap between the firm's competencies and the assets
required to compete. Without changes and successful strategic planning BMW will not be
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References