Analysis of Bmw

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Case Study Report

Strategic Management 313

Unit Index Number 3522

Semester 1, 2006

BMW Automobiles

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Group Members

Daniel Smentek, 13264679
Melanie Bernroitner, 13264682
Marie-Charlotte Neumann, 13264640

Submitted on, May 16, 2006

Table of Contents

Executive Summary4

Introduction5

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

Tangible Resources25

Intangible Resources:28

Capabilities29

Core Competencies30

Potential Action Steps for BMW33

BMW’s Strategy towards Success37

References41

Appendices45

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

Executive Summary

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.

Introduction

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

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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...
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