MBW Case Study
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BMW is a prominent German automobile manufacturer known for its premium brands like BMW, MINI, and Rolls-Royce. While BMW has been successful providing high-quality luxury vehicles, the automotive industry is changing with factors like globalization, new competitors, and shifting customer preferences. BMW's strategy of product differentiation through superior performance and driving dynamics now faces challenges sustaining its competitive advantage in the current environment.
MBW Case Study
- 1. BMW automobiles Case Study 3 Case Study from Gerry Johnson, Kevan Scholes, Richard Whittington, (2011), Exploring Corporate Strategy, FT Prentice Hall, 8th edition
- 2. 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.
- 3. 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.
- 4. New Entry 5 force analysis Supplier s Rivalry Buyers • Potential entrants- High Substitu te – 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 Completive Rivalry – High Threat of new entrance, Industry is in matured stage, low growth , quality is not a differentiation option and exist is difficult
- 5. Strategic Mapping A Strategic Group Map for the Automotive Industry (1990) High Mercedes BMW Rolls SBU Audi Perceived Value/Quality Royce Lexus Jaguar Medium Volvo Honda Ford Toyota Nissan Low Special Prod. Mass Prod./Limited Mass Prod./Full Product Line Diversification/Portfolio 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
- 6. Firm Infrastructure Margin Human Resource Management Success of BMW Supportive Activity Technology Procument Operations Marketing Outbound Inbound Logistics Logistics & Sales Service Primary Margin Activities Sustainable Core Competencies Critical Success Factors Competitive Advantage • Brand: associate with • Brand reputation quality high • Customer loyalty • Continuous value performance, luxury • Global Positioning - creation to the & driving dynamics Effective customer to meet • High qualified labor communication to changing value force differentiate the preposition • Control on supply brand/product in chain & relationship develop & • Strategic change to • Flexibility of developing markets adopt to the new production facilities • Effective distribution business & size of the • Sound management environment & facilities. of sales competitiveness • Product portfolio BMW known as a premium brand and struggling in sustain competitive advantage
- 7. Strategy Clock - 4 • 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
- 8. 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 ?
- 9. 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
- 10. Q&A Thank you
Editor's Notes
- #4: Can negatively affect to the value creation Image deteririzations ex, rolls roys/ chaina market