Strengths

Strong R&D Capabilities

Brand reputaion
Globalization
Highly skilled work force
Strong product
innovation
Opportunities
1. ncreasing fuel
pricing
2. U.S retail sales
3. Increasing
presence in chines
market
4. Unemployment
5. imports

SO Strategies
1. product
development= we
could use our
strong product
innovation to
create more fuel
efficient and
eletronic vehicles
2. market
development= we
could take
advantage of the
opportunities for
our growing
presence in China
with our strenght
of globalization by
being aggressive
and putting a lot of
BMW vehicles in
China

Threats
1. Rising raw
materials prices
2. Consumers
holding cars
longer
3. Rising fuel prices
4. Volkswagen
5. Exchange rate
fluctuations

ST Strategies
1. Product
development=
develop new
features and
improve some
features so BMW
group could
possibly win World
car of the year
award.
2. Product
developmentresearch and
develop a new
way to use the
materials to make
our vehicles with

Weaknesses
New supply management
Lack of strategic
partnership
Weak brand portofolio
High cost structure
Primium pricing strategy
WO Strategies
1. we could use the
incresing presence
in China market to
help improve our
weak brand
portofolio.
2. Joint venture- we
could use the
increase in imports
to help develop
more strategic
partnership
3. Product /service
development we
could take the
advantage of the
unemployment
rate and try to find
the right people to
help fix our new
supply
management
system.
WT Strategies
1. Joint venture=
start a partnership
with average car
company.
2. Unrelated
diversificationventure off of
transportation
vehicles and creat
a new product with
an unrelated
business and
generate revenue
from that
3. Product
developmentmake cars out of
parts that do not

less raw materials

waste.

cost as much but

still have a high
quality

Cash Flow
A good cash flow is beneficial for a number of reasons. First: it will help keep costs under
control. For example, some lines are prone to fluctuations in price due to its raw materials so having a
good cash flow will help to contribute to those slight increases. Another reason a good cash flow is
beneficial to success is because it will allow the automakers to provide incentives and lower prices to
help increase sales. Due to the level of importance of cash flow, it received a weight of (0.025).
When comparing each companys operating cash flows in 2014, Audi had the highest of the
three companies at a total of 7.42 billion euros. This was also an increase of 643 million from the
previous year. For this reason, Audi was ranked a four in cash flow. BMW came in second, with a
ranking of three. The total cash flow from operating activities was 2.9 billion euros however this was a
1.215 billion decrease from the previous year. Although one could assume that this big of a decrease
could be bad, that is not always the case. If the company is spending more by making major changes,
this is not a bad thing. Therefore as long as BMW is still bringing in a positive cash flow, they are
doing all right. Finally, Mercedes had a total operating cash flow of -1.3 billion. Due to having a
negative cash flow, Mercedes received a one in cash flow.

Compliance
Compliance is also extremely important when it comes to the automobile industry. This is the
ability to follow federal and local regulations and standards. Without compliance, a company would
not be able to sell its products or services legally. Additionally, if automakers decide to sell
noncompliant automobiles, they may have high costs for potential recalls. Due to this level of
importance, compliance received a weight of (0.15). Audi has a total of 24 model recalls and BMW
and Mercedes tied at a total of 16 model recalls. Therefore the rankings are as followed: Audi ranked a
two, BMW and Mercedes ranked a three. Having any recalls at all is a bad thing but it is
understandable that they are not always 100% avoidable. Fours were therefore not assigned and
neither were ones.
Distribution Network
Next is the distribution network. A distribution network is essential to success due to the
nature of the industry. Automakers rely on franchised dealerships to take on the role of a showroom.
Having more franchised dealerships will help advertise and increase the market. However, its
essential that these dealerships not only exist, but they are knowledgeable and reputable. Without a
strong distribution network, the company could lose market share quickly. Due to this level of
importance, the distribution network received a weight of (0.10). BMW, with a total of 339
dealerships, was ranked a four for the most dealerships amongst the competitors. Mercedes was ranked
a four as well for coming in just ahead of this at 368 dealerships. Audi sits at only 280 dealerships and
was therefore ranked a three. Having 339 dealerships is nowhere near bad, it just is not as good as its
competitors and this could strongly affect the companys competitive advantage.

Flexibility
Flexibility is another major critical success factor. Car buyers are susceptible to quickly
changing their buying habits. This can be for a number of reasons, whether it be from increased fuel
prices, the state of the economy, or new automotive technologies. Regardless of the reason, car

manufacturers must be flexible and must be able to respond to these changes in order to survive.
Flexibility received a weight of (0.05). BMW, Audi, and Mercedes all received a four in this category
due to their participation in green awareness and their environmentally friendly and efficient cars. This
is one example of how each company is adapting to the changes around them and producing new cars
based on changing consumer needs.
Operational Efficiency
Next is operational efficiency. Operational efficiency is what provides a company with
competitive advantage. It helps cut operational costs as well as bring in a necessary margin in order to
compete successfully with its competitors. Operational efficiency received a weight of (0.15). Total
asset turnover, or TAT, is one way of analyzing a companys operational efficiency. Audi has a TAT of
(1.1). Mercedes has a TAT of (0.7) and BMW has a TAT of (0.5). The highest TAT will receive the
highest ranking since that indicates they are producing a higher revenue per every dollar of assets.
Audi received a ranking of four, Mercedes received a three, and BMW received a two.

Positive Image
Positive image is extremely important and received a weight of (0.15). It received this weight
because it is the one of the main reasons a company will be able to survive in the automobile
manufacturing industry. When a customer considers buying a car, they are not only entrusting that
chosen car company with their safety but they are also making a major investment. Due to this, most
customers will do their research on what type of company is best to invest in. Without a positive image
a customer will not look twice. A way to analyze a companys positive image is to see how much they
are spending on advertising. Figure B.4 represents how much money was spent on advertising in the
United Kingdom in the year 2013. As the graph shows, BMW comes in first at 26.55 million British
pounds, with Audi following close behind at 26 million British pounds. Mercedes is lagging at the
bottom with only 21.21 million British pounds being spent on advertising. Due to these statistics the
rankings are as follows: BMW ranked a four, Audi ranked a four, and Mercedes ranked a two.

Product Quality
Product quality earned a weight of (0.15). Product quality is extremely important when it
comes to success in the automobile industry. Without quality, the company has nothing. Think about it,
if a company is constantly having recalls, who is going to have enough trust to buy one of their cars?
If they buy from the company and their first car is constantly needing repairs and giving them
problems, are they going to go there for their next car? Absolutely not! Due to their reputation of being
known as the top three car manufacturers in terms of overall brand quality, all three companies
received a four in product quality.

Resource Sharing
Resource sharing is another critical success factor that earned a weight of (0.025). It earned
this weight because it is extremely beneficial for advancement. Technology advanced sharing can help
a company keep up in the industry. This goes hand in hand with acquisitions and mergers. Having the
ability to increase an information network is critical to success. Without knowing how to keep up, a
company will quickly fall behind in the automotive industry. Due to BMWs partnership with Toyota,
the company received a four on resource sharing. Also due to Mercedes just partnering with Nissan,
Mercedes receives a four as well. Finally, Audi established a partnership with AT&T to introduce the
first car with in-car LTE capability. Audi also was ranked a four in resource sharing.

Social Responsibility
Finally, social responsibility is the last critical factor in the automobile manufacturing
industry. It earned a weight of (0.10) because the trends in social responsibility are increasing. People
are looking more and more for environmentally friendly automobiles and for companys that are
socially responsible. Having social responsibility will only help with marketing and will increase the

attractiveness of the company. BMW, in 2012, donated a total of $30 million towards education, the
community, and the arts. It has also decreased water and energy consumption, waste disposal in a
landfill, and industrial wastewater by over 50% in all categories since 2006. For these reasons, BMW
received a four ranking in social responsibility.
In 2010, Mercedes partnered with the China Youth Development Foundation and created what
is currently known as the one of the biggest start-up charity funds in the Chinese auto industry. Known
as Nurturing the World of Tomorrow, this represents the companys long-term commitment to China
and sets a comprehensive and leadership model in advocating in sustainable cause. This is a great
cause and helps the children in China and earns Mercedes a four ranking.
Audi is in charge of what is currently known as the Oak Forest Research Project. With this
project, sponsored by the Audi Environmental Foundation, over 90,000 trees have been planted in the
vicinity of selected Audi production sites. This is also a great cause and earns Audi a four ranking in
social responsibility.

The Scores
The total scores are as follows: BMW with 3.43, Audi with 3.40, and Mercedes with 3.33. This
shows where BMW stands amongst its competitors in terms of these success factors, and these are
great results. This shows that among these success factors, BMW is the leader with Audi trailing just
behind. Mercedes is slow to keep up.