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VISION

BMW MISSION STATEMENT


The BMW Group is the worlds leading provider of premium products and premium
services for individual mobility.

COMPETITIVE STRATEGY THROUGH MARKETING DEVELOPMENT


1. Improving engineering
From mid 1990s automobile producers strove to improve engineering as a route to
competitive advantage and to catch up with competitors.
2. Improving quality
From mid 1990s automobile producers strove to improve quality as a route to competitive
advantage and to catch up with competitors.
By mid 2000s, the car market was teeming with good quality cars. For example, the quality
of US automobiles had improved 24 % from the late 1990s.
3. Price Competition
In the first few years of 21 st century, players in the automobile industries as a whole
stepped up price competition.
4. Reliability
BMW automobiles are powerful, reliable and luxurious.
5. Design
The customer choice factors had become design as demonstrated by the fact that companies
that had given attention to look of their automobiles had made small gains, rather than
losing market share. This realization made design the first weapon in the fight for market
share, as the feature that grabbed customers attention.
Naturally, boardrooms took up design as a major plank of their strategy and sparked a hunt
for top level designers.
The promised rewards were rich enough to lure best talents, who were then provided with
lavish high-tech design laboratories and art studios.
6. Branding
The customer choice factors had become brand as demonstrated by the fact that companies
that had built powerful brands had made small gains, rather than losing market share.
It had become clear that a brand identity was one of the most effective ways to be more
competitive in an industry where more and more products came to the market.

Effective branding establishes emotional connections between customers on one side and
products, salesmen, and others on the other. A prime example of successful branding was
Toyota.
BMW conveyed the image of the Ultimate driving machine. Every model raised a set
of general perceptions and emotional connections generated by the mother brand, as well as
some specifically related to the model in question.
The launch of BMW 1500 established the BMW automobile brand as one with a reputation
for engineering excellence and managed to build a perception of valuable differences in the
minds of their buyers.
7. Brand Building and Management
The company tightly controlled its distribution network to the benefit of brand
management, communications and after sales services.
8. Advertising
9. National competitiveness
In the 21st century national resources influenced national competitiveness. One of Germans
distinctive national resources was a highly qualified labour force that could be used by
German manufacturers as a source of competitive advantage.
10. Global perspective
BMW is an international Company that operates in more than one country. By the latter
part of 20th Century, the automobile industry was global, mature and heavily consolidated.
The main markets for BMW automobiles have been in Western Europe, the USA, Japan,
South Africa, UK, China and the Pacific region, with the markets of Germany and US
accounting for almost half the total car sales. Its international perspective gave the
company a competitive advantage.
11. Market Segmentation
BMW segmented its markets effectively; BMW automobiles have been positioned
differently and priced differently in the various national markets, this gave the company a
competitive advantage.
12. Firm control on the supply chain and dealings and relationships with suppliers
BMW also exercised a firm control on the supply chain and dealings and relationships with
suppliers who mostly had maintained a long association with the company a combination
that gave the company a competitive edge.

ANALYSIS
1. SWOT ANALYSIS
STRENGTHS

BMW is a prominent European maker of prestigious automobiles, whose automobiles


are powerful, reliable and luxurious.
Diversification
Its operations also include motorcycles, software products and financial services
Launch of a large number of models
Launch of a large number of models across the price and class ranges, and a robust
policy of market development.
A significant employer and an economic force after the 2nd World War
BMW employed over 104,000 workers in 2003.
International Perspective of the firm.
BMW is an international Company that operates in more than one country and in
different continents effectively. The later 20th Century the automobile industry was
global, mature and heavily consolidated. Automobile production was first prominent in
the US, then Europe and later Asia especially Japan.
Innovation
By mid 2000s the car market was teeming with good quality cars, many brands and
models. BMW built powerful brands and designs which conveyed the image of
Ultimate driving machine
The turning point came in 1961 when it launched the BMW 1500 with a reputation for
Engineering Excellence
Highly qualified labour force
One of Germanys distinctive national resources was a highly qualified labour force
that was used by German manufacturers as a source of competitive advantage.
Excellent Branding
Valuable differences in the mind of their buyers
Effective Distribution Networks
BMW tightly controlled its distribution network to the benefit of brand management,
communication and aftersales service.

Effective Market Segmentation


BMW segmented the market effectively, the different segments include, entry segment,
mass market segment, premium segment, and luxury segment. The automobiles have
been positioned and priced differently in the various national markets.
Firm controls on supply chains and Good relationship with suppliers
BMW also exercised a firm control on the supply chain dealings and developed good
relationships with suppliers who mostly had maintained a long association with the
company.
Growth

BMW registered growth of revenue in 2002 of up to 4.2 %


Moving production into growth markets achieved the double effect of containing the
costs and partially hedging against currency risk.
Market Development
Progressive Agreements
BMW achieved some remarkably progressive agreements with the workers union and
were operating some of the most flexible and productive plants in the automotive
industry.
Effective Management across Cultures
BMW operated in more than one country and in different continents effectively.
WEAKNESSES
Uncertain of its destiny
The company concentrated on automobile production but without a focus, No Vision
Brand Building and Management put pressure on companys resources with less certain
results.
Failure of managing acquisition of Rover in 1990s which came to a sorry end 5 years later
when they had to sell the British Company for the sum of 10 US DOLLARS.
The incompetence of the CEO, Mr. B. Pischetsieder who failed to maximize the
shareholders value thus failed to meet the expectation of the shareholders.
OPPORTUNITIES
BMW INTERNATIONAL PERSPECTIVE
BMW international perspective is able to give it competitive edge in market development
especially in regions which have potentials and have not been reached yet. The main
markets for BMW automobiles have been Western Europe, USA, Japan, the Pacific region
with markets of US and Germany accounting for half car sales.
In 2002 Helmut Panke, a nuclear physist new CEO started a strategy of internal growth
through market product development. In 2003 BMW planning to launch a new model every
3 months through 2005.
The expansion of production facilities in US.
THREATS
In 1959 BMW faced bankruptcy.
The global economy experienced a sharp downturn in 2001 which lasted three (3) years.
The fall of equity prices- equity prices had fallen until late 2003.

Geopolitical tension and concern about oil supplies led to the uncertainty about the
economic and political environment.
In the climate of geopolitical tension sales in most automobile markets around the world
declined with the exception of UK.
The decline in the automobile markets in US was particularly severe.
Car companies sold cars at lower prices; the consequent depression of profitability was
likely to affect negatively their credit rating, thus increasing the cost of borrowing.
Depressed demand and over supply the larger European car companies had suffered from
depressed demand and oversupply.
Falling profitability Volkswagens profit fell by 49% in the 2nd quarter of 2003.
BMW aero engines markets and capital equipment were under serious threat as it lost its
demand as a result of German losing the war.
The failure of acquisition causing loss of great deal of money and of public face
(positioning)
Size modest compared with that of big five (5) that left them vulnerable to acquisition.
Customers expectations became a barrier to increasing prices later.
Increasing the production of smaller cars could have the effect of reducing the historically
high margins enjoyed by BMW. Moving into smaller cars meant earning lower margins
that were typical of those markets segments - But competitors in the lower segments were
volume producers with lower costs than BMW.
Quality threats with pressure on costs the risks of quality lapses was bound to increase.
Increasing the output at the level planned would threaten the very reason for BMWs great
success the Ultimate driving machine
Any model positioned in the proximity of a more expensive model could cannibalise it, 1st
series model cannibalise the 3 series.
II PORTERS FIVE MODEL ANALYSIS
BARRIER TO ENTRY
Capital outlays for production facilities BMW automobile are powerful, reliable and
luxurious and quite expensive, high level of specification offered by most models with
retail margins comparatively high. These attributes would act as barriers to automobile
companies that would wish to join because of high initial outlays for production.
THREAT OF SUBSTITUTE PRODUCTS

Most of the world automobile production was concentrated in five companies other than
BMW.
i)
General motors
ii)
Ford
iii)
Daimler Chrysler
iv)
Toyota
v)
Volkswagen
BARGAINING POWER OF BUYERS

Buyers of automobiles have unlimited choices. BMW must carefully identify their target
market and provide bespoke products to its customers if it is to survive as described by H.
Panke at the Annual Accounts conference on 17 March 2004. We offer our customers
emotional products which through the strength of the brand and the substance of the
product fulfill the customers wish for individualization and differentiation. The BMW
Group will never build boring products
BARGAINING POWER OF SUPPLIERS
The automobiles industries have many players. In making purchase decisions the suppliers
do not have absolute power over them.
COMPETITIONS
Competition has manifested itself in many forms:i)

Other automobile production companies have posed competition to BMW


General motors
Ford
Daimler Chrysler
Toyota
Volkswagen

ii)

Brands
Different brands before buyers.
Design
Different designs which positions buyers in different segment markets
Price
Different prices

iii)
iv)

ALTERNATIVES/ RECOMMENDATIONS

CONCLUSION

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