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BMW INDIA

BMW INDIA

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Published by: projectmaker2010 on May 02, 2010
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04/04/2013

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Executive Summary The motive of this essay is to give clear information about BMW ag’s entry into the

luxury and premium automobile sector. The flow of the essay would start with the background and introduction about the company, then coming over to the mark et factors that led company to enter INDIA, also about the entry strategy in ter ms of corporate decisions they took for doing business in INDIA and what compani es’ present strategy in INDIA is to gain the market share.

Bayerische Motoren Werke G. m. b. H. Started operations in 1918, the foundation stone was laid as late as 1916 as Bayerische Flugzeugwerke AG (BFW), it then cha nged into Bayerische Motoren Werke Aktiengesellschaft (BMW AG) in 1918. In today’s date. The list of ten largest automobile manufacturers features BMW g roup and even possess the brands like MINI and Rolls-Royce, the trio being the c ore heart of super luxury brands in the worlds industry. The BMW GROUP’S financial services also have a boosted stand in market and also the motorcycle sector is doing business successfully. BMW INDIA Company setting up headquarter in gurgaon (the ncr) BMW INDIA is 100% subsidiary of the BMW group. The investment initially in INDIA is around 1.4 billion INDIA n rupees. BMW INDIA is a German producer of cars and motorcycles marketed under flagship o f BMW brand In 2006 BMW focussed on one of the biggest and fastest growing market of luxury and niche car sector which is INDIA and also looking at the fate of the competit or Daimler Benz, grounded their tents in INDIA. Also allowing space for more inv estments in INDIA following financial year for over 30 million again in addition the initial investment done. This is all for the premium automobile sector mark et in INDIA which consist of about 1.3% which is in percent a small figure but w hen it comes to numbers it is around 10 million perspective customers in INDIA a nd with the current market and economy this figure will certainly go up at the r apid speed Now coming up to the factors which led BMW AG to invest as fdi into INDIA.

1. Infrastructure- this is the aspect where BMW in INDIA checked out th at INDIA is really good at infrastructure and is just ready to accept a premium car , and also the distribution channel in INDIA attracted them to invest up bec ause dealerships in INDIA to setup was not a difficult task. 2. Market attractiveness- Also one of the key factors inviting BMW was the market of INDIA which was the huge in number untouched by merely one competi tor and the tremendous opportunity to the growth of the same, to play the volume game 3. Political and governmental structures- the structures of political a nd government of a country plays an important role for companies to decide on fo reign investments or not. And if yes then what type of investment and how much a nd to choose the way of direct or partial mode. Also the behaviour of government of country like the country is transparent or not or the red tape governs are t here or not are the points was taken care by BMW. 4. Profit retention factors- the profit retention factor means the comp any taken interest in what the government policies are for foreign companies and the taxation norms for them when BMW launched in INDIA they were facing 9.5 inf lation that was very good for them. 5. Economic environment- The stability of the economy (National and Loc al) and its currency in which transactions occur. The cost of land and other fac ilities, and the extent of free trade in the market. 6. Legal and regulatory environment- The legal system and laws being pr actised by the country and the state on import of FDI and on technology transfer . Laws on Intellectual property rights of the company and extent of other tariff s and trade barriers. 7. Human resource factorsIn a term, BMW INDIA will employ around 200 people; up to 600 Additional jobs will be created in the dealer and service network Al so as INDIAn dealerships offered also included the good management and business passion here in INDIAn channel, they were sure that they are not going to face t he challenge to beat the market. So by the analysis of the factors like their company strategy and international factors and strategic decisions they chooses, we can say that BMW entry strategy is the one high control strategy. As for the following reasons, They are the wholly owned subsidiary of the group, meaning the entry mode is non equity this is a major criteria for determining the entry strategy of a company , as this undertakes a heavy investment and in terms of serious business company will overlook for the longer term business in the region, and won’t be much of flexible or in clear words there exit mode will be a major risk and will cost co mpany a fortune Also now after an entry mode strategy selected, There is also a strategy k nown as “timing for entry” that is the successor for entry mode selection here i n BMW case the entry timing is the mimetic behaviour which means following compe titive behaviour and the rise for the figures too that is 2500 units of last yea r gone up to 7650 units per financial year Your browser may not support display of this image. Presently, 12 dealers represent BMW in the INDIAn market; Bird Automotive

(Gurgaon, NCR), Deutschen Motoren (New Delhi); Navnit Motors (Mumbai), Infinity Cars (South Mumbai); Krishna Automobiles (Chandigarh); Navnit Motors (Bangalore), Delta Motors (Hyderabad), Kun Exclusive (Chennai), Bavaria Motors (Pune), OSL Prestige (Kolkata), Parsoli Motors (Ahmadabad) and Platino Classic (Kochi) . Owing to an exuberant growth potential, BMW is hopeful of multiplying its annual sales volume and has already chalked out an extensive dealer strategy to support its plans. This enormous expansion strategy , and total devotion towards the customer satis faction and the region of business is made out by a naked eye in the form of a c orporate strategy by BMW , using the multi domestic strategy type in cultivating the management. As for the facts, we can say that BMW undertaking the multi domestic strategy. B y fulfilling the following, * BMW appointing andreas schaaf as the delegated country head and given the complete authority and responsibility to manage and grow the INDIA operations by following the core strategy and make his own sub strategies by taking care of t he market need, customer feedback and the company issues. * As told by peter kashpova the ex INDIA head of BMW , he had to undergo the major and minor changes in the country wide management practices, following the changes in the managerial conduct book, to serve the country need as per. * BMW got many of the SUV.s and FAMILY sedans as per the INDIAn roads nad fa mily sizes , this decision also agrees with the characteristics of multi domesti c strategy. * It helps spreading the work load over the country and the headquarters sta ff and is not only delegated to either one. * The product can be better adapted to local markets by using local products since it is manufacturing in the country thus reducing costs and improving cust omer satisfaction. * Better able to bring in customers since the management has a better unders tand of the customers physic.

Your browser may not support display of this image. As for the product choice BMW choosen the best of mix from its international mar ket, BMW dealerships presently display the BMW 3 Series (325i, 320i and 320d,320 d Highline) and BMW 5 Series (525i, 530i, 520d, 530d and 530d Highline)that are produced at the BMW Plant Chennai. BMW dealerships also display the BMW 6 Series (650i Coupé and 650i Convertible), BMW 7 Series (750Li), BMWX3 (X3 xDrive25i, X 3 xDrive20d) and the BMW X5 (X5 xDrive48i and X5xDrive30d) which are available i n the country as CBU’s (completely built-up units). The BMW M3 Coupé, BMW M3 Con vertible, BMW M5, BMW M6 Coupé, BMW M6 Convertible, BMW 6 Series Individual and BMW 7 Series Individual can also be ordered at BMW INDIA dealerships.

Indeed the chosen strategy is one of the best to go after the trans-global strat egy to enter a international market for any firm, but there are limitations with this strategy too but then also it is the best of choice and option for BMW IND IA, as in INDIA, if u follow the trans-global strategy the firm will have to sta

rt from the scratch and understand the market by being rigid, but in this chosen strategy , the market responses and management decisions are handled together e ffectively, BMW INDIA will further strengthen the dealer network by stepping into Phase II, By expanding into the markets of Ludhiana, Bhubaneswar, Jaipur and Coimbatore, by the end of 2009. By the strategic location chosen by the BMW group , it is clearly seen that deal er presence are in the area of the customer linkage, to be precise the potential customer presence and to be in the easy reach of the potential customer. One of the best strategy move by the BMW INDIA group have been the establishment of international purchasing office ( ipo ) at its headquarter in gurgaon , the department will look at the development and operations of export from INDIA to t he BMW group international production department and there work in direction of increasing the share of sourcing from INDIA over the next couple of years. When BMW first came to INDIA in 2007 its brand awareness was very low. In 2007, only 2% of the new car buyers in INDIA knew about BMW. In 2008, this figure went up to 13%. Also having an strategic alliance with Bajaj Allianz general insurance for the m otor insurance and with ICICI bank to offer the customised and personalised solu tions for the finance, and also one with the orix auto , for the leasing for the customers , these all services are being handled by a separate department in IN DIA known as BMW finance INDIA. Right now as BMW INDIA’s, managing director, Andrea’s schaaf puts it the Activit ies include the identification and assessment of potential suppliers taking into account BMW’s requirements for quality, technology and logistics. There will be a time when BMW will put more pressure on sales and then we will definitely tar get higher volumes, BMW 2 years back was not in the purchase group. Today, BMW i s there in 90% of the group, that’s a very big step.”

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