The Background of BMW extends back almost 90 years and has a number of successes as its benchmark. The foundation of BMW group day back again to 1913 by Karl Friedrich Rapp, in Munich. Originally the company manufactured aircraft engines but when The Treaty of Versailles was signed in the same 12 months, it prohibited BMW from building aircraft engines. In the entire year 1917 it was renamed as Bayersiche Motoren Werke (Bavarian Electric motor Works), or BMW, even as we it know today.
In 1990 BMW re-entered the plane engine making business after creating BMW Rolls-Royce GmbH jointly with Rolls Royce. Today BMW has its head office in Munich, Germany and produces and offers motorbikes and automobiles having three high grade brands being: BMW, Minuscule, and Rolls Royce vehicles. Today BMW has its presence in over 160 countries with 21 production units in four continents. It uses over 96, 000 people and markets over 100, 000 vehicles yearly worldwide. The Group targets three cornerstone of vehicle maintenance expertise, which are Quality, Efficiency and Innovation. The BMW designers enter the development developing progressive, convenient and drive-focused service features that ensure best performance.
In this portion of the report we would emphasis on
Environmental Analysis
Resources and capabilities
Strategic synopsis
Environmental Analysis:
The macro-environment and permanent trends:
The industry framework and competitive environment
Customers, marketplaces and market segments
MACRO-ENVIRONMENT AND LASTING TRENDS
PESTEL analysis helps us determine the factors which majorly affect the strategies of a company
The word PESTEL is the Acronym of:
P- Politics
E- Economical
S- Sociable and cultural
T- Technological
E- Environmental
L- Legal
POLITICAL FACTORS:
The term Globalization has become an essential part of the automobile industry due to the demand in international market. Companies have to follow many regulations and procedures.
Political Factors affecting BMW are:
a) Taxation Policy
b) Employment law
c) Foreign trade rules etc.
ECONOMICAL FACTORS:
Economic changes impacting the group are:
During downturn BMW was required to strengthen its specific brands and the product portfolio to be able to lessen the negative economic effects.
The money rate changes also influence the company's insurance policies.
Fiscal and interest rate policies have to be kept in mind.
SOCIAL AND CULTURAL FACTORS:
Social and social changes that can affect the corporation are:
The BMW Group has to try to contribute actively to guard and develop the population whatsoever its locations and beyond.
The Group has to derive the center styles of its sociable dedication from its corporate and business objectives and its own commercial culture, which combines success orientation, cosmopolitanism and trust. These themes or templates include traffic safe practices, education, intercultural exchange, HIV/Assists attack etc.
TECHNOLOGICAL FACTORS:
This is a major driving pressure of a car industry in order to get competitive advantage
Companies try to focus on different policies to get petrol efficiency.
They have to work on increasing the electrification of the drive coach and hybridisation.
ENVIRONMENTAL FACTORS:
BMW has to go through the following environment factors.
a) Emphasising on recycling and reducing waste.
b) Abiding by the (Directive 2000/53/EC - the "ELV Directive") which will keep a check up on dismantling and recycling of vehicles more environmentally friendly.
c) European Commission rate rules to cut CO2 emissions on new automobiles to 130 gms/km.
LEGAL FACTORS:
Companies have to follow the corporate governance codes.
They also need to have a laws for worker involvement as well as workers benefits.
Other legal laws and regulations companies have to take into account are Dividend legislations, Compensation law, Stock Exchange regulations etc.
The industrial structure and competitive environment of companies strategically rely upon strength of five pushes, its research allow organization to build up their competitive benefit.
Now we will discuss each of the following at length.
Threats of New Entrants:
There are lots of factors that impact the entry of new players in the auto industry.
Large capital investment is required to enter the marketplace.
There is sensitivity to reputation which functions as a hindrance.
An advanced technology is necessary for this type of an industry.
This is already an over-crowded segment and a new entrant will have to start from the scuff.
But the reduced cost manufacturers like the FORD can become a threat in this portion.
Threats of Substitutes:
The threat of substitution will be the public move or car private pools etc. The options people are going for now days and nights due to different reasons like cost slicing, global warming etc.
BMW has a threat of other brands also like the MERCEDES, GENERAL MOTORS, TOYOTA etc.
BARGAINING Vitality OF SUPPLIERS:
The BMW Group emphasis that commercial sustainability can only succeed if it takes into consideration all steps of value string. It sets criteria for its Suppliers and associates. The suppliers have less say because of the fact that BMW operates on international network called INTERNATIONAL PURCHASING OFFICES (IPOs) whose job is to identify and validate local suppliers for both its local production as well as international creation network. Therefore it would be right to say that suppliers have less electric power scheduled to different sourcing strategies of the business.
CUSTOMERS, Marketplaces AND MARKET SEGMENTS:
Bargaining ability of potential buyers:
There is a high bargaining vitality with the clients because of a large competitive rivalry in the industry which causes lots of options available in the car industry. There is a vast available Price and Product range available for the buyers. Therefore the ultimate vitality is in the hands of the customer and not the company (BMW).
COMPETITIVE RIVALRY:
There is a higher Competitive rivalry in the automobile industry. That is due to the fact that the industry is concentrated, fixed cost is high, competition is high and also that all player wants to be before its competitor by taking its technology to the market as fast as possible.
BMW Group has managed to have a good brand image amongst the young and the affluent. Today the other name for BMW is Quality, Performance and Technology.
CUSTOMERS:
The customers of BMW have a very important factor in keeping which is their appreciation of travelling fun and sporty yet elegantly designed vehicles. The automobiles are classy, tasteful and luxurious and concentrate on the upper category of the society. They study each section of customers and make an effort to target them independently. For example they made BMW 3 SERIES Convertible and BMW Z4 for females, BMW X Models for young families with children etc.
MARKETS:
The target market segments of the BMW Group are Activities Convertibles, Super Executives, Executives, Touring/ real estate, Super Athletics and Four Wheel Drive vehicles.
MARKET Sections:
The BMW Group uses segmentation to recognize the buying characteristics. The company considers all the forms of segmentation like: Geographical, Demographical, Behavioural, Socioeconomic, etc. In order to target the marketplace efficiently. Be it the Bike or the Resale of automobiles the company takes into account each of the following segments to be able to own successful business performance.
RESOURCE, CAPABILITIES AND STRATEGIC Resources:
Every company needs and has certain resources and features for its even operating as they help a company in its survival and maintaining its competitive border. The different resources of BMW we would be talking about are:
FINANCIAL RESOURCES: The group has good financial less difficult. Recently it made a Income of 126 million Euros in its third one fourth. The organization works continuously to boost its Cost and Income to offset the impact of market conditions.
HUMAN RESOURCES: All of the employees are recognized by their personal responsibility, overall flexibility and dedication. The group prices its human tool by giving them attractive deals, financial benefits and employee family insurance plan.
INTELLECTUAL RESOURCES: The group has renowned engineering excellence, its own brand identity, consistency and luxuriousness that functions as an intellectual source for BMW.
PHYSICAL RESOURCES: BMW's technology, its typical designs and styles, its effective segmentation of the marketplace, its supply string management all are its key physical resources.
INTANGIBLE RESOURCES: It goodwill with customers. Its brand, its product quality, the sturdiness and reliability of its product and effective dealer chain management all are its intangible resources.
STRATEGIC Features:
The strategic capabilities of the group can be split into four parts:
THRESHOLD RESOURCES: The threshold resources of the group includes its dedicated employees, its source and demand chain management, its designed production and set up units.
CORE COMPETENCIES: Favourable conditions for infrastructure, skilled labour pressure, ease of working conditions, technology etc all act as primary competencies for BMW.
UNIQUE RESOURCES: Its anatomist, future strategies ( ultra light-weight carbon fibre reinforced plastics), quality labour drive are its unique resources.
Strategic property:
The strategic resources of BMW can be divided into four factors:
ECONOMIES OF Level: This performs an integral role in virtually any organisation as the key goal of the firm is to recover its high capital spent through larger level of result. This group achieves this by changing its working time relating to its demand. The higher demand contributes to more volume of time whereas reduce working hours when demand is low.
SUPPLY String: That is an important part as it includes the supply of raw materials as well as efficiency of productivity. This operates as a secured asset for the BMW Group since it has its creation units at different parts of the planet which ensures source chain working effectively and reducing travelling cost.
PRODUCT DESIGN: this is a key driving drive of any organisation and when it involves BMW it is the other name for product quality. Its designs are lavish, mind turner and reliable. The Group makes maximum utilisation of latest technologies.
EXPERIENCE: BMW has been in the industry since the Second World Battle and experience it has no other company in the auto industry can match which offers it a competitive advantage over others.
VALUE ADDING NETWORK:
All the functions of an organisation from the design to delivery of the merchandise to the ultimate customer is completed using Value Added Network. BMW considers all the procedures of the worthiness network to carry on its techniques since it has its assemblage locations and manufacturing units surrounding the world. Addititionally there is an internal assemblage lines. The BMW Group has its own value chain which is divided based on Design, Price and Geographical locations. The business offers a variety of products from "MINI" to the "ROLLS ROYCE". The merchandise of the company are priced in different ways corresponding to different target market. Example the BMW vehicles are priced just a little cheaper in the ASIAN markets as compared to the AMERICAN or EUROPEAN market segments.
The diagram given above is the value added network diagram utilized by the businesses. It consists of both PRIMARY ACTIVITIES and SUPPORT ACTIVITIES.
The SWOT Research of the BMW Group.
SWOT is the acronym of:
S- Strengths
W-Weaknesses
O- Opportunities &
Threats
The detailed analysis of Talents. WEAKNESSES, OPPURTUNITIES AND Hazards of BMW.
Strengths:
BMW is a favorite company in conditions of Branding and Quality. This power has helped it achieve a solid market position.
BMW is the world's leading superior quality automobile supplier.
It gets the capability to convert its resources into its competitive advantages.
BMW uses its advanced technology which improves its products Design, Price and quality.
BMW's supply chain management is also its biggest durability.
WEAKNESSES:
People have a perception that BMW's prices will be high which functions as a poor point for this.
Competitors (TOYOTA, LEXUS) are developing their products at a comparatively low cost.
BMW is using distributed components because of its cars that are too similar. That is leading to cannibalization of the sales of high end models.
Opportunities:
A volume of BMW's products are being sold even during economic crisis.
BMW has growing acceptance in Asian growing markets.
BMW has better its customer care which is also supplying it good opportunities.
THREATS:
BMW is facing an elevated completion in luxury market segment.
There is volatility in fuel costs on the market.
The company is facing price hike in its resource for example metal.
In nutshell we can say that BMW Group won't have a difficulty changing its weaknesses into strengths and its hazards into opportunities.
Now we will do the STRATEGIC SYNOPSIS of BMW.
STRATEGIC SYNOPSIS:
BMW Group is definitely the other name of powerful and cutting-edge technology. It has a competitive benefits over its competitors. Even in today's market crunch situations the Group managed to make earnings and increase their sales. BMW Financial Services personnel in their subsidiaries in order to investigate and boost their business operations on their own.
Their improvements have led to lots of accomplishments for the business such as:
They have were able to decrease the CO2 emission levels of their all makes.
They use effective dynamics in all the models.
All their existing models are market market leaders in their own sections.
BMW has allocated their various products to different global development sites more than a 12 12 months planning horizon. All their improved models have shown the transparency and versatility of its strategic planning process.
The planning process of the company reaches a 12-yr plan which is revised a number of times in a year and should be approved by the table of directors of the company. They work out on their Products and Sales before they plan their Production Capacity. They aggregate the products to the amount of derivatives of the merchandise series like the sedan, coupe, touring car or the convertible. The company also is effective after each of its approaching as well as the prevailing models even up to the degree they have the made a decision starting time as well as the shut down date ready.
The BMW Group works constantly on the environmental impacts with their vehicle by adopting a number of improvements which are designed to reduce the levels of carbon di-oxide (CO2) and nitrogen oxide (NO2) emissions off their cars.
The Group is having a "STRATEGY NUMBER ONE" which sets out eyesight to be the leading specialist of best products and services by 2020. The pillars the business would be using to realize this might be Future, Development, Customers, and Profitability. The business will be focussing on increased use of shared modules between models and brands that may enable them to help expand reduce upon their cost but still maintain the high quality. Today the company sells BMW, Minuscule and ROLLS ROYCE covering the entire range and types of high grade autos. Today it produces automobiles in eight different vegetation. They are continuing to develop successful dynamics technology and would try to achieve fuel current economic climate through HYBRID solutions.
The HYBRID types of BMW are anticipated to be available this year 2010. The technology of HYBRID autos has made the company touch new horizons in framework of technology keeping in mind the environmental issues. These innovations have enabled BMW specify its goals and its future strategies. The business has come up with HYBRID autos and E-CARS like the MINI-E which can be environment friendly. It has given BMW a competitive border over its opponents.
The company has managed to emerge quickly and effectively from the prevailing monetary crises. They reduced after their inventories, set cost and reduced after the working hours on several crops. The business even performed well in the administrative centre markets.
STRATEGIC Options:
The strategic alternatives of BMW would be reviewed using ANSOFF's GROWTH MATRIX
MARKET PENETRATION:
This means growing existing products in existing markets which is achieved by doing effective marketing. BMW is having an upper submit the Western and NORTH AMERICAN market segments. Its 3 series continues to be a head in the superior middle income car section.
PRODUCT DEVELOPMENT:
This means offering new products to the prevailing markets. The company is launching lots of new models in future that would extend its business like the BMW 3 series Limousine and Touring which are plentiful in the Western market. Some Notion and Hybrid cars would also be accessible in the near future.
MARKET DEVELOPMENT:
This means offering existing products to new markets. BMW is placing a great deal of emphasis on entering new marketplaces because of its future prospects. It is focussing on marketplaces like CHINA, INDIA and BRAZIL etc. The sales come to 90, 536 up 38% in CHINA; 6, 398 up 1195 in BRAZIL and 3, 619 up 24% in INDIA, reaching an archive. In these countries the economies are growing and there are young educated professionals who 're going for such automobiles.
DIVERSIFICATION:
This means taking a new product and choosing a new market completely. BMW has already achieved diversification through ROLLS ROYCE and producing its name in the Motorbike segment.
Methods of development:
The BMW Group can further develop itself through Joint Projects or Acquisitions when they would like to go global. This is recommended because:
There are certain limitations on ratio of ownership in some countries.
The local providers have a pre developed supply chain system.
The local operators have good knowledge about the existing marketplaces.
Having the making units nearby the creation sites incur less cost.
The company is suggested to visit for Joint Projects as a first choice and Acquisition as second.
PORTER'S GENERIC STRATEGY:
According to Porter's Universal Strategy the BMW Group is based on the Product Differentiation Matrix.
BMW serves a huge range of the market segments but its automobiles are differentiated by its customers who are prepared to pay an increased price for the brand as the company offers 'luxury' which has quality and features as compared to other brands like TOYOTA or GENERAL MOTORS. This enables the business to desensitize the costs and focus on beliefs that lead to higher price but also greater margins.
The company has achieved differentiation through its value adding which is achieved through Quality, Service and Brand Image. Its development network also is dependent upon determination and special understand how of its employees.
These all factors have led the BMW Group maintain its Product Differentiation and today its Loyal Customers are ready to pay an increased price and aiding them have an advantage over other players in the market.
Today the BMW Group is perfectly consistent with its available resources and capabilities. They may have excellent executive along with low cost operations and devoted customers. Their tag line "THE BEST Travelling Pleasure" is showing its real meaning today. It is also participating in safe on its strategy in developing its name in upcoming market segments.
RECOMMENDATIONS FOR Activities:
The BMW Group can maintain steadily its lead through the next strategies:
OPERATIONAL EFFICIENCIES
MARKET DEVELOPMENT
PRODUCT DEVELOPMENT
VOLUME LEADERSHIP
CUSTOMER ORIENTATION
SEGMENT LEADERSHIP
The BMW Group is working really hard through the years to maintain its position. This is actually the right time to work successfully on the above mentioned strategies as the entire world is appearing out of the recession phase. The Retail Lovers are also working together with the Group by buying their business and facilities through the financial crunch. The company has formed a solid retail network in Quebec. The company should work hard to be the lasting market leaders in the superior car industry.
The company can maintain public and ecological sustainability through useful value chain, extensive product responsibility and determination to save the resources available as part of its strategy.
The upcoming types of the company like the HYBRID models (Active Crossbreed X6) and MINI-E (ELECTRIC) are both unique in their segments. They are developed to reduce gas efficiency under weight conditions and city travelling but these can be did the trick after to be effective throughout a bigger rate and on fascinating driving experience too. The BMW Group also needs to work upon increasing its deal of Motorbikes where it happens to be lagging behind.
The BMW Group should also work upon rising as market leaders in their new marketplaces that they have entered lately like CHINA, INDIA etc. As the recession would be over soon therefore, it would supply the customers more buying electric power. The come may take good thing about this right time up as market market leaders in such expanding countries.
The company should also work on strategies like, how the demand of the customers new or old can be satisfied of different product variants effectively, quickly and inexpensively. It should also think beyond just the vehicles but also needs to look into different domains like complete networking of information between vehicles, incorporating suitability and internet linked platforms. They are able to also improve the components that are being used in the regions of security and comfort to avoid accidents, have range of motion concepts for congested areas and business lead to intelligent satnav systems.
From the investment viewpoint the company is planning to have
A return on capital applied (ROCE) greater than 26% and sales between 8%-10% by 2012 from its car segment. The company can achieve these by enhancing costs and performance.
The BMW Group may also greatly increase their Development Capacity at its existing vegetation where it sees its future demand to be more. It is already likely to increase the creation at its U. S plant from 150, 000 to 240, 000 models by 2012. Precisely the same steps can be taken in plant life in OXFORD and CHINA.
