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. PREMIUM CAR SEGMENT
3.1. CRITICAL SUCCESS FACTORS
3.2. BMW’S STRATEGIC CAPABILITIES
Objectives & Core Topics
This work examines the strategic positioning of BMW within the highly competitive and evolving global luxury car market, analyzing how the company leverages its internal capabilities to maintain success amidst economic downturns and changing consumer demands.
- Analysis of global automotive market trends in the 2000s
- Evaluation of the external environment using the PESTEL framework
- Assessment of industry competition through Porter’s Five Forces
- Identification of critical success factors within the premium car segment
- Review of BMW’s specific strategic capabilities and operational management
Excerpt from the Book
2.1. GENERAL OVERVIEW
In the 21st century the car industry can be described as mature, highly competitive and very dynamic. Despite being considered as global, automobile industry constitutes of three major areas – USA, Japan and Western Europe which together accounts for 80% of total sales (Lynch, 2006, p698) as well as almost 90% of total output (Donnelly et. al., 2002, 31). New markets, such as China, South America and Eastern Europe are emerging; however, as Lynch points out (2006, p697) the level of wealth differs among the various regions leading to highly varying customer preferences which need to be considered when entering new markets.
As a result of the fierce competition, the structure of the car industry has been changing radically. Extensive consolidation through acquisitions, joint ventures and strategic alliances has been taking place. According to Lencioni (2005), in given circumstances taking into account the BMW’s size and product range the company was at risk of being taken over, however, it successfully managed to expand their product range through internal growth as well as acquisitions.
Increased cooperation could not only be found among car manufacturers but also with their suppliers. Wide-ranging 1st tier outsourcing, including R&D, modularization, and supplier parks were being commonly used in car industry (Jung and Lee, 2006). Furthermore by the 21st century the quality and technology of the cars had risen to similar standards. In addition, companies were increasingly using the same platforms and other components in different models in order to increase profitability. The consequences were that cars produced by different companies looked very similar and the low differentiation led to increased price competition. (Lencioni, 2005). In addition to that, overcapacity had also become a concern within the industry (Oliver and Holweg, 2008). As a result companies were lowering prices as well as offering incentives which, however, had negative influence on the profitability of the whole industry.
Summary of Chapters
1. INTRODUCTION: Provides an overview of BMW's market position, brand portfolio, and historical growth leading up to the late 2000s.
2. AUTOMOBILES MARKET IN THE 2000S: Analyzes the macro-economic environment, external pressures, and competitive forces affecting global automotive manufacturers.
3. PREMIUM CAR SEGMENT: Identifies essential success factors for luxury brands and assesses how BMW utilizes its internal capabilities to secure a sustainable competitive advantage.
Keywords
BMW, Automotive Industry, Premium Segment, PESTEL, Porter's Five Forces, Strategic Capabilities, Brand Positioning, Luxury Cars, Market Competition, Global Strategy, Innovation, Supply Chain, Economic Downturn, Customer Profiling, Corporate Strategy
Frequently Asked Questions
What is the primary focus of this publication?
The publication focuses on the strategic positioning of BMW and how the company navigates the challenges of the global automotive industry.
What are the central themes discussed?
Central themes include market competition, environmental and technological influences (PESTEL), brand management, and the internal operational strategies of luxury car manufacturers.
What is the core research goal?
The goal is to determine how BMW's specific internal strategic capabilities enable it to achieve sustainable long-term performance within the high-stakes luxury market.
Which scientific framework is utilized for the industry analysis?
The analysis employs the PESTEL framework for external environmental scanning and Porter’s Five Forces model to assess competitive dynamics.
What topics are covered in the main section?
The main section covers brand building, positioning, quality and innovation standards, dealer network management, engineering principles, and human resources strategies.
Which keywords best describe this research?
Key terms include BMW, Automotive Industry, Premium Segment, Brand Positioning, and Strategic Capabilities.
How does the recent recession impact the luxury car market as discussed in the text?
The text notes that while premium segments are often considered resilient, the recent economic downturn hit luxury manufacturers hard, leading to declining sales and a strategic shift toward fuel efficiency.
How does BMW address the challenge of "platform sharing"?
BMW emphasizes unique platforms and brand integrity rather than aggressive inter-brand platform sharing, which the author notes is often deemed inappropriate for luxury segments.
What role does the Quandt family play in BMW's strategy?
The long-term ownership by the Quandt family is credited with providing consistency, stability, and support for BMW’s strategic direction.
- Citar trabajo
- Linda Vuskane (Autor), 2010, BMW Business Strategy - An Overview, Múnich, GRIN Verlag, https://www.grin.com/document/154650
