Strategic Management Report: BMW Market and Strategy Analysis

This report presents a strategic management analysis of BMW, a leading company in the automobile sector. The analysis begins with an abstract outlining the objectives, which include assessing BMW's current market position and the impact of external environmental factors, such as political, economic, social, technological, legal, and environmental (PESTLE) factors, on its operations. The introduction provides background information on BMW, highlighting its premium market focus and global presence. Task 1 delves into BMW's market share, external analysis using PESTLE, and a SWOT analysis to identify strengths, weaknesses, opportunities, and threats. It also describes BMW's internal culture, company structure, and current strategies. Task 2 explores the application of red and blue ocean strategies, proposing new strategies for future growth and outlining the necessary steps for implementation. Finally, Task 3 addresses the challenges that may arise during the implementation of these strategies. The report concludes with a summary of the key findings and recommendations for BMW's strategic direction.

Strategic Management

TABLE OF CONTENTS
Abstract ...........................................................................................................................................3
INTRODUCTION...........................................................................................................................4
Task 1...............................................................................................................................................4
1.1 Market share..........................................................................................................................4
1.2 External analysis using PESTLE...........................................................................................4
1.3 SWOT ANALYSIS OF THE COMPANY...........................................................................6
1.4 Description of the internal culture and company structure....................................................7
1.5 Company structure.................................................................................................................8
1.6 Current strategy of BMW......................................................................................................8
Task 2...............................................................................................................................................9
2.1 Red Ocean And Blue Ocean Strategy....................................................................................9
2.2 New Strategies For The Brighter Future..............................................................................11
2.3 Things needs to be undertaken To Follow New Strategies.................................................12
Task 3.............................................................................................................................................13
3.1 Challenges For Implementation...........................................................................................13
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................16

ABSTRACT
Strategic management is an essential part for the organizations which are working at
international level. The present report is based on the BMW which is one of the leading
companies in automobile sector. The main objectives of assignment are to analyze the current
situations of the company in to the international market. From external environmental analysis, it
has been assessed that political, economical, social, technological, legal and environmental
factors have significant impact on the business operations as well as functions. It can be seen in
the report that now customers place high level of emphasis on sustainable business environment.
Thus, by introducing eco-friendly vehicles BMW owner can attain success. Besides this, it can
be presented that blue ocean marketing strategy is highly significant which provides high level of
assistance to firm in gaining competitive edge over others. Along with this, it can be presented
that balance scorecard approach is highly significant which in turn helps in aligning goals and
objectives significantly.

INTRODUCTION
Strategic management can help to the companies which are working in the international
market to improve their strategies in stages. Strategic management will allocate all its resources
in a way that they can achieve the goals and earn maximum profit by its business entity (Kumar,
Adhish and Deoki, 2014). In this the company will make the certain rules to be follow to
implement its marketing plan in the market. BMW is the German company which manufactures
the cars and motor cycle. BMW is having target only on premium segment of population that's
why prices of cars and bike are always high as compare to the the market competitors. BMW is
having all three of its group in UK that is BMW, mini and rolls Royce. Beside the manufacturing
work BMW is also has the marketing sales unit in the UK. The worth of BMW till the date is
$60.4 billion. BMW also provides the financial services in UK. BMW is famous for its high tech
technology and design in there products.
TASK 1
1.1 Market share
BMW is an international brand and they have ranked on third position among the top car
manufacturers in the world and its holding no.3 as market share according to the statistical data
of year 2016. As compare to BMW to other car manufacturers last year BMW is having the
highest selling cars. It is having the 6.66% market share in UK, BMW has the profit from its
group as well the remaining two group that is rolls Royce and mini. As this proportion the BMW
is the highest earning auto-mobile industry in the economy (Kaplan and Norton, 2016). But as
the year of 2017 started BMW faces the huge challenges from the other auto mobile companies
in different ways like; technology, design and management but it come with its better policies
with help to retain the company. As they are working in the premium car market they are having
different market competitors like Mercedes Benz, Audi, jaguar, range rover, Porsche,Volvo etc.
1.2 External analysis using PESTLE
PESTLE is tool which can be used for analyzing the external environment of the
organization. External environment is more dynamic and it is not under control of the
organization. It can help to the company to take some measure as a precaution but do not totally

control it. So a pestle analysis is presented under here which can help to the BMW to analyze
those factors which are affecting on their business activities:
Political environment:- Factor which are related to the government is having huge impact on
the organizational activities. In the recent time Brexit has made a huge impact on then
organization sales. Some of the political factors are taxes rates, import-export regulation, trade
and copy right laws etc. the political factors are unstable they can be change any time (Johnsen,
2015). As the BMW is working in the international market so it is essential for them to make a
proper analysis of the political terms and as well as rules and guideline to prepare their strategies
and guidelines accordingly. As they are working in the different countries so they have to make
political connection with the countries to start and run their business activities.
Economical factors:- Economical factors are the another important element in the external
environment. Some of the economical factors are GDP, demand and supply, inflation rates,
exchange rates, bank loan availability, employment rates etc. After the Brexit UK has many
fluctuations in inflation rates which is impacting the purchasing power of the customers,
currently UK is having 3.2% of inflation rate. Increase in the fuel prices are impacting on the
sale of the cars, it is diverting customers to fuel efficient cars.
Social factors:- Social factors are those factors which are related to the people living in the
society like culture, norms,values, gender, age, income, buying behavior, consumer preferences,
their attitude toward the product etc. for example the businessman who is earning a good salary
and their standard of living is also high they will prefer the luxury products like BMW cars.
Because luxury define the hard work of the particular person (Hong, 2014). They get chance to
flaunt and also luxury product gives the confidence. BMW only targets the higher class
population those have the buying power and also what to have new experience of driving and
traveling.
Technology factors:- These factors are related to the system and process which is followed to
produce a different products. It implies how the company create the new innovation in their
products which the other cars don't have. Like BMW is having its hybrid car in which total a new
invention in the world of car.

Legal factors:- There are different laws in different countries like employment law some the
products need the license to conduct the business, company laws, safety laws and company has
to standardize its product according to the laws.
Environmental factor:- This factor tend to conduct all the business activities which should not
harm the environment. Like BMW hybrid car which is nature friendly car.
1.3 SWOT ANALYSIS OF THE COMPANY
STRENGTH:-
Brand name:- BMW is having the most well
reputed branded name. BMW known for its
luxury image and high technology designs .
Brand value:- It is car only for rich people
those income and standard of living is very
high and from its customer precept it have the
value of money customer gets the services
and quality product for what they pay and this
brand has the worth of money and that's why
its brand value is very high it is trusted brand
from so many year (Galliers and Leidner,
2014).
Have a clear vision of future:- BMW is
having the technology for its car for the future
also they so clear with there mission and
vision so they have the strategies for coming
future.
WEAKNESS:-
Only target to upper class population:- the
BMW only focuses on the upper class people
they does have no car model for the middle
class.
Less differentiation in cars model:- BMW
has many models in car and every car model
is having a special feature which make them
different to others. According to price they
have variation in the models.
Targeting strategy: They are targeting ion
the premium segment which is impacting on
their number of customers.
THREATS:-
Increase in competition:- There are some
other companies also working in this segment
OPPORTUNITIES:-
future hybrid and electric cars:- BMW has
the opportunity to introduce its electric car

like jaguar, Porsche,Mercedes Benz, land
rover etc. These companies are giving a huge
competition to the BMW so now it is essential
for the BMW to make its product better than
these companies to sustain in the market.
Change in government policies:-
government policies are unstable so any
changes in the government policies can affect
the company.
because market is having demand of electric
cars.
Demand of increases in auto mobile
industry:- in up coming future there is a
increase in auto mobile sector which lead to
the opportunity for the BMW to serve its
more and more customers. Automobiles needs
are never been shorter so it is essential for the
company to make a regular changes as per the
demands.
1.4 Description of the internal culture and company structure
BMW is a company to give the higher satisfaction to its customer and try to give great
quality of services to its customers. For that they follow their internal culture in organization in
which they set their goals for on which they have to work together. The BMW has built a culture
in which they have focus on the potentials to increase the skills and competencies of the
employees. BMW employees have its own values, belief which they follow in the organization
which is helps to an employees to be passionate towards their work and helps to increase their
productivity. The employees have their own strength which they use in their work to achieve the
common goals. Company encourage the employees to follow the attitude in the work culture
(Chang and Jennings, 2014). They follow their culture from many years and they want the
employees which are create team initiator, have creative thinking , can perform extraordinary,
they give their employees unique experience to work with them. The employees development
their overall personality by working with the company like BMW. The organization is having a
tall structure of the management in which they are having different level of management which
is having their own goals and objectives.

1.5 Company structure
There are different levels of management in the company the top, middle, lower level in
that they have their sub departments. They follow the hierarchy so that every employees knows
what they need to do and to whom they have to report. This decrease the chance of confusion
and conflicts among subordinates. Subordinates has to report its assigned superior and company
follow its vertical hierarchy (Njeru, Stephen and Wambui, 2014). They have different working
department for for different works and issues like finance, operations, human resources,
IT,marketing department. Every department to its assign work is keeping the transparency what
other department is doing so they can maintain the well co-ordination.
1.6 Current strategy of BMW
BMW have success by having most inactive marketing and advertisement. This company
attracts the costumer by there slogans I.e.'The ultimate driving machine” and 'Sheer deriving
pleasure”. BMW tells to there customers that BMW give pleasure in driving his car that no body
can give. WCRS is the advertisement agency which is working for BMW since 1972. BMW has
make his grate brand image by advertising. BMW have make there advertisement with James
Bond and Tom Cruise etc.
Geographically BMW have targets. But the more industrialized have been done in
Europe,North America,some of the parts of Asia, Africa, China, South Africa. 70% sales have
been done in Europe and North America.
BMW target the humans who have the age of 25 to 40. Because these people have the
successfully image. BMW has been labelled as the 'luxury car” and “foreign and international
car” that's way BMW not target the ethnicity and citizenship. Company targets the people who
having there salary 25000 pounds.
The marketing MIX of the BMW
Product : BMW works on the dynamic look of car. They major focus on innovation and
development. The latest version is BMW serise1,2,3,4,5,6,7.Z4. Company is coming with new
car name is MINI Countryman”. This time the company working to making the car smaller and
with innovation structure
Price: BMW charge the extra for premium quality. The price is based on different engine, gear
level,fuel consumption,sport version.

Promotion: BMW have different slogans. Company majorly invest large amount of in
advertisement in films like 'The World is not Enough”whit James Bond.
Place and Distribution: BMW have 156 dealers franchised in UK,148 dealers franchised in
MINI Cooper. The company operate into 100 countries with 4,400 dealers. They are authorised
to sell the cars ,parts and after sales service products.
TASK 2
2.1 Red Ocean And Blue Ocean Strategy
Strategies have been key in developing the business an making the firm to grow it is
important for every business manager to build the strategies which can not only drive the sales
for business but also helps in long-term scenario of the firm. Thus BMW managers should adopt
different strategies to make impact on the working of the company and also attract the new
segments, targets and customers (Walker, 2013). Further more in this rigid and complex world
their are many experts who have research over the strategies used by various organizations over
the years to make impact on the industry and they have come up with two most important
strategies which are: Red Ocean strategy and Blue Ocean strategy. To understand the concept of
both further classification is done.
 Red Ocean Strategy: This particular type of strategy speaks about the competing in the
existing markets which means the entry of new firms will not bother the company
because they have a good market in the existing scenario(Pietrzak and et.al, 2015). Also
in this type of strategy here firm wants to beat the competition and exploit the existing
demand, thus here the firm's managers are getting over their competitors which
eventually help the in gaining the competitive advantage. Here managers try to align the
whole system of a firm's activities with its strategic moves or low cost. This strategy is
basically termed and looked by many businessman as their resort to growth but the
growth will happen only if you achieve something which is not related to your existing
business portfolio(Le Saout and et.al, 2013). Here companies focus is on capturing the
more demand in order to sale more which in turn drives profits for the business.
If talked about BMW of implementing this particular strategy then they need to target those
audiences who have been purchasing its competitors products. As BMW is been into the
business of making the cars for the elite class people they have to target the people of elite class

who are not buying their variants of product. If BMW wants to be in the same market and don't
want to switch from elite class of people, then the firm should adopt strategy of red ocean to
remove its competitors from the market or find an alternative solution for making a move which
will help in gaining them a competitive edge(Melander and et.al, 2016). Thus making a
competitive edge will make them to generate good profitability. Further more this strategy is
more of like aggressive one because here the rival firms try to kill each other in terms of
business.
 Blue Ocean Strategy: This particular type of strategy speaks about going in the new
markets for gaining the advantage over its competitors so that more people are targeted
over and above that. The companies who adopted this kind of strategy are more of the
view of challenging the industry conditions and paradigms, here they are more focused
on customers rather on competitors and they don't segment the customer's rather they
combine or aggregate them in order to achieve the higher results from them. As they
aggregate them in this strategy they follow on marketing campaign which caters the need
of every class of people so that cost is minimized and also less efforts have been
encountered in making of the campaigns (Kaplan and Norton, 2016). As per the blue
ocean strategy they are bit like having the mindset of creating uncontested markets to
serve, which means they are more of doing business in the markets where no one has
reached and thus they find it very suitable for them to enter into such markets where they
can find no rivals and so many consumers which will help them create monopoly over
that particular markets. This strategy implementation over business process and
operations gives them a new look to see at the competitors which is they are of the view
that competition is irrelevant. They create and capture the new demand unlike red ocean
one's who exploit the existing demand and also they break the value-cost trade-off which
is in turn is pretty resemblance for the firms who adopt this. Here alignment of the whole
system of a firm's activities in pursuit of differentiation and low cost is studied by the
firm who adopts this strategy(Johnsen, 2015).
If talked about BMW of implementing this particular strategy they need to focus
on the lower segment, upper-middle class and middle class people can also be targeted if they are
likely to achieve this change the managers need to do an extensive research over the target

market but also sociological and other factors needs to keep in mind by the authorities of BMW
that they will have to deal with the perceptions of people who are currently buying the cars of the
company (Flander, 2014). Further on after implementation of the strategy BMW may face
different negative perceptions of upper class of people because they may develop that now the
brand is not specific for them only and that makes them to move the people form there brand to
other. Here by applying the blue ocean strategy BMW will have there assets capabilities as fluid
as they want not fixed that they will produce up to a certain level only. By the application of this
strategy a firm is able to solve the problems across its entire supply chain.
2.2 New Strategies For The Brighter Future
BMW by applying the Blue ocean strategy will make a move to new segments of the
customers. Thus it will give the BMW to go entirely into the new segment of middle class
persons. It is having some key advantage for the company which are:
BMW in order to make certain recommendations should adopt the strategies which in
turn should benefit the business. By application of porter's genric model BMW can make
effective plans in order to capture the new markets(Chang and Jennings, 2014). BMW should
create more demand in the existing markets of their product through the use of different
marketing techniques which will help them in making profits for business (Ferrell and Hartline,
2010). If BMW adopts blue ocean strategy they are likely to get into the new markets. with the
implementation of this strategy, with that they will be like having the new segments to reach to
and achieve the greater view in relation to expansion opportunities(Patel and Chrisman, 2014).
Here are the two variants of Porter's model and they are:
Diversification strategy: It is the best process of reducing the risk by investing in a
variety of assets. Side Step uses diversification strategy, to allocate the capital and to reduce the
exposure of assets. A related diversification means when a business expands its existing product
lines or the markets (Mathur, 2011). On the other hand, unrelated diversification means when the
company adds unrelated product line or the markets or add another product to increase the
product image and company’s brand (Vuori and Okkonen, 2012).
Cost leadership: This is also one of the best strategies which can be used by the
company. It is driven by the size, scale, efficiency, scope, experience of the organization. Main
objective of the firm for using such strategy is to create low cost of operations. Wal-Mart etc.

companies are using these tactics to increase sales and attract customers (Kunnanatt, 2011). It
helps to turn prospects into advocate consumers so that they will be loyal towards company and
its products and they will not turn for substitute product.
Here in the BMW can sale its new products to the new markets and eventually they will
catering the need of the people of different class and new segment. A company uses this type of
strategy to expand its product line and enter new markets(Semadeni, Withers and Trevis Certo,
2014). It includes so much of risk because BMW can't know whether people will like the product
or not and if not then how will sales take place and so on. In this a company is purchased by the
firm who wants to expand its operations effectively. This strategy is appropriate where the BMW
wants to expand its product line and enter new markets. This attempt of BMW can be risky but
not as uncertain as diversification strategy is(Venkat and et.al, 2015). Here one reason is that
products and markets both are already established and thus this makes the firm more profit and
goal oriented.
2.3 Things needs to be undertaken To Follow New Strategies
As making a decision is important in business for the survival and existence of it because
by sound decision making only it is possible to make judgments about the future of the business
which in turn will help in making profits in long term scenario of the business(Longo and
Rotolo, 2016). There are different things which needs to be evaluated while implementing the
change at the workplace and also the different things which BMW has to follow to introduce
blue ocean strategies will be that they need to understand first the behavior of their existing
customers over the implementation of the strategy in the organization further this will change the
course of business. As per the blue ocean strategy they are bit like having the mindset of creating
uncontested markets to serve, which means they are more of doing business in the markets where
no one has reached and thus they find it very suitable for them to enter into such markets where
they can find no rivals and so many consumers which will help them create monopoly over that
particular markets.
Thus customers may have the opinion that the negative perceptions that now BMW is not
having status in it and it is lower people's car and all that stuff so appropriate differentiation has
to be done in order to achieve more. They needs to ensure that further they have to maintain the
funds plus they have to incur lot of fund in strategy implementation as it is a money consuming