The automobile industry is the most interesting and complex business sectors in the global framework for analysis. The Japanese cars are now supplemented by luxury models, such as Lexus, Infinity, and Acura to compete with European cars made by BMW, Mercedes, and Audi. In this analysis, I’m going analyze BMW and its competitors using Porter’s Five Forces Model and other marketing tools and determine if BMW has a competitive advantage in the market.
The Bayerische Motoren Werke also commonly known as BMW is the world's most renowned automobile brand. BMW was founded in 1916. The company’s headquarters is in Munich, Germany and the current CEO is Norbert Reithofer. Today, the company is one of Germany’s largest and most successful car and motorcycle manufacturers. BMW Group owns three of the leading premium brands in the automobile industry: BMW, MINI and Rolls-Royce. They set the highest standards in terms of aesthetics, dynamics, technology and quality, born out by the company’s leading position in engineering and innovation. The company also has a strong position in the motorcycles industry and also offers a full range of financial services. Today, BMW’s two biggest competitors are Toyota’s Lexus and Daimler’s Mercedes.
The company has adopted a strategy to differentiate from others by being the number one in the industry. Great leadership and long-term thinking have been the cornerstones of business success. The BMW Group has been a sector leader in the DJS Indices for the last seven years. The company has a total of 23 production facilities around the globe in 12 different countries with representation in more than 140 countries. The company is famous for its world class luxury cars offered to international customers. BMW is considered as the world's leading premium manufacturer.
BMW vs the Competition
One of the reasons why BMW and Audi have been outselling Mercedes is their stronger foothold in the fast growing Chinese luxury vehicle market. China is the world’s second largest premium vehicle market behind the U.S., selling just over 1.5 million units in 2013 by the estimates. The country is expected to overtake the U.S. as early as 2016, in terms of luxury volumes bolstered by increasing disposable incomes and less penetration of luxury vehicles at present. China has only around 79 vehicles per 1,000 inhabitants, whereas the figure for the U.S. stands at 791 vehicles per 1,000 inhabitants. In addition, only 7% of the total vehicle sales in China at present are constituted by the luxury segment, compared to the consistent 10-11% for the U.S. Both Audi and BMW accounted for around 60% of the net volumes in China last year, with Audi selling more than twice the volumes sold by Mercedes in the country. Slower volume-growth compared to its chief competitors in China has somewhat hampered Mercedes’ aggressive growth strategy aimed at regaining the luxury sales crown by the end of the decade (Forbes, 2014). The company is still ahead of its competitors Daimler and Volkswagen in terms of market share and customer satisfaction. In 2012, Forbes announced BMW as the most reputable business in the world. BMW is following a local production strategy; BMW is highly committed towards its long term strategy of market penetration, while at the same time escaping high duties on imported foreign produced cars. Another production and sales strategy used by the company is the (CKD) process which is known as completely knocked down process in which different components and parts are imported from different local and international assemblers (Ferber, 2014). Today, BMW obtains a very competitive position on the market. At the very beginning the strengths included high potential to growth and profitability of the company, and professional management team, customer loyalty and excellent service. BMW has a hard core of loyal supporters. It develops lines of...
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