strategic option recommendation strategic cycle: 2000 – 2005 team mars spring 2008 bayerische...
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STRATEGIC OPTION RECOMMENDATION
STRATEGIC CYCLE: 2000 – 2005
Team MarsSpring 2008
Bayerische Motoren Werke
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Presentation Outline
Introduction X Objective of case study, Company Background
Analysis Y Addressing the issue, , External and Competitive Environment, Internal
Environment, Rover Venture
Recommendation Z
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BMW’s Mission Statement
To be the most successful premium manufacturer in the industry.
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BMW’s Historical Background
Founded in Munich, Germany in 1916
Initially concentrated on the development & production of air craft engines - building a reputation for reliability & excellence
Built its first motorcycle in 1923, and first automobile in 1928
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Main Product Segments
Automobiles Only auto maker to pursue a purely premium strategy for all market
sectors Motorcycles
develop and build the best motorcycles, set standards with regard to technology, environmental protection and safety, and provide outstanding customer service in the pre- and after-sales phases
Financial Services financing and leasing, asset management, dealer financing and
company car poolsOthers
Insurance, industry-specific strategy & process consulting, solutions and IT services
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BMW Strategies
Identifying potential and encouraging growth
Knowing what they represent
Recognizing where their strengths lie and making the best use of every opportunity
Following a clear strategy.
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Issue: Whether BMW should remain Independent
External Environment
Competitive Environment
Internal Environment
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External Environment
Global Convergence - Downstream and Upstream globalization in the auto mobile industry
Mergers and Acquisition
E-commerce
Shrinking profit margins
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Competitive Environment
Volkswagen well diversified company interest in consumer’s finance automobile rental
General Motors
worlds no. 1 maker of automobiles and trucks Hughes Electronics, Allison transmission (automatic transmissions) Gm Locomotives (locomotives and diesel engines), Isuzu Motors (49%), Subaru (20%)
Daimler Chrysler No. 3 in sales, No. 5 in volume BMW’s arch rival successful diversification
Toyota Lexus, best cost provider strategy.
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Internal Environment
Strengths: Image – distinctive identity, high performance Labor force – highly skilled and qualified labor force High profit margins Brand management and communication – successful
Weaknesses Technology was advanced but not innovative Inflexibility
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The Rover Venture
Objective Address their inflexibility, as an attempt to expand Overlap strategy Broader geographic market
Downfall Inadequate manufacturing Poor profitability High breakeven point Quality overlap Brand exclusivity rather than cost efficiency
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Recommendations
BMW should change its corporate strategy of independence; its size is not big enough to warrant that
It should acquire other brands despite its ruinous Rover experience; it’s either acquire or be acquired
It should hire experienced managers with an extensive knowledge in acquisitions and diversification
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Recommendations
It should keep pumping $ into R&D in order to maintain its high margins for its most luxurious models
It should increase its technological innovation so that higher differentiation can be achieved
It should introduce lower cost models to compete with lower priced luxury vehicles such as Lexus LS 400
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BMW at Present
BMW’s group revenue climbed 14 percent in 2007 to a record $83 billion ($ 25 billion in 2000)
The group's vehicle sales in 2007 rose more than 9 percent to 1.5 million units (only 820,000 vehicles in 2000)
BMW now owns Mini Cooper, and Rolls-Royce
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Questions