BMW Group operates in the market Australia. Strategic plan report


Project Report, 2018
40 Pages, Grade: 1,0

Excerpt

Contents page

1 Introduction

2 Background of BMW

3 Methods

4 Analysis of strategy/position
4.1 Mission and vision
4.2 Goals and objectives
4.3 SWOT-Analysis
4.3.1 Strengths
4.3.2 Weaknesses
4.3.3 Opportunities
4.3.4 Threats
4.4 PESTLE-Analysis
4.4.1 Political environment
4.4.2 Economic Environment
4.4.3 Social environment
4.4.4 Technological environment
4.4.5 Legal environment
4.4.6 Environmental

5 Additional information
5.1 Leadership
5.2 Financial performance
5.2.1 Share price
5.3 Portfolio Analysis approach
5.4 Positioning

6 Recommendations
6.1 Business level strategies
6.1.1 Generic Strategy
6.1.2 Product Life Cycle
6.2 Corporate level strategies
6.2.1 Vertical integration
6.2.2 Horizontal integration
6.3 Network level strategies
6.3.1 Joint Venture
6.3.2 BMW’s subsidiaries

References

1 Introduction

This strategic plan report will analyse the strategy and the competitive environ­ment of BMW. More specifically, the research question is: ‘How does BMW operate in the Australian market?’ Thereby, the focus for this research is the brand BMW. Background information about the company and their products is described in the second chapter. The research methods are presented in the third chapter of this report, which clarify how the information for this paper was obtained.

To analyse the strategy of BMW in Australia, it is necessary to examine the internal environment, task environment and the external environment. The an­alytical tools SWOT and Pestle were already described in the first assessment and are essential to chapter four in analysing the environment of BMW. This section also includes the past and the current strategy of the organization. Ad­ditional information is provided in the fifth section in this report and describes more facts about the company, which are not covered of in the SWOT and PESTLE analyses, in order to understand the organization better. The last chapter contains the recommendation for the company, which is split into three subchapters: the business level strategy, the corporate level strategy and the network level strategy.

2 Background of BMW

BMW is a car manufacturer from Germany, with its headquarters located in Munich, Bavaria. Its acronym stands for ‘Bayerische Motoren Werke’ (BMW Group 2017, p. 30), and its operations include the automobile, motorcycle and financial services (BMW 2017b).

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Figure 1: Brands of BMW (Author’s own 2018, unpublished).

BMW also produces the brands MINI, Rolls-Royce and BMW Motorcycles (BMW 2017b). The company’s legal structure is comprised of BMW AG (Ger­man corporation) as the parent company and BMW Group as the subsidiary company (BMW Group 2017, p. 30). In general, the firm employs approxi­mately 130 000 employees globally (BMW 2017a). Furthermore, BMW see themselves as the world’s leading premium manufacturer of both automobiles and motorcycles. Moreover, the company produce their cars in over 30 coun­tries and sell to over 140 different countries across the world (BMW 2017a). The result of this is that the organization delivered over 2 463 500 cars to their customers in the last five years (BMW 2017a).

Abbildung in dieser Leseprobe nicht enthalten

Figure 2: BMW Group deliveries of automobiles (BMW Group 2017).

The focus of this report is the strategic plan of BMW since it is the biggest brand of the parent company, BMW AG. In addition, the financial services of­fered to partners and customers also add to the company’s value offering (BMW 2017b). The firm is a profit organization, which means that the com­pany’s target is to maximize money and be profitable.

The most important markets for BMW are China, United States, Germany and United Kingdom; Australia is not included (Statista 2018a). More information about key markets can be found in the ‘additional information’ section of chap­ter five.

BMW has operated in Australia since 1979 under the subsidiary of BMW Aus­tralia ltd, with the BMW Group office in Melbourne and the BW Group Financial Services located in Sydney (BMW Au 2018).

BMW’s revenue for the past five years shows constant growth for automobiles and other sectors of their brands (BMW Group 2017, p. 5).

Abbildung in dieser Leseprobe nicht enthalten

Figure 3: BMW Group revenues (BMW Group 2017).

3 Methods

This section explains how the information and data presented in this report was obtained.

Some information was only available on the organization’s website or in their reports. The first research I did was on the company’s website and in their reports since this information is current, reliable and credible.

In general, facts and figures are better to research via company websites or reports, but often they do not publish this data. Statistics from websites such as ‘Statista’ are useful, because they give a brief overview and they are easy to find. Moreover, often they also compare and compile data from different companies in the same industry.

Articles may be appropriate for collecting different information and perspec­tives. The knowledge contained in books might be older and thus not as cur­rent, compared to that presented through articles, which are released more often.

Finally, in this case, additional information was also obtained from personal experience as I worked for BMW in Germany.

4 Analysis of strategy/position

In this chapter the current and the past strategies of BMW will be analysed. First, the mission, vision, goals and objectives of BMW will be described in the subchapters 4.1 and 4.2, as these are the basic tenets of the company’s strat­egy. Afterwards the organization’s strengths, weaknesses, opportunities and threats will be illustrated and described. The external environment affecting the firm will be outlined in the subchapter 4.4.

4.1 Mission and vision

The mission of BMW is to become ‘the world’s leading manufacturer of pre­mium automobiles and motorcycles, and provider of premium financial and mobility services’ (BMW 2017a). The company’s vision is contained in the statement: ‘we are number ONE. We inspire people on the move: We shape tomorrow’s individual premium mobility’ (BMW 2017c). The mission and vision are held by the company in general and do not relate to a specific market.

These statements are targets for BMW and aim to create a better value prop­osition for the stakeholders of the company. Organizations with specific state­ments operate more effectively than those that have not formulated a mission or a vision (Bart Baetz and Kenneth 1998). For this reason, it would be useful for BMW to have specific targets for the Australian market, but they are yet to formulate any.

4.2 Goals and objectives

In 2017 the general goals of BMW were to occupy the leading position in the luxury segment, by launching new models such as the BMW 8 Series, BMW X7 and Rolls-Royce Phantom (BMW Group, p. 21). Furthermore, the firm aimed to be the market leader in the use of renewable energy for their produc­tion and throughout their value chain. In 2016, BMW used in the production sixty-one percent on renewable energy. One year later this figure increased to eighty-one percent (BMW Group 2017, p. 34). This example shows that it is essential for a company to define its goals in order to reach them. In addition, it is also important that the goals and objectives are linked together. BMW’s goal was to increase its usage of renewable energy and its objective could have been to reach the measurable figures between 2016 and 2017.

Another goal in 2017, and currently for 2018, was for BMW to increase its range of car models. This meant that they developed and launched new mod­els into the market, such as the BMW i8 Roadster or the BMW Z4 (BMW Group 2017, p. 21). The objective here could be for the company to produce a certain number of cars for these new models.

One objective of the firm is to reach the target of half a million BMW and MINI cars driving on the road by the end of 2019 (BMW Group 2017, p. 21).

Another strategic objective of BMW is to optimise the range of energy effi­ciency for their automobiles and motorcycles (BMW 2017, p. 32).

Additionally, it is an objective of management to ensure the company’s long­term success so that shareholders receive attractive returns (BMW 2017, p. 156).

All these objectives are measurable, quantifiable and defined clearly, which will further enable the firm to reach its targets.

Finally, BMW has not formulated specific goals and objectives for the Austral­ian market. A reason for this may be that the relative goals and are already included in the company’s general goals, such as, increasing the number of its cars on the streets.

4.3 SWOT-Analysis

The following illustrates the SWOT analysis for BMW.

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- Different product portfolio

Figure 4: SWOT - analysis (BMW Group Investor Factbook 2017).

4.3.1 Strengths

The first strength is that they offer a large Financial Service segment, which provides customers with possibilities for different financial and insurance solu­tions. This service allows BMW to generate a competitive advantage over its market rivals. However, this strength can be also a weakness for the company when mistakes occur. This issue will be described in the ‘weaknesses’ section of this chapter.

BMW’s brand image and reputable company name are also strengths. A strong brand image can encourage customer loyalty and is important for gaining suc­cess in different markets such as in Australia (Dudovskiy 2016).

Another strength of BMW is its digitalisation of programs like DriveNow, ChargeNow and ParkNow, which are already operating in some German cities. In the future this technology could also be used in the Australian market.

Furthermore, a diverse product range allows BMW to cater to various customer requirements. For instance, its SUV vehicles are especially well received in Australia (Gratton 2017). Sales figures from 2017 indicate that BMW fulfils cus­tomer requirements, as its SUV, Medium SUV and Large SUV all rank within the top three car brands for Australia (Costello 2018).

4.3.2 Weaknesses

A weakness for BMW is the price of its vehicles in comparison to its competi­tors prices. Competitors include not only those in direct competition, such as Mercedes-Benz or Audi, but also car manufacturer outside of the ‘premium’ sector (DeMattia 2017). In Australia companies like Holden or Toyota have cheaper prices while offering high quality vehicles.

Between 2011 and 2016 BMW mistakenly gave credit to approximately 15 000 customers who could not afford the repayments. The consequences were sub­stantial; the organization had to pay back 72 million dollars to these buyers as well as giving five million dollars to a ‘community benefit fund’ (Bachelard 2016). This weakened BMW’s brand image and reputation, which affected the company’s sales figures.

Another weakness of BMW in the Australian market is their history of faulty airbags. They had to recall the air bags of four different BMW series, affecting approximately two million cars in Australia (Park 2018). This mistake also af­fected the image and the reputation of BMW.

4.3.3 Opportunities

A strength of BMW is the excellent quality of their products and services. How­ever, the company has recently made some mistakes in the Australian market. These mistakes may present BMW with an opportunity to improve vehicle qual­ity and customer satisfaction with its services.

Hybrid and electric vehicles may also present opportunity in the Australian market for BMW, where high petrol prices are encouraging people to use other transportation modes to travel the large distances between cities (Delbosc 2015; BITRE 2016, p. 4).

A general opportunity for BMW is the possibility of collaborating with other car manufacturers, such as Toyota, to share knowledge and save on Research and Development costs.

4.3.4 Threats

Substitute products may pose a threat for BMW in a long-term. Public transport in Australia is good, especially in cities where people use it more. Yet the car is still the most popular transportation mode in Australia, used by 80 per cent of the population (BITRE 2016, p. 4). Uber is increasingly popular in Australia, but is rarely used by individuals on a daily basis.

A problem for BMW might be the number of different competitors in the market who have cheaper prices comparatively. However, Mercedes-Benz and Audi are the biggest threats because they are the direct competitors of BMW.

The weakness with the air bags and the mistakes in the financial department of BMW Australia may also be a long-term threat. Possible damage to the brand image and reputation is high, especially when customers are inade­quately protected by the vehicle or are dishonest with their financial history. The high prices for the original materials used in vehicle production are also a threat for the company. As a result, BMW may raise their prices in Australia, passing on these costs to the consumer.

4.4 PESTLE-Analysis

The PESTLE analysis is a method used to investigate the effects of the exter­nal environment on the organization. When one external factor changes, it may cause changes to the other factors. This chapter is divided into six sub-chap­ters, the content of which are summarised by the following.

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Details

Title
BMW Group operates in the market Australia. Strategic plan report
College
University of South Australia
Grade
1,0
Author
Year
2018
Pages
40
Catalog Number
V496622
ISBN (eBook)
9783346014337
Language
English
Tags
group, australia, strategic
Quote paper
Tobias Rohringer (Author), 2018, BMW Group operates in the market Australia. Strategic plan report, Munich, GRIN Verlag, https://www.grin.com/document/496622

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