BMW – the Bavarian based luxury car producer is seen as one of the most prestigious, stable and admired companies in the world. By 2008 the company sold 1.2 million automobiles under its largest brand – the BMW. In 2001 it very successfully launched the new Mini which is the only brand kept after the failed acquisition of the Rover group with sales rising to over 230 thousand in 2008. In 2003 Rolls Royce was added to BMW’s portfolio and sold 1,212 units in 2008 – an increase of 53% compared to 2004 (BMW Annual Report 2008, pp6-7). The company has not only one of the strongest brands worldwide and exclusively high profit margins of 8 – 10% but since 2007 it has been the world's top seller in the premium class (Hawranek, 2008).
In the last 50 years BMW has built a powerful brand image and distinctive competitive advantage. However, with rising fuel prices and climate change BMW will have to work hard to develop an environmentally-friendly car that still supports the values that the company has been standing for.
Despite the fact that recent recession has hit hard the luxury market BMW considers itself in fundamentally good shape as it began preparing for a downturn in early 2008 (Ewing, 2009). However, there are no reliable predictions on how long the crises will last and how the automobile industry will develop in the future but the direction BMW has to work to is certainly clear – to a greener, more environmentally-friendly Beemer.
Table of Contents
- 1. INTRODUCTION
- 2. AUTOMOBILES MARKET IN THE 2000S
- 2.1. GENERAL OVERVIEW
- 2.2. ENVIRONMENTAL ANALYSIS
- 2.3. COMPETITIVE FORCES IN AUTOMOBILE INDUSTRY
- 3. The threat of potential entrants
- 4. The power of buyers
- 5. The power of suppliers
Objectives and Key Themes
This text analyzes the position of BMW in the global automobile market during the 2000s. It examines the market environment, competitive forces, and strategic challenges faced by BMW and other premium car manufacturers. The analysis uses frameworks like PESTEL and Porter's Five Forces to understand the dynamics of the industry.
- The competitive landscape of the global automobile market in the 2000s
- The impact of environmental factors (PESTEL) on the automobile industry
- Analysis of Porter's Five Forces within the context of the automobile industry
- The strategic challenges faced by premium car manufacturers like BMW
- The role of brand building and differentiation in a competitive market
Chapter Summaries
1. INTRODUCTION: This introductory chapter sets the stage by highlighting BMW's prestigious position and significant market share within the luxury car segment by 2008. It introduces the company's successful brands (BMW, Mini, Rolls Royce) and their market performance, establishing the context for the subsequent analysis of the automobile market dynamics and the competitive environment in which BMW operates.
2. AUTOMOBILES MARKET IN THE 2000S: This chapter provides a broad overview of the automobile market in the 2000s, characterized by maturity, intense competition, and rapid change. It divides the market into major geographic regions and highlights the emergence of new markets with diverse customer preferences. The chapter analyzes industry consolidation through mergers and acquisitions, increased cooperation between manufacturers and suppliers (outsourcing, modularization), and the resulting challenges of low product differentiation and price competition. The rise of build-to-order sales and improved customer service are also discussed as significant trends. The chapter sets the foundation for the deeper dives into environmental and competitive analyses that follow.
2.1. GENERAL OVERVIEW: This section dives into the general overview of the car market in the 21st century, highlighting its maturity, competitiveness, and dynamism. The global nature of the industry is discussed, focusing on the three major regions (USA, Japan, and Western Europe) accounting for the majority of sales and output. The rise of new markets like China is acknowledged, while the importance of regional differences in wealth and customer preferences is emphasized. This sets the context for the later discussion of challenges faced by car manufacturers, including intense competition, leading to industry consolidation, increased cooperation with suppliers, and similar product standards. The rise of build-to-order and improved customer service is discussed as a result of changing customer demands. The section concludes by pointing out the shift towards product design, marketing, and brand building as key competitive advantages in the face of price pressure.
2.2. ENVIRONMENTAL ANALYSIS: This section utilizes a PESTEL framework to analyze the external environment impacting the automobile industry. It examines ecological concerns (pollution, climate change, resource depletion), economic volatility (sensitivity to price and income, impact of recessions), political and legal regulations (emission standards, taxes, congestion charges), technological advancements (new materials, engine technologies, alternative fuels), and social shifts (changing customer preferences, increasing awareness of environmental and social issues). The analysis highlights the challenges posed by fuel efficiency concerns, economic downturns, and evolving consumer preferences, emphasizing the need for car manufacturers to adapt their strategies.
2.3. COMPETITIVE FORCES IN AUTOMOBILE INDUSTRY: This section uses Porter's Five Forces framework to analyze competition within the automobile industry. It examines the threat of new entrants (high barriers to entry in the luxury segment, but potential challenges from emerging markets), the threat of substitutes (public transport, motorcycles, bicycles), the bargaining power of buyers (increased power due to product similarity), the bargaining power of suppliers (interdependency, but potential for supplier power in areas like steel and energy), and the intensity of rivalry among competitors (high rivalry in established markets, but opportunities for cooperation). The analysis highlights the importance of brand building and differentiation, particularly in the luxury segment.
Keywords
BMW, automobile industry, luxury cars, premium segment, competitive analysis, PESTEL analysis, Porter's Five Forces, brand building, market trends, economic factors, environmental regulations, technological innovation, customer preferences, supplier relationships, global competition.
BMW in the Global Automobile Market: Frequently Asked Questions
What is the main focus of this text?
This text analyzes BMW's position in the global automobile market during the 2000s. It examines the market environment, competitive forces, and strategic challenges faced by BMW and other premium car manufacturers, using frameworks like PESTEL and Porter's Five Forces.
What topics are covered in the Table of Contents?
The Table of Contents includes an introduction, an overview of the automobile market in the 2000s (including general overview, environmental analysis, and competitive forces), and sections dedicated to Porter's Five Forces, specifically addressing the threat of new entrants, buyer power, and supplier power.
What are the key objectives and themes of the analysis?
The analysis aims to understand the competitive landscape of the global automobile market in the 2000s, the impact of environmental factors (PESTEL), Porter's Five Forces within the automobile industry, the strategic challenges faced by premium manufacturers like BMW, and the role of brand building and differentiation.
What does the chapter on the Automobile Market in the 2000s cover?
This chapter provides a broad overview of the automobile market's maturity, intense competition, and rapid change in the 2000s. It covers market segmentation by geographic regions, industry consolidation, increased cooperation between manufacturers and suppliers, challenges of low product differentiation and price competition, the rise of build-to-order sales, and improved customer service.
How is the external environment of the automobile industry analyzed?
A PESTEL framework is used to analyze the external environment, examining ecological concerns, economic volatility, political and legal regulations, technological advancements, and social shifts. This highlights challenges posed by fuel efficiency, economic downturns, and evolving consumer preferences.
How is competition within the automobile industry analyzed?
Porter's Five Forces framework analyzes competition, examining the threat of new entrants, substitutes, buyer power, supplier power, and the intensity of rivalry. The analysis emphasizes the importance of brand building and differentiation, especially in the luxury segment.
What are the key takeaways from the chapter summaries?
The introduction establishes BMW's position and brands. The automobile market chapter details market dynamics and competition. The sub-chapters delve into general market overviews, PESTEL analysis of external factors, and the application of Porter's Five Forces to the industry. The analysis highlights the importance of adaptation, brand building, and strategic responses to market challenges.
What are the key words associated with this text?
Key words include BMW, automobile industry, luxury cars, premium segment, competitive analysis, PESTEL analysis, Porter's Five Forces, brand building, market trends, economic factors, environmental regulations, technological innovation, customer preferences, supplier relationships, and global competition.
- Quote paper
- Linda Vuskane (Author), 2010, BMW Business Strategy - An Overview, Munich, GRIN Verlag, https://www.grin.com/document/154650
