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Business Strategy of BMW Group.

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Athina Papamargariti

on 29 October 2014

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Transcript of Business Strategy of BMW Group.

The Strategic Analysis of BMW Group.

The Internal Environment of BMW
Organizational Capabilities
Porter's Five Forces Analysis
Evaluation of Internal Resources
BMW's Strategies
Company's Background
"The BMW Group is the world's leading provider of premium products and premium services for individual mobility."

Tangible Assets
Intangible Assets
VRIN Framework
Thank you for your time, any questions?
PEST Analysis
BMW Group.
BMW's External Environment
PEST Analysis
Porter Five Forces Analysis
Key Success Factors
Established in 1917 Germany, Munich
One of Germany's largest and most successful companies in the world
Three Premium Brands : BMW, MINI and Rolls Royce
(Sold 1,845,186 vehicles in 2012 (10.6% increase)
Almost 105,000 Employees of BMW Group in 2012
BMW Mission
(BMW Group Mission Statement)
Political Factors
Taxation Policy (Luxury Car)
Foreign Trade Regulations
Sociocultural Factors
Lifestyle Changes (more social mobility)
Economic Factors
Financial Crisis in Europe
Increasing petrol prices, running costs
Technological Factors
Threat of Potential Entrants (Low)
Bargaining Power of Suppliers (Low-Medium)
Bargaining Power of Buyers (Low-Medium)
Threat of Substitute Products or Servises (Low to Medium)
Intensity of Competitive Rivalry (High)
Graph illustrates the BMW Competition based on product range and geographical scope.
Key Success Factors
Long Term Planning
Strategy of Ecological and Social Sustainability
Research and Development Investment
Marketing and Branding
Global Positioning in established markets
Brand Loyalty
Innovation / Differentiation
(hybrid, electric)
Thank you, any questions?
Rise in prices of raw materials
Currency fluctuation
Ecological awareness
Company's expenditure on staff training during crisis
BMW operates in different regions (cultures)
Alastair Bruce
Athina Papamargariti
Benny Naue
Kaysha Hughes
Lucas Zajancauskas

• Large number of suppliers

• Materials are widely accessible

• Suppliers are relatively small sized with no threat of forward integration

• High switching costs, however, BMW ensures close and beneficial relationship with their suppliers (helping them out throughout recession)

• Well established brands in the industry

• Large capital required

• Very hard to achieve economies of scale (have to produce a lot to reduce the costs)

• Patents restrict entry (in case of BMW)

• Relatively easy to choose an alternative and customers are quite price sensitive

• However, does it all apply to BMW?

• Mass Customisation and High Flexibility

• It also depends on the market we are talking about

A lot of alternatives, but none of them can offer the same convenience

Public transport can seem as more environmental friendly...

However, BMW's partnership with Toyota (developing the technology for mixed engine cars, i8)...

• Large Mature Industry

• Audi, Mercedes, Lexus – all competing for the same customer

• BMW response was Strategy Number One – developing brand loyalty, focus on growth, customers, profitability and long term future.

(Helmut Panke , Chairman Of BMW 2002-2006)
"I would say: focus on who you are, what you stand for. What are the values you have in the organization? What are the values ou believe in the products and services you sell and provide? BMW build high performance products because BMW is a high performance organization".
Large investment on Research & Development of new Technologies .

Focus on the Environmental issues and ways to create more environmental friendly solutions in transport sector.
Dual Fuel Engine , Hybrid Electric Cars, Hydrogen Driven Cars. (eg. Toyota Partnership)
Emerging Markets in BRIC
Governments' New Laws and Regulations
Increase of Oil Prices
BMW's Value Chain
Value Chain
Tangible Assets
Intangible Assets
Organizational Capabilities
McKinsey's 7S Model
Evaluation of Internal Resources
McKinsey's 7S Model
Refer to physical resources that an organization possesses and include plant, machinery, finance and HRM.
Production Facilities
Skilled workforce based in UK
Flexibility through outsourced assembly
Strategies that developed within the company or the organization overtime. This include company's reputation, culture, its knowledge and brands.
Customers perception : High-Value , Premium Status
Establish connection : Brand, Design and Technology Development
Strategic Alliances (i.e Fiat )
"For BMW is the ability to integrate world class engineering with world class excellence and highly effective Marketing" (Grand, 2010)
Dow Jones Sustainability Index (DJSI)
VRIN Framework
Brand Image
Expertise workforce
Innovation and Technologies
Three Premium Brands
Resource : www.slideshare.net/patricgallagher/bmw-a-strategy-build-on-premium-brand.(2013)
Strategy Number One (2007-2020)

Differentiation Strategy

Use of high quality and luxurious materials
Providing a better level of services
Branding & Designing an Excellent Brand Image
Innovation and Research Leadership
Premium vehicles in luxurious market

(Lynch, 1997)

Strong Brand Image
Product Innovation
Motorcycle as a niche product
High quality suppliers
High Employee Productivity
Strong R&D Capabilities

Not enough Strategic Alliances
High Cost Structure
90% Organic Growth
10% Mergers and Acquisitions
Small Brand Portfolio

Poised to benefit from the growing demand for cars in BRIC countries
Incising demand for hybrid electric cars
Rising Green Awareness


Currency Risk
Environmental Protection Regulations
Crisis in UK and Europe
Strong Competition on global scale
High global presence and financial hedging can reduce currency risk
Brand – as one of the main sources of competitive advantage. Thus, maintaining brand identity can increase brand loyalty which is vital to bounce off the competition.
Close relationship with suppliers can help to stabilize the potential rise of prices in raw materials
Cutting down costs by moving production to cheaper countries, e.g. India
Performance in BRIC countries can outweigh potential poor results in Southern Europe
Demand for "Green Technology" and company's ability to respond
Maintaining focus on BRIC and Southern Asian markets.. Establishing as a market leader and NPD
The Increased Demand for leasing agreements
Strong brand image and R&D can lead to diversification?Expanding portfolio?

Expand product range by producing volume cars (cheaper cars - more affordable)??
Premium brand image protects them from substitute products by Asian car manufacturers?
Four pillars - Future, Growth, Customers and Profitability
All targets fully attained:
Profits were doubled in the first 5 years
Common stock rise by more than 70%
Birth of BMW i3
Most importantly..
Keep focus on growth markets
Future Directions..
Strategic Alliances
Improvement in Marketing
Strategic Positioning and Future Recommendations
Full transcript