case analysis on bmw

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BMW(Bayerische Motoren Werke)

Titans areRuhul AminNusrat MehzabinKoushik Ahmed TusharM.M. Abdullah

BMW(Bayerische Motoren Werke)

Bayerische Motoren Werke AG(BMW), (English: Bavarian Motor Works) is a German automobile, motorcycle and engine manufacturing company.

BMW was originally founded in 1916, by Franz Josef Popp.

Overview of BMW

Industry: Automotive Founded: 7 March 1916; 100 years ago Founder: Franz Josef Popp, Karl

Rapp, Camillo Castiglioni Headquarters:

Munich, Bavaria, Germany Area served : Worldwide Products: Luxury vehicles, sports

cars,motorcycles, bicycles Slogan: "Sheer Driving Pleasure"

(Worldwide)

Overview of BMW

BMW Mission Statement: “We will sell our products with the highest quality and integrity.” BMW Vision: Current vision is to treat their customers like “F.A.M.I.L.Y.” The F stands for family treatment, A stands for attitude, M stands for more than the customers expects, I stands for individual attention and enthusiasm, L stands for like an honored guest and the Y stands for you make the difference. Major Competitors: BMW has four main competitors: Audi, Mercedes, Lexus, and Porsche. The two

bigger competitors are Audi and Mercedes.

SWOT Analysis of BMW

Strengths: BMW group Innovation & technological advancement Renowned brand in automobile industry Workforce Product portfolio Asian markets Plans for hybrid models

SWOT Analysis of BMWWeaknesses Cars recalled Strategic alliances Younger generation less brand conscious Opportunities Increasing product portfolio Changing lifestyle & customer groups Market expansionThreats Competition Price factor Rising fuel problems

BMW –Your Dream CarPresented By –Kowshik Ahmed TusarS.N:20111105011

PESTEL Analysis

P- PoliticalE- EconomicalS- SocialT- TechnologicalE- EcologicalL- Legal

PESTEL AnalysisPolitical Enforcement of new laws related to CO2 emission.Change in EU legislation related to end-of-life vehicle (ELV) recyclingLevel of political stability in emerging countriesPossibility of the UK to stop its EU membershipEconomical Volatility of GBP: EURO exchange ratesAppreciation of Renminbi (RMB) of 1% to 2% during 2012Vast GDP fluctuations in EU countries during the last few yearsVolatility of price for crude oil

PESTEL AnalysisSocial Ageing population in European marketsChanging family patterns (increasing numbers of same sex marriages, single parents etc.)Changing consumer attitudes towards savings and spendingRising life expectancy in developed countriesTechnological Increasing levels of popularity of “green” technologiesTechnological breakthroughs in auto manufacturing industryIntegration of internet-enabled technologies in automobile industryIncreasing levels of demand for alternative fuelsRealization of the concept of driverless car

PESTEL AnalysisLegal Changes in employee health and safety rules and regulationsPatents and Copyrights in relation to innovation on auto devices and functionalitiesChanges in laws and regulations specific to car manufacturing sectorChanges to relevant EU DirectivesEcological Increasing levels of consumer concern towards “green” productsEffects of non-government environmental organizationsChanges in waste management practices

Value Chain Analysis

The value chain concept developed by Michael E Porter provides as ystematic means of categorizing activities and functions of an organization, illustrating the creation of value for customers. It helps the company to determine which activities create value and which do not. When the value chain is capable of creating additional value at no additional cost, a competitive advantage is realized.

Resource-Based View Strategy

The resource-based view identifies the distinctiveness of BMW’s superior performance and competitive advantage to generate unique creations of product and service at lower cost which enables it to earn higher profits.

Resource-Based View Strategy of bmw

Resource CompetenciesThreshold Capabilities Integrated supply

chain Young employees Wide spread assemble

and production units

High quality products and service

Technical design knowledge

Capabilities for Competitive Advantage

Engineering Excellence

Value added work force

Brand management

Made-to-order cars Technology and ability

to translate new technical knowledge into product and service for customers

BMW –Your Dream CarPresented By –MM.ABDULLAHS.N:20111105009

Presentation Topic Porter’s Five Forces analysis of BMW: Competitor Analysis: Key success factor of BMW: Generic strategy: Cost Leadership of BMW: Differentiation strategy of BMW: Focus strategy of BMW: Grand strategy Concentrated strategy: Product development strategy: Market development strategy of BMW: Strategy of Bmw for emerging markets: Environmentally-friendly design strategy

Competitor Analysis Primary Competitor: DaimlerChrysler Toyota General Motors Ford Main Competitor: Mercedes Benz…………..

LEXUS

Audi

BMW VS COMPETITORSENTRY LEVEL SEDANS

FLAGSHIP SEDANS

MID LEVEL SEDANS

BM

WA

CU

RA

INFI

NIT

ILE

XUS

Key Success factor of BMW1.Customers----

2.Corporations….

3.Competitors….

Identification and selection of long-term objectives and strategies:

Generic strategy: Michael Porter developed three generic strategies, that a company could use to gain competitive advantage, back in 1980. These three are:

Cost Leadership of BMW:

Differentiation strategy of BMW:

Focus strategy of BMW:

Identification and selection of long-term objectives and strategies:

Grand strategy: A grand strategy states the means that will be used to achieve long-term objectives. Examples of business grand strategies that can be customized for a specific firm include:

Concentrated strategy: Product development strategy: Market development strategy of BMW: Strategy of BMW for emerging markets: Environmentally-friendly design strategy Customer-focus orientation strategy:

BMW –Your Dream CarPresented By –Ruhul AminS.N:20111105003

Grand strategy of BMW

Innovation: Innovation is a grand strategy that seeks to reap the premium margins associated with creation and customer acceptance of a new product or service. The underlying rationale of the innovation is to create a new product life cycle and thereby make similar existing products obsolete. But few innovative ideas prove profitable because R&D and premarketing costs of converting a promising idea into a profitable product and service are extremely high.

In this case BMW is successful enough. BMW’s brand image is tied highly to such innovation. It introduces the consumers in quick succession to the Rolls Royce, Z4 roadster, 5 series Sedan, 7 series Sedan, X3, 6 series coup, 1 series subcompact, Bavarian, M3 and so on.

It had to increase 53% R&D costs, 75% increase capital expenditures, had to build $1.5 billion factory, employ 5500 worker, train the first 400 in 2001 to produce and distribute Bavarian Giant, new model car.

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Vertical integration: It is a grand strategy based on the acquisition of firms that supply the acquiring firm with inputs or new customers for its outputs. BMW adopts both backward and forward vertical integration.

Backward vertical integration: To speed up the upcoming X3 to market, BMW outsourced development and production to Austria’s Magna International Inc., a unit of Canadian-based supplier and engineering services.

Forward vertical integration: BMW takes lease strategy to sell the cars. Up to 75% of its Luxury 7series Sedan and 50% of the 5series Sedan are leased in USA.

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Global integration matrix:

Global strategy

Transnational strategy

International strategy

Multi-domestic strategy

Global integration

National responsiveness

High

low High

Low

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Grand strategy selection matrix:

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Overcome weakness

MaximizeStrengths

Internal (Redirected resources within the firms)

External (acquisition or merger for resource capability)

Turnaround DivestureLiquidation

Vertical integration Conglomerate diversification

Concentrated growth Market developmentProduct developmentInnovation

Horizontal integrationConcentric diversification Joint venture

Strategy implementation, control and innovation:

Organizational Structure:

As mentioned previously, BMW AG is headquartered in Munich and has operations around the globe. The business is headed by two boards, as is typical of German public organizations: by a Board of Management, which is responsible and accountable for the operations, and by a Supervisory Board, which meets with the Board of Management to discuss the status of strategies. The Supervisory Board has the authority to hire and fire members of the Board of Management and represents two groups, stockholders and employees, with each group comprising half of the board membership.

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Management Style:While management is hierarchical, each BMW employee is empowered to make decisions if they have the competency to do so. However, it is expected that decisions not be made haphazardly; planning is expected for any decision. After the purchase of Rover, BMW CFO Stefan Krause said: “We don’t want to waste money on trying things.” (Chief Executive Group L.P., 2003). Management tends to be low-key, but extremely focused, and has experience from a variety of functional areas. For example, Panke actually started his career as a nuclear physicist, hired by McKinsey & Company as a consultant for BMW before eventually being employed full-time. Panke’s management style is said to be very open and conducive in fostering debate among management to generate new ideas and to solve problems; he expects entry- level employees to raise sensitive issues through the ranks.

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Controls for Employee Behavior & Performance: For employees located in Germany, one-page reviews are given by supervisors. Employees are graded on five criteria:

• Work Quantity (number of projects)• Work Quality (regarding project content)• Intensity of the Work, Engagement, & Excitement• Diligence, Precision, & Accuracy• Teamwork

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Recommendations

Now the recommendations based on the case analysis are as to:BMW should diversify their market,They should diversify and extend the cost-effective products lines besides the Luxurious Sedan series, Bavarian Giant and this will help them to increase sales..The BMW should not be confined to only the developed market but expand their market to developing and emerging markets like China, India. Their production and distribution facilities should not be confined only to domestic and primary markets.They should not be confined to only leasing but provide licensing and franchising agreement with foreign distributors. They should adopt consortia grand strategy because it will help them to add global partners to reduce cost.

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case analysis on bmw

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