BMWs

Strategy:

Flexibility

Submitted to
Sir Manny Ocampo

Submitted by
Acedillo, Ma. Joanna
Arcan, Erika Althea
Aristoza, Ann Julienne

BMWs Strategy: Flexibility

Table of Contents
HISTORY

ASSEMBLY LINES

SINGLE MODEL ASSEMBLY LINE

MIXED MODEL ASSEMBLY LINE

6
7

MIXED MODEL ASSEMBLY LINE: ASSESSED

UPSTREAM DEMAND IS STEADY

MACHINES ARE SIZED FOR CUSTOMER DEMAND
SIMPLIFIED SCHEDULING
STABLE LABOR REQUIREMENT
SIMPLER TRANSPORT

8
8
9
9
9

LOCATIONS

10

PRODUCTION PLANTS
RESEARCH AND DEVELOPMENT PLANTS

10
11

SALES VERSUS PRODUCTION

12

KEY SUCCESS FACTORS

12

BRANDING
GLOBAL POSITIONING
INNOVATION RATE

12
13
13

PRODUCT MANAGEMENT

14

SOURCES:

15

BMWs Strategy: Flexibility

BMWs Strategy: Flexibility

BMWs Strategy: Flexibility

BMWs Strategy: Flexibility

BMWs Strategy: Flexibility

History
BMW, short for Bayerische Motoren Werke, which means
Bavarian Motor Works in English, has come a long way since its
inception and has become one of the most popular sports, luxury, and
family car manufacturers today. The BMW history began with the
efforts of Karl Rapp, who incorporated Rapp Motorenwerke. The
company used to manufacturer aircrafts and had contracts with Gustav
Otto and Austro-Daimler to manufacturer V12 engines for its airplanes.
In 1916, the company was renamed to
Bayerische
Franz

Motoren

Josef Popp

Werke

GmbH,

Figure 1. BMW Logo

with

as the supervisor

of

airplane engines, after garnering success in

the airplane industry. Within a few weeks,
Max Friz was assigned as the designer of
airplanes and a new aircraft engine was
created, which would be given the name
BMW IIIa. After some time, the company
became popular as BMW and the designers
decided to change its logo, which is still the one they use to date.
However, in 1918, BMW was forced to cease production of aircraft
engines. Therefore, the company shifted its attention to manufacturing
motorcycles by 1923. In 1928, the company began producing
automobiles, with the first one being called BMW Dixi.
In the 30s, BMW introduced a new car, the Wartburg DA3, which
was also incredibly successful. Soon enough, the company attempted
to introduce a new front axle on both their Dixi and Wartburg models,
but due to construction faults most of the prototypes ended up in a
series of accidents. In 1933, the company bounced back and
manufactured the 303 which used the new M78 engine. Throughout

BMWs Strategy: Flexibility

the 30s, newer models of the 303 were created, with the most popular
being the 328 Brescia Grand Prix. However, due to the impending war
in 1940, BMW shifted its interest to manufacturing military vehicles.
By the 50s, BMW re-entered the automobile field and introduced
the 501, the first post-war BMW. In 1954, the most famous vehicle of
all time, the BMW 502 V8 Super made its debut, which allowed the
company to enhance its reputation worldwide. In 1956, BMW
introduced a muscle 507 car, which made the company the largest
money earner

Figure 2. 1956 BMW muscle car

at

that

time.

The 60s were an incredibly successful time in BMWs History. In

fact, the company had become so popular that the Munic Plant
couldnt handle the production and consumer demands. Therefore, in
1967, the company shifted to a new location with a larger plant and
began production of motorcycles in Berlin. In the 70s, BMW began
production of its vehicles in South Africa. A few years later, the BMW
motorsport GmbH was founded. Additionally, BMW established its own
museum of aircraft engines and traditional hit cars. Not to mention, it
was during this time the 5 series, 3 series, 7 series, and 6 series
vehicles were introduced in the market, which are still in production.

BMWs Strategy: Flexibility

During the 80s, BMW began production in Regensburg and the

company was operating efficiently all over the world. In the 90s, BMW
entered the US, and soon acquired the British Rover Group. This
brought the active Land Rover, Rover, and MINI brands under BMW
ownership along with rights of numerous dormant marques, such as
Wolseley, Triumph, Riley, Morris, and Austin.
In the 2000s, BMW took over MINI and Rolls-Royce and the
company introduced its famous 1 series. Soon enough, the company
established a plant in Shenyang and even created a joint-venture with
China. By 2013, the BMW launched the all new I3, which kick started
the new era of electric mobility.
The history of BMW shows the prestige and still exists as one of
the three best luxury automobile manufacturers in the world.
Additionally, the company holds a high place in motorcycle production.
Not to mention, BMW has four new divisions namely BMW Motorrad,
BMW I, BMW Motorsport, and MINI. Moreover, the company has a
yearly output of 2,117,965 automobiles and 120,000 motorcycles.

10

BMWs Strategy: Flexibility

Assembly Lines
Assembly lines include single-model assembly lines, multiple
model assembly lines, and mixed model assembly lines. Each assembly
line has a different layout and may be operated differently.
The case mentioned the single model assembly line of Mercedez
Benz in Sindelfingen, Germany manufacturing the S-Class and the
mixed

model

assembly

line

of

BMW

in

Dingolfing,

Germany

manufacturing the 7-series, thus, the focus of this case will only be the
single and mixed assembly lines.

Single Model Assembly Line

Single model assembly line is an assembly line where only one
type of product or model is manufactured. In the single model case,
the assembly lines are dedicated on one product or model that were
produced in large quantities. This is where the traditional mass
production systems were based. Each model is assigned to individual
lines. Each unit of model is the same with no variations.
However, todays marketplace shows that customers demand for
high product variety and short lead time. Mass customization has been
highly recognized today as a new paradigm

for manufacturing

products in line with the customer demands at production costs. Single

model assembly line is not configured to manufacture more than one
product.
When another model is to be produced, the existing assembly
line will not be applicable, thus, the need for shutting down of the said
system.

As a result of this paradigm shift, assembly lines must be

designed to meet customers needs while at the same time maintain

its quality.

11

BMWs Strategy: Flexibility

Figure 3. Single Model Assembly Line

Mixed Model Assembly Line

The mixed model assembly line will address the problem of the
single model assembly line in producing several products all at the
same time.
Mixed model assembly line is a serial flow assembly line where
different models are assembled. The models in this assembly line may
differ from each other with respect to size, color, materials used, task
times and precedence relations.

Figure 3. Mixed Model Assembly Line

12

BMWs Strategy: Flexibility

Mixed Model Assembly Line: Assessed

Upstream Demand is Steady
In this line, proper sequencing of products smoothens the
demand for upstream suppliers. The mixed model assembly line is
configured to produce models in line with demand of the consumer
which further means that the demand for the supplies of spare parts
will not be fluctuating because there is already an existing consumer
demand for the different models.
In the case, however, of the single model assembly line, the
demand for upstream suppliers for the production of different models
will depend on whether the assembly line that will manufacture the
model is ready for production. Producing an additional model will result
to either shutting down of the existing assembly line or building
another assembly line suitable for the production of the additional
model.

Machines are Sized for Customer Demand

In todays marketplace, the consumers wants and needs are fast
changing. They would want a large variety of products to choose from.
Single model assembly line is a one-model producing line that needs to
be shut down or reconfigured in order to meet the demands of the
consumers. On the other hand, mixed model assembly line addresses
this situation by manufacturing not just one but many different models
in a single plant. It can assemble one different model after another
different model without the need for further changeovers.

Simplified Scheduling
One setback for producing multiple models in one assembly line
is the schedule of production of a particular model. In single model

13

BMWs Strategy: Flexibility

assembly line, there is no problem in the scheduling since there is only

one model to manufacture. In the case of mixed model assembly line,
there is the existence of just-in-sequence system and just-in-time
system where all required parts are always fed to the line in the right
sequence and at the right time.

Stable Labor Requirement

Like in the upstream demand, labor requirement in the mixed
model assembly line is steadier compared to single model assembly
line. In the former, there will only be the same set of workers who are
trained to work on different models. In the latter, the labor demand will
depend on the availability of the assembly line where the laborers will
work in.

Simpler Transport
The transport of raw materials for production is simpler in mixed
model assembly line compared in single assembly line. The raw
materials in the former model will only be sequenced according to
order of production whereas in the latter model, the raw materials will
still be transported to other areas where the others models are
produced.

14

BMWs Strategy: Flexibility

Locations
Production Plants
BMW has 23 assembly plants in 13 countries. Majority of the
production plants are in Europe and Asia. The number of production
plants in Europe is attributed to the fact that Europe (Germany) is the
center of BMW headquarters with the Asian region a place of emerging
markets and relatively cheaper production.

Figure 4. Map plot of Production Centers

Research and Development Plants

BMW has 12 research and development plants across 5 countries.

15

BMWs Strategy: Flexibility

Figure 5. Map plot of BMW Research and Development plants

16

BMWs Strategy: Flexibility

Sales versus Production

From most recent available data, BMW has sold 1.8 Million BMW cars
worldwide. With annual average sales of 1.34 Million cars worldwide,
and annual average production of 1.35 Million cars, BMW nearly has a
1:1 ration on their supply and demand. Nearly 50% of their sales are in
Europe.
Table 1. Annual BMW Sales and Production
Year

Average

Sales

Production

2005

1,126,768

1,122,308

2006

1,185,088

1,179,317

2007

1,276,793

1,302,774

2008

1,202,239

1,203,482

2009

1,068,770

1,043,829

2010

1,224,280

1,236,989

2011

1,380,384

1,440,315

2012

1,540,085

1,547,057

2013

1,655,138

1,699,835

2014

1,811,719
1,347,126

1,811,719
1,358,763

17

BMWs Strategy: Flexibility

Key Success Factors

BMW has three key success factors, which have contributed to
their worldwide success, namely: branding, global positioning, and
innovation rate.

Branding
Being the most popular luxury automotive brand in the world
(Vijayenthiran, 2015), BMW caters primarily to the premium segment
of the market. With the average BMW owner earning Php4.2 Million
(converted according to current exchange rate) annually, the company
caters to the needs and wants of the top-tier population of the world.
The company has branded itself in such a way that one of the main
selling points of their product is the very idea of owning one; the name
itself.
The BMW Group uses a mono-segment type of positioning with
the company appealing to a single customer segment. In other words,
the BMW product portfolio only comprises of expensive vehicles at a
premium level and the company does not have budget vehicles in its
portfolio to target individuals and households with a smaller budget
(Dudovskiy, 2016).
Demographically, BMW targets both males and females, ages 2065 years old, single, and married alike.

Global Positioning
With multiple car manufacturers offering extremely similar
products at similar prices, and more or less with the same image, the
BMW group has established itself in the public in a positive manner.
The image that BMW has positioned itself encompasses exclusivity,

18

BMWs Strategy: Flexibility

performance, technologically advancement, and quality automobile

production.

Innovation Rate
In the late 1990s, BMW has noticed a shift in the values and
demands of luxury-car owners into a more family-oriented and luxury
time mindset. These new upscale consumers included aging baby
boomers who had started families, and liberal-minded wealthy
professionals. With this change, BMW decided to address their
markets changing needs and branched out from their single-product
line into a widespread spectrum of offerings. They acquired Rolls
Royce, re-launched the Mini Cooper, and launched their own SUV
series.

19

BMWs Strategy: Flexibility

20

BMWs Strategy: Flexibility

Product Management
The BMW groups strategy with their products is to keep them at
introductory and growth stages. They do this through periodically
introducing new models in their different product lines. Jim McDowell,
Vice President of Marketing at BMW, states that If a product is
declining, we would prefer to withdraw it from the market, as opposed
to having a strategy for dealing with the declining product. Were kind
of a progressive, go get em company, and we dont think it does our
brand image any good to have any declining products out there. So
thats why we work so hard at managing the growth aspect.
The product life cycle of a BMW is normally at 7 years, with new
models being introduced regularly within that span. Their attention to
product life cycles has made them adept at predicting markets, for
example: the average life product cycle in Sweden and Britain is 8
years, while in Japan it is only 4 years.
The companys attention to product life cycles and the fact that
they focus on the introductory and growth stage is testament to their
need of flexibility within their operations.
Their multiple line segment production process caters to the
constant need of producing new models for consumption without the
hassle and additional costs having a single line production model
entails.

With

multiple

new

models

from

multiple

series

being

introduced over an average 3 years, the multiple segment approach of

BMW proves to be beneficial and cost-friendly. They are able to quickly
shift from the production of one model to another should demand call
for it.
With this, BMW ensures that they not only cater to what the
market demands but also address how it acts through their operations.

21

BMWs Strategy: Flexibility

Sources:
http://research-methodology.net/bmw-segmentation-targeting-andpositioning/
http://www.stealingshare.com/pages/bmw-brand-study-a-look-at-howbmw-structures/
https://www.bmweducation.co.uk/page/what-are-the-key-dates-in-thehistory-of-bmw
https://www.bmwgroup-classic.com/en/history.html
http://www.strategosinc.com/mixed_model_0.htm
http://studentarbeten.chalmers.se/publication/151274-mixed-modelassembly-line-at-volvo-construction-equipment-requirements-formixed-model-assembly-line
http://www.bmwgroupplants.com/content/dam/bmwwerke/bmwgroup_werke_com/Dingolfing/
EN_Werksbroschuere_DGF_2014_Web_96dpi.pdf.asset.1461080994647.
pdf