Strategic Management Analysis

This report provides an analysis of BMW's business strategy and operations, including SWOT and PESTLE analysis, market entry strategies, and more. The report also includes a strategic plan for BMW based on Porter's five forces analysis. BMW's current business strategy is focused on gaining a powerful brand image in the competitive automobile industry, with core values of innovation, technology, quality, reliability, performance, exclusivity, and customer satisfaction. The report also highlights the opportunities and threats faced by BMW in the industry.

Running head: STRATEGIC MANAGEMENT ANALYSIS
STRATEGIC MANAGEMENT ANALYSIS
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Author Note

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Executive Summary
The report is based on the analysis of the business strategy that has been developed by a
major luxury automobile based organization named BMW. The audit of the organization is
done with the help of SWOT and PESTLE framework and further strategic positioning
techniques have been implemented in order to analyse the organizational operations. A
strategic plan is developed with the help of the analysis of automobile industry in which
BMW operates. The Porter’s five forces framework is used for the purpose analysing the
industry. The existing and potential units of the organization have been analysed in the report.
The market entry strategy of the organization and strategies that are employed by BMW are
also a part of the analysis.

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Table of Contents
1. Business strategy........................................................................................................3
I) Definition of business strategy...............................................................................3
II) Description of business strategy based on the operations of BMW......................3
2. Organizational audit...................................................................................................4
SWOT analysis of BMW...........................................................................................4
PESTLE analysis of BM............................................................................................6
3. Strategic plan analysis................................................................................................9
a) Strategic plan for BMW.........................................................................................9
4. Analysis of market entry strategies..........................................................................12
a) Description of the market entry strategies...........................................................12
b) Horizontal and vertical strategies........................................................................14
c) Strategies implemented for meeting the objectives of stakeholders....................15
References....................................................................................................................16

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1. Business strategy
I) Definition of business strategy
Business strategy can be defined as a set of decisions or actions that are developed in
order to provide assistance to the entrepreneurs for achieving the specific business related
objectives. This is considered to be a master plan which is used by the management in order
to develop a competitive advantage in the industry and conduct the business operations in an
effective manner. The organization is thereby able to please the customers and achieve
desired goals that are set by the business (Barros, Hernangómez and Martin-Cruz 2016).
The strategy that is thereby developed by the organization is mainly related to the
desired direction, destination and image that is formed in the industry. The strategy can also
be defined as the set of competitive actions and moves that can be used by the organization in
order to reach the desired destination within the specified time. Business are based on three
different levels which include, corporate level strategy, business level strategy and functional
level strategy. The different levels of strategy are based on the requirements and goals of the
business organization as well (Daspit et al. 2017).
II) Description of business strategy based on the operations of BMW
BMW AG is a multinational organization of German origin that produces different
luxury motorcycles and automobiles. The organization was established in the year 1916 and
the headquarters are located in Munich, Bavaria. BMW manufactures motor vehicles in
different countries like, Brazil, Germany, India, the United Kingdom, the United States and
South Africa (Bmw.com 2019). The company has developed the position of the twelfth
producer of the motor vehicles in the world with the help of 2,279,503 vehicles that have
been manufactured by the organization. The automobiles that are developed by the

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organization are promoted under the brand name of BMW and the sub-brands of the
organization including, BMW N and BMW I (Bmw.com 2019).
The current business strategy that has been developed by BMW is based on the
gaining a powerful image of the brand in the competitive automobile industry. The business
strategy that has been implemented by the organization is thereby considered to be
foundation of the success which has been achieved by BMW. The core values of the
organization include, innovation, technology, quality, reliability, performance, exclusivity,
reliability and satisfaction of the customers. The slogans that have been used by the
organization are “The Ultimate Driving Machine” and “Sheer Driving Pleasure” (Demir,
Wennberg and McKelvie 2017).
The strategy of the organization is also related to the identification of the potential and
encouraging the levels of growth. The knowledge of ways by which the organization is able
to represent itself and proper recognition of the strengths are considered to be an important
part of the opportunities which are offered by BMW. The goals that have been attained by the
company are related to the fulfilment of challenges that are faced by the company (Durand,
Grant and Madsen 2017). BMW has been successful in expanding its operations in the
emerging markets or countries like, Brazil, India and China. The changes that take place in
the external environment are able to affect the strategies that are developed by BMW for
operations in the industry. The manufacturing plants of the company are located in different
emerging countries with the aim of reducing the costs based on manufacture (Dyer et al.
2015).
2. Organizational audit
SWOT analysis of BMW
Strengths –

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BMW is considered to be one of the most valuable brands in the entire world
and the net worth of the organization is more than 40 Billion US Dollars. The
brand has been placed in the position of second highest valued organization of
the world. The competitors of the brand are Toyota and Mercedes Benz.
The revenue streams of the organization are geographically diversified in
nature and the organization does not entire rely on the home markets for
revenues. High levels of revenues are gained by BMW from different other
countries or markets in the world (Engert, Rauter and Baumgartner 2016).
BMW has been able to develop a successful and effective partnership with
China and also aims at dominating the Chinese market of automobiles. BMW
has developed a partnership with a local Chinese organization named
Brilliance Auto Group.
The driving based experience that is provided by the organization has been
able to achieve high levels of excellence (Frynas and Mellahi 2015).
BMW has also developed a clear strategy in order to meet future challenges
and the trends that are a part of its operations in the market. The three major
goals of the organization include, e-mobility, autonomous driving and
mobility services (Ethiraj, Gambardella and Helfat 2018).
Weaknesses –
The brand portfolio of BMW consists of only three major brands including,
BMW, Rolls Royce and Mini. The organization has sold 338,466 models of
the Mini cars in the year 2016. The company is highly dependent on the sales
of its luxury cars for the revenues that are earned in the market.
The debts levels of BMW have started increasing between the years 2012 to
2015. This increase is mainly based on the huge investments that have been

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made in technologies which can be used in the electric vehicles (Hill, Jones
and Schilling 2014).
Opportunities –
The rise in fuel prices in future can increase the demands for the vehicles that
are developed by an organization like, BMW. High fuel prices will be able to
reduce the demands for products that are offered by other organizations like,
Ford, General Motors and Chrysler. This in turn will be helpful in the
reduction of competition for BMW (Karadag 2015).
The increasing demand for autonomous vehicles are able to provide major
growth opportunities to the organization. BMW will be able to increase the
levels of revenues in the industry by proper improvement of the automated
products (Hubbard, Rice and Galvin 2014).
The frequency of the release of new car models is a major factor that is able to
provide growth related opportunities to the organization for its future
operations in the industry.
Threats –
The levels of competition in the global market are increasing in a continuous
basis and it has a major influence on the revenue levels of BMW. The
development high level electric cars by Tesla is able to increase the
competitiveness in the market.
The changes that are implemented in the regulations developed by the
government are able to affect the costs based on production and manufacture
of BMW (Kasemsap 2014).

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The rates of slowdown of the automobile based market of the United States
have a major impact on the future operations of BMW.
PESTLE analysis of BM
Political factors –
The regulations and laws that are developed by the automobile industry are
able to affect the operations of BMW. The laws are mainly related to different
environmental norms that need to be followed by BMW in order to operate in
a profitable manner.
The foreign policies which are developed by the government and the tax based
laws play a vital role in automobile industry. The success based factors are
decided in an effective manner by the taxes which can influence the
organization (Meyer, Neck and Meeks 2017).
The automobile industry of Europe and the US has introduced new schemes
related to regulations which are able to produce the high mileage based cars.
Economic factors –
The economy of different countries in which BMW operates is affected by the
revenues that are gained by the organization. The excess levels of capacity of
the cars which are produced by the organization are able to affect the revenues
and the design of the products.
The decrease in rates of Euro has been able to influence the car makers in
Europe and their revenue streams (Michael, Storey and Thomas 2017).
The economic downturn that has taken place in the US automobile market also
has a major impact on the revenues of BMW.

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The buying power and levels of surplus capital in developing countries like
China and India have a major impact on the operations of BMW (Morschett,
Schramm-Klein and Zentes 2015).
Social factors –
The changes that have been detected in the demands of the customers have
affected the sales of BMW.
The buying pattern of consumers of BMW have also changed a lot in the
recent competitive environment.
The levels of awareness and different environmental issues have been able to
influence the behaviour of the consumers (Sakas, Vlachos and Nasiopoulos
2014).
Technological factors –
The increase in levels of technology is able to help in gaining competitive
advantage in the market.
The implementation of sophisticated and new designs is helpful for the
company to increase the margins.
The technologies that are able to cause environmental pollution need to be
restricted and modified (Simon, Fischbach and Schoder 2014).
Environmental factors –
The levels of awareness based on global warming, burnout and greenhouse
effect are considered to be important environmental factors that can affect the
operations of BMW.

9STRATEGIC MANAGEMENT ANALYSIS
The preferences and tastes of the consumers have changed and they are more
attracted towards the hybrid cars, eco-friendly cars.
The implementation of EURO norms in a strict manner have been able to curb
the levels of pollution in different developing countries. The regulations have
a major impact on the operations of BMW (Steinbach et al. 2017).
Legal factors –
The set-up of strict norms in the US and European markets are able to
implement many restrictions on the products of BMW.
The EURO norms have a major implication on the production and
manufacture based process of BMW (Trigeorgis and Reuer 2017).
BMW has been able to position the brand in global market with the help of its luxury
products. The strategic brand positioning technique can be implemented by BMW in order to
develop a long term marketing based strategy. The offers and image of the organization can
be developed with the strategic positioning of the organization. A distinct and valued image
of the organization has already been developed by the organization in the minds of target
customers (Wheelen et al. 2017).
3. Strategic plan analysis
a) Strategic plan for BMW
Porter’s five forces analysis of BMW
Threats of the new entrants – The threats of the new organizations depend on
challenges that are faced while entering the industry. The threats based on the entry of new
organizations in the automobile industry are low. The requirement of high amounts of capital
is considered to be a major factor that is able to reduce the threat that is faced by the

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organization. The development of proper reputation in the industry is not an easy process for
the new organizations (Dobbs 2014).
Threats related to substitutes – An image has been developed by the brand of BMW
that is considered to be luxurious and powerful in natured. The organization is positioned in
range of luxurious and exclusive models and many other car companies like, Mercedes,
Toyota and General Motors are able to provide substitutes.
Bargaining power of the buyers – BMW along with its competitors is positioned in
the exclusive range of products that are offered to the customers. The bargaining based power
of the buyers is considered to be high as they are able to decide the prices of the products.
The effect of environmental issues on the organizational operations is also able to increase
the levels of power of the buyers (Dobbs 2014).
Bargaining power of the suppliers – The supply chain management based system that
has been developed by BMW is highly effective. The relationship that has been developed by
the organization with the suppliers is an important part of the success that has been gained in
the automobile industry. The associations which have been developed by BMW have
provided support to the operations of the organization (Wheelen et al. 2017).
Competitive rivalry – The organizations that operate in the automobile industry face
cut throat competition. BMW also faces major levels of competition from the other luxury car
based organizations. The levels of competitive rivalry are high in the automobile based
industry. The dominant markets for the sales of BMW mainly include, the European markets
and US markets. The Asian market has also become competitive in nature and has increased
the rivalry between the organizations (Trigeorgis and Reuer 2017).
Existing and the potential business units of BMW –

11STRATEGIC MANAGEMENT ANALYSIS
The existing business units of BMW are mainly based on the premium car segment.
The three major brands that are offered by the organization mainly include, BMW, Rolls
Royce and Mini. The BMW Group has been able to develop its position in the industry with
the help of the manufacture of motorcycles and automobiles which are able to provide
premium levels of mobility and financial services as well. BMW currently operates more than
30 assembly and production facilities in around 14 facilities which have developed a global
sales based network in greater than 140 countries. The other two major business units that
have been developed by BMW mainly include, the segment motorcycles and the segment of
financial services as well (Simon, Fischbach and Schoder 2014).
Potential business units of BMW - The potential business units or future directions
of BMW need to be based on the growth markets. The organization need to aim at improving
the services that are offered to the consumers in order to develop the long term sustainable
operations in an effective manner. The major growth markets of BMW in the industry
include, USA, Brazil, Turkey, Eastern Europe, Russia, China and India. The increase of focus
of the organization in these markets will be able to provide opportunities to the company
based on effective levels of growth (Meyer, Neck and Meeks 2017).
Growth based options of BMW – The growth options of BMW have been mainly
based on the levels of profitability rather than the increase of volumes of operations. The long
term strategy that has been implemented by the organization is related to doubling of sales of
the organization by the year 2020. The growth options of BMW are related to strategy which
is focussed on sustainable operations of the organization. The acquisition based operations of
the organization are considered to be a major growth option that can be considered by BMW
(Hubbard, Rice and Galvin 2014). The potential acquisitions that can be made by BMW are
important for the future growth of the levels of profitability and revenues of the organization
as well. BMW can consider the acquisition of one of the premier brands of Ford Motors. The

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weaknesses that are present in the product line-up of the organization can be reduced by
BMW in order to maintain the profitable operations. The organization can also aim at
expanding its operations in new segments of the market in order to continue the profitable
operations. The premium services and vehicles that are offered by the organization are able to
play a key role in the development of growth based strategies by BMW for its future
operations in the automobile industry (Frynas and Mellahi 2015).
4. Analysis of market entry strategies
a) Description of the market entry strategies
Market entry strategy can be considered to be a planned process of distribution and
method of delivery of different services and goods that are offered to a new target audience or
market. The services that are related to export and import of the services mainly refer to
effective creation, establishment and further management of the contracts in the foreign
countries. The organizations aim at expanding their operations in the foreign markets in order
to increase their presence in the market and the levels of revenues as well (Tulung 2017). The
different market entry based strategies that can be implemented by the global organizations
are as follows,
Exporting – The commercial activities related to the shipping and selling of
the goods to foreign countries can be defined as a part of foreign market entry
mode. This is considered to be the most prevalent approach related to market
entry that is implemented by the organizations. The process of exporting is
direct or indirect in nature. The direct export is based on the ways by which
the organizations directly sells the products to consumers in a foreign country.
On the other hand, the indirect exporting process is based on the ways by

13STRATEGIC MANAGEMENT ANALYSIS
which the organization sells the products to some buyers and further to the
customers (Hollender, Zapkau and Schwens 2017).
Contractual agreements – The contractual agreements that are developed by
the organizations can be of long term and non-equity associations that are
formed between the organizations in two different countries. The different
approaches in this case mainly include, licensing, franchising, contract
manufacturing, management contracting and turnkey projects (Hitt, Li and Xu
2016).
Licensing – The licensing based process is based on the rights and the grants
to the intangible properties that are provided by one organization to another. In
this process, the licensor is able to receive an amount of royalty fee from
licensee. The organizations in this case are able to share the technology, brand
names between in each other (Vassileva and Nikolov 2016).
Franchising – The process of franchising is considered to be a specialized
method of licensing which is based on the ways by which the franchisor is
able to sell the intangible properties to franchisee. The franchisee is also
supposed to follow the strict rules in order to conduct the business based
operations.
Turnkey projects – A service or product that can be utilized without any
additional work by a buyer is considered to be a part of the turnkey projects.
The contractors thereby agree to handle the details that are related to a foreign
client and they are also responsible for providing training to the operating
personnel (Zachary et al. 2015).
Contract manufacturing – The process of contract manufacturing is based on
the proper establishment of an effective working agreement between two

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major organizations. An organization is responsible for providing the custom
made production parts and different other materials for the client organization.
Management contracting – A management based contract is considered to be
an arrangement that is related to the operational control of an organization
based on the contract that is developed by another organization in order to
perform different managerial functions. The process of management
contracting is mainly based on the application of different methods of
performing some actions (Leonidou et al. 2015).
Joint ventures – This is considered to be an arrangement that is based on two
or more than two parties which agree to pool the resources that are possessed
by them.
Strategic alliances – Strategic alliances is a major agreement that is made
between two or more parties in order to pursue the similar objectives.
Direct investment – This is considered to be a process that is implemented by
a foreign business organization in order to control the interest in the enterprise
(Vassileva and Nikolov 2016).
The foreign market entry mode that has been implemented by BMW for entering
different countries is based on direct investment method. BMW has aimed at penetrating the
market of various countries with the help of the development of the manufacture based
facilities in the country. The manufacture of the products of the organization are based on the
facilities that are developed by BMW in order to manufacture the products and different parts
of the products that can be offered to the customers in various foreign countries (Tulung
2017).

15STRATEGIC MANAGEMENT ANALYSIS
b) Horizontal and vertical strategies
Vertical integration can be considered to be a competitive type of strategy that is
based on the control that is taken by the organization over many stages in the process of
production or the distribution of the products. The vertical integration of strategies is able to
ensure the full control on supply of raw materials for manufacturing the products. The two
types of vertical integration include, forward integration and backward integration (Wheelen
et al. 2017).
Horizontal integration is considered to be another type of competitive strategy which
is used by organizations. This is mainly based on the acquisition of the business based
activities which belong the same level of value chain.
The process of horizontal integration is implemented by BMW in order to expand its
operations and to increase the presence as well. The organization aims at developing proper
alliances and acquisitions in order to expand the operations (Trigeorgis and Reuer 2017).
c) Strategies implemented for meeting the objectives of stakeholders
The Ansoff matrix method can be implemented in order to analyse the strategies
which have been implemented for meeting objectives of different stakeholders. The four
major parts of the model are as follows,
Market penetration – The process of market penetration is based on increasing the
share in the market with the achievement of growth with the existing products in the markets.
The growth and expansion is considered to be an important part of the strategy of BMW
which has been used in the Malaysian market (Demir, Wennberg and McKelvie 2017).

16STRATEGIC MANAGEMENT ANALYSIS
Product development – BMW aims at developing new products on within an interval
of three months. The organization has been launching different products based on the strategy
that has been named as “product and market offensive”.
Diversification – The strategy is based on the selling of new products in the markets
with the proper implementation of the existing resources and capabilities that are possessed
by BMW (Frynas and Mellahi 2015).
Market development – The organization aims at developing the existing in new
market areas. The growth strategy of the market is related to the development of products.
Different markets that are targeted by BMW mainly include, Asia, Europe and the US
(Engert, Rauter and Baumgartner 2016).

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