ABSTRACT & CONCLUSION
The current recession, arising from a real estate crisis in the US and followed by a global financial crisis, has affected industries differently around the world. The automotive industry decreased by 15% globally in production of cars and light commercial vehicles (VDA, 2009) as result of the downturn. Lot of companies were supported by the government directly or indirectly. Obsolete structure of the industry and high overcapacity are the main problems. The assessment in this paper examines and evaluates the global impact of the downturn on the automotive industry and how the industries have reacted.
BMW, one of the ten largest car manufacturers worldwide, operates experienced a 10.4% loss in sales in relating to the previous year as result of the recession and decrease in demand in the automotive industry. The reaction to it was for example less investment in to R&D and redundancies. Almost all resources, capabilities and competitiveness of BMW were concerned. The extent to which the downturn affected those will be examined and evaluated in the second part of this paper.
The most important future trends in the automotive industry will be “green technology” and “changing in customers demand”. Capacity optimization will be important to win the competition. BMW is recommended to penetrate the market with its successful products and to invest in R&D to follow and setting industry trends. The third part of this paper provides perspectives and recommendation for the industry and provides strategy recommendations for BMW.
ABOUT THE AUTHOR
Markus B. Baum, MBA
Markus Baum is Group Finance Director at a management consulting firm with focus on business strategy, supply chain management (SCM), manufacturing & logistics, sourcing & purchasing, marketing & sales, financial management and information technology (IT-strategy). The company has subsidiaries in Germany, Switzerland, Belgian, France, United Kingdom and Russia.
Markus Baum earned a MBA with distinction from the University of Surrey (UK), is an international certified accountant, has and graduation in accounting & controlling and an apprenticeship as tax adviser assistant. Markus Baum is a member of the International Controlling Association.
Table of Contents
1 Abstract & Conclusion
2 Industry examination and evaluation
2.1 The global downturn – summary of the important events
2.2 Impact onto the automotive industry - PESTEL Analysis
2.3 Reaction of the automotive industry – Porter’s five forces
3 Company examination and evaluation
3.1 BMW AG – company profile and current performance - SWOT Analysis
3.2 Impact of the global downturn onto the company
3.2.1 Value chain analysis
3.2.2 Impact on resources, strategic capabilities and competitiveness
4 Recommendation
4.1 Perspective and recommendations for the automotive industry
4.2 Evaluation of strategic directions and recommendations for BMW
4.2.1 Portfolio screen - McKinsey Matrix
4.2.2 Product and market growth strategy - Ansoff’s Product-Market Growth Matrix
Research Objectives and Core Themes
This paper examines and evaluates the global impact of the economic downturn, triggered by the US real estate crisis, on the automotive industry and analyzes how key players, specifically BMW, have responded to these challenges through strategic adjustments.
- Analysis of the global downturn's development from 2006 to 2010.
- Macro-environmental assessment of the automotive sector using the PESTEL framework.
- Evaluation of industry competitive dynamics via Porter's Five Forces.
- Strategic review of BMW AG performance and value chain during the recession.
- Formulation of recommendations based on McKinsey and Ansoff matrix methodologies.
Excerpt from the Book
2.2 Impact onto the automotive industry - PESTEL Analysis
The global downturn has had a significant impact on the automotive industry. The slack period for consumption (see Chapter 2.1) led to a fall in demand for cars and placed the automotive industry in a difficult position. To fully evaluate the impact, it is critical to understand all the factors that influence the industry. The following evaluation is based on the PESTEL method, which scans the macro environment factors political, economic, social, technological, ecological and legal. The evaluation is limited to factors that are specifically important for the automotive industry in relation to the impact of the global downturn. The direct impact is described after each factor.
Summary of Chapters
1 Abstract & Conclusion: Provides an overview of the global economic recession's impact on the automotive industry and summarizes the paper's focus on industry reaction and corporate strategies.
2 Industry examination and evaluation: Analyzes the roots of the financial crisis and utilizes PESTEL and Porter’s Five Forces models to evaluate the external environment and competitive pressures within the automotive sector.
3 Company examination and evaluation: Offers a deep dive into BMW AG's profile and performance, utilizing SWOT analysis and value chain modeling to assess the impact of the downturn on specific resources and capabilities.
4 Recommendation: Proposes strategic directions for both the wider automotive industry and specifically for BMW, employing the McKinsey Matrix and Ansoff’s Product-Market Growth Matrix for future guidance.
Keywords
industry examination, global downturn, automotive industry, PESTEL, SWOT analysis, value chain analysis, strategic capabilities, competitiveness, strategic directions, portfolio screen, McKinsey matrix, Ansoff’s Product-Market Growth Matrix, BMW, strategic management, financial crisis
Frequently Asked Questions
What is the primary focus of this research paper?
The paper focuses on the global economic downturn and its specific consequences for the automotive industry, as well as the strategic reactions of major manufacturers like BMW.
What are the central themes discussed in this work?
The work covers macro-environmental factors, competitive industry forces, corporate value chain analysis, and strategic recommendations for long-term growth amidst economic uncertainty.
What is the primary research goal?
The goal is to examine the global impact of the recent recession on car production and sales, and to provide actionable strategic recommendations for BMW to improve its competitive positioning.
Which scientific methods are applied for the analysis?
The author employs established management frameworks including PESTEL analysis, Porter's Five Forces, SWOT analysis, the McKinsey Portfolio Matrix, and the Ansoff Product-Market Growth Matrix.
What is covered in the main body of the text?
The main body contains a detailed examination of the global downturn, an industry-wide PESTEL analysis, a company-specific analysis of BMW using value chain modeling, and comprehensive strategic recommendations.
Which keywords best characterize the research?
Key terms include global downturn, automotive industry, PESTEL, SWOT, value chain, strategic capabilities, competitiveness, McKinsey matrix, and Ansoff's matrix.
Why did the automotive industry suffer so heavily during the 2008-2009 period?
The industry faced a significant demand shock due to the global financial crisis, which resulted in reduced household consumption, limited access to credit (credit crunch), and high levels of industrial overcapacity.
What role did governments play in supporting the automotive industry?
Governments introduced contra-cyclical measures such as vehicle scrapping programs, subsidized short-time work to protect employment, and tax relief packages to stabilize the industry.
How is BMW recommended to adapt its product portfolio?
BMW is advised to protect its market leadership in the 3-Series, invest in the growing small car segment (MINI), and balance mature market declines by expanding its sales network in emerging BRIC economies.
- Citation du texte
- Markus Baum (Auteur), 2010, Strategic Management in a Global Context impact of the downturn, Munich, GRIN Verlag, https://www.grin.com/document/193817
