BMW Case Study: Strategic Analysis and Competitive Advantage

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Business Strategy
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Table of Contents
Introduction......................................................................................................................................3
LO1 Analyze the impact and influence which the macro environment has on an organization and
its business strategies.......................................................................................................................4
P1 Applying appropriate frameworks analyze the impact and influence of the macro
environment on a given organization and its strategies...............................................................4
M1 Critically analyze the macro environment to determine and inform strategic management
decisions......................................................................................................................................6
LO2 Assess an organization’s internal environment and capabilities.............................................7
P2. Analyze the internal environment and capabilities of a given organization using
appropriate frameworks...............................................................................................................7
M2 Critically evaluate the internal environment to assess strengths and weaknesses of an
organization’s internal capabilities, structure and skill set..........................................................8
LO3 Evaluate and apply the outcomes of an analysis using Porter’s Five Forces model to a given
market sector....................................................................................................................................9
P3 Applying Porter’s Five Forces model evaluate the competitive forces of a given market
sector for an organization............................................................................................................9
M3 Devise appropriate strategies to improve competitive edge and market position based on
the outcomes..............................................................................................................................11
M4 Produce a strategic management plan that has tangible and tactical strategic priorities and
objectives...................................................................................................................................14
D1 Critique and interpret information and data applying environmental and competitive
analysis to produce a set of valid strategic directions, objectives and tactical actions..............14
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Conclusion.....................................................................................................................................15
References......................................................................................................................................16
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Introduction
The deep analysis of the external environmental factors is very essential as because these factors
may have the strength or sometimes the negative impact on the business operations of the
organizations. In order to control both the internal as well as the external environmental factors,
“BMW” need to frame out & implement the strategic policies & practices in an effective manner
so that the increased & sustained growth can be enhanced for achieving the overall common
organizational goals & objectives. The automobile industry “BMW” is the German Multinational
Company which was founded in the year 1945. “BMW” is one of the topmost producers of the
motor vehicles considering the twelfth position in the whole World. The most effective &
efficient business strategies are needed to be implemented by the company for the wide
expansion in the competitive market (Majumdar and Bhattacharya 2014).
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LO1 Analyze the impact and influence which the macro environment has on
an organization and its business strategies
P1 Applying appropriate frameworks analyze the impact and influence of the macro
environment on a given organization and its strategies
The most important section of the “Macro Environment” which is also known as the external or
the PESTLE analysis is the initial step of the “Strategic Analysis”. The concept of the traditional
cycle is being eliminated with this process. Those factors which are not controlled by the
business organizations are being included under the “Macro Environment”. The main purpose of
analyzing the macro environment is to identify & determine all the effective opportunities &
negative threats which can greatly affect the operations of “BMW”. In order to strengthen &
enhance the deep understanding of the macro environment, the company should have the
effective networks with the political leaders, checking out the financial documents & looking out
the articles or the magazines (Birnleitner, 2013).
Following are the PESTLE factors which are to be considered effectively while conducting the
proper analysis of the environment for the company, “BMW”:-
 Political: It includes the legal laws & government regulations which can affect the
business plans & strategies of the automobile industry, BMW. The company needs to
consider all these political changes & also implement effective measures to control the
political issues in the business organization. The changes in the payment of tax & in the
foreign policies are to be considered properly.
 Economic: These factors include the exchange rates, the global economic growth and
many other. A large amount of revenue is being increased with the large production of
cars & the increasing demand (Tehrani and Rahman, 2014). This large production has
also increased the GDP rate. These factors may change & the market may come down.
Hence, these factors are to be necessarily considered by the company.
 Social: The cultural & the demographic changes which can affect the buying pattern &
the capacity of customers at the global level are being included under the social factors.
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During the recession in the market, the buying patterns can be changed (Birnleitner,
2013). It also includes the harmful environmental issues which are being caused by the
harmful emissions of the automobile industries.
 Technological: The competitive advantage can be enhanced with the new & innovative
technology in the company. The automobile industry, “BMW” can increase its profit
margins with the new as well as the sophisticated designs. Any environmental pollution
being caused by the new technology must also be considered.
 Environmental: These factors include the awareness of “global warming, greenhouse
effect”. The needs & demands of customers can also get changed towards the eco-
friendly cars for preserving the environment.
Legal: The strict rules or the norms are being included under it for reducing the pollution and the
business organizations need to strictly imply those defined norms so that the organizational
growth cannot be hampered (Birnleitner, 2013).
All these external macro environmental factors are to be effectively controlled with the
implementation of the most effective measures for smooth enhancing or organizational
operations. The business managers of “BMW” have to grab the favorable opportunities to control
& reduce the unfavorable or negative threats. The internal business strategies & policies must be
in accordance with the changing legal policies & government regulation. Therefore, the new &
innovative technologies must be manufactured by “BMW” for enhancing the wider expansion &
getting the lead in the competitive market (Wolf and Floyd, 2013).
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M1 Critically analyze the macro environment to determine and inform strategic
management decisions.
The implemented strategic decisions by the business organization are being greatly influenced by
the external environmental factors which are to be effectively analyzed with the help of PESTLE
analysis. All the external changes in the business environment can be accessed by “BMW” to
respond more effectively & gain a competitive advantage. For the departments of “strategic
management, human resource department, and marketing” the PESTLE analysis is proved to be
the most appropriate concept. The level of understanding the political, social, economic,
technological, legal & environmental factors will equally affect the effective manufacturing of
the products & also enhance the organizational development. The threats must be reduced or
eliminated with grabbing effective opportunities. The strong strategic decisions can be
encouraged when the external factors are being controlled with the help of implementing
efficient measures (Banahene and Mensah, 2016). The external factors are necessary to be
controlled for implementing the most appropriate decisions & for the enhancement of effective
planning for the future.
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LO2 Assess an organization’s internal environment and capabilities
P2. Analyze the internal environment and capabilities of a given organization using
appropriate frameworks
Along with the external environmental factors, it is very essential for the business organization to
analyze the vital components of internal factors such as the behavior & attitude of the employees,
the department of management & also the overall organizational culture. In order to enhance the
dedication & encouragement level of all the employees in the business organization, the most
effective training sessions must be conducted by the business managers. Following are the
internal factors which are being explained in the context of “BMW”:-
 The system of Value: It includes the “ethical beliefs” which are to be implemented in the
organization for achieving the defined objectives. Identifying the nature or the behavior
of all the stakeholders of the company is very necessary for “BMW”. The company has
its own defined ethics in accordance to the policies & procedures which are to be applied
& achieved effectively.
 Goals & Objectives: To gain a competitive advantage is the main aim of “BMW” apart
from earning a higher amount of profits. This aim can be achieved by the company when
it will be able to enhance the higher satisfaction level of all the customers (Banahene and
Mensah, 2016). “BMW” need to look out the overall operations which are directed &
guided to be accomplished in accordance with the business policies & strategies.
 Organizational Structure: The business organization structure of “BMW” includes the
“independent directors, shareholding processes, their distribution, the board of directors
& the performance management department”. The business strategies are being
influenced by the complete structure of the business organization so it needs to be very
effective & also positive in nature. All the business operations must be smoothly
enhanced so that efficient & prompt decisions can be implemented by the business
managers.
 Top Managers and Corporate Culture: The decisions which are being taken by the top
level managers are being implied by the “close corporate culture”. The other members are
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not allowed to interact in between unless & otherwise they are not been invited. The
“open corporate culture” is being applied by the “BMW” in which the lower level
managers & everyone is allowed to participate in the effective decision-making process.
 Quality of Human Resource: The human resource is the greatest asset for each & every
business organization. It also includes the different skills, behavior, attitude, commitment
or dedication & many more. Different employees possess different unique qualities &
skills. The business managers assign the roles & responsibilities according to their skills
& capabilities. The employees of the company must feel motivated & encouraged while
performing their tasks so that the goals & organizational objective scan be achieved
effectively & efficiently (Indris and Primiana, 2015).
 Physical Resources & Technology: The innovative new cars are the most effective tools
of the business organization which can enhance the sustainability of the business for a
longer period of time. The production cost can be determined with the help of this
internal factor. For enhancing the new & unique innovation, the department of “Research
& Development” needs to be operated in an effective & efficient manner.
M2 Critically evaluate the internal environment to assess strengths and weaknesses of an
organization’s internal capabilities, structure and skill set.
The term “SWOT analysis” is also called the “SWOT matrix” which can be effectively
conducted by the business managers of “BMW”. Following are been described as the effective
strengths & unfavorable weaknesses:-
Strengths:
 The strong brand image.
 Most effective & strong capabilities of “Research & Development”.
 Strong & efficient innovation of products & services.
 Higher productivity of the employees.
 The product of “Motorcycle” as a niche product.
 Standard & higher quality of suppliers.
 The steady decrease in Co2 emissions.
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Weaknesses:
 The performance of “BMW” is poor in Asian Markets.
 Reduction in the production & weak or delay in deliveries.
 “Lack of Scale” as compared to the other strong competitors.
 The high amount of wages.
 The strategic alliances are too less.
The “BMW Group” needs to analyze both the strengths & opportunities in an effective &
efficient manner so that the innovative & talented skills or the capabilities of all the employees
can be enhanced properly in a better way, towards achieving the defined organizational goals &
objectives (Indris and Primiana, 2015).
LO3 Evaluate and apply the outcomes of an analysis using Porter’s Five
Forces model to a given market sector
P3 Applying Porter’s Five Forces model evaluates the competitive forces of a given market
sector for an organization.
The “Universal Strategy” is being used as the framework in the “Porter Analysis” for enhancing
the most efficient decisions in the company’s business strategies so that the “BMW Group” can
compete with all the external factors & also with the topmost leading business organizations. For
accessing the organizational factors, the five effective factors are being determined by “Michael
Porter” with the help of which the company can build up & also retain the strategic business
position in the competitive environment (Flemming, 2014). Following are the five factors of
“Porter Analysis” which are been examined effectively in relation to the organization of
“BMW”:-
 Rivalry among existing competitors: The intense rivalry among the automobile
industries can reduce the prices of the products because of which the overall amount of
profits can also be reduced. The rivalry may be raised with those competitors who
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possess the same size & same level (Yam, 2016). It also includes features such as lower
industries & the decreased rate of market growth and the barriers for the exit are very
high. This factor has a higher level of impact on the business organization of “BMW”.
 Threats of new entrants: This barrier includes the high amount of investment to be
incurred for entering into the automobile industry. The business organization “BMW”
is the top most leading brand in the whole World; hence it gives the tough competition
to all the organizations that are newly developed. It includes the factors such as the
higher amount of initial investments & the increasing amount of fixed costs, the limited
access to those suppliers who are specialized, the close relations with the existing ones
or for the longer-period of service contracts and the customer loyalty (Yam, 2016). This
factor has a lower impact on the “BMW Group”.
 Bargaining power of buyers: It is very essential for the business organization of
“BMW” to keep looking out the changing variations in the number of prices & also
implementing the most appropriate policy for gaining the competitive advantage. The
customers’ demands new & the most unique products from the business organizations,
also at the minimum price level. It includes the features such as purchasing the large
volumes, switching to the alternative product which is unique & also includes the low
amount of costs, undifferentiated products which can be replaced with the other
substitutes, the strategic importance of the products to the customers, the production
cost already known to the customers. This porter factor has a medium level impact on
the business organization.
 Bargaining power of suppliers: In order to determine those products which are being
supplied by a large number of suppliers, the “BMW Group” has the greatest
opportunity in relation to this as because it is the top most leading brand considering the
twelfth position in the competitive market (Waruwu and Sitompu, 2016). The company
needs to determine the effective business policies & strategies for meeting up the
demands of products & services. It includes the features of customized products of the
suppliers which are valuably differentiated, a higher amount of switching costs to the
alternative suppliers and the high dominance of the market by most of the suppliers.
This factor of Porter analysis has a high level of impact on the business organization.
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 Threat of substitute products & services: This factor of substitution threat of the
porter analysis requires the good relations to be maintained by the business
organization, enhancing the higher level of customer loyalty, zero amounts of penalties
or the lower switching cost for the potential customers, and following up the current
new & innovative trends (Waruwu and Sitompu, 2016). This factor has the medium
level of impact on the organization of “BMW”.
M3 Devise appropriate strategies to improve competitive edge and market position based
on the outcomes.
Following are the appropriate strategies which are needed to be implemented by the “BMW
Group” to implement these strategies for retaining the leading position in the competitive
market:-
 Cost leadership strategy: It includes the attractive prices of all the products & services
to enhance the competition level.
 Differentiation strategy: “BMW” can differentiate itself from other business
organizations with the help of the leading brand name.
 Innovation strategy: With the help of increased innovated products & services, “BMW”
can enhance the competitive advantage & can also ensure the innovative results &
benefits.
 Operational strategy: The specialized activities & organizational operations can help in
attaining the higher amount of profits. The other things are being implemented very
slowly & take a longer time period (Waruwu and Sitompu, 2016).
 Technological competitive strategy: With the enhancement of new & innovative
technologies, all the members in the business organization of “BMW” can enjoy the
competitive advantage.
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