3. 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.
4. 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)
5. 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.
6. SWOT Analysis of BMW
Strengths:
BMW group
Innovation & technological advancement
Renowned brand in automobile industry
Workforce
Product portfolio
Asian markets
Plans for hybrid models
10. PESTEL AnALySiS
Political
Enforcement of new laws related to CO2 emission.
Change in EU legislation related to end-of-life vehicle (ELV)
recycling
Level of political stability in emerging countries
Possibility of the UK to stop its EU membership
Economical
Volatility of GBP: EURO exchange rates
Appreciation of Renminbi (RMB) of 1% to 2% during 2012
Vast GDP fluctuations in EU countries during the last few years
Volatility of price for crude oil
11. PESTEL AnALySiS
Social
Ageing population in European markets
Changing family patterns (increasing numbers of same sex
marriages, single parents etc.)
Changing consumer attitudes towards savings and spending
Rising life expectancy in developed countries
Technological
Increasing levels of popularity of “green” technologies
Technological breakthroughs in auto manufacturing industry
Integration of internet-enabled technologies in automobile
industry
Increasing levels of demand for alternative fuels
Realization of the concept of driverless car
12. PESTEL AnALySiS
Legal
Changes in employee health and safety rules and regulations
Patents and Copyrights in relation to innovation on auto
devices and functionalities
Changes in laws and regulations specific to car
manufacturing sector
Changes to relevant EU Directives
Ecological
Increasing levels of consumer concern towards “green”
products
Effects of non-government environmental organizations
Changes in waste management practices
13. 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.
14. 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.
15. RESouRCE-BASEd ViEw
STRATEgy of Bmw
Resource Competencies
Threshold 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
16. BMW –Your Dream Car
Presented By –
MM.ABDULLAH
S.N:20111105009
17. 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
18.
19. Competitor Analysis
Primary Competitor:
DaimlerChrysler
Toyota
General Motors
Ford
Main Competitor:
Mercedes Benz…………..
LEXUS
Audi
21. Key Success factor of BMW
1.Customers----
2.Corporations….
3.Competitors….
22.
23. 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:
24. 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:
25. BMW –Your Dream Car
Presented By –
Ruhul Amin
S.N:20111105003
26. 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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27. Grand strategy of BMW
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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28. Grand strategy of BMW
Global integration matrix:
Global strategy
Transnational strategy
International strategy
Multi-domestic strategy
Global
integration
National responsiveness
High
low High
Low
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29. Grand strategy of BMW
Grand strategy selection matrix:
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29
Overcome
weakness
Maximize
Strengths
Internal (Redirected
resources within
the firms)
External
(acquisition or
merger for
resource
capability)
Turnaround
Divesture
Liquidation
Vertical integration
Conglomerate
diversification
Concentrated growth
Market development
Product development
Innovation
Horizontal integration
Concentric diversification
Joint venture
30. 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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31. Strategy implementation, control and innovation:
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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32. Strategy implementation, control and innovation:
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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33. 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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