BMW Strategic Analysis in the UK: Market Position and Development

This report provides a detailed strategic analysis of BMW's position in the UK market. It begins with an examination of macro-environmental factors, including political and economic influences such as CO2 emission laws, EU legislations, currency exchange rates, and socio-cultural trends affecting consumer behavior. The report then assesses BMW's industrial position using Porter's Five Forces, highlighting competitive rivalry and the threat of substitutes. Internal resources and capabilities, such as supply costs, experience, and production design, are evaluated, followed by a SWOT analysis identifying strengths, weaknesses, opportunities, and threats. Finally, the report considers stakeholder perspectives, including value networks, trust, acceptance, and assurances, to provide a comprehensive view of BMW's strategic landscape in the UK. Desklib offers this and many other solved assignments for students.

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Executive Summary
BMW is a major European brand form car manufacturing and sales. In this report emphasis
have been laid on the manufacturing unit of BMW. IN UK there are two major political
factors that affect the business if car manufacturing in UK. The first is the new laws proposed
against CO2 emission and the second is the alterations in the EU legislations in the context of
the ELV recycling. Essential economic factor that influences BMW’s performance in the
currency exchange rates. Other essential factors like purchasing powers as well as brand
development in other countries also influences the company. The use of latest technology and
innovative product design is the USP of the brand. The Porters five forces analysis of the
company also reveals that the brand equity of the company is higher and that is why they
hold a competitive advantage over the smaller brands as well as over the customer and
suppliers.

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Table of Contents
1. Introduction............................................................................................................................4
2. Discussion..............................................................................................................................4
2.1 Analysis of the macro environmental factors...................................................................4
2.1.1 Political Factors.........................................................................................................4
2.1.3 Socio-Cultural Factors...............................................................................................6
2.1.4 Technological Factors................................................................................................6
2.1.5 Environmental Factors...............................................................................................7
2.1.6 Legal Factors..............................................................................................................7
2.2 Industrial Position.............................................................................................................7
2.2.1 Porter’s Five Forces analysis.....................................................................................7
2.3 Internal Resources and Capabilities.................................................................................8
2.3.1 Supply Costs..............................................................................................................8
2.3.2 Experience.................................................................................................................9
2.3.3 Production Design......................................................................................................9
2.3.4 SWOT analysis........................................................................................................10
2.4 Stakeholder Perspectives................................................................................................10
2.4.1 Value Network for BMW........................................................................................10
2.4.2 Trust.........................................................................................................................11
2.4.3 Acceptance...............................................................................................................11
2.4.4 Assurances...............................................................................................................11

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3. Conclusion............................................................................................................................11
Reference List..........................................................................................................................13

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1. Introduction
In the course of this report, detailed analysis of the strategic position of the BMW
Company in UK would be analysed. For the purpose of construction of this report, a detailed
analysis of the micro environmental factors of the company will be conducted. In order to do
that, the political, economic, socio-cultural, technological, environmental as well as legal
factors will be analysed. Followed by that the industrial position of the organisation will be
analysed also. The Porter’s five forces analysis of the company will be conducted for
analysing the position of the company in the industry of car manufacture and sales. Followed
by that, the internal resources and capabilities of the company would also be analysed. The
supply costs, production design as well as experiences of the company in the automobile
sector would be analyse in this section. Followed by that a SWOT analysis for the detection
of the internal aspects of the organisation would also be conducted. Lastly, the stakeholder
perspectives of the company have also been considered in this report. Thee stakeholder value
proposition of the company have been considered here also. Followed by that analysis have
been done on the grounds of trust, acceptance and assurances of the stakeholders of the
company. Finally, recommendations for the future sustenance and development of the
company have also been provided in the course of this report.
2. Discussion
2.1 Analysis of the macro environmental factors
2.1.1 Political Factors
IN UK there are two major political factors that affect the business if car
manufacturing in UK. The first is the new laws proposed against CO2 emission and the
second is the alterations in the EU legislations in the context of the ELV recycling. However,
the export of BMW from UK is recently facilitated by the political stability in the countries

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like China, Brazil as well as Russia. However, there are also instances that in UK the BMW
Company had attempted to manipulate the political environment externally for the purpose of
creation of a favourable political atmosphere. The opposition of BMW towards the EU
proposals for a tougher limit on the emission of carbon in the year 2012 is a substantial proof
against that. More emphatically, Gur et al. (2015), observes that in Europe, BMW had been
lobbying in order to pacify the plans of enhancing the fuel efficiency of the cars together with
trumpeting its green credentials as official sponsor to the Olympic Games.
2.1.2 Economic Factors
Vast fluctuations in the GDP in the countries under the European Union that was
having direct impact on the consumer spending have had a direct influence on the sales
performance of the BMW group. As Hyde (2015), states, another essential economic factor
that influences BMW’s performance in the currency exchange rates. The figure below
demonstrates that in the last few years the depreciation of the value of Euro have benefitted
the BMW group since their export rate in the important international countries like US is very
high.
Figure 1: Exchange rate of EUR:USD
(Source: Jun and Park 2016)

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Owing to high inflation rate, BMW is also forced to increase the prices of their
vehicles on a regular basis. Recently, as Bechhold et al. (2017), states, the price that was
fixed for the US market is USD $250 for the 428i Coupe and USD $1000 for the Drive501
crossover.
2.1.3 Socio-Cultural Factors
Social factors that influence the business of BMW in UK are demographic changes on
the purchasing behaviour of the country. Recession in the mature markets in UK and all over
Europe and the major exporting markets impacts the buying behaviour of the people. This
makes it problematic for the company to set their projected sales rate for the various
countries.
Recently, in the more developed countries, consumers perceive a car’s value in terms
of fuel consumption as well as the carbon emission rate of the vehicle. As Wu, Inderbitzin
and Bening (2015), states many of the UK based customers do not perceive e care as a
symbol of status anymore.
2.1.4 Technological Factors
BMW have been highly benefitted from the use of latest technology in their cars. Use
of recent and adaptive technology helps the company in saving cost and manufacturing more
speedy cars at lesser cost. The automobile industry in UK had been facing recession recently.
However the use of the new as well as improved design had helped the company to overcome
the trend of low profits in the UK market.
However, regulatory as well as restrictive measures that are taken by the government
of the UK for lesser carbon emission also endorses the companies, manufacturing cars in UK
to use latest technology for reduced carbon output (Feucht 2018). As an outcome, since the

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carbon output of BMW cars already less compared to the other branded cars in UK, BMW
gains a competitive position.
2.1.5 Environmental Factors
The customers’ preferences in UK towards eco-friendly cars as well as compared to
that towards fuel cell cars or the hybrid cars is one important factor that drives the
technological innovation of BMW in UK. As an outcome, they are becoming the global
emblem of spreading awareness against the greenhouse effect as well as other factors like
global warming as well as burnout among the patrons.
2.1.6 Legal Factors
In UK the Legal factors exercising their influence upon BMW in UK are much akin to
the political factors also. There are recently introduced strict pollution emission standards set,
that are stringent in compared to the previous regulations (Matas, Raymond and Dominguez
2017). However, recently the strict environmental regulations are implacable in the US as
well as other important markets of BMW in the European market also. The rigid
consequences of the EURO norms in the LDC as well as the developing countries like India
also have major impact on BMW.
2.2 Industrial Position
2.2.1 Porter’s Five Forces analysis
2.2.1.1 Threat of new Entrants
The threat from the new entrants in the UK markets is nominal. The reason behind
this is that there is huge capital cost that that is involved in the set-up of the manufacturing
plants as well as the assembly liners. In the UK automobile industry, the new entrants

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generally takes much more time for being recognised as reputed by the consumers (Chen and
Wang 2018). At present BMW is counted as one of the premium car brands.
2.2.1.2 Threat of Substitutes
Consumers consider BMW to be a powerful as well as luxurious brand. However,
there are also powerful substitutes for BMW in the UK market. As Bourgue et al. (2016)
informs, the names include Mercedes, GM as well as Toyota. Hence, the threat of substitutes
is generally high.
2.2.1.3 Bargaining power of suppliers
With a very sophisticated supply chain management procedure, BMW maintains a
stable and stern relationship with the suppliers. However, as Reinhardt et al. (2017), states,
the bargaining power of the suppliers of BMW in UK is high because of that fact that
suppliers keep fluctuating the cost of raw materials.
2.2.1.4 Bargaining power of buyers
The bargaining power of the suppliers is generally low. This is because of the fact that
the cars of BMW falls under the range of exclusive cars and the customer base of this brand
is actually willing to pay high prices for the enjoyment of premium quality as well as service
of the BMW cars.
2.2.1.5 Competitive Rivalry
There is cut throat competition in the UK market among the premium car brands. The
maximum number of car manufacturing brands are positioned in such a way that they will
enjoy the same target market (Milowski et al. 2018). Stiff competition in the US as well as
Asian market has further aggravated the rivalry.
2.3 Internal Resources and Capabilities

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2.3.1 Supply Costs
As evident in the previous analysis, the input costs of the company greatly determines
their success. Conclusively supply costs becomes essential asset for the company. For the
purpose of managing their supply costs, BMW has determined various global locations like
as China, Germany, USA, South Africa and definitely UK with an all over work force of
104000. According to Evans (2017), with distribution of flexible assembly units as well as
lowering of the transportation costs of the raw materials, it is ensured that the supply costs of
the BMW Company would be on the lower side.
2.3.2 Experience
Considering the parameter odd experience in any organisation, the aspects of cost
control and eventually the attainment of cost efficiency are very important. A holistic
realisation of the firm’s unit costs can help mightily in generation of competitive advantage.
In BMW, the accumulation of cumulative experience fosters the expectation for
lowering the unit costs. Unlike the other important companies in the automobile industry of
UK, BMW have been operating in the sector since the closure of the Second World War
(Ranaivoson, Delaere and Xia 2017). Hence a reduction in the costs is required with the
yearly increase in the units produced from the assembly lines that are newly formed in the
competitive markets of BMW. Even if the necessary competitive advantage is not achieved,
the lessening of the unit costs ensures the survival capacity of the company.
2.3.3 Production Design
Product design might be directed for ensuring maximisation of the working capital,
better yield as well as labour productivity. Again, this can also be utilised for the purpose of
gaining of competitive advantage together with amplitude of marketing intelligence for
outcompeting the rivals in the domestic as well as the international rivals.

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Owing to their excellence in the product designs, BMW have been able to earn market
reputation. As Zhai et al. (2017), states, for the purpose of maximising the usage of the
available working capital, the company has embarked on the new as well as emerging
technological advancements.
2.3.4 SWOT analysis
2.3.4.1 Strengths
As a reputed company, they have a high brand value as well as market gratitude. The
labour force of the company is also qualified par excellence. Again, the use of most advanced
technology has helped the company to develop most advanced design, quality as well as price
offerings for the prospective customers.
2.3.4.2 Weaknesses
The low cost products of the competitive brands is the most feasible weakness for the
company. Again, there is the over reliance on the European as well as US market only.
2.3.4.3 Opportunities
In spite of economic downfall in the country, BMW experienced an increment in the
units of products sold. The brand is also growing in popularity gradually in the developing
countries like as Chin and India also (Ranaivoson, Delaere and Xia 2017). As an outcome,
sales would enhance in the future also.
2.3.4.4 Threats
There is cut throat competition in luxury niche of automobile companies. This is one
added threat along with repercussions from the economic downfall and the enhancement of
the fuel cost as an outcome. Enhancement of supply costs for the raw steel.

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2.4 Stakeholder Perspectives
2.4.1 Value Network for BMW
2.4.2 Trust
Many of the stakeholders who do not have the technical knowledge about the industry
or the mode of operations of the company, rarely understand the nomenclature of the
organisation. Conclusively they might be reticent to trust professionals involved in product
development and sales. As per Feucht (2018), many of the stakeholders are reluctant to trust
the project teams that undergo the crucial work of demonstrating the engineering that
underlay the proximity of profit of the company. So far the domestic stakeholders are
concerned, their trust is confined with the company, owing to their repute and premium brand
name.
2.4.3 Acceptance
Although there are lot of budget friendly car brands in the UK market, it is essential
that the stakeholders support BMW’s initiative to develop premium cars with exclusive
technological assists and class apart performance. It is for the support of the stakeholders and
their acceptance of the production and marketing strategies of the operators of the company,
the brand have been able to establish themselves as a global name.
2.4.4 Assurances
The board of directors is liable for the proper presentation of the criteria report as
stated in the sustainability reporting guidelines of the company. The company has performed
their market operations comforting to the guidelines to the Standard on Assurance
Engagements (ISAE) 3000.
3. Conclusion