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Melanie Pattersonon 5 April 2014
Transcript of BMW 2030
Macro Level Analysis
Dynamic Price & Quality Strategies
Key Success Factors
BMW Value Proposition
BMW Life Cycle
Firm Level Analysis
BMW Core Competencies
Implications for BMW
Mature markets impact competition, adding pressure to manufacturers to establish sustainable competitive advantages.
This emphases the need to identifying emerging markets where the competition will be reduced and higher growth rates can be achieved; geographical diversification.
Industry Level Analysis
Porter's Five Forces
Political instability (Middle East & Asia)
Rising fuel pricing
Underfunded pension risk
Please feel free to ask any questions
Scenarios for the Global Automotive Industry in 2030
In core geographie
KPMG's 2014 highlighted the factors most likely to influence consumers' purchase decisions, these help support the identification of KSF's:
BMW fall in a strategic group with manufacturers such as Mercedes-Benz, Audi and Lexus; all offer premium cars globally.
An increase in perceived product value, or a decrease in cost of ownership by one of these premium brands could significantly weaken BMW's competitive position. An analysis of these scenarios, and consideration in future strategies will also help protect their future competitiveness.
Angwin, D., Cummings, Stephen., Smith, Chris (2011)
The Strategy Pathfinder: Core Concepts and Live Cases
, 2nd edition, John Wiley & Sons, Inc.
BMW Group. (2007) Annual Report 2007 [Online]. BMW Group, Retrieved from: http://www.bmwgroup.com/annualreport2007/_downloads/BMW_Group_2007.pdf [Accessed 31st March 2014]
Ip, Y. K. (2003) "The marketability of eco-products in China's affluent cities: A case study related to the use of insecticide", Management of Environmental Quality: An International Journal, Vol. 14 Iss: 5, pp.577 - 589
Lencioni, V. (2004). "BMW automobiles."
McKinsey&Company (2013). The road to 2020 and beyond: What's driving the global automotive industry?
Meyer, M. (2014). "KPMG's Global Automotive Executive Survey 2014."
Porter, M.E., (1980) "Competitive Strategy: Techniques for analyzing industries and competitors" New York: The Free Press
Porter, Michael E., (2008), The Five Competitive Forces That Shape Strategy.
Harvard Business Review
, Vol. 86 Issue 1, p78-93
Standard&Poor (2013). The Global Auto Industry Shifts Its Focus to Overseas And Emerging Markets. Credit Week, McGraw Hill Financial. 33: 7.
ESTEMPLE analyses forces in the macro-environment to help identify drivers for change which may affect the industry and the organisation itself (Angwin, 2011).
What does this tell us?
It is an imperfect market, exploiting a differential strategy.
As competitive rivalry is high, premium manufacturers must keep and leverage differential advantage (through quality and technological advances).
Also considering the low risk of new entrants and medium risk of substitution it is a good industry for existing manufacturers. However, suppliers hold some power so relationships must be strong to minimise future risk.
A dynamic and highly competitive market; premium manufacturers must maintain their customer-focus, keep an eye on their competition and to the future.
Framework retrieved from Porter, 2008
In 2013 Forbes ranked BMW 12th as "The World's Most Powerful Brand", brand value $27.9bn (Toyota 15th and Merecedes-Benz 16th).
Emissions equivalent petrol car:MPG
The automotive industry must face the challenges of adapting its strategies to meet environmental requirements; issues related to:
non-renewable material & energy consumption
generation of waste during production
Eco-innovation is the term used to describe any innovation that reduces damage to the environment.
The Chinese have different perceptions and behaviors towards the concept of environmental sustainability. The marketability of eco-products must depend on the human wants, backed with purchasing power within an acceptable market size and varies from product to product.
Marketability of eco-products depends on the extent of the Chinese green consumption preferences, a matter of the adoption process.
BMW's Future Competitiveness
Will advances in eco-innovation be a critical success factor for car manufacturers to gain competitive advantage in China in 2030?
BMW Diversify Into The Energy Market:
For BMW to compete in the future they will maintain and leverage their core competencies
They will do this by continuing:
enhancing their brand value
streamlining their supply chain
building strategic partnerships
focus on continuous innovation
being first to market
going beyond customer expectations
In order to be competitive they need to:
diversify their product range
make significant R&D investments in green technologies
One way to do this is....