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BMW (Bavarian Motor Works) is a German vehicles organization, and its
achievement in auto and motorcycle division makes one of the top barnd
in automobile. It was established in 1916, yet started processing in 1928
(Gmbh, 2014).BMW organization corporate headquarter in Munich.The
three premium brands world's generally influential BMW, MINI and Rolls-
BMW made a vehicle holds the most astounding principles of
workmanship, traditional mechanics, engineering and quality. Because of
a solid position in the motercycle segment, the BMW Group likewise offers
a fruitful extent of financial related administrations. BMW Group are
handled worldwide production which is focused around the nimbleness
and economy (Gmbh, 2014).


Question 1-
A. Automobile industry market size-
As per data given by, In the automobile industry the size of bussiness is too small
just 662.28bn and 31.44 million only vehicles were sold. (see Figure 2)
This is because of,automobile industry is worldwide and developing, it has been
a great deal of 5(Five) huge organizations as
General motors
Volkswagen and
It was observed that General Motors made the highest revenue in the industry
with 157.19 bn and sold 8.5 m vehicles.
As we observed that general motors built the highest revenue 157.19 bn as
compare to other automobile industry and the lowest revenue 41.52bn built by
BMW(see fig -2) along these year in 2004, the automobile business is too small
and exceedingly coordinated. A substantial scale lodging markets permit local
endeavors to utilize economies of scale and degree(Heneric.O et al.,2004)
BMW and the five major companies in 2003

Fig-2:source-from case study

B. Automobile industry market growth:

In 2004, business sector development in the vehicles business is immaterial
(as per data). This is because of geopolitical strains and also different
ecological and political economy additionally fell pointedly in the worldwide
economy in 2001 -2003.This implemented is really created the markets
coupled with the breakdown of stock prices and constrained to 2003 and the
share of the overall industry of the automobile business. Enter the industry
more competitive prices, depressed the entire industry profitable. Oversupply
has depressed demand faced by Europe.Market growth has been only
experience of the UK, the Nordic countries and China as the growth curve
reached on average. A great growth market could create an important source
of competitive advantage(Heneric, 2004).

C. Automobile industry market share:
The market consolidated with the market growth negligible and showed no
increase in the market share of the automotive industry.The competitive
prices with free insurance and no percentage rent, proved non-profit industry
caused depression which eventually perform market also affected negatively
the rate of credit in the automotive industry.Therefore, selling a few cars at
low prices depressed the entire industry. To increase brand recognition, U.S.
carmakers have spent $50 billion on the market, $15 billion dollar loss occurs
when the stock market fell.
1.1 Macro environment analysis
During first few years of 21
century BMW faced worst global circumstances and
later economic forced tp move downturn in 2001 which condition is corrected in
2003 due to extract of past experience compelled BMW to sustain growth
later.Consequently, organization can utilize PEST model to investigate these

Fig 3.Source-

1.1.1 PEST analysis:
This investigation is carried out as an ecological checking.The presence of it
relies on upon your perspective, the assets, the issues and open doors made
and affected by nature's turf (Jain, 2000). In the setting of the detailed analysis, a
PEST Framework is utilized to investigate the variables influencing BMW, which
are as follows:-
I. Political / Legal factors:
Geopolitical problem with tension and oil supply concerns buy
unsteadiness in the budgetary environment and additionally political
environments.The European business was awful because of the political
business sector, making it troublesome for BMW, when the business
sector was saturated for their premium product.Political choices
influencing the financial environment of the firm or organization (Palmer &
Hartley, 2009). There is a legitimate necessity of assistors or advertising
supervisors to comprehend enactment and work accordingly(Mc Danie,
Lamb & Hair, 2007).

II. Economic:
After the world war-II, to assemble the economy, the automobile business
has assumed an essential part and the utilization of human assets has
been made enhance the productivity of the economy.Nevertheless, the
decrease in stock costs was seen from 2001 to till 2003, influencing the
whole automobile industry. On the other hand, Britain, China and a few
Nordic nations have accomplished share of the overall industry, so the
political issues in a roundabout way influenced commercial ventures,
harshly in the United States (as per information given).Then the trends of
competing values in adverse business industry and market share seriously
affected (impetuses low values). The trend of the model, and the quality of
marking similar economic pressures of the business.
The new product and administrations, made through learning, imagination,
innovativeness, risk, experimentation, sufficient capital necessities.
(Ludvigsen. KE, 1996) .Economic analysis has helped the organization
comprehend where it remains in the business and additionally to know the
costs and benefits will need to go up or downward pressure. This
investigation aides evaluate the measure of generation that is possible
and is an extremely imperative choice to choose the product might be
done effectively (Palmer. A, Hartley, 2009).

III. Socio-cultural Factor-
BMW Group is a worldwide acclaimed brands on the world. There are 150
outlets of BMW overall they worked from its central station in Munich.To
satisfy their social obligation, BMW has constantly attempted to produce
eco-accommodating vehicles. In Europe and in US there has been interest
for these "GREEN" products. BMW has dependably been into advances,
they have been additionally working for half breed and electric
power(grahl, C 2006).Overpricing of prodects is an issue for BMW.
Nations like China to pay for the expense of purchasing a BMW than
Canada and Australia. The Chinese respect paying twice or three times
more than the genuine expense of the product when it was accessible at
less expensive rates(Pankaj Doval, Indiatimes,2011).
IV. Technology:
The innovative configuration and studio symbolization Labs was
conceived mechanical and technological developments in the industry. At
the point when quality is no more an issue, clients are pulled in to the new
plan and innovation. The mechanical developments to enhance the quality
and outline for automobile with brand building and successful
administration and has given another look to the business to pull the
clients (Trant & Williams, 2004).
1.1.2 Industry lifecycle analysis:
Life cycle analysis is a powerful approach to comprehend the vertical or
industry in which stage the business life cycle examination in industry is
isolated into 4 stages specifically presentation, development, growth and
deterioration. Analysing the automobile business have been completed
and watched that the business had reached at "development STAGE" of
the cycle. Along these lines, at this phase of the life cycle, the business
must keep up "MARKET SHARE" of them. Adulthood otherwise called the
immersion stage, in which if the business can not keep up piece of the
overall industry, and after that the organization can undoubtedly get into
the decrease stage. This is because of the high rivalry in the business. In
the developed phase of the life cycle, to keep piece of the overall industry,
advertisers help in enticing promoting and open new channels of
distribution (from information given).

Figure 4 (Johnson, Sholes & Whittington, 2008)

The graph indicates the industry position:
Auto industry is in the full grown phase of the life cycle (see Figure -4), likewise
indicates that if maturity is not kept up (share of market), and afterward the
business can without much of a stretch move span down to lessen the life-cycle
Subsequently from the above analysis is carried out (PEST and industry life
cycle), the pattern is identified, as depicted in the accompanying fragment.
2. Automobile industry trends:
Demonstrates that the automobile business confronts the accompanying
patterns, some of which have a tendency to demonstrate helpful to the
business while in the range of have a tendency to give intense rivalry and

I. Pricing competition :
Rivalry in the automobile business have brought on gigantic losses in the
business sector, particularly the huge three company, Ford, General Motor
and DaimlerChrysler. Discouraged and oversupply is suffered the
European auto companies.E.g. In the second quarter of 2003, Profit of
Volkswagen fell 49%. This challenge put negative effect on the FICO
assessment industry. Thus it brought deprssion in the car business. This
challenge is carried out further bolstering addition a good fortune, which
inevitably turned into a pattern as it has been consumed by all brands in
the business in the mid-2000s.
II. Quality :
Auto industry into the nature of the product again as the course of
competive point, however in the mid-2000s, the entire business has been
overwhelmed with great quality, it is dependable and well developed.E.g.
American Automotive narrow down their defects 212to 53 per100 car
in1998. Therefore quality is still an issue in the automotive industry.
However, the quality of the design was to put pressure on the industry.
However, this trend has become like all brands are on it.
III. Design and branding :
As quality is not the issue, clients were getting pulled in to the brand plan
and marking appeal.the additionally made an enthusiastic association with
clients as an approach to attain clients, increment piece of the pie in the
market share.E.g. Toyota conveyed its product perception as high quality
and fuel economy. BMW conveyed its product as an ultimate driving
machine. Branding bought tough competition and profits were also

Question 2-
To perform analysis using Porters 5 forces:
According to porter they develop conceotual farmework as five factor model to
anylysis the industry . It is demonstrated in a manner that decides the quality of
the focused in business at critical structural characteristics(Jan,2000).
The analysis of the automobile industry is been done in the following segment

A. Threat of New Entrant- Weak
In order to enter in the automobile industry lots of high investment is needed for
manufacturing plant . In addition, new entrant is required to have good
knowledge of designing and manufacturing products. Besides, the time taken by
a new entrant to hold a position of reputation with consumer is generally high
hence the threat of a new entrant is low in the short term.
B. Threats of Substitute Products - (Medium)
Cars are generally used as a mean of transportation. The alternative mean of
transportation to them are Buses, Truck, Train and Aeroplanes
In Automobile Industry it is not only meant may not be the only mode of
transportation because it is an organization which deals in manufacturing and
designing of premium cars.
Automobile industry not only provide a form of transport but is also involved with
the designing and manufacturing of premium cars
A person, who wants to buy a car just for the purpose of transportation, will never
buy BMW, since such people looks for cheap or convenient alternatives.
Therefore BMW can easily be substituted

C. Competition from Rivals Very High
To be a competitor in automobile market requires billions of dollars. Easy cash
flow resulted in lot of competition in automobile market in general.
As automobile industry entered 21
century, competition was very tough for.
Different companies were having their individual strategies to make their brand
popular. As the market of automobile was raising day by day, so BMW started
offering easy finance services to their customers so that they can easily by their
D. Bargaining Power of Buyers- Strong
The bargaining power of the buyer is considered to be strong, in case of bulk
buyer such as fleet managers and car rental companies has a tendency to lower
the price of the product. There is a low switching cost for individual buyer in
opting for other brands (low switching cost); hence the bargaining power of the
buyer is noticed as there was very little to differentiate among the products of the
industry. However still the power of the individual buyer is considered to be low
and is not a threat .As the BMW had such an identity and image which attracted
the high society group of people, hence the bargaining power of buyer was not a
threat as less number of competitors is competing in this segment (premium

E. Bargaining Power of Suppliers- Medium
BMW is the company which has its production and manufacturing stores all over
the world. They not only make cars but they also manufacture their spare parts.
The major suppliers of BMW are those companies which produce Steel,
Aluminum, Iron, Cables and plastics.
BMW has plenty of supplier(s) from which they can choose, so BMW has the
power of negotiating with suppliers. The rate of raw material was increasing in
price .Suppliers also get influenced by rise in price. They have knowledge of the
market and they know about cost of the product, demand of the product and total
price in which automobiles companies are selling the product.

Figure 5
Hence the analysis of automobile industry is been done using Porters 5 forces, it
can be concluded that the industry is attractive to be in for BMW and based on
the analysis done in question 1 and question 2.

In the market Segmentation could be termed as partitioning the business in minor
classes, adjusting to clients having comparative tastes and who respond to
present items in the business sector comparatively.BMW has portioned its
market in numerous zones. The principal division is on the premise of
topographical area. According to one study, the market leader according to
geographic location as the United States and Western Europe, accounting for
about 67% per cent of customers. In Jobbler (2004), a rule partition a business
portion is the level of income, which is clearly high-revenue market in light of the
fact that all their autos under first class.

Figure -6 .BMW top 10 markets.
The discriminating achievement variables of an organization and value
troublesome however worth the trouble later to exceed expectations in their field.
The achievement components are assessed in the investigation of inner and
outer. The following is given a key component of the achievement of the BMW
bunch, which will toss light on BMW's position on every point.
I. Market segmentation:
The business fragment of BMW, as takes after: Positioning and estimating
has been executed contrastingly in better places. Alongside this, BMW
has hard controlled production network and additionally exchanging
associations with suppliers. Subsequently, BMW manufacture a significant
distinction in the personalities of purchasers.
Organization to assemble a picture of an image of youth, the European
master attracting young youth and premium group of people. Estimating
and positioning however urge organizations to extend markets around the
world.With controlled dissemination organize, the profits of brand
administration and interchanges after the sales, the organization closer to
purchasers and this permitted BMW to suitable business sector
fragments.The powerful market division is one of the components that the
organization has procured the top spot and turn into the automobile
business' most profitable bussiness in the world.
There was a development; as the sales of BMW in the year 2003 rose
(According to the information given). As indicated by Wendell smith "more
exact conformity of product and advertising exertion to customer or client
necessities" as diverse product is by and large bought by distinctive group
of people (Tony Ellson, 2004). Subsequently compelling business sector
division was one of the key elements of achievement.
II. The key sucess factor for BMW:
The business fragment successfully with production chain administration,
a development in share of the overall industry has been watched for
BMW; However, get to discriminating achievement component is the most
imperative variable for analysis of the organization.The most noticeably
bad wrongdoing in auto industry is to get great data and afterward to not
follow up on it. - Robert shook his prosperity happens when planning
meets open door (Kotler, 2003).

A. Quality, branding & services:

BMW quality is viewed as great with magnificence in
designing/engineering; However, the aptitudes of very qualified specialists
can not overlook the quality.Successful Branding bring BMW the top most
level BMW. Markting and branding has been carried out is successfully
brand is viewed as a 'last drive machine and a model of it brought built to
understatnding among clients.Most drivers consider, for example, superior
cantina autos and likewise has turned into a symbol for young experts and
professional European. Known for the quality and worth of their brands,
BMW could addition market of the share all inclusive worldwide (as per
information given).
Figure 8.Sale of BMW model.Source
Besides, after sales service and communicate with customers about the
quality conscious customers.
B. Network of supply chain and distribution:
Alongside markting/branding and quality, dissemination system and
proficient production network that brought success to BMW.This turned
out to be viable in picking up share of the overall industry and worldwide
development, as expanded offers of BMW autos were seen (From the
given information). This element empowered BMW to turn into the
carmaker's most beneficial in the industry.
C. Skilled labours:
The skilled work is advantageous for Germany's BMW. These laborers
could assemble a distinction in the purchaser's mind through their abilities.
Sought after deemand , 140hr employyes work a week, which shows that
laborers have assumed a critical part in deals and the achievement of the
BMW. The skilled work is viewed as a national asset of Germany in light of
their extraordinary work.
D. Sustainability-


As per Dow Jones Sustainability Index, the BMW Group has been the sixth time
consecutively as one of the heading endeavors for manageable advancement in
2004. At the time the stock of the record represent to BMW discovered the most
paramount maintainability is utilized on the worldwide fiscal markets.According to
the study by Morgan Stanley and Oekom research, all the speculations in the
fragment focused around supportability criteria saw more than normal
performance. BMW additionally headed the schedule for the vehicles division in
the Corporate Responsibility Rating distributed by Oekom research AG. Once
financial related achievement was accomplished the BMW Group assumed
ownership ecological and social issues. This has hold them in great stead so far
which demonstrates that system and administration assumes a key part so as to
manage accomplishment for a long haul.

3. Value chain analysis:

Figure 10.
Michael Porter presented the idea of value chain analysis in 1985. Anylysis was
performed to evaluate the execution of the business, to give an good product or
administration (Porter, 1985) .
The value chain analysis is performed for BMW, depicted the activities in and
around related focused quality of BMW (Johnson & Scholes 1999, p.156).

Primary activities:
1. Internal logistics: Long-term relationships with suppliers are being
observed with strict control of the supply chain and transaction.
2. Working operations: Engineering excellence with the latest technology,
engraves products with quality, reliability and strength.
3. Outgoing logistics: BMW distribution control system, brand management
and communications to and after sales service.
4. Commerce and sales: Branding establish an effective emotional
connection between the customer and the products and sales staff, profits
were observed as there is a demand in the global market. In 2003, the
turnover has reached 41.53bn of BMW.
5. Services/assistance: Communications and after-sales service to
customers, as well as the distribution network of the company so customer

Secondary activities:
1. Human resource management: Employees with a high level of German
skills with talent to best advantage to BMW. The agreement with the
progressive labor unions prove advantageous to BMW as it has become a
versatile and efficient machine in the industry.
2. Technological development: The use of advanced technology with lack
of creativity was observed. The requirements of innovation is seen, to gain
market share.
As per advertising guru Theodore Levitt: the new rivalry is not between
what organizations produce, between the Company's extra yield as
packaging, administrations, promoting, client guidance budgetary,
conveyance plans, and so on that individuals esteem (Kotler, 2003).

Question -4-
4.1 TOWS Analysis-

The threat of the presence of strong competitors in the luxury car
The threat of the new competitors.
Threat of substitute products cheaper than competitors in the industry.
Ever increases in fuel costs
Increasing cost of raw materials such as steel
The presence of a large number of products in the premium segment of
the competition itself though.
Use advanced techniques to stable in market and stay ahead with the
famous name brands in the developing countries like China, India and
production and flexible development environment combined with
workforce highly motivated when compared with competitors.
lower rates than competitors.

Outsourcing abridged assemblers of automobiles like BMW's possibility
for design therefore blighting their capability of adding value to their
Indecisiveness of the management in the time of Rover UK merger crisis.
Rover UKs high get by stage where a direct affect was seen at the
profitability of the company.
Interest in maximizing shareholders while owning 46% of the stake by
family itself.


They engaged hugely trained workforce from Germany through which they
succeeded to make an insight of important divergence in the perception of
its target buyers therefore fetching a basis of competitive advantage.
Well-built and effective distribution network in comparison to its rivals.
Strong brand name and high class product quality as assessed to other
Unmatched product and marketing strategy.

The SWOT Process

Figure -11 Strategic management N. Ritson 2008

4.2 Resource and strategic Capabilities-
Threshold Resources-
Threshold are further divided into tangible and intangible resources
Tangible Resources-
Bmw has higly skilled workforce and well established value network,technology
to manufacture high performance cars and motorcyles and focused technology of
low emission gas engine.More than that BMW is also in financial services which
can be used in automobile verticals as financial resources.
Intangible Resources-
Youthful image of brand and royal image of Rolls Royce brand are two intangible
resource for BMW automobile .More than that Ultimate driving Machine as a
brand punch line roars as definitive sheer joy of driving BMW
cars(Goschel,2005),The emotinal attachment of consumer with brand can be
classic example of intangible resource.
Unique Resource and core competences-
BMw has unique resourc is technology in combustion engine which consume 12
percent less power and emission of harmful gases up to 20 percents
(Goschel,2005),More than that BMW has created brand which emotionally attach
to cosumers.The reliablilty and smart environment awerness has conveyed the
message of sheer driving of joy which becoe core competency of

4.3 Porters generic strategy:
According to Porters generic strategy is focused around three areas; general
expense administration, differentiation and centering(focus).Porters choice of
strategy is focused around two variables, key goals and key focal point (Jain,
2000). Porters general strategy has been anylysisng and investigated as follows:
In 2004, the immense request in the worldwide business has been watched,
especially in the U.S market, where development of 8% was watched Lexus
mark likewise lost his position because of solid rivalry with BMW.
This is because of the magnificent notoriety in designing alongside
marketing/branding and division of the BMW, was the contrast for the product.
Clients reconized it is unique and interesting.The benefits of brand
administration and correspondences and sales after services of the company
The quality, which was the trend in the automobile industry together, raised the
company. This differentiation also bought demand from the market. The tight
control on the distribution network, supply chain also deals and relationships with
suppliers bought advantage to the company.All these factors with product quality
bought success to BMW.
Quality, which is the pattern in the automobile business together, raised the
organization. This contrast was likewise bought from the business request. Strict
control over the dissemination system, and likewise offers store network
associations with suppliers for the buy company.all preference of these
components to the nature of items purchased accomplishment for BMW.
4.4 Bowmans strategy clock:
To evaluate the route of competitive advantage for BMW, bowmans strategic
clock is been used. This strategic clock is based on the work of Cliff Bowman
with porters generic strategies. It indicates the competitive position of the
company towards the competitors in the industry (Bowmen and Faulkner, 1996).

Figure 12.Source- Bowman, C. and Faulkner, D. (1997), Competitive and Corporate Strategy,
Cliff Bowman and David Faulkner developed Bowmans strategy clock, which
looked at Porters strategies in a different way. It extends the three strategic
positions stated by Porter to eight and has cost and perceived value as two key
parameters to judge the success of each strategy.

According to the strategy spectrum of the organization, the company desires to
take care of price related strategies in which the main objective of the company
would be attaining more revenue without cutting down on other aspects. This
means that company must continue to offer high value products at competitive
price points. To this effect it must place its product within strategies 3, 4 or 5.

Strategy 3 (Hybrid):
This strategy involves offering products at comparatively lower cost but
higher perceived value than other low cost competitors. Such a strategy
will allow BMW to diversify its product portfolio towards the lower cost
segment of premium products, and will allow it build revenue through
volumes of sales. The brand name would draw customers to buy the
product because they can be assured of a great quality of work backed by
world class R&D and innovation. Such a strategy would definitely help
BMW to increase its presence in developing markets like India, Brazil and

Strategy 4 (Differentiation):
Such a strategy calls for differentiating the product based on higher pricing
thereby giving the customers a higher perceived value. It has been the
story with BMW so far and has given them good success, so there is no
point in revoking this strategy. All the more they should continue their
branding efforts through rich innovations thereby giving the customers the
feel and aura of possessing a world class automobile built through cutting
edge technology.

Strategy 5 (Focused Differentiation):
This strategy calls for unique products, which give a very high perception
of value thereby helping company charge extra premium prices. This is
something similar to designer products. BMW had such products after
acquisition of Rolls Royce, but more recently products like Mini Cooper
which are distinctive in style can allow the group to charge a higher
premium pricing for them. Recently they have looked at expanding their
sales using this strategy and the launch of Mini in India is a perfect
example of same.

4.5 Competitors analysis:
The automobile industry, even being consolidated was highly competitive. The
pricing competitions, quality, branding etc. were some of the competitions the
industry faced (according to the given data). However, considering the competitor
for BMW, it is been analysed that it is the Lexus brand was the major competitor
along with Mercedes -Benz. BMW being in the luxury segment had these two
competitors. Lexus brand was the top most brand of USA which gave tough
competition to BMW. Lexus have always been in the top position even when the
BMW had the lowest share in the market. Mercedes-Benz was also the
competitor with the highest producer in the market. The competitors were
powerful, because they were the volume producers with low cost then BMW.
Also brands from other segments were considered to be competitors; however
they were not a threat, in the segment in which BMW competed. Watch distant
competitors as well as close ones (Kotler, 2003)
It was difficult for BMW, to gain market with such a competitors, however through
effective market segmentation, it was able to able to overtake the Lexus brand,
also it can give better competition to Mercedes- Benz , as BMW aim was to raise
the sales by 40% by introducing new models every three months.
The best way to beat competitors is to attack you first, work harder to make your
product line obsolete before your competitors do (Kotler, 2003).