Bmw Strategic Analysis

BMW:

BWM is a Germany based automobiles, motorcycle and engine manufacturing company which was established in the year 1917. It has its head office located in Munich and has operations in more than 150 countries across the globe (BMW 2011). Apart from the parent company, the company also owns the premium brands like Rolls-Royce and Mini (BMW 2011). The company has its main operations based in European and American Region and has total global workforce of 96,000 employees. The company is amongst the top 10 leading car manufacturers across the globe. More importantly it is amongst the few automobile companies that have not only sustained itself in the period of economic recession, but it has even managed to be profitable in its operations.

Success of the company

Brand image:

The success of the company can also be measured by the performance and the perception of the brand amongst the consumers. A highly successful company would enjoy a strong brand reputation in the market and the brand of an organisation becomes a driving force towards it success as much as its operational capabilities (McDonald and Sharp 2003). BMW has a strong brand image in the market. The group owns 3 major brands BMW, Rolls Royce and MINI, these are the top most brands in the world. The success of the BMW brand is highlighted from the fact that according to the survey conducted by BrandZ a market research firm, BWM was ranked in 2nd position in the list of the global brands in automotive industry and it was placed in 30th position in list of overall brands in the world (DATAMONITOR 2011)

Financial success:

The financial success of the company can be measured from the fact that the company had revenues of $80,283 Million for the year 2010. This was an increase of 19.3% when compared to the previous year financial result in 2009. However, the biggest boost to the profitability of the company can be measured by the increase in the net profitability of the company, the net profit for the year 2010 was $6762.3 Million in comparison to the $383.6 Million profit in the year 2009, the net profit of the company had increased by more than 17 times. Finally, the actual net profit derived by the company also increased by more than 16 % in a single financial year, the net profit was $4271.9 Million in the year 2010 in comparison to the $270.2 Million in the year 2009 (FAME 2011).

Strong sales:

The company has also experienced a strong growth in the sales of its automobiles which is responsible for the financial success of the company. In January 2011 the company was able to sell 105,177 cars across all its brands which was a 28% increase in the same period of the year 2010. In Europe region which one of the main economic region for the company, the company was able to increase the sales of its car by more than 19.3% (BMW Blog 2011). In US which is the 2nd most important market for the company the company has managed to increase its sales by 21.1%.

Value chain analysis:

According to Michael Porter(1996), in order to understand the firms competitive advantage in the market it is necessary to analyse what value is the each activity of the firms process adding to the final product which is giving them a competitive advantage over the others. Therefore, it is necessary to perform an analysis of the key activities in value chain of BWM to find out its strengths and weakness.

Primary activities:

Inbound logistics:

* The company has 17 manufacturing plants located in 6 different countries from where it also exports car to neighbouring markets (BMW Blog 2011).

* The raw material is acquired from local sources near the production plant and for the assembly plants, the nearest suppliers and production plant sends the raw material to keep the costs low.

* The company maintains a healthy relationship with the buyer which is one of its strongest points and makes them involved in the production process (Dieter 2007)

Operations:

* Just in time (JIT) concept is used to order raw material only when required to keep the inventory levels low and also minimise the wastage.

* If there are any problems in the production line of the car, then the operations are shut down until the particular problem is rectified, this prevents the same problem from taking place again.

Outbound logistics:

* The company follows a combination of hub model as well as assembly plants for the outbound logistics of the cars.

* The company has strategically located manufacturing plants in six different countries which not only service the demands of the local country but also acts as export hub for neighbouring markets where it cannot set up a complete Greenfield operations.

* The company also has 6 different assembly plants located in key markets of different countries, these markets are big enough for the company to have some presence but not big enough for full scale manufacturing operations.

Marketing and sales:

* Marketing is another key factors which has helped the company to gain a good position in the market.

* The company has product has different product offerings for different type of customers. The company constantly keeps on introducing newer variants of its existing models in every 3-4 years. The group also has brands like Rolls Royce for the ultra luxury and MINI for semi luxury, these brands offer cater to different category of customers in the market.

* In order to develop its brand image the company has presence in automotive sports like sports car racing, rally racing, touring car racing and Motor bike racing. The company also had a significant presence in Formula 1 racing but had to withdraw later due to contract problems.

Service:

* The approach by the company towards the customer service is their key strategic advantage in the market which other competitors find it difficult to achieve.

* The company has a system called Customer Oriented Sales Process (COSP) in place, wherein the product line can be altered to the consumers need and they can change their orders even very short time before car goes into production (BMW 2012).

* Using combination of internet and ICT the customers can choose from more than 500 customisation options, 350 model variations, and 90 different colours. This entire process takes place without involvement of any middle;