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Bmw Business Analysis

Essay by   •  July 9, 2019  •  Case Study  •  7,603 Words (31 Pages)  •  35 Views

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Executive Summary

The main objectives of this report are to evaluate BMW Group’s overall performance by identify the existing marketing strategy and to suggest an alternative strategic approach to enhance its performance.

BMW Group Vision:

We are Number ONE.

We inspire people on the move.

We shape tomorrow's individual premium mobility.

BMW group’s Mission Statement is short but not specific enough. It provides little information for its stakeholders and does not tell BMW from other rivals in the same industry.

Corporate Social Responsibility is a catalyst for change to BMW. They strive to set examples for those they work with to show high standards of environmental management, corporate giving, and maintain workforce diversity. BMW is proud to be in South Carolina, and they appreciate the various relationship.

Using the Three Bottom Line, looking through economic, environment, and social aspects, BMW has complied with 3 of the aspects as citizens of both the global corporate economy and the Upstate community.

PESTEL analysis constructed by components which including Political factors, Economic condition, Social factors, Technological forces, Environmental forces and Legal regulatory conditions. Political factor that could affect BMW’s strategy is interference of government or political parties. Change in currency rate act as an economic fact that could drives future prediction of BMW. Besides, demographics also could affect the change in future strategy of BMW depends on the market BMW about to entering. Technological always a fact for BMW in making or changing their future strategy to ensure their innovation always follow the trend. Furthermore, the fact that able to change BMW’s future strategy is about environmental because automobile industries always get related to the topics of environment pollution. An example of the fact about legal regulatory conditions that affect the change or plan of future strategy is restriction and strict pollution norms set up by certain countries like United State.

Porter’s five forces analysis are required in this analysis.  The five forces are threats of new entry, threats of substitute products, rivalry among competitors, bargaining power of supplier and bargaining power of buyers. According to this analysis, the threats of new entry are low because new entry requires huge amount of initial capital investment. However, the threats of substitute product are considered as high and medium-moderate. Then, rivalry among competitors are high as every competitors’ objective is to make maximum profit. Hence, advertising and market communication played the crucial that will help in boosting company’s profitability. Next, the bargaining of  supplier are considered as low due to BMW Group had huge number of suppliers and all the products offered by these suppliers are not unique. But the bargaining power of buyers are high as buyers will always search for the best deal which can provide them maximum satisfaction by using the less cost.

VRIN testing will be carried out to identify the resources and capabilities of BMW. VRIN testing basically test the rare, value, inimitable and non-substitutability of resources and capabilities. Examples of BMW’s resources and capabilities are brand portfolio, innovation capabilities and engine control patent.

BMW believed that value-added force is one of their strategic capabilities. BMW provide training to their employees to ensure their company competitiveness. Besides, BMW also adopt a well-coordinated system of talented employees for the same purpose.

Next, innovation is BMW’s core competence. BMW able to develop new strategies such as reduced emissions, lightweight construction and engine efficiency. Some accident has happened due to BMW low level of quality control.  This shows that BMW have to improve their quality control on the spare parts produced by BMW’s supplier.

A research on the financial statement of BMW Group from the year 2014 to 2016 had been carried out. Research was being done by using liquidity ratio and activity ratio. Liquidity ratio used are current ratio and quick ratio while average collection period and average payment period had been used for activity ratio. And the result shows that BMW Group does not manage their current liability level in 2014 efficiently as it produced the result of 0.96:1 and 0.77:1 for current ratio and quick ratio respectively. However, BMW Group manage to handle their current liability and their current ratio had increased to 1.61:1 while the quick ratio had increased to 1.27:1. For activity ratio, it shows that BMW Group had performed well as they managed to reduce the collection days from 11.75 days in 2014 to 10.66 days in 2016. The same goes for payment period as it had increased from 28.73 days in 2014 to 41.18 days in 2016.

In terms of weakness, BMW faces some strategic issues as it has made safety recall campaign due to defective automobile parts. This can affect its brand image. Besides, BMW should harness the opportunities in producing fuel-efficient vehicles as fuel price increases. It should also focus on the potential green car market in Southeast Asia region. As President Trump threatens to impose tariff on imported cars to U.S., BMW should reconsider its strategy to build a new plant in Mexico.

A recommendation to the issue of defectiveness of airbags supplied by Takata Corporation is that BMW Group should implement vertical integration strategies.  By implementing this strategy, BMW Group management team can supervise all stages in the process of manufacturing airbags, from purchasing raw materials to installing airbags to the car.  Besides, BMW Group should engage forward integration to strengthen and reinforce brand awareness and at the same time to gain better access to end users by proving longer duration of warranty for airbags and free services and maintenance on defective airbags.

Regarding to the issue of fuel prices are forecasted to rise, BMW Group should implement focused differentiation strategy on producing fuel-efficient vehicles.  This is because this is a golden opportunity for BMW Group to expand their sales to a different market whom preferred to buy fuel-efficient vehicles and maintain their current customers by improving their services and maintenance. In today’s industry, there are only few rivals producing fuel-efficient vehicles. Hence, it is a good opportunity for BMW Group to be extraordinary in terms of launching fuel-efficient vehicles and conserving the environment at the same time.

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