ideal analysis of bmw ag essay

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Strong Manufacturer Reputation can be viewed as the main strengths of BMW. Through many years marketing executive has been grown the brand image, sonow BMW can be perceived as the 3rd most expensive brand in automobile market and it is valued at $29 billion. Trained and highly skilled workforce is the asset in which BMW invests greatly. For, assembly of top quality cars demands for quality materials and very skilled workforce. Therefore , AS BMW HYBRID cars are manufactured only in the areas where one of the most skilled car manufacturers job like Indonesia and USA.

High quality product is the strength for which people valued AS BMW HYBRID. The level of were recalled cars made by BMW far more less evaluating to their rivals. CSR activities of BMW fantastic impressive. The care making company delivers large investments in various CRS programs, like sustainability requirements for its suppliers, health management of employees, balanced job life and zero waste at its plants. Contribution to the environmentis one of the main goals from the company, intended for, about twenty car designs assembled by simply BMW give off carbon dioxide as low as 140g/km.

Moreover, AS BMW HYBRID engineers generate new kinds of fuels, for example, hydrogen (Jurevicius, 2013).


High cost coverage is the expression of the cost associated with production and employees retention. Therefore , the oust framework of THE CAR cars is much higher assessing to Toyota, GM, and Volkswagen. Bad brand portfolio might most likely have adverse implication around the future expansion prospects. The portfolio of BMW is limited to AS BMW HYBRID, MINI and Rollce-Royce. Besides, these 3 brand demotions perform well inside their segments, bul inefficient profile may boost the level of business vulnerability to possible financial crises.

High product rates driven by BMW targeted segment. While company produces luxury automobiles it usually spends a lot within the materials, qualified workforce and on the brand graphic to As a result, these bills increase auto prices which are extremely rich in comparison with competitors. Ineffective level of acquisition and ideal partnerships can result in late growth, pertaining to only 10% of the AS BMW HYBRID growth is associated with accusations the rest 90% are organic one. Therefore , if vehicle concern desires to grow, then there must be even more acquisitions and strategic relationships (Dudovskiy, 2014).

Analysis of uncontrollable factors


“Green Vehicles require may grow later on. The tastes of people have been shifted to more green products; consequently , consumers will be more likely to acquire hydrogen fueled or crossbreed cars because they emit significantly less pollution. Growing fuel prices will power customers te look for less costly ваЬвёШе&, celebrate a new industry of hybrid and hydrogen fueled autos assembled by simply BMW Richness of organization portfolio is definitely the next proper step pertaining to BMW. Therefore, company are certain to get opportunity to introduce more designs Regulations concerning level of release could positively influence within the BMW’s position in the industry. Pertaining to, other car manufacturers must invest in R&D programs whilst BMW can get chance to entice new clients (Jurevicius, 2013).


Extreme competition may be the constant in automotive industry, hence high level of competition pressure BMS be competitive on the price not on differentiation. Also, the vividness in developed economies intensifies competition. Raising raw materials rates will affect on the cost of car assembly, thus cause decreased earnings. Dropping energy prices as a result of risen removal of shale gas. This will likely drop fascination of hydrogen fueled, crossbreed and electrical cars. Raising exchange rate of Euromav negatively influence on the profits, for the main transactions BMW makes outside the european zone (Dudovskiy, 2014).

1 . 2 Evaluation of Exterior forces

In the case when there may be high level of uncertainty as a result of rapid adjustments the scenario analysis is carried out for the estimation of future macro-environment. Tool which is used for key drives identity is INFESTATIONS (political, economical, social, technical) analysis.

Politics factors

The major political aspect for THE CAR is the fresh environmental laws, precisely, regulations of C02 emission and legislations about the end-of-liferecycling. As well, additional personal factor is the stability in developing marketplaces like Chinese suppliers, Russia and Brazil, for example, unstable personal environment can easily negatively influence on the design of buyer spending.

Cost-effective factors

New fluctuations of GDP in EU countries have had immediate reflection with the customer spending. Moreover, the grow of Renminbi (RMB) is influencing the revenues of AS BMW HYBRID along with exchange prices of Euro and continuously changing crude oil price.

Cultural factors

Social factors that need consideration of BMW are following:

” The aging process European population

” Rising requirements of moving into developing countries

” Altering friends and family patterns ( single parents, same sexual marriage)

Technological factors

Scientific factors that influence BMW are mainly focused around the growingdemand for “green technologies, option fuels. In addition , implementation with the unusual idea such asdriverless car has become influence around the automotive industry(Dudovskiy, 2014).

1 . 3 Correlation of competitive advantage and Value Cycle System

Benefit chain method is the group of internal methods that change inputs in to outputs. Throughout the analysis valuable chain a business could discover its primary and support activities, even more reduce costs and increase difference. The research of value sequence helps to id the most valuable activity ” the one that creates competitive advantage. Depending on what competitive benefits company really wants to create, cost or difference advantage, the worth chain examination would reveal the path(Jurevicius, 2013).

Cost advantage

Differentiation benefit

I It can be applied when company wants to compete about costs, as a result it must figure out cost what factors pushes advantage and disadvantage costs. Companies use differentiation strategy when they desire to create excellent products or services. Stepl. Primary and support activities


Step 2. Be familiar with relative need for

every activity.

Step 3. Realize costs of each and every activity.

Step 4. Get linkage between activities.

Step 5. Recognize ways of the fee reduction

Step 1. Buyer value-creating actions


Step two. Analyze difference strategies for

the improvement of customer benefit

Step three. Realize the very best sustainabledifferentiation

The BMW features perfectly used the value sequence analysis to identify its lasting competitive difference advantage. Hence, it helped automotive organization to enhance it is service through “smart developing. Now clients can modify cars by choosing motor size, transmission type, feature of interior and exterior, and also the color of the vehicle body. This improves the competence of BMW and places pressure on competition to outperform (Ahmed, 2014).

1 . four Analysis with the automotive industry

In addition to the competitiveness as well as the position in the marketplace we also must vitally asses the conditions in automotive industry to realize strength of competition and the market attractiveness. The Porter’s Five Forces analysis will perfectly disclose overall condition of the extravagance cars market (see Appendix 1 . 1). Threat of new entrants ” low

Admittance into high-class automotive gun requires significant investments for R&D andpurchase of creation licenses. However , already existing non-luxury car assemblers can enter the market by development of new division. Menace of substitution- low

THE CAR is a powerful company which includes strong brand. BMW automobiles considered as to get more than just transport. Therefore , alternatives such as chartering, trains, mountain bikes cannot be relevant(Colditz, 2012). Bargaining power of suppliers -low-medium

AS BMW HYBRID has been controlled in large-scale production network around the world, with car production and aftermarket. Luckily, the automotive industry are full of suppliers specializing around the production of spare parts and materials needed for car making, this facts proves that market runs under almost perfect competition. Therefore , the switching cost form one supplier to a different is relatively low. However , customer loyalty is usually a part of the industry with gives to suppliers just a little power to impact on the prices. Bargaining power of customers ” low-medium

Customers in the high quality cars part constantly seek out products and services extra than normal. This sets a lot of pressure in luxury autos makers, because need to meet high consumer expectations. Consequently , BMW features strong customer relationship managing (CRM). The CRM of BMW correctly works pertaining to the company strong brand dedication. BMW generates unique products which make superior customer satisfaction. The technologically advanced BMW vehicles can rarely be substituted. Level of competition-medium-high

As THE CAR is a developer of luxurious cars the primary competitors pertaining to the company are Mercedes-Benz and Audi. These businesses are targeted onto a similar segment of the market; they are also offering fairly the same item. Moreover, the introduction of the Asian car companies represents a significant threat. For example, Lexus is also delivering progressive, advanced and high-quality cars(Ramsh0J Ploen & Kronborg Olesen, 2010).

My spouse and i. Evaluation of BMW’s strategy formulation

installment payments on your 1 BMW’s Business-level Strategy

The endurance for businesses is tough in modem complex environment where boundaries are nearly vanished, competition is challenging and externalenvironment is constantly changing. Thus, when a company will not update products and does not possess sustainable approach it will be from the industry quickly. Therefore , in order to say competitive and have good sustainable competitive advantage Michael Porter advises three tactics (cost command, differentiation, and focused strategy (focused strategy is also subdivided into cost focused and differentiation concentrated strategies)) (Manktelow, n. g. ).

Through the entire analysis of BMW’s business practices we are able to assume that the company employs focused differentiation technique. Keeping the objective of being the best choice provider of premium products in the industry, business is intending to set a solid competitive risk (BMW, 2012). Precisely, THE CAR is focusing on the middle-upper and top classes, as a result defining the borders in the segmentation, quite simply, focusing on a certain group of people. Likewise, as the expensive company BMW is offering unique, officially advanced product or service that are widely differ from the rivals(Kasi, 2009).

2 . 2 Rationale with the strategy and Stages with the Industry Lifestyle Cycle To control growth and predict the possible foreseeable future outcomes these kinds of concept as life-cycle can be applied. Irrelevantly to in which it does apply either corporation, product or maybe a whole sector the life-cycle is always has four stages ” launch, growth, maturity, and drop. Obviously, life-cycle of the market has longer stages. The luxury car industry exists a lot more than 100 years, this successfully approved the advantages phase, and it does not demonstrate any look of the decline.

Contrarily, throughout the evaluation from the industry we could assume that it can be on the midsection point among growth and maturity, pertaining to in 2013 there in which a noticeable growth in the demand for luxury automobiles. Additionally , constant development of the technologies could support anti-declining tendency. (Henley, n. deb. ) The phase from the industry has an direct impact on the functionality of the business and institution of the strategy. Align business strategy of BMW and the current stage of the market focused difference strategy seems to be appropriate. Thus, in order to compete with other goods on the market BMW differentiates its products and offers these to a particular group (Kasi, 2009).

2 . several Corporate Strategy, Ansoff’s progress matrix and International Progress Strategy Ansoff e progress matrix is a strategic management tool which is used to choose progress strategy. This proposes several ways of organization expansion like maket penetration, product development, industry development and diversification (see Appendix 1 2)(Manktelow, d. d. ). As was mentioned previously, the corporate approach of BMW is to record a command position in the market while offering premium products. The company has focused to grow through the expenditure in progress innovations, improving vehicle strategy and drive systems. Moreover, in order to increase globally business is employing diversification technique. Though, this can be a risky strategy, however , BMW is expecting that using diversification is going to:

¢ Reduce risk of funds generation by few sources

¢ Increase expansion rate

¢ Boost competitiveness

Thus, BMW’s lateral diversification is definitely expanding a product line and enriching proper acquisitions (Range Rover). Whilst corporate diversification is focusing on on fresh motors expansion, though it may have substantial costs, but it won’t harm core niche of AS BMW HYBRID (Marion, 2013)

2 . four BCG pertaining to BMW

BCG matrix can be strategic management tool applied for the analysis of the organization strategic. This divides business portfolio into four groups (see Appendix 1 . 3), each is based on attractiveness and competitiveness with the industry. Those two factorsidentify productivity of the organization portfolio. BCG matrix can be used for the decision upon which brands the company will need to support even more, and which brands has to be eliminated. Basing on the BCG Matrix of BMW car segment we are able to assume that it is a stat person. For, the business has large share of the premium marketplace and indicates high progress rate due to its models. Whilst, the motorcycle and monetary dimensions with the company are thought as money cows, pertaining to both of them have got high talk about of the premium market, but the growth price of the financial services and motorbike is regular and is actually not change within the past five years.

The corporate level strateg of BMW is definitely subdivideed in to three single business units (see Appendix 1 . 4). These are Automobile, Morotcycle and FinancialServices. However , the primary source of earnings for the business is the vehicle devision. Most of these three BMW’s business unitis are verticaly integrated. Hence, BMW sets an focus on the internal progress rather than growth through mergers and purchases. The portfolio BMW primarily composes form stars and cash cows business units, disclosing that the organization is focusing on introducing profitable businesses to promote and furtherdevelop its optimum potential(Brandes ainsi que al., 2005).


The manufacturer image of AS BMW HYBRID is really strong; people benefit these autos for stability and ease and comfort. As Handling Director I would suggest to develop and enhance brand image. However , in order to broaden on the market and improve skills I would highly recommend company to focus more on the enrichment from the portfolio. Intended for, in spite of the simple fact that THE CAR is innovator in the luxurious car industry, but it records only 2% of overall car market. Therefore , the modern strategy should be formulate and address for the portfolio richness through the tactical acquisitions.

For effective execution of strategic acquisitionBMW are required to follow to the three important strategic implementation elements like system and change management, strategic management, and corporate governance. To minimize employees’ resistance to new strategy the causes of using a new one should be clearly conveyed. Further, there has to be a strong support from the top management and executives regarding the strategic obtain program. Additionally , corporate governance must equilibrium profitability and sustainability from the strategy, as well as to monitor correct execution.

List of references:

1 . Ahmed, G., 2014. Competitive Advantage Description, Types, Example & The right way to Achieve THIS? [Online] Offered by: [Accessed six March 2015]; 2 . THE CAR, 2012. Company portrait. Approach. [Online] Offered by: [Accessed twenty-eight March 2015]; 3. Brousses, et al., 2005.

The Ultimate Driving Machine: A BMW Minivan? [Online] Sold at: [Accessed twenty nine March 2015]; 4. Colditz, R., 2012. A STRATEGIC RESEARCH ” A CASE STUDY ON BAYRISCHE. Prague: University of Economics Prague; 5. Dudovskiy, J., 2014. BMW PESTEL Analysis. [Online] Available at: [Accessed 4 Drive 2015]; six. Dudovskiy, M., 2014. AS BMW HYBRID SWOT Evaluation. [Online] Available at: [Accessed 1 March 2015]; 7. Henley, J., in. d. SUPPORT LIFE CYCLE AND INDUSTRY YOUR LIFE CYCLЕ. [Online] Available at: [Accessed 25 Mar 2015]; 8. Jurevicius, Um., 2013. BCG growth-share matrix. [Online] Sold at: [Accessed 30 March 2015]; 9. Jurevicius, O., 2013. SWOT evaluation of AS BMW HYBRID. [Online] Offered at: [Accessed you March 2015]; 10. Jurevicius, O., 2013. Value String Analysis. [Online] Available at: [Accessed 22 March 2015]; eleven. Kasi, 2009. Porter General Strategies. [Online] Available at: [Accessed 28 March 2015]; 12. Manktelow, M., n. d. The Ansoff Matrix ” Understanding the Risks of Different Choices. [Online] Offered by: [Accessed twenty-one March 2015]; 13. Marion, L., 2013. BMW approach. [Online] Offered by: [Accessed 30 March 2015]; 14. REUTERS, n. m. Bayerische Motoren Werke AKTIENGESELLSCHAFT (BMWG. DE). [Online] Sold at: [Accessed you March 2015]; 15. Rodrigo, 2012. Proper Analysis (PESTEL, Porter and SWOT) of BMW. [Online] Available at: [Accessed 4 Mar 2015].


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