PESTEL analysis is a critical tool that executives can depend on to organize factors within the

general environment and to establish the way these factors impact organizations and industries
around them. PESTLE often reflects the names of the six segments within the general
environment. It includes, economic, political technological, social, economic, legal, and
environmental.
Political factors
BMW Group is impacted by political influences including the introduction of new regulations,
policies, and political corruption. However, unlike small companies, the group has a huge
amount of funding, brand image, and profits. It implies it can easily influence policies for the
organization's growth. Political instability impacts BMW Group by affecting the ability of
consumers to purchase the product and investing in countries with political instability poses risk
to the company’s investment.

Economic factors
The company faces stiff competition from Toyota. Besides Global economy fluctuations have
been impacting the company’s performance, profits, and valuation. Fluctuation makes it hard for
the company to predict losses and profits in the following year because the currency is also
volatile.
There is also a crisis in Europe, Asia, and the United States that continues to depress the
spending of consumers for the past twenty years. If the global economy fails to recover from
economic downtown then consumers will continue to prefer to purchase a pre-owned vehicle that
is cheaper than the autonomous one. Self-driven cars will affect various market players.
Insurance companies may be compelled to change their business model and companies may save
money since they will not have to pay drivers. It may also save on healthcare and environmental
costs.

Social: The question of the specified people using the self-driven car is still not clear as to how
the technology might be adopted by most consumers.
Environmental: self-driven cars have lower emissions than traditional vehicles.
Legal: Regulators as expected to encourage and make self-driven cars legal and bad legislation
could derail the investment and effort needed to develop the technology.

Ethical: the issue of privacy requires a solution. The type of information to be collected by self-
driven vehicles, and people to access it. Safety is also important since there must be clear
methods to prevent the vehicle from being hacked, infected by the virus
The five porters Include:
The threat of New Entrants is high.
This includes Internet giant Google which demonstrated its self-driven car in the summer of
2014.
The threat of Substitutes is low: No clear company has come up with a substitute for self-driven
cars.
The bargaining Power of Customers is high. The higher price of self-driven cars compared to
traditional cars may make only a few consumers purchase the cars due to the hard economic
times experienced in the world. However, in the luxury industry, high brand loyalty determines
the bargaining power of consumers.
Bargaining Power of Suppliers low: BMW Group supplier's bargaining power is low. The
company has over 13000 supplies of different sizes and the importance of creating a business
with popular companies such as BMW for every supplier hold vast status. The price differential
strategy of BMW products ensures that supplies cost relative to the selling price of autonomous
vehicles is small.
Competitive Rivalry is high. Audi and Tesla are offering BMW stiff competition on similar
technology. Tesla is the most popular company in an autonomous vehicle.
Opportunities:
Expanding into an autonomous vehicles including Google and Tesla, BMW will indeed exploit
the increasing demand for self-driven cars. Providing an environment-friendly self-driven car,
the company is best suited to cater to the world's desire to reduce carbon emissions throughout
the globe. BMW has made tremendous inroads into the Chinese market, which is the largest in
the world in relation to self-driven cars.

2-What are the strengths or weaknesses of the organization?

The four main techniques to gain a competitive advantage include cost leadership,
differentiation, strategic alliances, and defensive strategies.
Strengths
 The strength of BMW includes high-quality products. The company strikes a perfect
balance between high-end luxury, performance, and durability. Each vehicle rolled out of
the factory is perfectly designed and created to offer state-of-art cars for consumers.
 BMW is among the most valuable automotive brand globally. The company has been
able to focus on the needs of consumers enabling it to build a strong and valuable
company and was ranked the world's most valuable brand in 2021. In 2016 it was also
ranked the world's second most valuable brand.
 BMW has managed to successfully make a partnership with China which is the largest
world market for self-driven cars.
 BMW is among the most experienced companies in terms of green technology. The
company has decades of experience in hybrid and full-electric technology thus offering it
a full advantage in the world swiftly shifting to greener energy. The company started
working on electric cars in the 1970s.
 The company also has balanced geographical revenues. It has diversified revenue streams
from various world regions thus guaranteeing its long-term sustainability. The company
has a notable market share in Asia, America, and Europe.
 High R & D investments. R& D majorly influence the success and long-term
sustainability of a company. BMW invests heavily in autonomous, electric, and hybrid
cars.
 Handling, engines, and traction motors: The company topped the market in engine
production and this has made it stand above the rest on several occasions.
 Information technology integration: The company managed to integrate technology
innovations into its cars winning various global prices including 2014 the Berthold
Leibinger Innovation award in 2014 for its laser-light technology and the Autoblog’s
 2014 Technology of the Year award for the whole technology suite working together on
the BMW.
 BMW employs a focus strategy on vehicles. They sell the products to markets at cheaper
prices than their rivals while still generating profits. The company achieves this by
reducing costs in the production chain.
Weaknesses
 Controversial recalls tend to taint BMW's image. The company is recalling over 350,00
older models in the United States, and over 1.4 million to replace faulty Takata airbags.
 Many lawsuits: BMW is facing many lawsuits such as an obstruction case in South Korea
and collusion over emissions in Europe. This can damage the reputation of the company.
 The company has a small portfolio: some of its competitors own many top brands while
the company lacks product differentiation and comprises mainly BMW, MINI, and Rolls-
Royce.

In the past, BMW has been able to successfully differentiate its products by engaging in
value-adding value chain activities. What are some of these specific activities? How can
BMW ensure its ability to continue with value-adding activities as it evolves into a maker of
self-driving cars?

 Use the "Value Chain Analysis" to identify value-adding activities and functions.
 This question is not about Business or Corporate level strategies. focus on the
functional level.