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Research and Analysis of BMW Group
Prepared for MGT 3660-Y
Professor Ryan Parks
Prepared by:
Ayonni Soumanou
Dalvir Rehal
Deia Figarola
Moses Seriki
Nnenna Uhuegbulem
Submitted on:
April 8, 2017
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Table of Contents Executive Summary 3
Introduction 3
BMW Group Background information and history: 3
Current Brands, Segments and Value Chain 4
Global Production Network 5
Strategic Partnerships: 6
Purchasing and Supplier Network 7
Sales and Distribution Network 7
Growth in Europe and Asia and decline in the US market 8
Business Network 8
BMW Group Financial Services partnerships 9
Alphabet and its partnerships 9
Acquisitions and Joint Venture 11
Research and Development 11
External Analysis 14
SWOT Analysis 14
Porter’s Five Forces Model for BMW 15
Corporate Social Responsibility 16
Constructive Critiques 17
BMW’s Future Plans 18
Appendices 19
References 26
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Executive Summary
This paper revolves around our research and analysis on a transnational company, BMW Group.
BMW is a well-known brand for the luxury category in the Automotive Industry. Majority of the
company information provided were derived from the company’s own website and their 2016 Annual
Report. BMW also initiated its global manufacturing plant localization strategy as globalization
became prominent due to the rising need to access new markets, access to better suppliers & materials.
BMW expanded in Europe initially as majority of their market is within the European realm before
expanding to the other parts of the world such as Asia and the US. Today, BMW has an operation,
whether manufacturing, sales, research and development, financing or all, in each continent. Further
details regarding their Value Chain, Global Production Network, Business Network and external
network. An analysis of our direct comparison between BMW and Daimler AG (Mercedes) and a
general comparison with other common automotive brands regarding reliability, fuel consumption to
name a few will be discussed. Lastly, we will look into what the company does in terms of Corporate
Social Responsibility and how it affects their brand and consumers purchasing decisions.
Introduction
BMW (Bayerische Motoren Werke) Group, a manufacturer of premium automobiles and
provider of mobility related services, as a transnational company is the focus of the context of this
paper. An overview of the company’s history from the foundation, pre-war operation, during the war,
post-war to what it is now at present shows how BMW came to be & how globalization is changing it.
BMW Group Background information and history:
BMW is a German Trans National Company founded in March 1916 by Karl Rapp and Gustav
Otto who were both engineers and entrepreneurs of aircraft engine design and production hence the
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company logo’s rotating propeller that has since then been reinterpreted but not eliminated despite the
numerous logo redesign. After the First World War, the company relocated to Munich, Bavaria in
Germany to where it’s Headquarters remains today. During the Second World War, BMW became an
armaments manufacturer aside from manufacturing motorbikes, automobile and aircraft engines. After
the Second World War, BMW struggled just like the rest of Europe wherein it took 3 years of
reconstruction and rebuilding before production and operations resumed. BMW had its struggled from
low sales, lack of materials sourcing, financial issues, production and marketing issues, and Labour
(Human Rights) issues. Today, BMW Group has 31 manufacturing facilities and 14 assembly plants
which have been placed strategically in order to market to 150 countries globally (BMW, n.d.).
BMW’s extensive development on manufacturing and production ventures (Joint-venture included) as
well as the acquisitions made throughout the years are as follows: Motorcycle, Automotive, Aircraft
Engines, Finance & Leasing business, Motorsport, BMW Museum, Electric Car, Project i, Modern
Mobility Innovation and the acquisitions of Rover, Triumph, Mini (MINI) & Rolls Royce (BMW,
n.d.).
Current Brands, Segments and Value Chain BMW’s current operations are on Motorcycles, Automotive and Financial services where the
company prides itself as a leading premium manufacturer and provider. Some of the automotive
brands acquired had been sold and they now only manufacture BMW, MINI and Rolls-Royce for
Automotive. The following are all part of BMW Group: Product sector includes BMW, BMWi, BMW
Motorrad, John Cooper Works, MINI, Rolls Royce while Drive now, Reach Now, Park Now, Charge
Now, Digital Energy Solutions, Alphabet, BMW Financial Services and Designworks are their Service
Sector (BMW, n.d.).
Looking into the product sector, specifically on automotive production, we can note that the
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organization is highly centralized and has a highly engaged network such as a few innovative
partnerships with Google, Apple (Hwee, 2015). For HR, their workforce is mostly unionized because
of the geographic location of where majority of their manufacturing facilities. They source their
materials globally as the company focuses on quality which means global sourcing is necessary in
order to find the best suppliers. Logistics is straightforward, the company’s strategy is to have
manufacturing or production facility where there is a high market demand in order to maintain their
target 10 days delivery protocol to dealership locations (Hwee, 2015). They do not hold a lot of
inventory mainly due to customization orders and flexible manufacturing technology is not designed
for mass production in BMW (Hwee, 2015). Human element comes in on the design, technology
(machinery control and technological development), quality control, and sales & marketing as shown
on the adapted Value Chain Analysis of BMW (Figure 1). However, the production process produces
automotive that is already pre-ordered and in the US it is at least 80% pre-ordered by customers. Their
core competency is technology and innovative developments that is focused on their main production
(Automotive) while maintaining their profitability, customer-focused strategy and sustainability goals.
Global Production Network
On BMW’s 2016 annual report, BMW Group has a vast production network spread across 31
locations in 14 countries worldwide (BMW, n.d.). The 31 locations are consisting of 19 BMW Group
manufacturing facilities and 5 plants belonging to joint-venture operations, 5 partner plants, and 2
contract production plants (Figure 2). The Group applies the same quality, safety, and sustainability
standards across its production network. Each plant in the production network have strategically
selected products that it manufactures (Figure 3). For instance, the BMW Group plant in Wackersdorf,
Germany is the distribution center for parts and components, cockpit assembly, and processing of
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carbon fibre components. Petrol and diesel engines for BMW and MINI are assembled in Steyr,
Austria along with the production of the core engine parts and high performance engines for M
models.
Strategic Partnerships:
BMW Group ventured out with a few strategic alliances (partnerships) to create flexibility in
serving regional markets. Per its 2016 annual report, the Group manufactured BMW and MINI
vehicles in Russia, Egypt, Indonesia, Malaysia, China, and US (BMW, n.d.). First, the Shenyang
plants in China are operated through a joint-venture partnership with Brilliance China Automotive
Holdings Limited. The plants in Shenyang manufacture exclusively for the Chinese market and
produces petrol engines and core engine parts aside from the extended-wheelbase versions of the
BMW 5, 3 & 2 series and the BMW X1 (BMW, n.d.). The plants also produce plug-in hybrid vehicles
for BMW 5 series and BMW X1 extended-wheelbase version. In 2016, China showed a 17.4% growth
in the automobile market from 2015 registering an increased of 28,293,400 new passengers and light
commercial vehicles (BMW, n.d.). Second, the BMW Group partnered with the SGL Group to form a
joint operative known as SGL Automotive Carbon Fibers (SGL ACF). The joint operation located in
Moses Lake, US produces carbon fibre for subsequent use in the production of carbon fibre fabrics in
Wakershorf, Germany (Figure 4). The carbon fibre fabrics are used in the passenger compartment of
BMW vehicles, specifically the BMW i8 electric vehicle (BMW, n.d.). Third, BMW Group also
outsourced the production of specific vehicles wherein contracts were awarded to produce several
MINI vehicles at Magna Steyr Fahrzeugtchnik in Graz, Austria and VDL Nedcar in Born, Netherlands
in 2016 (BMW, n.d.).
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Purchasing and Supplier Network
The BMW Group relies on a network of over 100 auto parts suppliers from around the world to
support its global production (BMW, n.d.). This provides the automaker with the flexibility to respond
to the fluctuating demands while procuring production materia ls, raw materials, capital goods and
services. There is about 50% of its suppliers are in Germany or was a subsidiary of a German company
while another 35% are in east and western Europe on a 50/50 basis, and the remaining 15% is in the
other parts of the globe. Currently, as shown on the Regional Mix of BMW Group’s 2016 Purchase
Volume, the regional distribution of purchasing volume appears to have changed due to the increasing
vehicle sales and production volumes outside of Europe resulting in an expansion of production
capacity in the Spartanburg, US plant as an example. On Figure 5 in the Appendix, a few suppliers for
BMW Group and the components that each supply is listed. Figure 7, shows BMW’s purchase
volumes in 2016 reflecting the company’s operation, sourcing strategy and locations. The
organization’s goal is to maintain a balanced sale, production, and purchasing volume. Last year,
BMW opened its key components plant called the “Lightweight & Engineering Center” in Landshut to
be built in-house through a collaboration between BMW Group and 160 Engineers from Engineering
Center (BMW, n.d.).
Sales and Distribution Network
The BMW Group enjoys a robust sales and distribution network consisting of 3,400 BMW,
1,580 MINI, and 140 Rolls Royce dealerships globally (BMW, n.d.). Its primary distribution channels
include authorised dealerships, BMW Group branches & subsidiaries, and independent importers in
certain markets like Africa. In addition to on-location sales, new vehicles are also sold online wherein
customers can select a vehicle model, customise its configuration, financing, and payment
arrangements. On top of the that, online customers can even trade-in their old vehicles, receive advice,
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and enter a contract directly with a dealership allowing customers the flexibility to buy products &
avail services at any time and at any location. The new BMWi model is distributed via 1,300
dealership and agency locations worldwide. Sales are delivered via an interlinked multi-channel model
including a mobile sales team, a Customer Interaction Centre (CIC), the internet, and dealerships
(BMW, n.d.). It was published in their 2016 annual report that The BMW Group sold 2,367,603
BMW, MINI and Rolls-Royce brand vehicles worldwide which is a 5.3% increase from what was
reported in 2015. And that on a brand level, the BMW brand sold 2,003,359 units which is a 5.2%
increase compared to their 2015 sales. They boast that MINI’s sold 360,233 units which has also
increased by 6.4% compared to the previous year. They also reported that Rolls-Royce had a 6%
increase in sales as well, delivering 4,011 units to customers in 2016 (BMW, n.d.).
Growth in Europe and Asia and decline in the US market
In 2016, BMW Group’s Key Automobile markets reported mostly an increase except for US as
shown on Figure 6. The BMW Group sold 1,092,155 units; exceeding its 1,000,000 sales target for the
BMW, MINI, and Rolls-Royce brand vehicles in Europe for a second year in a row. In Germany, sale
increased by 4.5% by selling 298,928 units. Regardless of Brexit, vehicle sales in Great Britain grew
by 9.2% in 2016 and even had a record sales of 252,205 units. Asia also had its share of growth,
reporting 747,291units sold in total for all three vehicle brands which is an impressive 9% growth
from 2015. Sales in the US market however struggled because of aggressive marketing by competition
wherein the North American continent sales declined by 7.2% to 460,398 units of sales for all three
brands. In 2015, US sales fell by 9.7% to 366,493 units (BMW, n.d.).
Business Network
Over the years, The BMW Group has differentiated itself within the automotive industry
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through the products and services being provided for their customers. The finance department of the
group’s main function is handling the organization’s financial services which offer a wide range of
products and services such as leasing, retail and commercial financing, selected insurance and banking
products (BMW, n.d.).
BMW Group Financial Services partnerships
The organization’s financial segment group has built strong partnerships with some major
financial institutions around the world to help facilitate its financial transactions and to be able to give
the best services to their customers. In the US, the group established a partnership with Cox
Automotive and Manheim, which allows the manufacturer to expand its auction services with their
RMS Automotive Digital Platform (Manheim, n.d.). Initially, only BMW franchise dealers had an
online access to high-quality BMW and MINI vehicles before they cross the auction block. However,
with the partnership, the independent and non-BMW franchise dealers with a valid “AuctionACCESS”
account now have 24/7 online access to BMW Group's national inventory for off-lease vehicles
(Manheim, n.d.). Also, the BMW Group also built a strategic partnership with the DBS bank in
Singapore. This enables BMW Group’s customers who wish to purchase any BMW, MINI and Rolls-
Royce vehicles to enjoy the wide range of financing services being offered and facilitated by DBS
(BMW, n.d).
Alphabet and its partnerships
The BMW Group has been successfully building a strong reputation through its Alphabet
solutions since it became active in the market in 2002; Alphabet was established in 1997 in United
Kingdom. It focuses on providing customized consultation, financing and car services to a wide
variety of multi-brands customers (BMW, n.d.). Currently, Alphabet manages over 300,000 multi-
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brand company car contracts and is represented in 14 countries. The group has been able to create
strategic partnerships through Alphabet’ products and services with over 65,000 companies using
Alphabet services in Europe and Australia (BMW, n.d.) Alphabet provides customized business
mobility solutions and fleet management services to meet specific corporate requirements and bring
the greatest benefits by offering manufacturer independent products and end-to-end consulting for all
their brands and models (Alphabet, n.d.). The BMW Group has a strong relationship with many car
manufacturers such as VolksWagen and Toyota (Lexus) since many of their cars are used it to provide
many of the services. These solutions are delivered through three main products and services which
are funding that offers services such as allowing customers to acquire vehicles through a tailored rental
arrangement for low costs (Alphabet, n.d.); fleet management division provides services such as
maintenance and repair of cars, road assistance, fuel management, and accident management to
companies & individuals, and so on. The advanced mobility solutions complement the funding and
fleet management services by providing enhanced solutions to its clients. AlphaCity is a concept
introduced by the group to promote corporate car sharing. It allows companies to lease premium
BMW Group cars to ease their employees’ business trips at a reduced cost (Alphabet, n.d.). CO2
emissions have become a real concern in our society today, the company has created Alpha Electric
which provides innovative services such as the suitability of electric vehicles (EVs) for fleet, support
for the introduction of EVs into businesses and provide full in-life support services (Alphabet, n.d.).
Alpha Guide, a travel application, is another major solution that provides drivers and fleet managers
with all the necessary information required to facilitate their business trip(s). The application has
numerous features and is accessible through apple store, Google Play, and Microsoft. In addition,
Alpha Guide users can use the application to book Uber and obtain the pricing details (Alphabet, n.d.).
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Acquisitions and Joint Venture
In 1994, BMW Group acquired Rover for £800 million however the acquisition did not benefit
BMW as it failed to consider factors such as cultural clash (Tutor2u, 2012). Then in 2011, the BMW
Group acquired ING car lease. ING car lease was a leader in the operational car leasing & fleet
management sector in Europe as it had 240,000 vehicles and was in the top 10 positions in all the 8
European countries it operated in (ING, n.d.). BMW Group undertook some joint ventures to offer
better designed products and increase its market share in the competitive industry. For instance, BMW
Group formed an alliance with TOYOTA, which is one of the leading brands in the automotive
industry, to produce for both companies’ sports cars. The cars will be produced by Magna Steyr, this is
the company that assembles Mercedes G-Wagen for its main competitor, Daimler AG (Road and
Truck, 2016).
Research and Development
When it comes to research and innovation, the BMW Group has been collaborating with many
technological firms and educational institutions to come up with outstanding and innovative solutions
that will benefit the company. In the US, the car manufacturer’s Information Technology Research
Center (ITRC) has partnered with the State of Carolina specifically with Clemson University to
develop and create innovative technological solutions that will personalized the customer's driving
experience (BMW, n.d.). In Germany, the BMW Group and IBM headquarters of IoT in Munich are
collaborating to research on how technology can be integrated in BMW cars (IBM, 2016).
Comparison between BMW Group and its industry
The BMW Group is keeping up with the technological development in the automotive
industry. Per a KPMG, a survey of 200 automotive executives, the BMW Group has been named the
champion and the leader of connected cars in the industry (Business Insider, 2016). The internet of
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things (IoT) connected cars have taken over the industry. in terms of convenience. (Business Insider,
2016). Car companies are also focusing on improving performance and energy efficiency. Yearly in
the US, automakers usually invest more than $15 billions in research and development as connected
cars are expected to generate $8.1 trillion between 2015 and 2020 (Business Insider, 2016). However,
despite being the leader of connected cars in the industry, the BMW Group does not spend as much as
its competitors on R&D. The biggest spender in 2016 was Volkswagen's with $15.3 billion while
Toyota was second at $9.2 billion, and Daimler was third with $7.6 billion (Auto News, 2016). The
BMW Group has seen a significant reduction of its market share within the industry; the group used to
be the most seller of premium cars. Mercedes-Benz sales overtook BMW last year for the first time in
more than a decade, a feat achieved, ironically, only after parent company Daimler stopped chasing
market share and focused on making stylish high-tech cars (Reuters, n.d.). The leader manufacturer by
market share in 2016 is GM with over 15%, followed by Ford and Toyota (Figure 8). Mercedes-Benz
is the only premium cars maker that made it to the top ten with barely 2%, taking the spot from BMW
Group (Figure 8). The automotive industry is known to be a major contributor to the environmental
pollution and impacting the climate change, mostly through their fuel consumption and carbon dioxide
emissions (CO2). With the pressure of some pro-environmental groups and international institutions,
the industry is now strictly regulated and CO2 targets have been set for manufacturers (Auto News,
2016). To meet their targets and protect the environment, many car manufacturers are now producing
EV (Electric Vehicles) & e-mobility solutions to support consumers. Per KPMG survey in 2016,
BMW and Toyota will be the leaders as they ranked in the top spots for being the most ground-
breaking innovators in the future followed by Honda, Ford and Tesla. In terms of partnerships, many
cars manufacturers are teaming up with Uber; some, to develop its self driving cars or to deliver its
services through their ride-sharing applications (Bloomberg, 2016).
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Comparison of BMW Group and Daimler AG
BMW Group and Daimler AG are two leaders in the industry when it comes to luxury vehicles
and customized products and services. These 2 global companies are both from Germany and similar
in terms of their business & operations. BMW Group manufactures luxury vehicles, buses, engines,
and motorcycles. Daimler AG produces similar products as BMW Group except motorcycles. In
addition, Daimler has few brands which are Smart, BharatBenz and Western Star. It also acquired a
43% shareholding in Mitsubishi spin-off Mitsubishi Fuso (Daimler, n.d.). These 2 companies both
have a presence in the same countries through their dealerships and production & assembly facilities.
Daimler is also concerned about the environment as it delivers eco friendly mobility products and
solutions. Among all the products and services, the one that they do not have in common is a bus
transport system which provides fast, convenient and cost-effective urban mobility transportation
called Bus Rapid Transit (BRT) of Daimler (Daimler, n.d.). As both companies operate worldwide,
they have built strong partnerships to ease their operations and gain more competitive advantages in
their current markets. For example, the Germans car makers have successful business partnerships
with Uber. Uber is providing services through the Alpha Guide app of BMW Group. Daimler is also
collaborating with Uber to develop autonomous vehicle technology and to eventually put self-driving
Mercedes-Benzes on the Uber ridesharing network (EMercedesBenz, 2017). In China, Daimler built a
strong partnership with Baidu to improve built-in software gadgets in its cars (Business Insider, 2015)
whereas when BMW Group initiated a partnership with Baidu it unfortunately did not last as their
goals on the commercialization of autonomous cars were not the same (Fortune, 2016).
In 2016, Daimler has surpassed its main competitors in revenues as well as in market share.
Daimler’s annual revenues was € 153.3 Billion (Business Insider, 2017) compared to BMW Group
that ended up with € 94.16 Billion (Market Watch, 2017). Both car manufacturers have approximately
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the same standardized delivery of 8-12 weeks (Cartelligent, n.d.) but Daimler’ success could be
attributed to a slightly shorter delivery time. BMW’s six-month deliveries rose 5.8 percent from the
previous year to 986,557 autos, compared with a 12 percent gain to just over 1 million cars for
Daimler’s Mercedes (Bloomberg Pursuits, 2016).
External Analysis
SWOT Analysis
In this research, we discovered the following strengths, weakness, threats and opportunities of
BMW Group as shown in Figure 9 & Figure 10. A very important note is that of the brand reputation.
The brand is highly recognized all over the world for it’s luxury and refined quality. BMW has a
strong brand reputation and they have been named the 2nd most valuable brand by the Forbes. This is
because BMW is committed in continuous improvement practices and innovation throughout their
supply chain and can stay ahead of it’s competitors when it comes to innovation. The BMW’s brand
image also attracts the best suppliers and dealers which further adds to the quality and responsiveness
of their products and services. Their value-added production system is characterized by both flexible
and “leagile” processes such as Built-To-Order & Just-In-Time/Just-In-Sequence which have brought
greater flexibility and agility to their supply chain. Among automakers, BMW have developed one
most of the most comprehensive and unique reverse logistics processes that enables them to achieve a
greater environmental sustainability index. In addition, their acquisition of Rover group (MINI) and
Rolls-Royce have further added value to their existing brand image. The firm also benefited from
technologies and practices used in their acquisition for the supply chain along with the increased
market knowledge and access to the market that they were serving. Their competitive advantage in
constant innovation and continuous improvement are hard to match. The latest mobility services
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“drive now” and the new i3 model are examples of this strength. However, having a global supply
chain can also pose challenges which leads to some of the company’s weaknesses. For the study that
we carried out, we found that BMW’s manufacturing cost are relatively higher than many other firms
in this industry. This is mainly due to a higher purchasing cost as the best of suppliers are used to
ensure quality as well the skilled workforce required for production. Due to the factors mentioned,
BMW’s cost of repair compared to other car makers in the premium segment is relatively known to be
higher. Interestingly, these factors are also their strengths. Many of the key components being used
such the engines are imported which contributes to the higher overhead cost for BMW. However, the
firm is exploring various options on setting up R&D facilities and sourcing a local manufacturing for
engines in countries like India to be in line with their plants in China. Though the firm have initialized
and provided an extended warranty coverage period for their cars, there are still room for
improvements in this area. Allowing customization of their cars also do contribute to higher costs in
manufacturing than those achieved through mass economies of scale production (mass production) but
this also provides opportunities to the firm in improving the mass customization processes. One of the
4 main threats are the increasing competition in their market segment. Volkswagen in the executive
segment, Daimler-Chrysler’s Mercedes and Toyota’s Lexus in the luxury segment along with their
competitive pricing takes a portion of the pie of BMW’s market share. The second main threat is the
risks involved in local sourcing which includes duplication of intellectual assets and grey marketing
wherein BMW mainly faces these challenges in countries like Russia, Poland, Turkey and in some
African nations. Lastly, the fluctuating currency and recession in the European Union are the other
main threats to BMW’s supply chain.
Porter’s Five Forces Model for BMW
BMW has no threat from new entrants because the automobile industry requires both huge
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capital and skilled human capital as shown in Figure 11. For a new company to deliver the same
standard as BMW, they would need to stand out by have an appealing brand and product(s) which
requires intensive capital, technological knowledge, design & engineering skills and not to mention
time. In the automotive industry customers have plenty of choices available which gives them high
bargaining power. Tough competition with similar products & quality are also offered by various
competitors which takes away BMW bargaining power as a producer/manufacturer as reflected in
Figure 11. On this table, we can see that BMW has a low bargaining power with its suppliers because
they choose & use only what they deemed is the best provider as well as the most reliable suppliers
available in the market. These requirements alone limit the number of qualified suppliers which
restricts their negotiation power when it comes to pricing. There is a tough competition in the
automotive industry wherein competitors are offering the almost the same quality type of products at
fair prices compared to what BMW offers. Even though BMW has a very loyal customer base they
struggle with gaining new customers. Another threat of substitute is bicycles for “green” towns such as
Vauban in Germany where the city does not allow cars as well as consumer preference to lower the
Carbon footprint (Business Insider). There is huge and aggressive rivalry among competitors such as
Volkswagen and Daimler AG for premium luxury vehicles. Tough competition is forcing BMW to
reduce their prices which lowers their profit margin to only 9.5%.
Corporate Social Responsibility
BMW is striving to become more sustainable and socially responsible. The company has
decreased its energy usage by 36% and water consumption by 31% since 2006 resulting in about 3-4%
improvement per year. They stated in their website the “CO2 emission by BMW Group vehicle fleet
sold in Europe was reduced slightly to 127 grams CO2 / km (2014: 130 grams CO2 / km; – 2.3 %)
during 2015”. BMW Group committed over $36 million: 47% to education, 35% to the community &
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18% to arts as stated in their “Corporate Giving”. When it comes to greenwashing, Investopedia
reports, “The general idea behind greenwashing is to create a benefit by appearing to be a green
company, whether that benefit comes in the form of a higher stock price, more customers or favored
partnerships with green organizations.” Reduction of Carbon Footprint is a hot topic recently and
BMW tries to do their part by releasing hybrid vehicles and battery-operated electric cars. In the
energy industry, companies especially the world's top biggest carbon emitters are attempting to
rebrand themselves as being more environmentally conscious and friendly.
Constructive Critiques
BMW has a high manufacturing cost thereby increasing the overall cost of production for its
products. A percentage of the cost incurred is transferred to the final consumer hence increasing the
cost of the vehicle which is why their products are categorized as premium or luxury. Maintenance of
a BMW vehicle also costs more due to the higher manufacturing parts costs (J, Lancaster, 2016), See
Figure 12 & 13. Based these 2 tables (Figure 12 & 13) we can see that the cost of owning and
maintaining a BMW is not comparable to the cost of owning a Toyota which is statistically the most
reliable. The key is on knowing what the amount of mileage consumption you get out of your vehicle
before it reaches a point when the wheels fall off or beyond repair? Based on that measure, Forbes
reported in 2014 that Toyota makes the longest-lasting cars and trucks with at an average of more than
200,000 miles. The record comparison of various automotive brands made by Forbes was about New
York-based Mojo Motors’ report. Mojo Motors is the company behind the used-car classified ad site
mojomotors.com. Forbes reported that Mojo Motors sought answers by how well will a car last till that
point of worthlessness (uselessness) in terms of the amount of mileages a car can travel by analyzing
its listings for more than half a million cars and trucks from model years 1995 through 2014. Figure 11
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and 12, shows the result of the top ten brands and BMW’s ranking wherein its durability performance
falls behind compared to consumer’s perceived quality of the brand. Commitment to innovation and
increase in product variety has brought on the greatest challenge in the company's history because the
intricacy and complexity of the functions offered in BMW’s premium luxurious cars has multiplied
these last few decades based on increase safety features and connectivity thus increasing the
manufacturing cost even more. These increasing expenses is forcing BMW to increase its prices which
has backlashed with Customer Brand Based Equity for selling overpriced vehicles.
BMW’s Future Plans
The BMW brand will continue to set the bar high when it comes to innovation, design and
technology. This will continuously cause a constant battle with their competitors within this luxury
level or higher category. BMW must maintain its prestigious brand identity and try to maintain their
momentum by evolving its brand, developing new products and push the boundaries of the automotive
industry. An abundance of options for the automotive buyers exists wherein vehicle models have
similar functionality and characteristics. BMW will need to manufacture a unique product and service
that will address the needs and preferences of its current consumers and new consumers alike.
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Appendices FIGURE 1: VALUE CHAIN ANALYSIS
Figure 1: Adapted Value Chain Analysis by Hwee (2015). Source: Building & Sustaining Strategy: Bayerische Motoren Werke (BMW)–Automotive Industry
FIGURE 2: BMW GROUP PRODUCTION PLANTS
BMW Group Production
Plant locations outside
Europe
BMW Group Partner
Plant locations outside
Europe
BMW Group Research and
development network outside Europe
Araquari,Brazil Hosur, India BMW Group DesignWorks, Newbury Park, US BMW Group Technology Office
US Mountain View, US
Chennai, India Jakarta, Indonesia BMW Group Engineering and emissions Test Center, Oxnard, US
Manaus, Brazil Cairo, Egypt BMW Group ConnectedDrive Lab China, Shanghai
Rayong, Thailand Kalinangrad, Russia BMW Group DesignWorks Studio Shanghai China
Rosslyn, South Africa Kulim, Malaysia BMW Group Engineering China, Beijing,
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China
Spatanburg, US BMW Group Engineering Japan, Tokyo,
Japan
BMW Group Engineering US, Woodcliff Lake, US
BMW Technology, Chicago, US
Figure 2: BMW Group Production Plants Source: 2016 BMW Annual Report FIGURE 3: BMW GROUP PRODUCTION PLANT IN EUROPE
BMW Group Production
Plant locations in Europe
Partner Plant locations in
Europe (Contract
production)
Research and development network in
Europe
Berlin, Germany Born, Netherlands BMW Group research and innovation Centre (FIZ), Munich Germany
Dingofing, Germany Graz, Austria BMW Group research and technology centre, Munich, Germany
Eisennach, Germany BMW Car IT, Munich, Germany
BMA Innovation and Technology Centre, Landshut, Germany
Landshut, Germany BMW Diesel Competence Centre, Steyr, Austria
Leipzig, Germany
Munich, Germany
Regensburg, Germany
Wackersdorf, Germany
Steyr, Austria
Hams Hall, Great Britain
Oxford, Great Britain
Swindon, Great Britain
Rolls Royce
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Manufacturing Plant, Goodwood, Great Britain
Figure 3: BMW Group European Production Plant. Source: 2016 BMW Annual Report
FIGURE 4: JOINT VENTURES AND JOINT OPERATIONS
Joint Venture BMW Brilliance Automotive
Holdings Ltd.
Joint Operation SGL Automotive Carbon
Fibres
Dadong (Shenyang), China Moses Lake, US
Tiexi (Shenyang), China Wackerdorf, Germany
Figure 4: Joint Venture and Joint Operations Source: 2016 BMW Annual Report
FIGURE 5: SUPPLIERS
Supplier Component and Parts
Brembo Brake Calipers, clutches, automatic transmissions
Thyssenkrupp Batteries of the BMW i3, Shock absorbers, suspension parts
Elringklinger Gasket and exhaust system
BorgWarner Turbo
Systems
R3S turbocharging system for diesel engines and VTG turbocharger with
low-pressure exhaust gas recirculation (EGR) technology.
Peiker Acustic GmbH
& Co
High speed mobile internet car.
Harman/kardon Interior music and audio system
Delphi Battery and electric vehicle charger components
Figure 5: Suppliers. Source: 2016 BMW Annual Report
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FIGURE 6: 2016 KEY AUTOMOBILE MARKETS
Figure 6: Key Automobile Markets. Source: 2016 BMW Annual Report
FIGURE 7: BMW GROUP PURCHASE VOLUMES
Figure 7: BMW Group Purchase Volumes. Source: 2016 BMW Annual Report
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FIGURE 8: MARKET SHARES BY MANUFACTURERS
Figure 8: Top ten manufacturers. Source: October 2016 Edmunds website. FIGURE 9: S.W.O.T ANALYSIS OF BMWS’S GLOBAL SUPPLY CHAIN
Figure 8: Global Supply Chain SWOT Analysis (Jurevicius, O., 2016)
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FIGURE 10: BMW GROUP’S SWOT ANALYSIS
Figure 10: SWOT Analysis (Dudovskiy, J., 2016) FIGURE 11: PORTER’S FIVE FORCES MODEL FOR BMW
Figure 11: BMW Porter’s Five Forces Analysis (Dudovskiy, J., 2016)
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FIGURE 12: BMW’S RANKING COMPARISON TO TOP 10 AUTOMOBILE BRANDS
Brands Miles Until
Worthless
Conversion in
Kilometers
1 Toyota 210,705 339,096.83
2 Honda 209,001 336,354.51
3 Ford 198,409 319,308.34
4 Dodge 198,266 319,078.20
5 Chevrole
t 195,754 315,035.53
6 Nissan 193,593 311,557.73
7 Subaru 189,370 304,761.47
8 GMC 188,584 303,496.53
9 Acura 178,947 287,987.28
10 Mazda 177,729 286,027.10
29 BMW 158,000 254,276.35
Figure 12: Automotive Brands Ranking
Source: AutoRemarketing.com FIGURE 13: BMW’S COMPARISON TO TOP 10 AUTOMOBILE BRANDS
Figure 13: Vehicle Lifetime Mileage. Source: AutoRemarketing.com
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