BMW Strategic Analysis |
Amanda King, Zachary Conner, Chris Miller, Sulaiman Alsayyari |
Management 452.301 |
Table of Contents
Executive Summary 2
Introduction of Company and Current Situation 3
External Environment Analysis 4
General Environment 4
Industry Environment 7
Competitor Environment 7
Conclusion of External Environment Analysis 8
Internal Analysis 10
VRIN Analysis 11
Financial Analysis 12
Conclusion of Internal Analysis 16
Identification of Key Problems 20
Recommendations and Implementations 21
BMW is known for its manufacturing of premium-brand cars and off-road vehicles ...view middle of the document...
Therefore, BMW vehicles cost more than vehicles produced by Ford, Chevy, Toyota, etc. BMW has a business strategy of focusing on creating sustainable competitive advantages through innovation, technology, customer focus, and its brand by producing premium vehicles exclusive to the luxury market.
BMW has implemented a diversification strategy. Originally, BMW started as an aviation production company. BMW decided to continue production, but only in the motor vehicle industry. Internationally, BMW incorporates a transnational strategy. In addition to the environment, BMW takes pride in their products, customers, and employees. BMW has clearly become a high quality car manufacturer that has established its brand in the vehicle market (Driving Performance).
Introduction of Company and Current Situation
Bayerische Motoren Werke, more commonly known as BMW, is ranked among the top 10 automakers in the world. Their influence is large, sending its products and vehicles all over the globe. BMW’s financial services segment offers car leasing and credit financing for retail and corporate fleet customers, dealer financing, insurance, and deposit banking. BMW currently has 23 production and assembly plants in 13 different countries, with 12 separate research and development plants in 5 different countries (LexisNexis).
Early in 2013, BMW announced their formation of a strategic alliance with Toyota. The alliance is aimed at developing hydrogen-based fuel cell technology, as well as beginning work to build a new sports vehicle that will run on the clean, high-mileage gas hydrogen based fuel (Eisenstein, 2013).
While the BMW image looks great on the surface, a look under the hood can tell us how BMW stands in the market of luxury cars. To complete an external analysis, we evaluated the general, industry, and competitor environments.
External Environment Analysis
Environmental trends within the luxury automotive industry are significant, though not as much as with lower-end vehicles. The physical segment has been changed due to rising fuel prices, pressuring the companies in industry to find way to create more fuel efficient sports cars. The rising fuel prices can be pinned on the recent economic recession. Also, the rising fuel prices impact the sociocultural segment by creating a more environmentally friendly conscious population. Those who are in a position to buy luxury vehicles are not as concerned about saving money through buying less gasoline. Still, this doesn’t mean that consumers won’t be concerned about MPG; because of this, it is still important that luxury automotive manufacturers offer fuel efficient options. Figure 1 illustrates the trend of increasing fuel economy in new vehicles.
Figure 1: Fuel Economy
Social factors are important within this industry. Those who spend the money on a higher quality car usually want people to know the high quality brand they purchased; so many...