Analysis, Pages 12 (2951 words)
Logo-BMW’s white-and-blue logo is recognizable worldwide, and recalls the company’s start as an aircraft engine manufacturer. It symbolizes a pilot’s view through a propeller as alternating white and blue segments. •Most successful multi-brand premium car manufacturer-BMW has three brands, BMW, MINI, and Rolls-Royce. They delivered 141,952 BMW, MINI and Rolls-Royce automobiles in 2007 and sales increased by 7. 4% from the previous year. •Super luxury Rolls Royce car-The Rolls-Royce phantom holds the number one position in the super-luxury car segment.
The Phantom was launched in 1993, and the final assembly, as well as all-wood and leatherwork are custom made for each customer’s individual specifications.
The plant where they are produced, the Goodwood plant in England, contains only two robots to paint the space frame body; all other work is done by hand, in keeping with the Rolls-Royce tradition. •Spends one of the highest revenues on R;D-BMW Group employs about 8,000 people worldwide within the research ; development (R;D) network and has invested millions of dollars over the years.
They employ engineers, designers, model builders, computer experts, and scientists of various disciplines FIZ co-ordinates and optimize research activities across the group to create the BMW cars of the future. •Brand-BMW ranked in the top 20 most recognized global brands. BMW is now the only multi-brand automaker that utilizes a pure, premium brand strategy. The objective behind this strategy is to generate higher income per vehicle on the basis of products with a high intrinsic value and a strong brand image. Their brand ranked number 15 in 2006.
Longevity-Bavarian Motor Works (BMW) was formed in 1916 after two small aircraft engine manufacturers merged. In 1923, BMW began to build motorcycles, then its first car in 1928. •Driving School-Many manufacturers have associations with driving schools; BMW runs its own. The BMW Performance Center, adjacent to the BMW Manufacturing facility in Spartanburg, attracts owners and prospects from around the country for an ultimate brand experience. •Sales-BMW is one among the leading players in the premium cars segment. It achieved a record sales volume of 1,373,970 units in 2006. BMW is ranked among the ten largest car producers globally. Awards/Recognition-Reflecting BMW’s commitment to developing quality and innovative products, the company has been honored with several awards in the past. For example, BMW was presented with the ‘Design Award of the Federal Republic of Germany’ in February 2006 for the BMW 6 Series Coupe and Convertible models. Presented by the German Design Council, the award was the highest official German design award.
Following this, the MINI model of the company won the Golden Steering Wheel 2006 award in seven out of 15 categories, ten days ahead of its official market launch in November 2006. Formula 1-BMW won its first Formula 1 championship in 1983 using a four cylinder, 1. 5-liter production based engine. Of course it was turbocharged and could develop well over 1,000 horsepower, some say over 1,500 for short periods of time. BMW continues to field a Formula 1 team because it provides the ultimate in competition and thus the ultimate in learning for BMW. •Excellence through quality & innovation-BMW Group’s success is its strategic focus on developing customer-friendly innovations, coupled with an approach to innovations management that is unique within the motor industry Customize your own car-BMW has the option of seeing a sample of the car you’d like by selecting different options such as the color of interior design and exterior design, the wheels, the model etc. •Intelligent processes-the COSP(Customer oriented sales and production process) bases production on the customer’s customized version and not by company standards. They employ 70,000 workers in 23 different locations to build the customized cars. A customer can change or alter the options and style of the car right before it goes into production. •Environment-friendly-BMW considers environmental and recycling requirements.
They use recycled products to build cars. They have environmental standards for all the plants throughout the world. They build cars that lower the amount of fuel consumption. •Superior technology and development of new products – BMW is doing this is by developing a hybrid engine as part of a global alliance. The aim of this development is known as a “two-mode” hybrid vehicle, combining a combustion engine with two electronic engines. This design is aimed towards improving the performance, fuel consumption, emissions and range of conventional hybrid vehicles.
The primary goal of modern hybrid systems is to save fuel. •Commitment to customers – BMWs’ main goal is to focus on getting the product to the customer as quickly as possible. BMW has a program known as the “Customer oriented sales and production process. ” This way, the customer is able to make any last minute changes to the equipment and accessories they’ve ordered shortly before the vehicle goes to assembly-without delaying the date of delivery. •Design Work – design process of building vehicles is done by California Innovation Triangle.
This state of the art firm uses computers to help aid the process of design. The highlight of this facility is what the industry has begun to call “the model plate. ” The model plate is a measurement system that transfers the contours of the object being scanned to computers where a 3D model is produced. The designers can then go in and make changes to the object through the computer in order to make the part as suitable for its intended use as possible. What makes this machine so rare is the size of object that can be scanned. The model plate can scan very large object, up to the size of an omnibus.
With the use of this technology BMW and California Innovation Triangle are able to layout and design entire vehicles piece by piece. •Involvement in community – South Africa serves as good example of BMW’s social commitment. BMW works to bring change from within by enacting equality in the workface, and investing not only in the business, but also in education, healthcare and recreational facilities for employees. The factory at Rosslyn, near Pretoria, evolved from a CKD facility to serve the old South Africa, into a sophisticated facility that is now part of BMW’s international production-distribution network.
This risk BMW took provided South Africa the ability to export. And in 2002, the South African factory captured the J. D. Power and Associates gold award for initial production quality. •Environmental commitment – BMW factories meet the demanding ISO 14001 environmental standards worldwide. This is not only true for the oldest BMW factory in the city of Munich and at 10 year old American plant in Spartanburg, South Carolina, but also with new factories in emerging and less regulated markets like Thailand and Russia. Excellence through quality & innovation-BMW Group’s success is its strategic focus on developing customer-friendly innovations, coupled with an approach to innovations management that is unique within the motor industry.
From features like the twin-flat motorcycle engine, V-shaped overhead valves, and hemispherical combustion chambers introduced on the classics of the 1920s and 30s, to modern technology including ABS brakes, Xenon lights, smart airbags, the head protection system, Valvetronic and iDrive, BMW constantly reinforces its credibility as a premium manufacturer Management-Chief executive, Norbert Reithofer, who took office on September 1, will be seeking to build on the Bavarians’ global momentum. Reithofer has a brilliant track record as head of production, such as combining lean manufacturing and Japanese-like continual improvement with benchmark flexibility for a premium automaker which gives BMW a big cost advantage over leading competition and making it tough for competitors like Mercedes to gain any ground. •Young customer base-With the Mini and series 3, BMW has a significant dvantage of gaining younger and first time purchasers over other luxury brands. The youth market is critically important because if a young buyer chooses a particular brand for a first car, he or she is more than likely to buy others with the same name plate as they mature and move up in the market. Even though buyers in the 16-35 age category only accounted for a small percentage of overall sales it is important to gain there sales because as the old marketing principle goes it is easier to keep a customer than to gain new ones. WEAKNESSES •New Models-Is it really worth developing new models?
It entails expenses along with shipping prices. Each day BMW is striving to produce and develop new cars to satisfy the customers. In the long run, who actually knows if these cars are going to be a big hit. The company might actually be wasting their time and money in producing a model that will not be worthwhile. When developing and producing cars it is important to decipher whether or not the car will become one that is popular on the market. •BMW’s heavy cost German base. -More and more competitors are shifting product development activities to lower cost countries.
BMW could be forced to negotiate a way to maintain cost competitiveness and its reputation for German engineering excellence made in different countries. •Price-Another weakness of the BMW industry is getting the customers to buy these cars. Yes, the hybrid vehicle will save you fuel, but it will be so expensive that it might be hard trying to find customers to buy them at such a high price. Another reason the price of the vehicle is so high is because they are shipped across the United States and also come from a factory in Germany.
The expenses of the vehicles and the shipping rate are two key weaknesses that many companies must work with. •Motorcycle Sales-The European market accounts for more than 60% of BMW’s motorcycle sales on an average. The group is heavily dependent on this region with Germany being one of the largest markets for its motorcycles business. With the demand in Germany being highly inconsistent in the past six years, this high dependence on a particular region can have an adverse effect on the company’s sales, during periods of demand stagnation in the region. For example, BMW’s motorcycle sales in Germany declined by 9. % to 24,064 units in 2005, which further declined to 23,617 units in 2006. •Corporate image-too serious ad tradition-bound. •Hybrid Prices-These types of cars will save you a lot of money on fuel, but the problem BMW is having trouble with is pricing the hybrids. It would be hard for BMW to find customers that would buy the hybrids at a high cost. •Shipment Cost-Most of the cars are shipped from Germany to the United States. The shipping cost would affect the price of the car. This is one the expenses that the BMW company’s would have to deal with in pricing their vehicles for the customers satisfaction. Online Strategies-BMW is not winning the “information war” in the market place about its own customers, their attitudes, complaints, wishes, etc. BMW is not operating in a manner, which acts to “include” its customers including their meeting and information sharing sources. Existing online efforts do not meet consumer needs. There is a lack of “human intelligence” and an over-reliance on visual marketing in BMW’s on-line strategies. •Dealer Networks-BMW’s dealer network is in the midst of great change. Overall basic product margins are down while business infrastructure requirements are up.
Many dealers do not feel that the field reps are there to help them build their business but rather just to comment arbitrarily and deliver business change requirements from BMW headquarters. There is a problem with two way information flow in the distributor-dealer relationship. Dealers feel that they are not being listened to and are also not being serviced in critical areas of their business by BMWNA staff. •Management-Dealers want to be able to discuss key elements of their business given their limited capital resources. Given the size and nature of he motorcycle market many dealers feel that BMW’s current policies are overly restrictive to the healthy development of their business and that BMWNA should operate in a more flexible manner which could be seen as co-development of a dealer’s franchise not just top-down management by memo. •Changing Consumer Environments-Also, as it appears that BMW’s dealer strategy is to move to larger centralized ‘corporate style’ stores, many of the smaller ‘mom and pop’ dealerships that historically or currently serve a key segment of the BMW owners/riders are being alienated and/or eliminated.
By following this policy of upgrade or be eliminated BMW is removing both the habitat in which the consumers live as well as the knowledge base and support structure from which they engage in BMW oriented motorcycle commerce. OPPORTUNITIES •India-The Company has been launching several new initiatives and has been widening its product base since 2001. The company expects ample growth opportunities in India, and it is keen on expanding its bases in these countries. •The expansion of the euro. -In May 2004 more countries adopted the euro making it the world’s biggest trading block.
This offers ample opportunities for BMW to leverage its strong European position in the premium car segment to gather more market share across new and expanding markets. •A Chinese luxury car market-Rigorous attempt to get into the Chinese luxury car market signifies an increase in the earnings of the company over the coming years. China already ranks as the third largest market for BMW’s 7 Series luxury limousines. BMW predicts that vigorous growth will place China among the company’s seven largest markets in a few more years. •Diesel Power-BMW foresees an immense opportunity in the diesel-powered cars segment. Tourism-the Zentrum building is located in South Carolina. This gives tourists the opportunity to take a look at the history of BMW, also at the cars, the speed and innovation free of charge. It is the only BMW museum in the United States. It is also located next to the only BMW manufacturing plant in the United States. BMW should take a look into building more museums throughout the world. •Expansion-although BMW is very successful they should think about expanding their manufacturing plants throughout the United States and other countries.
They only have one location in the United States which is in South Carolina. •Have the best and most current technology-It is important for BMW to have the best research and development staff where they can keep the company up-to-date with technology. With the latest technology and supplies, BMW can create the best cars the fastest and most efficient way possible. •Broaden information sharing -BMW should broaden information sharing amongst their dealers, distributors, and factory. This will improve product repair knowledge resulting in improved customer service and satisfaction. Improve and run their business based on their business plan-Improving the capabilities of dealers to sell more BMW products in the marketplace through refinement of their business plan •Utilize the Internet more-Multiply the value of the ‘human capital’ in the BMW network by “e-knowledge” and “e-training. ” •Better training of their salespeople-Development and implementation of business practices that harness the best of each individual dealer and make their unique market position/skills a valuable part of the entire network. Partnering with Sirius Radio-In 2005, BMW partnered with Sirius Satellite Radio to promote its new 3-serious car for 44 days. BMW used Sirius to promote its new car because the radio station had 1. 24 million subscribers and still growing. On the final day of promotion it broadcasted a live concert with various artists. •Acquiring Volvo-The chairman of BMW, Dr. Norbert Reithofer, is plan on expanding the business with a fourth brand name, Volvo. Although sales of Volvo has been slow in the North American and Europe, its brand name focuses mainly on safety and its fashion appeal is not attractive to the eye.
BMW could help out by acquiring the company to make it a more global brand, also in the Asian Market. •Apple iPhone-The new Apple iPhone is one of the next best things of phones. It is a touch screen phone with a built in iPod. This would give BMW the opportunity to integrate the iPhone into their cars. •China market-An opportunity for BMW is the increase in the luxury automobile market in china. The most significant growth of the luxury market can be attributed to Jiangsu province which has created an 84 percent increase.
Next to Jiangsu is Guangdong, making 79 percent recorded growth in the market. On the other hand, Zhejiang province also bagged a 54 percent increase. THREATS •Demand Patterns-BMW operates in an industry that is prone to cyclical demand patterns due to consumer wants and needs. •Currency-Any unfavorable trend in Euro valuation against major currencies can hurt BMW’s performance. •Fuel Efficiency-While BMW continues to work on high performance, clean and efficient gasoline engines, the company is also committed to a green-house-gas- free hydrogen powered vehicle as a long-term strategy.
At this time we have an active development program that will enable us still to bring to market a full size automobile, propelled with hydrogen, before the end of the decade. •The continuing decline of the dollar against the euro-This threatens to undercut BMW’s top-line thereby tempering its profitability. The euro to one-dollar ratio has dropped from 0. 702626 euros to 0. 690376 euros from October to November. •The rising price of raw materials -Materials such as steel threaten to offset the company’s earnings.
BMW continues to face the rising cost of raw materials as the key challenge to maintain and improve their growth performance. The annual average market price of aluminum, copper and plastic rose by 34%, 76% and 13%, respectively, in 2006. Likewise, the price of industrial raw materials also increased by more than 30% in 2006. •Rising gas prices – with a weak U. S. market, steadily rising gas prices and gaining popularity in non-luxury vehicles there is the temptation to move down market.