BMW Group Business Analysis: A Comprehensive Report

Desklib provides solved assignments and past papers to help students succeed.

BUSINESS ESSENTIALS
BMW GROUP

Table of Contents
INTRODUCTION........................................................................................................................2
BACKGROUND OF THE COMPANY............................................................................................3
PESTLE ANALYSIS......................................................................................................................3
ANALYSIS OF THE MARKET COMPETITIVENESS........................................................................5
MARKETING ANALYSIS............................................................................................................. 7
RECOMMENDATIONS...............................................................................................................9
CONCLUSION............................................................................................................................9
REFERENCES........................................................................................................................... 10
1

INTRODUCTION
In the current competitive business environment, business organizations are thriving for
gaining success and advantage over the competitors in the global business environment. A
business organization needs to have a proper understanding of its external and internal
environment for formulating effective strategic planning and business policies (Shenkar et
al., 2014). This business project will be based on a well-known automobile company ‘BMW
Group’ and would attempt to analyse the key business functions that support in increasing
the competitiveness of the company in the global automobile industry. Marketing plays a
great role in building a competitive position in the market. Therefore, the marketing
function of BMW would be analyzed here by applying different marketing concepts to make
appropriate recommendations to the company for attaining greater growth and
competitiveness in the global automobile industry.
[Source: BMW Group, 2019]
2

BACKGROUND OF THE COMPANY
Bayeriche Motoren Werk (BMW) is a well-known automobile and Motorcycle brand based
in Munich, Germany. In 1916, the company was founded as the aircraft engine
manufacturer and soon entered into the automobile industry. It is one of the largest
producers of motor vehicles in the world. It offers automotive and motor vehicle in the
premium segment with its three main brands; BMW, MINI and Rolls-Royce. The company
has a global sales network with its 31 productions and assembles facilities in 15 countries
(BMW Group, 2019). Throughout its 100 year history, the company has survived in the
competitive business environment with continuous development and reinvention in its
business strategies and policies. In present, more than 134,563 employees are working in
the company.
During the last year, the sales of Rolls-Royce have been increased by 22.2 % and the sales of
BMW have been increased by 1.8% (BMW GROUP, 2018). Revenue of the automotive sector
is increasing while the sales of Motorcycles are not according to the set targets. Therefore,
to maintain its competitiveness, it is important to understand the marketing environment of
BMW.
PESTLE ANALYSIS
PESTLE analysis technique can be effectively used to analyse the external environmental
factors that could affect the competitiveness of BMW. This would support in formulating the
effective strategies and business policies to BMW to successfully operate in the global
market (Terpstra et al., 2012). The PESTLE factors that may affect the functioning of BMW
are enlisted below;
FACTORS IMPACT
Political The introduction of new government policies, political corruption
and regulations could have a great influence on the BMW. The
political instability could affect the consumer’s ability to purchase as
well as also risk the company’s investments (Frue, 2019). Moreover,
the legislation related to the CO2 Emission influences the company
to adopt greener operations and resulted in the development of the
first hydrogen passenger car.
3

Economic Global economic fluctuations could affect the performance,
productivity, profit and valuation of BMW, Specifically, in the
European market, the fluctuations in the GDP, and tariffs may affect
the profitability of the company. Fluctuation in GDP, exchange rates
and increasing inflation and slow economic progress also affecting
the customer’s spending power (Haseeb, 2017).
Social BMW Group is required to make efforts to adjust with the cultural
differences in the different economies. The company has to modify
its products according to the needs of different economic markets.
Moreover, The customer predilection to the car as a status symbol is
transforming to be fuel-efficient and environment-friendly (Haseeb,
2017). However, BMW is successfully dealing with every type of
culture and customer behaviour and earning significant profit
through this.
Technological In terms of technology development, there is so much competition
in the automotive industry. Innovation and adaptation is the only
way through a company can sustain in the market. BMW has
ensured the inclusion of latest technology in its vehicle (Frue, 2019).
The latest, innovations in hybrid vehicles, automatic car parking and
autonomous driving are now the key focus of BMW. Technological
developments and inclusions would support in gaining
competitiveness.
Legal The norms and regulations of the different economies have to abide
by the BMW to successfully operate in the market. The company has
to abide by the motor vehicle laws, health and safety laws,
environmental regulations act as well as several copyrights and
patent laws related to the vehicles (Haseeb, 2017). The changes in
the laws and regulations can hinder or halt the performance and
profitability of BMW.
Environmental Nowadays, consumers have become more aware of the
environment and the earth. The consumers now desire to purchase
energy-efficient vehicles that do not pollute the air and environment
through emission (Frue, 2019). Customers are demanding more
hybrid, technology embedded and energy-efficient vehicles. BMW is
focusing on introducing more hybrid and electric models to comply
with the changing needs of the customers.
4

ANALYSIS OF THE MARKET COMPETITIVENESS
The market competitiveness of BMW can be effectively analysed by employing the value
chain analytical framework proposed by porter (Terpstra et al., 2012). This framework
would facilitate in outlining the business activities that can create value and advantage for
the company in the global market.
[Source: Jurevicius, 2013]
PRIMARY ACTIVITIES
Inbound logistics: - the BMW Group has around 13,000 suppliers that are located across the
international boundaries. With such a large number of suppliers across the globe, the
company can effectively minimize transportation cost along with maintaining the quality.
Most of the raw materials of BMW are sourced from Eastern Europe and Germany because
the majority of its production and assembly units are based in these two regions (Dudovskiy,
2016). This supports in reducing logistics cost and facilitates undisputed supply.
Operations: - the operations automobile operations of BMW are mainly divided into three
areas; body shop, paint shop and assembly. The operations unit of BMW focuses on
assembling the products in minimum time as possible.
5

Outbound logistics: - the company has a global distribution network that comprises around
3,310 BMW and 1,550 MINI and 149 Rolls-Royce dealerships across the world. around 63%
of the new Vehicles of BMW group are transported by rail (Scholz, 2015). The company
exercises three patterns of distribution involving direct sales to customers, selling through
dealers and selling through distributors.
Marketing and sales: - the targeted market of BMW is the people between the ages of 25-
40 years with the successful image. It is positioned as a premium brand in the global market.
The company uses print and digital media for promoting its products (Dudovskiy, 2016).
Social media is proved to be a cost-effective marketing channel for the company to reach
out to the global audience. The efficient marketing mix and successful brand image support
in increasing sales of BMW.
Services: - exceptional quality after-sales services is one of the core sources of competitive
advantage for BMW. BMW is recognized as the outstanding customer service and business
performer through introducing innovations and improvements in its customer services
provisions (Scholz, 2015). The after-sales services of BMW involve, Maintenance cost,
inspection, BMW hotline, original parts for repair and free of charge service appointments.
SUPPORT ACTIVITIES
Firm infrastructure: - the company has well-organised management and monitoring system
that works on through the different departments such as headquarters, research and
development, production, sales and marketing, water use, waste management, and office
recycling to manage the different operations of the business.
Human resources: - BMW is focusing on acquiring talented professionals and recent
graduates through drive programme and global leadership development programme.
Currently, the company has a workforce of more than 134,563 employees (Dudovskiy,
2016).
Technology development: - For copying the rapidly changing technology, The Company
highly invests in the research and development programmes the company is focusing on
bringing technological changes in its products (Scholz, 2015). Currently, it focuses on hybrid
technology, active steering, xDrive and laser light technology and Dynamic stability control.
6

Procurement: - for procurement of the raw material of BMW, BMW uses different types of
buying channels such as e-purchasing, tele-purchasing, and other web-based tools. For
improving its procurement, the company is focusing on utilizing opportunities and
leveraging potential, managing and minimizing risks, sustainability training and has also
developed Aluminium Stewardship Initiative (ASI) (Dudovskiy, 2016).
MARKETING ANALYSIS
Marketing functions act as the key player in developing and retaining the desired position
and image in the market. It is quintessential to gain an advantage over the competitors. the
marketing strategies of any business organisation are generally based on the key elements
of the marketing mix i.e. 7P’s of marketing (Terpstra et al., 2012). Therefore, by analysing
the 7P’s of marketing of BMW, the current market position, strategies and competitiveness
of BMW can be effectively analysed.
[Source: Terpstra et al., 2012]
7

Product: the product range of BMW is the key aspect of its success. The company provides
high-quality luxury cars and motorcycles in the market. Majority of the BMW Products are
standard across the continents while some offers a high level of personalisation in a specific
market (BMW Group, 2019). It offers premium sedan, SUV and sports cars and two-
wheelers. The company focuses on continuous innovation and improvements in its products
to remain competitive in the market.
Price: BMW offers high-end luxury automobile and is considered as the status symbol in the
market. The brand prices of Rolls-Royce and MINI are a bit higher than the standard BMW
products range. With its luxury pricing strategy, the company classifies itself as a desirable
segment in the market (Mathur, 2016). But for entering into the newer market like INDIA,
the company has adopted a dynamic pricing strategy to compete in the market.
Promotion: the company has a well-recognised image in the global market. it promotional
strategy focuses on aggressive advertising using different media channels like magazines,
social media, TV and billboards etc. the company also sponsors big sports events and mainly
relies on pull strategy (Atwal and Williams, 2017). The promotion strategy of BMW enables
to ensure continuous brand awareness.
Place: the company follows the lean distribution model and its products are available
through around 5000 dealerships across the different locations of the world. The company
has massive production facilities that cover its global reach through over 15 countries. This
has also enabled to expand the market and earn higher competitiveness.
People: the company has a diverse workforce that is spread across the different locations of
the world. Until 2018, there were around 134,563 employees are working for BMW. The
company emphasises on onboarding young and talented employees through internship and
other programs with the prime focus on developing innovative products and greater
customer satisfaction (Yuying and Quingrun, 2018).
Process: the business process and operations of BMW are expanded across the national
boundaries. The company has a strategic network of manufacturers and dealers that
focuses on improving business process and quality with greater profitability.
8

Physical evidence: the differentiated appearance and design of BMW serve as the physical
evidence for BMW that distinguishes the brand from its other competitors (Yuying and
Quingrun, 2018). The beautifully designed and innovative products are the core identity of
BMW. Moreover, the improved after-sales services are serves as the physical evidence of
BMW.
RECOMMENDATIONS
Being one of the leading premium automobile brands in the global industry, BMW confronts
with drastic competition and challenges in the global economy. The afore-mentioned
analysis has suggested that the company is beholding the greater brand image and value in
the market as well as it is also facing a tough competition and challenges due to rapid
technological change, changing customer preferences and regulations. Moreover, global
brands like Mercedes and Toyota and such other brands are creating great competition in
the market that may affect the profitability and performance of BMW. Therefore, it is
recommended that the company should take initiates to enhance its technology and global
supply chain to gain an advantage over its competitors. Along with focusing on upgrading
business operations, BMW should also emphasise on CSR programs and sustainable
business operations.
CONCLUSION
The report has discussed the different aspects of the marketing function of BMW that
affects the business profitability and performance in the global market. Through this report,
it has been identified that BMW is one of the strongest competitors in the luxury or
premium automobile segment across the world that produces world-class competitive four-
wheeler and two-wheeler. The External environment of BMW creates greater opportunities
for the company with limited threats that could be mitigated with the business strategies
and strengths of the organisation. Besides this, few recommendations have been provided
for facilitating higher growth and competitiveness for the company in Future.
9

REFERENCES
Atwal, G. and Williams, A., 2017. Luxury brand marketing–the experience is everything!. In
Advances in luxury brand management (pp. 43-57). Palgrave Macmillan, Cham.
BMW Group, 2018. Annual Report 2018. (Online) available at
https://www.bmwgroup.com/content/dam/bmw-group-websites/bmwgroup_com/ir/
downloads/en/2019/hauptversammlungen/BMW-Group-Annual-Report-2018.pdf Last
accessed on 23rd July 2019.
BMW Group, 2019. OUR STRATEGY. (Online) available at
https://www.bmwgroup.com/en/company/strategie.html Last accessed on 23rd July 2019.
BMW Group, 2019. Who we are; The BMW Group company profile. (Online) available at
https://www.bmwgroup.com/company Last accessed on 23rd July 2019.
Dudovskiy, J., 2016. BMW Value Chain Analysis. (Online) available at https://research-
methodology.net/bmw-value-chain-analysis/ Last accessed on 23rd July 2019.
Frue, K., 2019. PESTLE Analysis of BMW: Shaping the automotive industry. (Online) available
at https://pestleanalysis.com/pestle-analysis-of-bmw/ Last accessed on 23rd July 2019.
Haseeb, 2017. Pestle Analysis of BMW. (Online) available at
http://marketingdawn.com/pestle-analysis-of-bmw/ Last accessed on 23rd July 2019.
Jurevicius, O., 2013. Value Chain Analysis. (Online) available at
https://www.strategicmanagementinsight.com/tools/value-chain-analysis.html Last
accessed on 23rd July 2019.
Mathur, S., 2016. We don’t run our pricing strategy based on the market economy: BMW
India president. (Online) available at
https://economictimes.indiatimes.com/industry/auto/cars-uvs/we-dont-run-our-pricing-
strategy-based-on-the-market-economy-bmw-india-president/articleshow/69360531.cms?
from=mdr Last accessed on 23rd July 2019.
10

Scholz, A., 2015. NEW TECHNOLOGIES AND INNOVATION IN THE SUPPLY CHAIN OF BMW
GROUP. (Online) available at https://images.valuechain.be/2015331103055570-bmw-
supply-chain-innovations-mar-2015-new-tech-scm-1503005-vrijgeven.pdf Last accessed on
23rd July 2019.
Shenkar, O., Luo, Y. and Chi, T., 2014. International business. Routledge.
Terpstra, V., Foley, J. and Sarathy, R., 2012. International marketing. Naper Press.
Yuying and Quingrun, 2018. Global marketing strategy of BMW. (Online) available at
https://globalmarketingprofessor.com/global-marketing-strategy-of-bmw/ Last accessed on
23rd July 2019.
11