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BMW Strategic Management
The Car Manufacturing Industry
Research has proven with time that the most creative and efficient labor force in this globe of conventional production has come from both Japan and Germany who lead the world in creative initiatives. Moreover, studies have also shown that the reason for these two countries being highly productive is because they follow their cultural heritage. There are only few luxurious brands in the car industry that even an infant recognizes and hence there are a few factors that need to be taken it into account when recognizing the strong and continue existence of BMW group in this heavily competed industry (Rothacher, 2004). Hence, the following trends visible were very visible in the growth of luxurious car brands in Germany and Japan. Understanding these trends could help others brands and products to establish their footing as well:
At the time of company's establishment it was very important to make decisions regarding the production plant along with all the additional parts and tools that are located in trendy and acceptable markets all over the world. This was so because any wrong decision regarding these issues may have lead to failure in making a favorable image and the company may have incurred lesser profits (Rothacher, 2004).
2. Moreover, company's top management started searching for the most efficient people and after recruitment started hiring the best workforce who fit in their aim of producing faultless and high value products. Researchers have shown that's these conditions were extraordinarily fulfilled by both Germany and Japan (Rothacher, 2004).
3. In addition another very important variable is deciding the name of the brand. Researches prove that the quality and the brand of the car suits the suggested name. But studies have also proven that this variable may not a very important feature in making revenues for the short-term but it will most likely benefit it in long run. In this competition of producing most efficient cars in the world, Germany ranked first whereas Japan is at 2nd rank (Rothacher, 2004).
4. The image of the country is very important. Country should maintain its good image in the mind of other nations so that consumers respect the company of origin and because Japan was not very efficient in building its positive image as Germany so it did lag behind initially. However, numerous historical factors have shaped and altered Japan's negative image (Rothacher, 2004).
5. Countries in the luxurious brand industry can also create good perception in the minds of other nations by maintaining good relationships with their neighboring countries. There is a chance of superfluous hostility among the regional economies and Germany understood that. This is primarily why Germany sought to help developing countries as it is operating as highly integrated economy on its own; this further helps Germany in retaining its positive image in Asian countries as well as in Europe and the Americas more so then any other country as well as Japan -- its top competitor (Rothacher, 2004).
Germany has three major and most popular brands who take part in mass production of luxury cars i.e. BMW, AG and Mercedes Benz. BMW rules the market share among all these three companies because of their effective strategies where as Mercedes and AG have lost their market share because of the premeditated blunders. The purpose of this paper is actually to analyze the impacts of internal environment and external environment has on the decision making process of the top management of the BMW group of companies (Rothacher, 2004).
Moreover, we will focus on how much influence does the external environment has on the BMW's internal organization's structure by analyzing the growth trends in the company using SWOT and Porter Five Forces model. We will also analyze its overall market share and brand position in the world today.
BMW's Business Endeavors:
BMW proves over and over again that they are one of the best companies when it comes to the production of luxurious, successful and high-quality cars in the world. The head office of this company is sited in Munich, a German city. The primary functions of the company include production, distribution and the marketing of their luxurious brands like Sedans, Convertibles and Coupes as well as various brands of motorcycles (Radinger and Schik, 1996). BMW operates and invests in three diverse industrial environments:
2. Motorcycles and
3. Financial Services
Following are few most influential and prominent persons in BMW who are responsible for decision making over the years:
1. The administrator of the Board of Management for BMW AG, Dr. Helmut Panke
2. The Director for HR and IR (Industrial Relations), Mr. Ernst Baumann
3. The director for Sales and Marketing at BMW, Dr. Michael Ganal
4. The Development Manager, Prof. Dr. Ing. Burkhard Goschel
5. The Director of Finance, Stefan Krause
6. The Production Manager, Dr. Ing. Norbert Reithofer
BMW -- Competitor Analysis:
Mercedes group is the top competitor of BMW in market of luxury cars. This is similar with the respect to both the American and the European market. But when we talk about Western Europe, there are some more competitors that include Volkswagen famous for Audi, Bentley, Fiat's famous for Ferrari, Alfa Romeo, Lanica and Maserati. In same manner Ford is also in the list with Land Rover, Jaguar, Volvo and Aston Martin that adds more toughness in the rivalry for the most valued luxurious car brand in Western Europe. More competitors include Porsche, Toyota, General Motors (with cars like Opel, Saab, and Vauxhall) and Renault (Pavelec, 2007; Kiley, 2004).
When we talk about Unites States, the major competition of BMW is with the Lincoln brand from Ford; VW -- Bentley and Volkswagen's Audi; Porsche; Lexus from Toyota and General Motors are also in the list with its Cadillac and Saab. Also, it can be clearly identified that the principal opponent of luxurious Rolls-Royce brand from BMW are Maybach and Bentley Sedans produced by DaimlerChrysler (Pavelec, 2007).
The following chart is drawn under micro approach and shows the trend of comparison of Coupe from BMW 1 series with its rivals.
If one analyzed the present trend of economy in society today it would be safe to say that the high level of inflation and increasing unemployment should impact the luxury car producers as well. But, nonetheless, BMW manages to stay on safer side this economic breakdown and shows good progress in sales which simultaneously increases the level of profits. This makes the board members of BMW think and plan on continuing the overall investment rates in luxurious cars as they believe that the market will eventually puff up and they can get more profits easily while increasing the degree of growth and market share. Moreover, BMW is looking for potential markets so that they can increase their control and production. With this they are also working on financial aspects and are trying to improve the share value in existing market (Kiley, 2004).
The company wants to be on the same trend of earnings in 2011 as compared to their standings in 2010. They have to think about new strategies though if they aim to maintain the same level of sales because of the increase in steel prices and decreasing value of dollar which they have to face in 2011. Nevertheless the BMW Group of Companies has exhibited its satisfaction from all brands as there is an increasing trend of improved sales of all its brands. Moreover BM also plans to introduce introducing new cars once they catch up with their production resources. Company can face offshoot risks with this approach because of, as aforementioned, the external factors that include higher prices of steel and decreasing value of dollar. This approach however does show a positive demeanor from the company as it shows that the company is ready to face the problems with change and artistry as its identifying characteristics (Kiley, 2004).
BMW has its branches out of its homeland Germany and also has various assemble plants worldwide which are more accurately presented in following table (Alan, 2005):
Hams Hall Plant
BMW Brilliance Automotive Ltd., Shenyang (joint venture with Brilliance China Automotive Holdings)
TRITEC Motors Ltda, Curitiba (joint venture with DaimlerChrysler)
This section relates to the points related to the potential Strength, Weaknesses, Opportunities and Threats of BMW. All of these have been gathered from the study conducted by Kiley (2004) as well as from the BMW Annual Reports from the years 2004, 2005 and 2006.
Esteem and Renowned brand name is one of the major strengths of BMW group. BMW can easily be identified by its high quality products of automobiles. It's a multi-brand company recognized worldwide by its name, in spite of its initial production patterns, which tended to be towards the production of high degree luxurious cars. This can be justified…[continue]
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