The BMW Group: An Analysis Of BMW

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With its three brands, BMW, Mini and Rolls-Royce, the BMW group is competing in the industry of luxury automotive and motorcycles. This industry is performing well ; while the motorcycle market has been relatively flat these last years, the automotive market shows a positive increase with a strong growth in China (+17.4%) and Europe (+6.6%).
In this industry, BMW faces the competition of two major rivals, Audi and Mercedes-Benz. As these three groups represent an important part of the market, competition is tough, where each one pushes its limits to be the leader. We can analyze the five main competitive forces presented by the Porter’s model as follow.
First of all, let’s consider the threat of substitutes and the threat of new entrants. The threat of new entrants is relatively low. Indeed, the initial investment to enter in this market is pretty consequent; manufacturers have to invest in a Research and Development department, in plants, or even in a marketing service. Moreover, the already tough enough competition makes this market less attractive for potential new entrants. Finally, the brand
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To begin with, as we said before, customers can now switch from premium cars to cheaper cars with almost the same features. Therefore, the switching costs are low and customers need not give up on features they like. This reinforces the customers’ bargaining power ; brands have to do more to impress and attract the consumers. Furthermore, consistently with the development of new technologies, customers are informed and more and more demanding. It is easy for them to find out if their car is environment friendly for example. However, the bargaining power of the customers is lowered by the fact that brand loyalty is really strong in the luxury market as consuming luxury products allow them to show their social status and because they are usually emotionally attached to a specific

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