ECONOMY ANALYSIS

INDIAN ECONOMY
 India’s GDP have estimated to be increased 7.2% in 2017-2018 and 7% in 2018-2019
 India has retained third position as the largest start-up base in the world with over 4750 technology
start-ups
 India’s labour force is expected to touch 160-170 million by 2020
 India’s foreign exchange reserve were US$405.65 billion in march 15th2019, according to RBI

FACTORS AFFECTING THE ECONOMY

 GNP: It measures the monitory value of all final goods and services produced over a specified
period within the boundaries of a country.

 Inflation: it is a general increase in price in an economy and consequent fall in the purchasing
power of money
 Agriculture: Companies using agricultural raw materials as inputs and other supplying inputs to
agriculture are affected by changes in agriculture production

 Interest rate: If there is an uncertainty in the market in the terms of interest rate then any
developments regarding interest rates will usually have a direct and immediate effect on the
current market.
 Exchange rate: Balance of trade inn import and export determine the exchange rate.

 Political stability: A stable political environment is necessary for steady and balanced growth. No
industry or company can prosper in the midst of political turmoil.
 Infrastructure: It includes electricity, roads, railways and communication channels. Infrastructure
leads to inefficiencies, lower productivity, wastage and delays.

 Government revenue, expenditure & deficits: Government is the largest investor and spender of
money, so the trend in government revenue, expenditure & deficits has a significant impact on the
performance of industries and companies.
 PORTERS 5 FORCE MODEL OF AUTOMOBILE INDUSTRY

1. THREAT OF NEW ENTRANTS:

India have incredible forecast on growth, infrastructure progress as well as ever increasing
financing options. All these aspects make the industry attractive. This transacts to:

 High capital requirements

 Economies of scale
 Requirements of advanced technologies
 Brand name have to be strong

2. Bargaining power of the customers:

When it comes to choose there are over 20 foreign manufacturers in the country, this include high end
manufacturers like Lamborghini & Rolls-Royce and cheap options like Tata Nano. Because of this:

 The buyers price sensitivity is low

 Distributor dependency is low
 The number of customer is large

3. Threat of substitute products:

India is known for 2 wheelers and 3 wheelers which are real threats to manufacturers of automobile. This
means:

 There is a high threat in terms of making a switch to substitute

 Substitutes are limited

4. Bargaining power of suppliers:

The manufacturers in India have high bargaining power. This translates that:

 High level of competitors among suppliers

 Low supplier concentration
 Critical input production
 Critical volume to suppliers
 5. Rivalry among the competitors:

In India the rivalry is very high in automobile industries and they are trrying to become the leaders in the
market. This translates that:

 Product diffentiation
 Low cost of storage
 Large size of industry
 Fast growing rate in industry
 Entry of few competitors
 PESTEL ANALYSIS OF AUTOMOBILE INDUSTRY

Certain factors that greatly influence the automobile industries in India can be divided into:
 Political
 Economical
 Social
 Technological
 Environmental
 Legal

1. Political factors
Indian automobile industry is an attraction to many investors. All the investors are pooled in three
main regions despite the expansive size of the country. This is because these regions are far more
developed as compared to other regions.
 The government is responsible for the development of these regions
 Government has set up bodies which help the automobile industry in carrying out research
and development
 These bodies also maintain a monitoring system for all automobile industry

2. Economic factors
 Automobile industry have lead to good economic growth in India
 With the economic growth India is attracting foreign investors to the automobile industry
 Price of the crude oil and petroleum products always affect the automobile industry
 Rise in crude oil and petroleum products makes things expensive and trickle down to
automobile manufacturing as well as maintenance
3. Social factors
 Large population helps to form a bustling market for the manufacturers
 Taste and preferences of population may vary but manufactures always take note of fast
selling automobiles and create appropriate designs
 Many companies in the automobile industry have created these vehicles for domestic
consumers
4. Technological factors
 Latest technological inventions
 The latest inventions help in reducing the expenses of buyers
 The government is also helping in research and development to satisfaction of both
producers and consumers
5. Environmental factors
 Investors are opting to manufacture environment friendly products
 There are also some investors who have chosen to manufacture electric vehicles
6. Legal factors
 The industries is extremely incentivised with investor being given 100% direct investment
pass
 Zero tax for investors who ship cars to other countries from their manufacturing base in
India
 COMPANY ANALYSIS OF BMW
VISION

To be the most successful premium manufacturer in the industry.

MISSION

The BMW group is the world’s leading provider of premium products and premium services for individual
mobility.

MAJOR COMPETITORS

 Mercedes Benz
 Audi
 Jaguar
 Lexus
 Volvo

STRENGTH

 Innovation and technological advancement

 Renowned brand in automobile industry
 Diversified product portfolio
 High skilled employees

WEAKNESS

 Cars recalled recently

 Few strategic alliances
 Younger generation are lesser brand conscious

EXPORT

German’s automaker BMW AG is the biggest automotive exporter by value for the fifth consecutive year, with export
totalling over $8.4 billion in 2018.