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Essay: BMW overview and situational assessment

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  • Subject area(s): Business essays
  • Reading time: 4 minutes
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  • Published: 19 February 2022*
  • Last Modified: 18 September 2024
  • File format: Text
  • Words: 914 (approx)
  • Number of pages: 4 (approx)

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Overview

BMW, one of the leading manufacturers of luxury cars in the automotive industry. The company is known for its distinctive style, high quality and luxury approach. Despite challenges from rivals to low-price alternatives and other risks, BMW has reported good financial results each year and has maintained its market shares. It is of interest to research further, in order to find the reasons behind a good business and a powerful brand. In addition, we must research the future potential and continuity.

The business BMW has its headquarters in Munch, Bavaria, Germany. It owns and manufactures Mini cars as the parent company of Rolls-Royce Motor Cars. Under BMW Motorrad the company BMW manufactures motorcycles. In 2012, a data shows that 1,845,186 automobiles and 117,109 motorcycles were produced by the BMW company. The BMW is part of the ‘German Big-3’ luxury car manufacturers, along with Audi and Mercedes-Benz, which are the world’s three best-selling car manufacturers

The very first car built by the BMW company was called Dixi, based on the Austin 7, and licensed by the Birmingham, England Austin Motor Company.

A SWOT analysis of the organization.

The term SWOT-analysis comes from the abbreviation Strengths, Weaknesses, Chances and Threats.

Opportunities Threats

  • In the near future, fuel prices are likely to rise in the market for autonomous vehicles
  • Growing competition in the global car industry
  • Rising government regulations will raise costs.

Strengths Weakness

  • One of the world’s most popular automotive brands
  • Geographically diversified revenue sources
  • Productive partnership in China
  • Great engineering and excellent driving experience.
  • It has a weak portfolio of automotive brands with no product differentiation.
  • The high prices for their vehicles.

According to Interbrand, the BMW brand is the world’s third most valuable automotive brand, worth US$41.5 billion.[2] Forbes lists BMW as the world’s second-most valuable automotive brand, worth US$28.8 billion.[3] Only Toyota’s and Mercedes-Benz’ brands can compete with BMW on both sides.

Nevertheless, BMW’s range of car products consists only of 3 separate models: Mercedes, Mini and Rolls-Royce. In 2015, the company sold only 338,466 models of their MINI cars and 3,785 models of their Rolls-Royce cars out of 2,247,485 vehicles sold in total. Given that automotive revenues of €85.536 billion constitute 92.8 percent of the overall revenue of the BMW Group and that the bulk of those automotive revenues are only BMW vehicles, the group is highly reliant on sales of its luxury BMW vehicles.

But the prospects are there, the fuel prices have been low in recent years and are expected to increase in the near future as a result of supply changes. Low fuel prices have boosted demand for big vehicles like pickup trucks and SUVs. Many businesses have gained from the low fuel prices, like General Motors, Ford, Chrysler, because of their powerful SUVs and pickup truck offerings.

They face challenges such as New companies like Tesla with its electric cars, which will make it very difficult for BMW to succeed in the electric cars market. Additionally, Google is also targeting the conventional automotive industry, which is trying to create self-driving cars. The rivalry is further fueled by the fact that the potential of the global production of automobiles far exceeds demand. There was an additional 31 million units of global overproduction potential in 2015.

Ways to create a competitive advantage.

An all the more important competitive advantage has become. The that need for digitization raises costs but, at the same time, it has become necessary to invest in technology and better management of the supply and distribution chain, given the strength of competition. A well run supply and distribution chain is a source of competitive advantage for the car brands but equally critical is R&D and marketing. This paper analyzes the various sources from which car brands can gain a competitive edge and stay strong against changing market situation and competitive environment.

Brand identity may be an significant source of competitive advantage. What your customers think of your label impacts your revenue and productivity to a significant degree. While this isn’t the only source of competitive advantage and won’t help you alone against rapidly shifting market dynamics, it still has a great role to play in helping you navigate fast changing winds. Your brand value comes from the view your company has of your customers. A variety of car brands with different brand identities are present in the industry. There’s a wide variety of options open to consumers, from luxury to low cost.

Technology is the main source of competitive advantage in the 21st Century. Now the demands are very high and customers want it all in one product. Technology will only help you fulfill the high customers needs and keep them happy.

To retain leadership position in the automotive industry, creative marketing strategies have become all the more important. Competition in the automotive world has continued to develop strongly, giving rise to a need for new approaches and skills in marketing

Those were two of the key reasons for the car brands’ competitive advantage. Beyond these there may also be other small or large outlets to establish competitive advantage. Although technology has become the major differentiator in the 21st century, the position of brand identity and equity as well as financial leverage has also grown significantly. The more and better the supply and distribution chain is handled, the better is your market place. It is because your product quality depends on the consistency of your supply chain and your global footprint relies on your distribution network.

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