mbw case study
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BMW automobiles Case Study 3
Case Study from Gerry Johnson, Kevan Scholes, Richard Whittington, (2011), Exploring Corporate Strategy, FT Prentice Hall, 8th edition
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Introduction• A Prominent German automobile manufacturer• BMW Group - Diversified operations - automobiles, motor
cycles, Software Products, Financial services and Lifestyle• Owns strongest premium brands in the automobile industry
(BMW, MINI and Rolls-Royce)• Corporate Strategy -"Strategy Number ONE" - become the
world's leading provider of premium products and premium services for individual mobility
• Case is about the automobile industry in mid 2000 and BMW's road to sustain success in 2000s.
• Case mainly focused on High performance saloon automobiles from BMW.
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PESTLE Factors• Political• Economic
– Power towards Asian from Europe (Brice countries)– Exchange rate fluctuation– Cheap labor cost from Asian countries (China)
• Social – Life style changes
• Legal – Tax registration affects on profitability
• Environment– From Consumerism to environment awareness, protection
Key Take out : The industry dynamics are changed from after 2nd world war era and today’s context. So PESTLE factors have affected to the customers expectations and
decision making process.
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5 force analysis• Potential entrants- High
– There is a significant threat from new entrance.(through JV and alliances)
• Product substitute – High– Segment specific substitutes are high,
• Power of buyers – High – Many choice, Over supply in the market, customers are benefited
from competition, (Zero % lease, insurance
• Power of Suppliers – Moderate– Backward integration is possible for the manufacturers but suppliers
produce unique items to selected manufactures only
Rivalry
New Entry
Buyers
Substitute
Suppliers
Completive Rivalry – HighThreat of new entrance, Industry is in matured stage, low growth , quality is not a differentiation option and exist is difficult
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A Strategic Group Map for the Automotive Industry (1990)Strategic Mapping
Product Line Diversification/Portfolio
Perc
eive
d V
alue
/Qua
lity
Low
Med
ium
Hig
h
Special Prod. Mass Prod./Limited Mass Prod./Full
Ford
Jaguar
RollsRoyce
Volvo
Toyota
Mercedes
Nissan
Honda
LexusAudi
BMW
Key takeout: Equal size of players in SBU level who closely compete each other. Each players success depends on degree of responsiveness to the customers’ value
creations & adopting to the new business environment
SBU
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Success of BMW
Core Competencies
• Brand: associate with quality high performance, luxury & driving dynamics
• High qualified labor force
• Control on supply chain & relationship
• Flexibility of production facilities & size of the facilities.
Critical Success Factors
• Brand reputation• Customer loyalty• Global Positioning -
Effective communication to differentiate the brand/product in develop & developing markets
• Effective distribution• Sound management
of sales• Product portfolio
Sustainable Competitive Advantage
• Continuous value creation to the customer to meet changing value preposition
• Strategic change to adopt to the new business environment & competitiveness
Supportive Activity
Firm InfrastructureHuman Resource Management
Technology
Procument
Primary Activities
Inbound Logistics Operations Outbound
LogisticsMarketing
& Sales Service
Margin
Margin
BMW known as a premium brand and struggling in sustain competitive advantage
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Strategy Clock -• Differentiation –With price premium – perceived
added value sufficient to bear price premium
• Differentiation platform changing responding to the environment & competitiveness– Quality is no more a differentiate
factor, – emotional bond, manage brand as a
status symbol by responding changing customer preference
4
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Concerns of BMW strategies • Continuous Product development – Fast NPD process could loose the focus and low quality
products which can lead to brand image deterioration
• Product portfolio• Image Cannibalization among different series of models• Flattering of the features to cost reduction of different
model due to competitive pressure
• Future survival due to Small size of the company• Decision on alliance & take over• Failed on Land Rover• New alliance with Lexsus ?
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Possible Recommendation • More focus on emerging countries without
deteriorating the brand image• Get the cost advantage through 1 series and
X3 series without cannibalizing expensive model
• High global presence to reduce currency risk• Strategic alliances of competitors
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Q&A
Thank you