Introduction

:

BMW was founded in 1916 and has been publicly traded since 1969. The company produces and markets a varied range of higher end sports cars and motorcycles and with BMW, MINI and Rolls-Royce Motor Cars, the BMW Group is one of the most successful multi-brand premium automobile manufacturers in the world. In 2008 the group sold 1,435,876 BMW, MINI and Rolls-Royce brand vehicles with over €53 billions of Revenues. The group employed over 105,800 employees in 17 production facilities around the world.

The first step to look at the external environment in which the firm operates and the main challenges faced by the organization and to do so I will use the PEST analysis. The second step is the analysis of the immediate or operational environment. This part will cover the subject of customers, competitors and the market share. The third and last step is a tracking of the firm’s shares, in the last months and relatives assumptions concerning the fluctuation of the share.

In order for BMW to promote their greener image they have manufactured the first passenger car running on hydrogen ready for common use. In recent times oil prices have reached 150$ a barrel which is another contributing factor that has affected BMW’s sales. Another factor regarding the economic climate is that the dollar has fallen against the Euro meaning that in 2007 BMW lost 517 million Euros due to adverse currency fluctuations and increasing raw material prices. .1st Part . because consumers sought more fuel-efficient vehicles in order to offset the rise in fuel prices and higher road tax. The economic recession that has occurred in the last year has taken a knock on consumer purchase behaviour and also consumers ability to gain credit because of the credit crunch. The first reason is that raw materials. Their greener image is being heightened by new engine technology called Efficient Dynamics that is being promoted in the UK with an integrated campaign promising 'Less emissions and more driving pleasure'.PEST analysis Political: In recent times political factors such as the EU laws concerning the carbon emissions. due to increasing transport costs. Therefore BMW has had to invest in “greener” technologies as well as providing new technological advances. is the economic climate in which it operates. Obviously the fact that BMW produces and sells cars at a premium price puts BMW in a risk position. went up in price. which has had an effect on the company. produced by cars. Although this has increased BMW’s manufacturing costs. Secondly this made the price of petrol and diesel rise that increased the cost of transportation for road users. have meant that BMW has had to review their cars and engines in order to adhere to EU laws. the consumer is becoming far more aware of their carbon footprint and so BMW’s failure to change would damage sales and their market presence. Economic: A very important environmental factor. So although they have had strong sales their profits were reduced by external factors. This had an effect on larger vehicles. such as SUV’s. the financial crisis. which increased BMW’s own costs and therefore affected profits.

which has the very latest technology concerning engines. safety and performance. It is trying to design less-polluting cars by making existing models more efficient. .The governments have imposed new road tax. example. people feel they have to be in “environment saving” involved and look after “ecosustainable” cars. This will mean that a winning formula in one country may not necessarily work in another and so this has to be taken into account so to be successful in all markets. Environmental Protection Agency's (EPA) National Environmental Achievement Track. hybrid power (combustion engines and electric motors) & hydrogen engines. For example in some cities in Italy. it has helped shift societal attitudes towards saving the environment. as well as developing environmentally friendly fuels for future vehicles. BMW has taken measures to reduce the impact the company has on the environment. The BMWi is one such initiative. This means that larger and higher polluting cars are now more expensive to own and run which has consequently had an effect on their sales. more than ever. It is also a member of the South Carolina Environmental Excellence Program and is on the Dow Jones Sustainability Group Index. which rates environmental friendly companies. Social: BMW have in recent years diversified into many different markets and countries meaning that they are dealing with different cultures. high polluting cars cannot circulate in the town centre or if yes they have to pay high cost license. So BMW has had to invest in better technologies in order to maintain their competitive advantage in such a fast changing industry. which recognizes companies for their environmental stewardship and performance. which are dependent on a cars’ emissions. Their latest technological advances are showcased by their Formula 1 car. more entertaining and cheaper vehicles. expectations.electric power.S. Given the fact that governments combined with all sorts of promotion show great concern about the climate change issue. Legal: Environmental: The company is a charter member of the U. Technological: Lately technology has been a key selling point for car manufacturers because customers feel the need for safer. Today. values and incomes.

. BMW focuses exclusively on the production of premium automobiles and motorcycles and the following table shows the total automakers’ market share. General Motors: Opel. The principal competitors of BMW’s ultra premium Rolls-Royce brand are DaimlerChrysler’s Maybach brand and Bentley sedans. Porsche. This group is a giant in the luxury automobile industry that supply high class vehicles of the same range of BMW.503 vehicles and a market share of 2. Aston Martin and Volvo. suv. Alfa Romeo and Maserati. Fiat group: Lancia. Mercedes cover a wide range of high class cars. off-road.2nd Part – Operational environment Main Competitors: In the premium car segment in Europe and US.541. Mercedes Car Group has been known for its prestige and ability to meet customers’ needs. Market share In 2007 BMW group was ranked 14th in the worldwide ranking of automakers with a production of 1. VW and Bentley. Ford group: Jaguar. Like BMW. Ferrari. Land Rover. Toyota and Lexus. BMW and Mercedes currently dominate the luxury car market.. Other competitors of BMW in Western Europe include: Volkswagen group: Audi. As stated before. Formula1 and touring cars. Renault.1%. the direct competitors of BMW is Daimler Chrysler’s Mercedes Car Group. Saab and Vauxhall. such as: sedan.

The BMW Group was able to defend its leading position over Mercedes Group during the first three months of 2009. performed considerably better than the overall premium segment. the 5 series product line. . responsible for Sales and Marketing: “Despite the difficult conditions. Mini or Rolls-Royce are usually well-off person with high requirements. and technological advance products. For example the 3 series product line has been targeted for people. luxury and exclusivity.. which is projected to shrink by around 27%. that are on the way up the ladder of success. high performance. The brand emphasis on their core values such as performance. have been created for people that achieved an established success in their career and so they can afford to the mid-range BMW luxury product. in other words that particular target market could be described as the upwardly mobile.” BMW. As stated by Ian Robertson. Customers BMW is classified in the luxury / performance segment. the BMW Group aims to remain the world’s leading supplier of premium automobiles in 2009 and after the first two months we are right on track. The BMW brand increased its market share of the worldwide premium segment. quality. Instead. and the target audience is of highly brand individuals. in fact these niche of people expect luxury. People that can purchase BMW.

the German company announced that it would make a loss in this quarter because of consumers scared of the current situation and credit freeze. . would emerge stronger from the crisis and reaffirmed profitability targets for 2010 and 2012.3rd Part – Share tracking General share information In September 2008. The world's leading premium car maker. The 4 of November 2008 BMW reported a slump in profits of -63%. The German stock index finished to touch the lowest value since 2006 loosing 27% in value compared to the end of 2007. the international financial crisis became increasingly felt in BMW affecting its shares in the stock markets.

Europe and Japan.535 in 2007. From the second part of 2007 the company had a negative trend till the end of 2008. affected by the general financial crisis caused by the credit crunch. sales decreased by 15.796 versus 23. The crisis started primarily in US and extending to Canada. to 195. This affect dramatically the sales in all the car industry and consequently the trend of shares.4 percent. the general trend of BMW was affected dramatically by the situation of the general financial crisis.2008 During the second half of 2008 began the automotive industry crisis. BMW's automobile sales are down 40.2 percent in December to 13.2008 to Dec 30.Trend 2005-2009 As shown in the graph.064 in the same month a year ago. From Dec 01.085 automobiles compared to 230.Comparing the shares . In 2008.

the BMW Group will overcome the current difficult situation. putting it into an excellent starting position for the future". As a strong and innovative company. particularly its impact on the real economy in 2009.with the previous year it is notable a drastic decrease of value: the 28th of December 2007 BMW share’s price had reached 42.71. Chairman of the Board of Management of BMW. stated Norbert Reithofer. we need to look at the opportunities such times may bring us. The automobile industry is without doubt facing some extreme challenges. Historical prices .38. However. BMW Group will emerge stronger from current difficult situation "The financial crisis is by no means behind us yet. the 28th of 2008 the share closed with 21.

to increase its earning power.20 per share. During this period the company of Monaco accused losses for 152 millions of Euros in contrast with the last year that had a net profit of 487 millions of Euros in the same period.2009 During the period from January till March. The lowest value has been reached at the end of January touching the value of 17. The general turnover of the company has decreased 13% caused by a decrease in sales of 21%. US are still the main market for the German company.2%. this can be seen as a good result compare to the general trend of the automaker industry that has decreased by 37%. During the first quarter the company sold 42.2009 to Mar 31. During January. this results in a cash flow of 220 millions of Euros.30. the value of BMW shares. in the same period reached 40. . during March sales decrease of 24.From Jan 02. One year early. The production has been cut by 34%. BMW started a rigid programme to cut costs. the trend is characterised by a continuous fluctuation.731 vehicles in this market achieving the leading position in the premium car market.

8% compared to 2008 in the same period. the number of cars sold by the BMW Group during the first quarter 2009 declined as predicted.264 units. India and Brazil. MINI and Rolls-Royce brand cars sold in the first three months of 2009 fell by 21. The total number of BMW. in China has delivered +13.2009 The international economic and financial crisis affected the performance of the BMW Group in the first quarter of 2009. BMW reached a positive trend in the “emerging markets” such as China. In addition to sharp drops in sales volume on major markets. . the German company.7%. the BMW Group’s reported figures were impacted by continued high refinancing costs.2 % to 277. In the first quarter. in India +13% and in Brazil sales has been increased of +12. As a result of the global financial and economic crisis. has maintained its growing standards.From Apr 01.2009 to Apr 30.

Sign up to vote on this title
UsefulNot useful