Case Solution on Bmw's Prototyping

Case Solution On Bmw's Prototyping

Table of Contents

Business-level Inefficiencies and Challenges 1

Prototyping at BMW 1

Pros and Cons of the Current Prototyping System 2

Pros and Cons of the Proposed Prototyping Process 2

Disadvantages of complete (or majority) outsourcing 3

Recommendations for prototyping process 3

Major Recommendations 3

Minor Recommendations 4

Recommendations to achieve a goal of releasing new series each year 4

Exhibit 1: Porter's Generic Strategies 5

Exhibit 2: Types of Prototypes 6

Business-level Inefficiencies and Challenges

* Increased competition: BMW produces luxury cars catering to a very small market segment (Focused Differentiator, Exhibit 1). As per the case facts, by 1990, the Japanese new entrants into the luxury car segment had become serious contenders, eating away the market share with their luxury cars being priced substantially below the competitive European models. Though prices were a less important factor in this segment, this was

clearly a threat to the existing players.

* Releasing not just incremental models: Unlike their Japanese competitors, BMW releases completely new models and not just models which are an incremental improvement over a previous model. Consequently the lead times involved are different since development of a completely new model does need working on the model from the scratch.

* Time to market: Owing to the prototyping process and the guiding principle of releasing completely new models that BMW follows, the development lead time for BMW is on an average six years, as against their Japanese competitors which have a lead time of 4 years. Thus, BMW was able to produce new models once in 8 years.

* Conforming to high design standards: In order to produce a model that is not only technically sound but also aesthetically excellent and durable, they have to spend more time and effort in styling than almost any other car company.

* Use of latest technology: In order to be the leaders in technical...