BMW Corporate Strategy - Case Study Example

Corporate Strategy) Instructions Are there key substitute products or services for current products or services There are some substitute products for BMW. The competitors of BMW include other car models. One of its strongest competitors that has replaced BMW as the better car choice is Japan's Toyota. This Japanese company continues to literally gobble up its competitors car market segment in the United Kingdom and other European Union member countries is it Kaizen strategic management style. The imported Kaizen strategy is characterised by cars that are low priced, of high quality and efficiently produced. The Toyota mentality is also known as the continuous improvement of car production. Toyota has been acknowledged by many sectors of the United Kingdom and other European Union sectors as the bench marker in the automotive industry. Other car manufacturers are hurriedly trying to imitate the Toyota philosophy in their work place. The other car substitutes for BMW include Volkswagen, General Motors and Ford. These car manufacturers use the same parts in their car models and car brands(Larsson & Falkemark, 2006;5) . 2. What are they and how are they positioned relative to your BMW group products or services India's conglomerate TATA has bought the Jaguar from Ford company for one billion pounds. The Jaguar is expected to produce its new medium saloon, the XF, that was sold in Mar1 in the United Kingdom and on in April in the United States. The Jaguar had suffered a slump in sales by as much as forty five percent in the last month alone. This percentage data is translated to having only seven hundred fifty seven cars sold in January alone. The current Jaguar model is the S -type car. In fact, there had been over eight thousand orders for the XF jaguar model around the world. Even Tony Blair tested the XF model himself. The BMW brand also suffered a decline in sales in the same January period. There was a decline of eight percent decrease in sales for the same month of January alone. This is translated into only two thousand five hundred sixteen cars sold for the same thirty day period. The Japanese car, Toyota, which builds cars for prospective clients in Burnaston and Derby, UK had dropped by eleven percent to only eight thousand, four hundred eighty seven only. The Japanese car manufacturing company, Honda, has been producing its cars in Swindon, United Kingdom. Honda has suffered the same fate of declining sales because its sales had declined by two percent. This can be translated to actual sales of only seven thousand seven hundred units. Another Japanese car company, Nissan, has been increasing its car sales. Nissan was able to sell many of its Qashqai model introducing an increase of thirty percent. This can be translated to four thousand six hundred sixty -six new Nissan Qasqui model ("UK Car Industry Cuts," 2008, p. 22). The 2006 year ended with BMW only generating 5.4 percent of the entire car market. the Volkswagen group generated twenty percent of the car market. The average Japanese OEMs gathered a big thirteen and fifty /100 percent of the car market. Meanwhile, Daimler only got a smaller six and 2/10 percent of the market. Renault had gathered eight and 6/10 percentx. Daimler is one of the major competitors of BMW. This company focuses on highly salable products in the car market segments that include mid -size, luxury and sports utility vehicles. Another strong competitor of BMW is the German car manufacturing company called Audi. Audi is a subsidiary car company called Volkswagen. Audi focuses on the very lucrative luxury and high performance car market segment (BMW:207 company profile edition 3: Competitor analysis,2007;p.7). 3.What are the key competencies required in the BMW group industry BMW has many key competencies. The company has been able to develop a new petrol engine family in a joint cooperation project. These engines are used in future models of its MINI cars. This was possible with the help of Matts Carlson's scientific mind. BMW has also turned down the cooperation efforts of another European Union member. Another BMW competency is that it can afford to enter any business relations with its car manufacturing competitor including the Rover car brands. However, the company, BMW, has the competency to enter into business partnerships with hybrid car manufacturers like General Motors or simply GM. The company, Daimler -Chrysler is also another good hybrid company for BMW to enter into a business alliance in the car industry ("BMW and Mini Sales" 2002, 15). The company's competency is enshrined in its corporate strategy "Identifying potential and encouraging growth. Knowing what we represent. Recognising where our strengths lie and making the best use of every opportunity. Following a clear strategy. Goals we have attained are in essence the point of departure for new challenges. This shows that BMW's competencies are centered on recognising the company's strengths and making the best of every opportunity in order to increase the company's market share(Larsson & Falkemark,2006;p.24). 3. What key resources are required in the BMW industry The key resources of the BMW industry include its emphasis of obeying environmental laws. The clean vehicle initiative is now a reality as companies are in favor of a clean vehicle society. In fact, Clean tech are like politicians who make strange bedfellows. General Motors and Toyota are combining forces with ExxonMobil to produce a clean hydrocarbon fuel in the short to medium term time table. In this regard, many people from many cars manufacturers like Buick and BMW are entertaining the plans to mass produce the upcoming hybrid o fuel -cell vehicles. This move would indeed place smaller firms making clean -tech engine components at the same footing as the other investors (Makower, and Pernick 2001, 8). 4. Average rough growth rates and profitability of firms in the industry is....... The company has been increasing its car deliveries that translate to sales for the period 2001 to 2005 alone. The 2001 BMW car deliveries amounted to 985.7 thousand deliveries. The deliveries of BM cars amounted to 1,0577.3 thousand in 2002. The deliveries of BM cars amounted to 1,104.9 thousand in 2003. The deliveries of BM cars amounted to 1,208.7 thousand in 2004. The deliveries of BM cars amounted to 1,328.0 thousand in 2005. This shows that BMW has a very significant improvement in its sales during the period 2001 to 2005 alone. Its Rolls Royce had increased by more than 0.50 percent(Larsson & Falkemark, 2006, 23). 5. Plot or map the BMW industry forces (E.g. using force field analysis, 5 force model, force model or any other model you choose) showing the major external environmental forces operating in BMW. BMW influences the public to buy its cars by using different forces. BMW drives the public to buy its cars by advertising that their cars are symbols of luxury. Thus, sales had increased because the company concentrated all its resources on getting a large share of the luxury car market segment. The external forces operating BMW are the customers, the suppliers, the community, the government regulating agencies (in charge of environmental and other statute implementation), the capacity of the public to pay the cars (Elkin 1998, 69). Look at each force and define it as an opportunity or a threat. Define any offensive or defensive strategies. 6. Answer the following: a. Is the BMW industry attractive or destructive Does the firm want to stay in the industry in which they are competing Why The BMW industry is attractive. The firm wants to stay in the industry because it has been increasing its car deliveries. the discussion above on the car deliveries shows that the company is increasing its sales for the period 2001 to 2005. Thus, the company should continuing pooling all its resources together to keep its increasing sales trends on track. b. How can competing firms protect themselves from industry threats The competing firms can protect themselves from industry threats by lowering their price to reasonable levels. Another strategic management tool here is to increase and maintain high quality products just what BMW is known around the world. BMW sells its cars at higher prices than most cars. However, its cars are known to be of very high quality. c. What opportunities are created by trends in BMW industry The trend in the BMW industry has created many opportunities. One such opportunity is the possibility of increasing its labor force. the increase in labor force will increase BMW car sales. Another opportunity is for BMW to tinker with new models that offer other advantages like increase in speed or space ship style car design. Another opportunity is the change to research and develop car fuel engines that increase the miles to every fuel liter. d. Can BMW manipulate the industry the way they want The BMW company cannot manipulate the industry the way it wants. For, the car industry is composed of more than six car manufacturing companies. Thus, It would be detrimental or not good in terms of net profits to go against the united stand set up by the six car companies in terms of size or other factors. However, BMW can influence the other players in the car industry in some ways. e. How can BMW become/maintain industry leadership The BMW can become /maintain its industry leadership by continuing to produce its reasonably priced cars packed with high quality parts and services. 7. Who are the principle players in the BMW industry Which firms will be winners in the future There are many principal players in the BMW industry. One such player is the customer. The company produces the cars in order to fill the customers' needs for a transportation asset. Another player is the supplier of parts and other car accessories. The supplier of the car parts and car accessories are interested to know if the company will continue to be in business five years from today, ten years from today and even more. The suppliers will seek other clients to replace BMW if they acquire some information that the company will close down in the near future. Another player is the employee producing the cars. The company will generate more car sales if the company hires high quality specialist employees to manufacture the cars. Another player is the banks for they will generally loan money to BMW so that the company can continue its research and development of new and more fuel -efficient models. How are successful firms positioning themselves The successful firms are positioning themselves through several means. One such mean is by spending large sums of money to advertise the BMW cars and services in the tri -media. Tri -media includes the newspapers, television and radio stations. Another way is to offer excellent pre -sales, during sales and after -sales services. Another means to continue producing the world -famous BMW cars. How sustainable is their dominance The company will continue to sustain their dominance in the car industry. The name BMW alone strikes fear in the hearts of the car industry competitors. For, the company is not reducing its efforts to produce high quality cars that are reasonably priced. What type of rivalry is present The type of rivalry present is that is present in the car industry is what is described as continuous, energetic, unrelenting and business -like system. For, other people will 8. What role does distribution and logistics play in the BMW strategy Distribution and logistics play a very vital role in the BMW strategy. For, the customer would feel discouraged if the managers of the company could not find the BMW model in the car display showroom. Thus, the company must continue to be on its toes eagerly researching on the current and future trends of the companies (Miller 2001, null03). 9. Are acquisitions/mergers or other factors changing the ownership patterns in the BMW industry Yes, acquisitions /mergers or other factors changing the ownership patterns in BMW. BMW and Porsche are the top tow successful mergers in the car manufacturing industry. BMW's increase in sales was influenced by downstream mergers and acquisitions (Ealey, and Troyano-Bermudez 2000, 72). Should Strategic Alliances or Spin-offs be considered. Yes. alliances between BMW and its suppliers, customers should be immediately set in motion. Alliances are what a company needs to win over its competitors in the car manufacturing business. How BMW should continue to have a harmoniously relationship with its suppliers of spare parts and accessories so that the production of cars will continue (Carruthers, and Halliday 1998, 72). Why The company, BMW, needs the alliances to have a competitive advantage over its rivals in the car industry. What can they achieve strategically What synergies exist or can be created The suppliers of BMW will ensure that there is a steady supply of raw materials needed to complete one car. The synergy created is that a steady supply of materials would ensure that the company, BMW, would be able to fill the car needs of its prospective and current clients. 10. How significant are changes in environmental constraints affecting the BMW industry Include (for example) political, social, technological, economic, physical, legislative, demographic, age profiles, trade unions, skill levels and/or what ever else you see fit. Environmental constraints do not affect the sales of BMW because the BMW has not violated any environmental laws. 11. What technological or other developments are affecting product/service development, cash management, procurement, marketing, and logistics, sales and after sales, systems, people management The technology affecting products and services of BMW is its strive to increase the mileage that its fuel can deliver (Ealey, and Troyano-Bermudez 1996, 62). 12. What changes are taking place in customers' demand patterns Are new market segments developing (or capable of being created). The different changes in the customers' demand patterns are the main reasons why they are now buying reasonably priced high quality cars. This is the reason why Japanese cars like the Toyota has become very popular in the United Kingdom and the United States(Smith 1998, 25). Are existing markets changing their buying behaviour Yes, the existing markets are continually changing their buying behaviour. Many of the people prefer to buy cars that are lower price when compared with other car brands like Ford, Toyota and other brands. 13. Can you identify any particular financial strategies in the BMW industry and how well is your BMW placed in pursuit of their financial strategy BMW's financial strategy is to increase its finances. The best way of increasing finances is to increase sales. An increase in sales would automatically increase cash on hand. BMW has been very successful in accomplishing this financial strategy because it is one of the top cars in terms of sales (Carruthers, and Halliday 1998, 72). Brand corrosion: mass-marketing's threat to luxury automobile brands after merger and acquisition. Mergers and acquisitions will increase the company's resources and territory. BMW has has acquired the Rover. The Rover vehicles continue to generate highly profitable sales to the BMW("Main Economic Events -- 2000", 109). Analyzing the competitive advantages and disadvantages of company with the TOWS Threat. The company is threatened by other cars like Toyota, Ford, and others. This is good for the company, BMW. Opportunity. The BMW company has the opportunity to take away a large share of the car markets of its competitors (Hocker 2004). This is good for the company, BMW. Weakness. The company's weakness is its price. A BMW car is too expensive for the ordinary citizen to buy when compared to the price of a Japanese car. This is good for the company, BMW. Strength. The company's car is known for its quality in exchange for its higher price as compared with other car companies. This is good for the company, BMW. BMW uses even more robots for both flexibility and quality. the company will not fear any health dangers because robots are not human beings (Gardiner, and Matthews 2000, 150). The company does not have a material disadvantage from the above TOWS analysis. CONCLUSION: 1 Likely Scenario. The likely scenario is that the company continue generating profits and sales unless an untoward incident like floods, earthquakes and cyclones occur that would cause a decline in the sales of BMW cars. 2 Pessimistic Scenario. The company's sales and net profits will decline because the Japanese car companies like Toyota will offer lower prices of its high quality cars. 3 Optimistic Scenario. BMW will rise to the top in terms of car sales because the company's car represents affluence as compared with the Japanese cars. The advantages of buying BMW cars is that its name is synonymous with quality at the high price. Thus, people want to buy a BMW car to show that they are rich and famous (Miller 2000, 14). - BMW Annual report 2003,2004 and 2005. The company did good for the three ear period. The company generated revenues of 32,108.5 million for 2005 and net income of 1,540.9 million. The company generated revenues of 31,385.5 million for 2005 and net income of 1,573.0 million The company generated revenues of 29,308.3 million for 2005 and net income of 1,374.2. This is based on the reliable Hoovers' Report Online: http://www.hoovers.com/globaluk/sample/co/fin/history.xhtmlID=ffffcrkhxyrhyjssyc Works Cited BMW and Mini Sales Roar Ahead. 2002. The Birmingham Post (England), May 11, 15. Carruthers, Bruce G., and Terence C. Halliday. 1998. Rescuing Business: The Making of Corporate Bankruptcy Law in England and the United States. Oxford: Oxford University. Ealey, Lance, and Luis Troyano-Bermudez. 1996. Are Automobiles the Next Commodity. The McKinsey Quarterly , no. 4: 62. Ealey, Lance A., and Luis Troyano-Bermudez. 2000. The Automotive Industry: A 30,000-Mile Checkup. The McKinsey Quarterly : 72. Elkin, Paul. 1998. Mastering Business Planning and Strategy: The Power of Strategic Thinking. London: Thorogood. . Gardiner, Vince, and Hugh Matthews. 2000. The Changing Geography of the UK. London: Routledge. Hocker, Cliff. 2004. The New Frontier: Auto Dealers Are Rethinking the Way They Do Business and Finding New Solutions to Old Challenges. Black Enterprise, June, 143+. Main Economic Events -- 2000. 2001. National Institute Economic Review : 109. Makower, Joel, and Ron Pernick. 2001. The New New Economy. Whole Earth, Spring, 8. Martin, Stephen, and David Parker. 1997. The Impact of Privatisation: Ownership and Corporate Performance in the UK. London: Routledge. Miller, Daniel, ed. 2001. Car Cultures. Oxford, England: Berg. Miller, Russell R. 2000. Doing Business in Newly Privatized Markets: Global Opportunities and Challenges. Westport, CT: Quorum Books. Smith, Dexter Jerome. 1998. Vehicles. The Middle East, July, 25. UK Car Industry Cuts Sales Forecast for Year Ahead; AUTOMOTIVE. 2008. The Birmingham Post (England), February 7, 22. Larsson, H, Falkemark, C, BMW analysis, 2006, London Hoovers, Retrieved May 18, 2008, http://www.hoovers.com/globaluk/sample/co/fin/history.xhtmlID=ffffcrkhxyrhyjssyc Read More