Strategic Management

threats. BMW. BMW Group is a dynamically evolving entity operating within a dynamically changing environment.Strategic Management 2 The purpose of BMW strategic analysis is to gather and evaluate information concerning SWOT (strengths. Automotive industry is one of the leading industries in the world. achieving over 10 % operating profit” (Lenciani. It can also be useful in the development of a number of strategic options which attempt to tackle opportunities and threats. but perhaps its greatest contribution lies in providing the management strategist a broad framework for analysing the position of a firm at a particular moment in time. opportunities. In general. because it is within this sphere that BMW competes. both for resource inputs and to sell its product outputs. As well as any other company. This is called the microenvironment (or the competitive environment). a European automotive leader. with BMW Automotives accountong for about UERO 25bn. build on corporate strengths and avoid weaknesses. BMW is owed by Quandts (46% of the group). An examination of how strategy is formed gives useful insights into the nature of strategy itself.148). 1998. and capable of dealing with. and give future strategic alternatives. weaknesses). Scholes. SWOT is normally associated with more rational approaches to strategy formulation. The aim of automotive industry is to maintain the level of service and product quality and develop strategies to improve their product/services. Strengths and 2 . An important consideration is that for most management there is a choice of strategy. which turnover was about “UERO 35 bn. According to Johnson and Scholes (1998): “The aim is to identify the extent to which the current strategy of an organisation and its more specific strengths and weaknesses are relevant to. is affected by different factors of environment which have a great influence upon it. 2001). BMW tries to get and keep a customer proposing higher quality at lower price than its competitors. the changes taking place in the business environment” (Johnson. p.

low-cost of the services. Today. 1998). This strategy is supported by the buying process and the pricing. strategy of adhesion to BMW’s core values had been vindicated by the bottom line with the 3-series saloons continuing to be especially in demand”( (Lenciani. 2001). “BMW had traditionally taken great pride of the quality of its engeneering. BMW has maintained high-speed growth through continuous optimization of is product mix and constant technological innovation. so they choose instead to deal with us with our promise of service and support when needed. The product positioning is based on personalization strategy. confidence. They care more about reliable service and confidence than about the lowest price. Another strength of BMW is that building customer management experience and a passion to deliver best-of-breed customer solutions. They don't want to rely solely on their own expertise. higher than was usual in most production vehicles” (Lenciani. while opportunities and threats are considered as external factors (Johnson. the positioning 3 . The strength of BMW target is that it is based on innovations and new as any other businesses. Positioning of the brand can be characterized by establishing trustworthiness. At the very beginning the strengths included high potential to growth and profitability of the company. 2001). It develops lines of services to satisfy the needs of wide audience. “In business terms. The strengthens of the company are based on strong market position and strong brand image. Scholes.Strategic Management 3 weaknesses of the company are internal factors. Also. and competence for customers. customer loyalty and excellent service. The company is ruled by the team who is able to raise the price level and gain more or less strong market position. BMW has a hard core of loyal supporters. This strategy helps BMW to appeal to the consumers' minds with offerings. and professional management team. BMW obtains a very competitive position on the market. BMW creates products for specific target market.

2001). which was 60-100day. Today.Strategic Management 4 strategy of BMW helps the customers to have product within their minds. The goal of the company is to provide the opportunity to personalize purchase. The advantages of BMW include new vision of product development based on consumers’ needs and ideals. are likely to feature highly as it fights for survival in markets faced with over-capacity. “customers could be brought into a Web-driven relationship with an automobile supplier” ordering directly form the supplier (Lenciani. The traditional auto market is not in maturity one. Product differentiation and price competition creates a likely for most automakers. and today it offers a limited opportunity for high profits. advertising. The original mission had made it clear that it was in the relatively unexploited 'adult' 4 . so it sets about developing products. affluent European professionals: most drivers perceived high-performance saloon automobiles as synonymous to BMW” (Lenciani. necessitated a clear identification of target market. 2001). Internet and e-commerce creates great opportunities for automotive industry (and customers) to hasten the process of purchase. A specialized product range. Branding. backed by improved efficiency. Within rapidly changing environment this kind of development ensures that long-term survivors are those firms who are more competitive and are better able to satisfy consumer needs and adapt to the new competitive environment. and additional services to customers and product innovation strengthen the BMW’s image. promotion. Internet “shortens the lead time for the production of an automotive. that are both distinctive and could be sold at a premium price. price competition. In BMW group. This approach helps BMW appeal to particular needs of every client. To address the target market BMW creates customers' trust to make them willingly follow the company. “The BMW brand also acquired a distinctive identity as a symbol for young. BMW relies chiefly on an efficient market system and product improvement.

the Far East and Asia are emerging as attractive markets for BMW. which in turn resulted from its consideration of the market or customer needs. Specification in BMW is determined as a result of an organization's policy. Peugeot. influenced BMW Group and automotive industry. closely connected with legislation and government regulations. 5 . the weaknesses of BMW are high competition among world leaders. Another tendency. and Kyoto Protocol on global warming. and the activities of competitors.Strategic Management 5 sector that BMW saw its clearest opportunity for innovation. is “mergers and acquisition activity with emphasis moving from automobile manufacturers. The choices are dictated in part by product and market competition. Globally. This is the process of designing quality into the service. which requires ecologically safe solutions. BMW set out to create a range of high-quality products that were distinctive in shape. The majority of businesses offer services to a big geographical area. In Europe. Automotive market is charac terized by high fixed costs is always under pressure to keep production at full The weakness of the company is capacity to cover the fixed costs. and only a new direct-marketing strategy help the company to compete. The weakness of the company is that automotive market is not very fragmented. BMW has many competitors. Sales strategy is on a one-to-one basis. Also. BMW is forced to switch to offshore sourcing of certain components to keep costs and prices competitive. BMW has several options for addressing the problem of price competition. and includes such giants as GM and VW. Fiat. already highly concentrated to parts suppliers” (Lenciani. which in turn resulted from decisions on its market policy. there is a tendency towards environmentally safe “green car” which forces company to find alternative solutions: hydrids or hydrogen fuel cell vehicles. requirements. 2001). In particular. Recent years.

with eager buyers joining long waiting lists (Lenciani. In spite these facts. launched late in 2000” (case study). In general. Rationalization may include selecting new intermediaries. 2001). Technological forces generate problem-solving inventions. A strategic alternative for BMW can include a rationalization of the distribution structure which will substantially reduce the total markups required to achieve distribution in international markets.Strategic Management 6 The threat of substitution is possible for BMW as substitution occurs where a consumer is able to replace a product with a different type of product performing the same service or satisfying similar needs. economic analysis shows that BMW is one of the most successful automakers today. The policy of safety adopted by BMW is the main strategic criteria. on the one hand create barriers to entry. potential and capability to support high performance environments are the key elements for the next years. The fall of Euro against other major currencies becomes a great threat for BMW. Competitive rivalry among European and American competitors is strong which. BMW faced strong competition form Daimler-Clrysler’s C-class and from Audi’s new A-class. The situation suggested that Asian competitors (Toyota and Nissan) increase competition which can cause the decrease in prices. Financial data of Rover and Toyota showed profit decline. create fierce competition in the industry. but on the other hand. Overall business strategy. 6 . or establishing direct marketing operations. BMW target is on average as dependent on reliable innovations and technology as any other businesses. the outlook of the industry does not present BMW with attractive perspectives for profitability. Strategic moves can be made towards new technology achievements and safety. assigning new responsibilities to old intermediaries. “Its brand’s popularity is still rising.

however. and requires a search for alternatives which build upon the company's present knowledge and skills. In the case of product development BMW will maintain the security of its present markets while changing products or developing new ones. consolidation in its present products presents adequate opportunities. Today.. and in creating products to market needs. as customers and their needs. For BMW. some companies in the same industry are more successful than others. Equally. It has the global resources and certainly has the technological capability. BMW are good at communicating the desirability and requirements of product development internally so as to avoid the disruptions that new developments can 7 . Auto-makers follow the changing needs of their customers by a policy of continually introducing new products. Product development is preferred because BMW is particularly good at R & D. BMW is well-positioned to take on this important global leadership role. lending support to the view that competitive advantage is largely internally developed. there is a danger of ignoring the environment. changes in technology. New product development will open new markets for BMW and allows attract new target audience. When product life cycles are short (or consumers demands are changed) product development becomes an essential requirement of company strategy. It will also concentrate on developing the products which build on core competences and skills. BMW will become more market focused than less successful firms in selecting opportunities for product development. Conceptually new Car is the future of the industry. can play an important role in determining competitive success. etc.Strategic Management 7 In general. Clearly. competitors. and local authorities need to shift their pattern of services as local needs change. There may be many reasons why BMW should have a preference for product development. and because it has structured itself around product divisions. The strategy towards a “green car” should be the main priority of the company today in order to compete in future.

Another strategy concerns existing products. development of retailing activities around the world. Because the market has moved on. Chinese market (as a part of a global market) shows the highest rate of economic growth around the world. Asian market development can include entering Indian and South Korean. increased revenue from success in Chinese market.Strategic Management 8 bring. Of course. promotion to other divisions. China markets exploiting new uses for the product or spreading into new geographical areas. The opportunities of BMW include: high potential to growth and profitability of the company. continue a global expansion and penetration into Asianmarkets. since the move into a new market segment may require developments of variants to the existing product range. there can be a gap between the skills required to compete in the market and those possessed by the firms. It is evident that global strategy should include the determination of the basic long-term goals concerns the conceptualization of coherent and attainable strategic objectives. 8 . So. market development and product development may go hand in hand. a new conceptually new car is the market need and BMW can be the first company which starts it’s manufacturing. It will help to meet the needs of a particular customer and provide specific personal service for every supplier and customer of BMW. To conclude it is possible to say that business processes will help to satisfy requirements of different clients. In the case of Asian market development BMW will maintain the security of its present products while venturing into new market areas. Without changes and successful strategic planning BMW will not be capable to achieve the overall objectives. In the infrastructure of BMW goods quality is the major question. Recent years. In these situation BMW will be faced with four distinct options: to build up the resources required to compete in the market by closing the gap between the firm's competencies and the assets required to compete.

Scholes. G. 2001. 1998. Hemel Hempstead: Prentice Hall. K. Exploring Corporate Strategy.Strategic Management References 1.. 9 9 . Johnson. Lenciani. 2. V. BMW Automobiles.

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