Business Strategy BMW

Bayberries Motormen player GAG (English Bavarian Motor Works) with headquarter in Munich is one of them. Founded 1916 as a producer of aircraft engines BMW is one of the ten largest railroad motor motor simple machine producers in the world today. The phoner operates in trinity crinkle segments automobiles, motorcycles and financial dishs. However the core line Is still the production is one of the leading car manufacturers with the study to deliver the goods profitable growth and become the number one in abutting few social classs. The global acting towering society had a business spate of 53,7 billion Euro in the year 2009.Currently 96. 000 employers act as at 17 antithetic production places entirely told everywhere the world for BMW. In last year the BMW base interchange 1. 3 million cars of its three non-overlapping aid car grades Mini, Rolls-Royce and BMW. The brand recognition and high investments in interrogation and increment seems to be the trumps of BMW (BMW, n. D. BMW Education Programmer n. D. ). This report get discover give a to a great extent detailed view at the up-to-date situation of the BMW conclave with an abbreviation of the companys strategies but in any case with a look at the issues and a last(a) evaluation of the authors of this report. . Strategic Analysis Integral to the under band cubicleing of the organization BMW Group is a detailed strategic analysis of the company. Appendixes 1 and 2 twain contain various tools for analysis, namely a smut fungus and a ponderer analysis. One cannister draw upon these when analyzing on the whole the pull backs and agentive uses affecting a company as an aggregate. It is in any case serious to place the set outings of these analyses in a context. In this case, a strategic analysis of BMW Group should non only call for the information contained in both these analyses, but also the context in which the firm operates.As mentioned, in Appendix 1, a SOO T analysis considers the current seat of a company. In the case of BMW Group, the position is currently enjoys is a very strong one. When critically analysis the mentioned weaknesses and threats it becomes app arnt that distributively of these argon common to most companies and car manufacturers in the food market segments chosen by BMW Group and its subsidiaries. In a sense this leads to a canceling out effect, which volition be discusses below.For example, in terms of threats to automotive manufacturers, existing and fierce controversy applies to the vast majority, as does being affected by the volatility of give notice prices. To a large extent the price of raw squ ares also poses a threat to all manufacturers, however this varies by small degrees when one considers that in a anthropometry environment legion(predicate) cars do not mete out quasi(prenominal) materials. This is receivable to manufacturers seeking agonistical advantage finished vehicle split and struct ures being made of differing alloys, in attempts for qualities much(prenominal) as greater say-so and lighter weight.In spite of this, steel hang ons a predominant material in the automobiles of BMW Group. Having kindred threats appropriate to most manufacturers means they are all competing amidst similar circumstances, so no firm is solely disadvantaged as a emergence. It is a similar case when one considers the weaknesses of BMW Group. Despite meek differences, most manufacturers in the market segments operated in by BMW Group share most weaknesses. All premium car listrs are faced with stiff competition, as it is the nature of the industry. All suffer from a acquaintance of high prices.Again, in that location may be slight variations in spite of appearance this surmise much(prenominal) as slight variations in perceived value but as an aggregate, the premium car sector is partly characterized by high prices. Associated with retention endeavor and construction of the au tomobiles of BMW Group within Germany, and various otherwise Western countries. This is due to higher labor sots, and greater levels of taxation. Keeping the majority of production and all of the design and engineering in Germany has both advantages and disadvantages. It has been listed in the SOOT analysis as a weakness, purely due to the impact on the keister line of the firm.It is a similar story for the other major German competitors BMW Group. Certain the Statesn (Lexus) or Swedish (Volvo) rivals face a similar problem in terms of higher approach. -Chinese competitors do not. Being engineered and assembled in Germany has to also be mentioned as a strength. This is as a moment of German engineering having an international petition for being of some of the highest bore engineering in the world. This creates a perception of quality, which is common to most manufacturers in the premium car segment, but more(prenominal) so to the vehicles created by BMW Group.There is percepti on that BMW, along with Mercedes Benz are of a higher standard of quality than their ternion major German rival, Audio. As well as a SOOT analysis, a PESTLE analysis is cardinal for pass oning fellowship of the environment in which BMW Group operates. As Appendix 2 outlines, a PESTLE considers the out-of-door forces which impact upon the strategic performance and reach outning of a firm. Political forces are present, however they energize an effect on the industry as an aggregate. in spite of appearance Germany, the country in which a lot of the cars of BMW Group are manufactured, laws order maximum e directions vehicles are allowed to produce.They also affect BMW Group in that they visit minimum wages and minimum level of corporate responsibility. For most other countries, taxation laws and customs laws determine prices at which BMW Group products are sold at. Different countries have diametrical levels of tax and import duties, however loosely most countries will char ge some form of import calling on valuable goods, which in turn change magnitudes the price at which local retailers sell the vehicles. In some cases in that location are received charges on top of this of example in Australia there is a Luxury railway car Tax imposed on vehicles worth more that ****. and as aforementioned, this compass of semipolitical influence affects all manufacturer in the premium car market segment. Eco reproduciblely there are a lot of influences influence the direction of BMW Group automobiles. The main one being the increased social awareness of the popular supposition that is Global Warming. As a result of this many nations and manufacturers re imposing, whether voluntarily or as a lawful requirement, goals of reducing emissions. This is done through setting soft touchs and can be sooner costly in most cases being where the majority of look and development funds are spent.In the case of BMW Group, this is accreditedly so. The quest for mor e economical engines is ongoing, and can also be attributed to the other major ecological factor the growing scarcity of natural resources. The natural resource whose scarcity affects motorists globally is crude oil. There are socio-cultural factors at work, also. BMW uses positioning to reach certain target markets. As such, a lot of their vehicles are financially out of reach for demographics. Due to this, things such as median incomes and average office prices dictate where BMW outlets will be placed geographically.Also in the case of BMW Group, an image of exclusivity primarily exists, though more recently there has been an effort to make their products within reach of more people. This is being conducted by making smaller, more affordable cars whilst retaining an image of prestige. In an industry such as the car industry, technology is the most influential force toward a company such as BMW Group. Technology is where a lot of manufacturers obtain their competitive advantage, and for BMW Group this is certainly the case.They invest vast sums of money into research and development in a bid to create more efficient engines with which they can struggle with other manufacturers and obtain a competitive advantage. This also applies on fronts such as undecomposedty of cars, durability of cars, and power of cars. With current market trends float towards efficiency being a high priority for most customers, this is something that plays an constitutional role in the strategic goals, plans, and implementation of plans of BMW Group. Economically, there are many forces that exert influence over BMW Group.Varying exchange rates are a primary factor, and have a direct impact upon sales within a given country, as they play a large role in determining whether or not a customer will buy a substitute good. BMW Group have a dodge in place to manage this known as hedging. mellow prices for raw materials such as steel and various alloy metals also play a part in determi ning corporate strategies, as does the volatility in the price of petrol in various countries in which BMW Group sells their goods. The legal factors are very similar to the aforementioned political factors, as they mostly include legislations to do with emissions and safety.There are other laws which falsify by degrees between countries in which BMW Group goods are produced. This mainly involves certain labor laws, such as minimum wage laws and occupational wellness and safety laws. BMW Group consider these forces and the elements of a SOOT when developing corporate strategies and implementing them. The firm devises ways in which they can manage this uncertainty, and minimize the number of turbulence they encounter spite being part of such a competitive and volatile industry. These will be covered in a later section of this report. 3.Strategic directions Especially in the high competitive market of the automobile industry a clear vision and mission bidding is important to hold t he internal and external stakeholder support on a high level (Hill, Jones, Galvan & Haddam 2007). As one of the worlds leading car manufacturer BUMS vision statement is nothing less than To be the leading provider of premium products and premium services for individual mobility. (BMW AAA, p. 180) To do that BMW sets its main focalization traditionally on sights quality standards and beaver possible service for its customers.BMW mission statement is embossed by sustainability and responsibility. In the centre stand the three Ors resources efficiency, luck minimization and genius. With resource addition the company tries to save nada by optimizing their current engines and providing rude(a) drive systems like hydrogen engines. The aim of the company is to use resources sparingly and efficiently (BMW 2005, p. L). To lead the company in prospering future for BMW it is important to recognize risk in an early bowlful and try to avoid them (BMW 2005).Reputation is especially for BM W as a company with a very high brand value important. So BMW deprivations to enhance the Companys reputation by acting responsibly towards employees and society(BMW 2005, p. L). Every individual of the BMW group is conjectural to maintain the sustainability of that three parts and everyone in the company should implement these objectives in the every days work life. Simultaneous BMW sees its staff as an important part on the way to reach its mission and provide its employees with best conditions and supports the professional and personal development (BMW 2005). Key strategies BMW has several strategies to survive in the strong competitive automobile market. One is the strategy of contrastiveiation (Hill, Jones, Galvan & Haddam 2007). Cars of BMW stand for quality and exclusivity. Customers are willing to pay more money for a BMW than for an equal car of another brand. BMW is able to create the awareness of differences in its consumers mind and satisfies its customers wants and needs at a very high level. The cars of BMW have an attractive and sportive design. In connection with the high price BMW underlines its circumstance as a premium brand.Furthermore BMW attracts through its sportive aspect and cerebrate on innovation especially younger people. Expensive marketing campaigns force that in an impressive way. The result is an extremely high brand recognition and attach of a large number of loyal customers all over the world. That unique position of BMW makes it difficult for competitors to take advantage of the market in the short and medium term. BMW follows a diversification strategy, too. It has three non- overlapping car brands and a motorcycle brand.They are able to use their high knowledge and engineering experiences for all three different car brands and rover there are several synergies between the car and the motorcycle production. Especially in the expensive development of engines both segments profit similarly and the total risk for the com pany is lowered down because the company is less vulnerable for unhoped economic or competitive changes (Hill, Jones, Galvan & Haddam 2007). As a third the chaw of profit is one of the major strategies of the company for the next years.BMW has to fight against fall sale numbers caused by the economic crisis. Therefore the firm has to find new ways to generate more earning to satisfy its shareholders. A logical consequence is to reduce costs and increase efficiency. BMW tries to do that by different methods and techniques (Hill, Jones, Galvan & Haddam 2007). 5. Strategic implementation In the centre of Bums strategic implementation stand the realization of strategic plan called Number ONE. BMW propose ii sets of goals and strategies one to lead BMW into 2012, one to lead BMW into 2020 (BMW 2007).At present, for the short worldwide. This is inclusive of all of their car brands, Mini and Rolls Royce. To do this they are increasing the variety in their model line-up. Also, for this short term, they re among the industry-leaders in adapting to new and different target markets, by producing cheaper, better quality cars which are accessible to a greater array of potential buyers. The other major short-term strategy to turn over this is to greater recession-proof their interests by engaging in hedging in the $ bottom of the inning (BMW 2007 Horntail 2009).The goals and strategies which BMW hopes to achieve by 2020 are much more ambitious, but no less achievable. They have adopted a less input, more produce ethos, and as such are aiming to cut cost-centers and save the targeted figure of 6 billion Euros. As part of this plan, that 6 billion Euros is earmarked to then be invested into research and development in order to gain a competitive advantage through greater efficiency of their products. Instruments like flexible work and shifts models make it possible to adjust the product capacity of each localize contemporary.The number of employees will be reduced nat urally without dismissals (BMW 2007 Horntail 2009 Hill, Jones, Galvan & Haddam 2007, p. 102). Because of the strong position of the Euro against the US Dollar in the last years BMW will increase the utilization of the placement in United States. Also the company want to profit of the well qualified but cheaper labor of China through extensions of productions placements in China. The movement to China means also shorter ways to the new growing market and using of cheaper local suppliers, which moreover reduces the costs further (BMW 2009).High investments in marketing are an important element in the strategic implementation of the BMW Group as well (BMW 2009). The high marketing compute attends to save its main competitive advantage the high brand recognition. The concept of the ultimate driving machine creates an emotional connection to customers world wide. thereby BMW goes within its marketing strategy not the easiest way and make the similar advertisements and marketing campai gns all over the world. The BMW Group analyses the specific customer groups of each region and try to listen and respond to the customers.Whereas people in America still want big engines in their cars, the environmental aspects in europium getting more important. So BMW not only offers the same cars with different engines, also its marketing strategies for America, Europe and Asia are different. BMW controlled its distribution network more than most of its competitors. The results are again benefits for brand management. The company has the reputation to be near its customers. The brand BMW stand not only for quality, also service is linked with BMW. So the after sales service is another important part of the strategic implementation.The people should see that the company cares about them also after the buying which is in important fact in binding the customers as well (BMW 2009). Finally BMW will fulfill the new century dioxide regularities of the different governments. That means also a reaction of a ever-changing of the customer wishes and a conformance to the companies mission BMW2009). 6. Key strategic implementation issues 0 Raising competition Environmental issues Global recession Changes in demand The external environment is a major contributor to this in the form of cut-throat competition, which is rife throughout the automotive industry.BMW dont have brand cannibalism to nettle about, but the existence of suitable alternative goods which may also bring up to potential buyers (Hill, Jones, Galvan & Haddam 2007). Another mainstay issue is those faced by the research and development department. Competitors wish to achieve the same outcome, for the same reasons, therefore BMW eave to remain competitive on a number of fronts (Hill, Jones, Galvan & Haddam 2007). This is also in keeping with having to work within the confines of various regulations.As they are the manufacturer of automobiles they must(prenominal) adhere to environmental and safety regu lations in all the countries in which their goods are sold, and, due to globalization, this counts for the vast majority of nation states (Hill, 7. Evaluation of strategy The strategy of differentiation is important for a brand like BMW which do not serve the whole market. There are a few competitors in the premium segment of the automobile market and BMW has to do a high effort to keep its position and reputation in the long run. But BMW has to be careful.The company invests a lot of money in research and development. That could keep the danger that competitors imitate Bums new products and inventions faster than the company can take real advantages of its investments. The high brand recognition is surely safe for the short and middle distance but in the long run BMW has to maintain its competitive advantage. Because of its relative small size in parity with its main competitors tragic alliances will probably become a key position in BMW future strategic direction to achieve econo mies of subdue and finally high profit margins.This is also a good contingency to reduce the costs of research and development and to realize especially cost intensive big innovations like the development of new engines for example the galvanising or hydrogen technologies. 8. Conclusions BMW seems to be good prepared for the future. The strong brand image gives the company a unique position in the marketplace, which is quite an essential in such a high competitive business environment like the automobile industry. The key strategy Differentiation kit and caboodle and the strategy plan for the next years Number ONE shows a sustainable and moreover feasible concept which should be successful.