STRATEGIC OPTION RECOMMENDATION

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Bayerische Motoren Werke

• STRATEGIC OPTION RECOMMENDATION
• STRATEGIC CYCLE
• 2000 2005
• Team Mars
• Spring 2008

BMW
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Presentation Outline

• Introduction X
• Objective of case study, Company Background
• Analysis Y
• Addressing the issue, , External and Competitive
  Environment, Internal Environment, Rover Venture
• Recommendation Z

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BMWs Mission Statement

• To be the most successful premium manufacturer in
  the industry.

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BMWs Historical Background

• Founded in Munich, Germany in 1916
• Initially concentrated on the development
  production of air craft engines - building a
  reputation for reliability excellence
• Built its first motorcycle in 1923, and first
  automobile in 1928

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Main Product Segments

• Automobiles
• Only auto maker to pursue a purely premium
  strategy for all market sectors
• Motorcycles
• develop and build the best motorcycles, set
  standards with regard to technology,
  environmental protection and safety, and provide
  outstanding customer service in the pre- and
  after-sales phases
• Financial Services
• financing and leasing, asset management, dealer
  financing and company car pools
• Others
• Insurance, industry-specific strategy process
  consulting, solutions and IT services

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BMW Strategies

• Identifying potential and encouraging growth
• Knowing what they represent
• Recognizing where their strengths lie and making
  the best use of every opportunity
• Following a clear strategy.

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Issue Whether BMW should remain Independent

• External Environment
• Competitive Environment
• Internal Environment

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External Environment

• Global Convergence - Downstream and Upstream
  globalization in the auto mobile industry
• Mergers and Acquisition
• E-commerce
• Shrinking profit margins

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Competitive Environment

• Volkswagen
• well diversified company
• interest in consumers finance
• automobile rental
•  
• General Motors
• worlds no. 1 maker of automobiles and trucks
• Hughes Electronics, Allison transmission
  (automatic transmissions)
• Gm Locomotives (locomotives and diesel engines),
  Isuzu Motors (49), Subaru (20)
• Daimler Chrysler
• No. 3 in sales, No. 5 in volume
• BMWs arch rival
• successful diversification
• Toyota
• Lexus, best cost provider strategy.

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Internal Environment

• Strengths
• Image distinctive identity, high performance
• Labor force highly skilled and qualified labor
  force
• High profit margins
• Brand management and communication successful
• Weaknesses
• Technology was advanced but not innovative
• Inflexibility

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The Rover Venture

• Objective
• Address their inflexibility, as an attempt to
  expand
• Overlap strategy
• Broader geographic market
• Downfall
• Inadequate manufacturing
• Poor profitability
• High breakeven point
• Quality overlap
• Brand exclusivity rather than cost efficiency

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Recommendations

• BMW should change its corporate strategy of
  independence its size is not big enough to
  warrant that
• It should acquire other brands despite its
  ruinous Rover experience its either acquire or
  be acquired
• It should hire experienced managers with an
  extensive knowledge in acquisitions and
  diversification

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Recommendations

• It should keep pumping into RD in order to
  maintain its high margins for its most luxurious
  models
• It should increase its technological innovation
  so that higher differentiation can be achieved
• It should introduce lower cost models to compete
  with lower priced luxury vehicles such as Lexus
  LS 400

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BMW at Present

• BMWs group revenue climbed 14 percent in 2007 to
  a record 83 billion ( 25 billion in 2000)
• The group's vehicle sales in 2007 rose more than
  9 percent to 1.5 million units (only 820,000
  vehicles in 2000)
• BMW now owns Mini Cooper, and Rolls-Royce

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Questions