The amazing success of the BMW group for decades inspired me to write this brief report on this group. Initially, the report will provide an overview of the group. Secondly, by using PEST and Porter’s 5 forces analysis, it will describe the current and future environment that the group is operating in. Next part will be an analysis of strengths as well as weaknesses of the group via the market and its competitors. Then the report will present the strategy NUMBER ONE that is used by the group to position itself as the most successful premium automaker in the automotive industry. Besides, I will also provide a recommend about where and how the group should focus on next 3-5 years in order to succeed. The final section is some conclusions and references of the report.
2. Overview of BMW
1. Company background
The BMW group, founded in 1916, is a German automobile, motorcycle, bicycle and engine manufacturing company. It also owns 2 automotive brands: Roll Royce and Mini. It produced about 1.5 million automobiles and more than 110,000 motorcycles across all its brands in 2010. The group is the only automobiles and motorcycles manufacturer worldwide which focuses entirely on premium segment that requires products with high standards and outstanding quality.
The BMW group believes that its strategy NUMBER ONE, which stands for "New Opportunities" and "New Efficiency", will guide it to the year 2020. By 2012, the group will increase sales to 1.8 million automobiles and 150,000 bikes per year. Its strategic objective is to ensure that: “The BMW group becomes the most successful premium manufacturer in the car industry”. (BMW group)
It means that the group will continue to do business in the premium segment in terms of not only its cars and motorcycles but also its other services. The group are building on its strengths and concentrating on its core competence in a specific segment.
The annual report 2010 of the BMW group indicates its mission as following:
“The BMW Group is the leading provider of premium products and premium services for individual mobility”.
The report also shows the group’s objectives to achieve the mission statement above:
• Value enhancement as the main objective.
• Profitability and growth to safeguard independence.
• Scope to engineer the future.
3. The current and future environment of BMW
1. Overview of automotive industry
The auto industry is one of the most highly concentrated industries. About 10 global automotive manufacturers account for more than 75% of the production worldwide. The recent economic crisis has motivated a massive change in structure of the automotive industry that will set a new growth stage over the next decade. To remain competitive, automotive manufacturers will need to focus on more low-cost and user-friendly vehicles to meet the requirements of customers in both mature and emerging markets. The current trend of automotive manufacturers is shifting their production factories from high-cost regions (North America and EU) to lower-cost regions (South America, China and India). Cost and demand are 2 underlying causes behind the location shift in the industry. The cost of labor in emerging markets continues to be a great advantage to cost-cutting policies of automotive manufacturers. Many low-cost regions also have high potential for growth of demand. So, the location shift will lead to a localization that will reduce transportation costs.
Higher fuel prices and climate change are matters that automakers should pay attention to. These matters make them either rely less on traditional fuels or use alternative energy. Thus, green vehicles such as EVs (fuel-efficient electric vehicles) and hybrids will attract more customers than normal ones. By the next decade, green vehicles will account for about a third of total global sales. Green...