Strategic Management 313
Unit Index Number 3522
Semester 1, 2006
Daniel Smentek, 13264679
Melanie Bernroitner, 13264682
Marie-Charlotte Neumann, 13264640
Submitted on, May 16, 2006
Table of Contents
BMW and the Automobile Industry6
Aspects of the Automobile Industry6
Historical Background of BMW6
BMW in the Global Environment9
General Environment of the Automobile Industry9
Five Forces of the Automobile Industry14
Competitive Structure of the Automobile Industry17
BMW’s Direct Competition22
BMW’s Resources and Capabilities25
Potential Action Steps for BMW33
BMW’s Strategy towards Success37
List of Illustrations
Figure 1: Report's Course of Action5
Figure 2: Labour Costs in EU Countries 200511
Figure 3: Outcome of General Environment Analysis14
Figure 4: Evaluation of Porter's Five Forces of Competition17
Figure 5: Strategic Map20
Figure 6: Profit Margins26
Figure 7: SWOT Analysis BMW 200633
The following report analyses the automobile operations of the BMW group in regard to its competitive position in the automobile market. BMW is a German premium car manufacturer comprising the three brands BMW, Mini and Rolls-Royce.
The analysis of the external environment indicates an attractive but challenging general environment. The industry environment shows low threat of new entrants, low bargaining power of suppliers, high bargaining power of buyers, moderate threat of substitute products and intense rivalry among competitors. In order to get a better understanding of the industry’s competitive structure, a strategic map has been developed. Thereby the DaimlerChrysler’s Mercedes Car Group has been identified as BMW’s main competitor.
Examining an extensive range of resources, several capabilities were discovered. These capabilities were analysed concerning the four criteria of core competencies resulting in four competitive advantages high brand recognition, exclusive positioning, pro-active behaviour and ongoing innovation. By conducting the SWOT analysis, eight strategies have been developed to cope with BMW’s internal and external situation. These were categorised into alternative courses of action: market development, product development, public relations and diversification. These courses of action have been evaluated in terms of the criteria impact, image and costs. A related diversification in form of buying an existing brand from a lower price segment, turned out to be the most suitable approach for BMW to gain greater market power.
The highly competitive automobile industry creates a need for new action steps to stay ahead of competition (Hanson et al. 2005). The following report analyses the automobile operations of the BMW group in regard to its competitive position in the automobile market. Since the company comprises several brands, all positioned in the premium segment, corporate strategies are needed to successfully manage the whole group. As a result of a consolidated automobile industry, other corporate car manufacturers compete with the apparent niche player BMW. Following the objective of rising sales figures to gain higher market share the report will give recommendation on how to achieve this goal (Lencioni 2004). Figure 1 illustrates the report’s approach to develop a promising strategy for BMW.
Figure 1: Report's Course of Action
Source: Created by Authors
BMW and the Automobile Industry
Aspects of the Automobile Industry
In the latter part of the 20th century the automobile industry was dominated by five companies, illustrated in Table 1.
Table 1: Five major automobile...