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Bmw Swot

Essay by 24  •  August 28, 2010  •  1,918 Words (8 Pages)  •  1,234 Views

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Strengths

BMW is a well-known company with a high status branding that has a very high recognition factor. The company has been strengths in both research and development and design as well as in marketing. For example when it comes to marketing it was a BMW advertisement that was the first e-advertisement that made it to Campaigns 'Pick of the Week' (Doman). However, in a long-term purchase such as this there is a need for moire substance than just marketing, otherwise the life of the company would be relatively short due to the nature of the purchase. It is in these longer-term systems and strategies that we can see many of the strengths of BMW, we can consider these by starting with the market position of the company.

BMW as well as Mercedes' and a few other companies have managed too successful attain m a market position where they have a focus on a narrow range of exclusive cars. These can be seen as aimed at the market place that is not also sensitive to price, and as such we must argue that the market positioning may be seen as a strength as there will not be such a reaction if the economic conditions change. The customers that are in the target group are happy to pay a premium price for what they perceive as a premium product (Thompson).

This may not be so true of the subsidiary companies that have had different problems, such as the ill-fated Rover group. However, the core product has remained strong (Thompson). This may be seen as diversification, and some of the diversification may also be seen as a strength, for example the purchase of Rolls Royce where there is a similar strategy, however the range and target market are even more focused

and exclusive.

The strategy of BMW is designed to be defensive against other car manufactures, and as we will see when it comes to the section on threats this is a defensive strategy that BMW have adopted after learning the need for defensive as well as aggressive marketing and strategies. These strategies can be seen as follows;

 Customers may choose any color that the wish from the entire range, this is only matched by Rolls Royce and Aston Martin, other companies offer a choice of color but only within a limited range (Thompson). The advantage of this is by differentiation and the gaining of a competitive advantage, the target market here is different from he other companies that offer the same facility of choice. Therefore there is an advantage over companies such as Toyota and Mercedes. There is also a very wide range of optional extras (BMW).

 The marketing as well as design emphases the differentiation by focusing on safety, the environment, as well as comfort and economy (Thompson). This is emphasized in all models and can also be seen as reinforcing the branding of the BMW logo and name.

 the way in which the company is run allows for a high level of control. The national BMW sales companies in each country are all wholly owned subsidiaries of the company. This is also co-ordinated with the strategic location of the parts warehouses so that they are in the most beneficial locations (Thompson).

 The computer system that BMW use for the ordering of parts by the independent distributors is also very efficient, reducing the time it takes between placing and order ands supply. The orders are placed directly into the BMW central computer for processing (Thompson).

 There has been a sting message form BMW that it intends to retain its independent position, and this appears to have given the market confidence in the company, as such the company may be seen as stronger financial in the markets own perception (Thompson).

 In the United States BMW managed to gain a first mover advantage in terms of its European competitors, being the first company to produce cars on this continent (Thompson).

However we can also argue that it was this international desire that also bought about a realization of some of the weaknesses of the company.

Weaknesses

There has also been a desire to make use of strategic alliances and acquisitions. This has not always been undertaken with the full knowledge or abilities to make the changes needed. This was demonstrated in the acquisition of Rover. This was not successful and then in 2000 the company was sold, as there was simply too much work and expense involved in turning the company around. There were severe doubts by anyone that the company could be turned around, and in the end there was only one bid for the company, a bid from a venture capital company Alchemy, which also turned out to fail in favor of a bid from the employees of the company in a consortium bid. We can see here that the synergy that BMW had successful maximized and benefited from with Hyundai was not a feature here. Therefore there was a loss of funds as well as bad publicity, which surrounded the news of the sale and the failure of BMW to turn around the company. In the end the company was sold to the employee consortium by the name of phoenix for a mere Ј10 (Lorenz). In a separate, but related sale Land Rover were sold to Ford illustrating the depth of this weakness (Foundry Management & Technology). However there are also other weakness that can be identified separately from this.

We can also argue the strength we have seen in the narrow ranges may also be seen as a restriction and limitation in terms of the market. For example there has been a conscious decision not to look to the sports car and hatchback. Despite this there have been some exceptions to the rule, the 1994 module of the BMW compact was a development of the 3-series with a hatchback (Thompson). Also those who have watched the James Bond film, Golden eye will also see that there has been an effective use of a BMW sports car. This may lead to confused marketing however in the case of these cars this does not appear to have occurred, possibly explained by the very strong branding that surrounds the cars. If we look at an analysis of the position of the company in terms of Porters Competitive Advantage model then we can see the weakness as well as the strength that this brings.

Porters Model of Competitive advantage applied to the motor industry (Thompson, 289)

Low Cost Differentiation

Broad Target Cost Leadership;

Toyota Differentiation;

General Motors

Narrow Target Cost Focus;

Hyundai Differentiation

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