The Bmw As A Manufacturing Company Marketing Essay

The Bmw As A Manufacturing Company Marketing Essay The main headquarters of the BMW group is based in Munich, Germany. It produces premium-class cars in eights of manufacturing plants globally. A successful strategy to target huge market provide huge amount of income for the company.BMW dealerships send trade-ins to wholesale auctions and made all their money from car sale, parts and service. The supply and distribution of finished cars to the global markets provide income to the company. The company determines the investments needed in production departments by using the self-financing strategy, and obtaining operating investments mainly from cash flow. Therefore, its yearly cash flow determines its yearly investment budget, which is the upper limit for investment expenditures. Investments budgets are reduced accordingly in order to replace equipments. Financial services segment focuses on leasing automobiles and financing credit for customers and dealers. BMW Manufacturing opened an onsite pharmacy for its associates.The on-site pharmacy will allow BMW to continue to offer competitive pharmacy benefits for associates and help curtail rising drug prescription costs, stated Bunny Richardson, a spokeswoman for BMW. Costs: The BMW as a manufacturing company made costs when upgrading its plants and other facilities globally. The BMW experience high running costs in keeping with the quality of the craftsmanship of the products, as they have a good reputation known for their better value.Free maintenance costs provided to customers which normally covers everything except tires so as to keep its reputation with regard to cost of ownership.there is high costs in allocating a new product to a certain plant, for buildings, and for expanding equipment that the new product shares with existing products, hence, high levels of automation are not profitable in countries with low labor costs.raw material costs: Natural fiber display excellent mechanical properties are light in weight and nevertheless stable and they reduce the burden on the environment but they are very expensive. What measures of performance are applicable to the industry? Reliability of Delivery: The BMW group introduced an online ordering system in 1998 which gives dealers the option of showing customers their desired car on the screen and confirming the delivery date on the spot. It takes only less than three months to build a car according to user specification including delivery. Delivery leads time: In 2000 BMW strengthens its position as the market leader in the premium segment of automobiles. By 2002, BMW stood second in the premium segment automobile market, next to Lexus. Quality and reliability of product: BMW is USING new ways to give their product a more unique identity and provide to clients products that gives them satisfaction.BMW makes sure that qualified personnel are available in a foreign countries and the positive effect on its image of production in Germany (made in Germany). Capacity to produce required volumes: BMW adopted a product offensive strategy TO flood the automobile market with a new product every three months and use d edicated assembly lines for mass production. Product flexibility: Allocating several products to one plant makes it easier to balance its utilization, and producing large-volume gives the firm the flexibility to cope with varying demand. Price: to achieve good financial status BMW offers prices that are unique from the price offering the competitors offer. Cars are priced very differently in the various national markets. The customers that are in the target group are happy to pay a premium price for what they perceive as a premium product (Thompson, (1996). Value chain for the industry(BMW) Value system for BMW Environmental factors that may influence the industry Political: Politics can have an influence on companies in an industry (Cheverton 2004). One example is the German value added tax increase from 16 to 19.BMW company makes sure they are aware of the political situation of the country so as to get good reputation, and trust .Economic In Germany, challenges such as currency fluctuations, above-average raw material prices AND the increased petrol prices lead to a reduced car demand (Bernhardt and Kinnear 2006, BMW Group 2006). However, The Company can be said to be economically stable for the past years, thats why they try to improve their products to give the best to their clients. Socio-Cultural: on average older population in European countries forces car manufacturers to develop new strategies in relation to their target groups (Cheverton 2004, FTD online 2006b). A generally lower average income may lead to lower demand for cars, especially in the luxury segment Technological: The Company offered new innovations in the technological sector and introduced new concepts with regards to the car engine industry. The company makes sure that the products they have are updated with regards to technology and if new technologies emerge they can compete with these products. Activity 2: Establishing Company Direction (10 marks) How would you describe the Ethos and Aims? The aims of BMW are to sell and make money and be ahead of the competition.BMW company aims to make driving a pleasure. The driver must always be in the loop, thats central to the BMW ethos, people buy an m5 because its fun to drive and those impulses wont change. Our cars must also be safe, stylish and reliable. says Freymann. The marketing plan for the entire company aims to outline and analyses opportunities for the company to be recognized as the automobile market leader globally so as a way of strengthening its competitive position. Based on this, recommendations for the future direction and implementation of the marketing-mix will be given. BMW group aims to support products through financial products and services offered to consumers throughout centers globally. In addition, customer relationship is enhanced by offering comprehensive banking and insurance services tailored for the prospective customers. The aims are very important to BMW because they shape the personality of the organization. They affect the way the company work, provide services and products, and support to the people. There is a clear aim for the BMW organization in providing quality long lasting customer service. Employees and customer are regarded as the first priority in order to continue successful growth and reputation of the company. How would you describe the Strategic Vision? The vision statement of BMW read as follows uniqueness through diversity, leadership, taking risk, courteous. The statement clearly implies that the company has a great commitment by providing professional management by carrying out and aiming to support complicated industrial production systems. The company encourages employees to work professionally and always aiming for the success of the company. The vision clearly shows that employs are trained in a very successful and highly innovative place to maximize the strong relationship to employee and customer satisfaction. What can you deduce from their Mission Statement about what they are seeking to achieve? The mission statement of BMW read as follows to become most successful premium manufacturer in the car industry. This clearly shows that the company has been for many years continued to keep its own reputation as a leader in production of premium cars with high quality. The purpose, mission and future success of the company focuses on the provision of high customer service satisfaction. Employees are very committed and work together as an integrated organization to represent a community that will be able to represent a BMW automobile company with pride and always ahead of the game. Describe the apparent Corporate Strategy for the implementation of that Mission and Vision. In the competitive compact where there is very high customer demands and hope from automobile manufacturers, the BMW proved to customer that it is a premium manufacturer by launching new products such as sports car. The corporate strategy is good but some implementations need to be included such considering adjustments for the marketing needs. The products possess a very good specification but the potential problem can be caused by the prices of the products in relation to what the competitors offer. The mission shows that serious suggestions can be included to increase the sustainability of the company as the premium manufacturer in this highly competitive sector. Hence increasing the long term customer relationship, good opportunities for technical development by the support of research and development measures, an strengthening the development of new distribution and dealership channels Can you identify any Strategic Inflection Points that have affected the sector? As the bigger contributor to the manufacturing sector in German the company achieved its success and trust from a long time but this long tradition was not easy. Dating back to around 1945 the company was doing well in manufacturing and production of aero engines but in later years the market for engines was not good and promising as the company experienced some financial problems. While German recovery form economic recession through the 1950s, the company was not able to be productive as it faced financial problems and it depended on Mercedes Benz company financial recourses in order to keep its sustainably position in the manufacturing sector. The BMW was later helped by Herbert Quant as a strong partner and this finally enabled the company to find a highly productive market such as saloon cars. The saloon cars market almost strengthens the position of BMW as we see, today, the BMW business is structured to maximize its retail margins. Designers continue to use the materials and technologies to improve performance and ensure safe passage BMW is an example of a survivor who stood the test of time and developed from a failing company to one of the most successful firm. Activity 3: Industry and competitive analysis (15 marks) Carry out a competitive analysis of your industry sector from the perspective of your chosen company or organisation: What are the dominant economic factors for the sector? Market size: nowadays, the current car manufacturing sector is so big and there are different main automotive manufacturers such as BMW, Audi, Acura, Mercedes Benz, and Lexus. Other competitors include Volkswagen, Toyota, Ford, and Honda. There was economic recession prior to the world war caused small automobile companies such as Toyota, Honda, Ford to come together and share the market in automobile manufacturing. After the period of war there was a rapid automobile growth as the new infrastructures were being set up such as roads and countries continued to become more developed. Scope of competitive rivalry: in the nineties automobile manufacturing sector increase tremendously to be more globalised because there was new openings of international plants and extensive strong link between big automobile manufacturers such as BMW and Mercedes Benz. It is an industry that encompasses the entire globe, as well as the areas of production and distribution, aftermarket. Rivals and their relative size of rivals: BMWs main competitors are Audi, Acura, Mercedes Benz, and Lexus. BMW has successfully set the benchmark for prestige motoring since the 1980s, creating a standard now fiercely contested by other manufacturers such as Mercedes, Lexus and Audi. Standardised products: all the products produced by BMW, are of the same high standard throughout the world, the opening of international plants provided a good service and support the production of quality automotives similar to those offered by the parent branch in Germany. The company makes sure that it set the standard to all its associated new and existing companies in regard to the manufacturing of car engines.Rapid technological change, technology in the automobile sector is very high so it is the responsibility of manufacturers to keep pace with technical aspects of manufacturing so that their products can be in demand to compete even when new technologies emerge. The automobile manufacturers must adapt the new technologies that are environmentally friendly and does not put society health at risk. Assess the competitive position of the company by reviewing the strength of each of the five competitive forces. Porters five forces Potential entrants: BMW company uses a strategy to respond quickly and flexible to provide customer satisfaction, thus, reducing the influence of potential competitors. The company provide new innovative techniques to serve the clients so that the company can provide a unique product as compared to other competitors, THUS, PREVENTING THEIR INFLUENCE. Competitive rivalry: the competitive rivalry highly influences the company.. The company offer goo d customer relation services, hence, gaining good advantage over rivals. Provision of quality prices prevent client away from competition. The other way to attract customers is to provide promotional services so that customers get a well informed decision about BMW Company. Substitutes: BMW Company proves to clients that they offer quality products and service that is far much better than substitutes so as to prevent substitutes to cause much competition. The company also tries to offer products and services superior than substitutes so that they can attract more clients by offering superior products. Bargaining power of buyers: the company has good customer satisfaction , it keeps customers relationship strong by introducing some new benefits to buyers such seasonal free maintenance where the customer will be assigned with a special employee who will deal together up until the time where the customer is satisfied. the bargaining power of BMW company is very high as it is trusted and tremendously popular among the targeted customers worldwide. Bargaining power of sellers: BMW demonstrate the value of their suppliers so that it can attract other companies to purchase the suppliers products thus their bargaining power increase. This is shown by BMW Company having dealerships, who sell the company cars in wholesales. What is causing the competitive structure and business environment in the sector to change? Technological change: the company offers new technological innovations by introducing new concepts with regards to the car engine industry. It also set the standards for car engine manufacturing so that all products will keep pace with technology and be able to compete with new emerging technologies offered by other competitors in the automotive industry. Changes in societal concerns, attitudes and lifestyles: The Company makes sure that the product they create will emit low emission that can reduce pollution. BMW emphasizes safety among the production of their goods. They make sure that the proper safety standards are followed and there are no hazardous chemicals in the production. Increasing globalization of industry: BMW produce products to meet the global market as it have partner associates and dealerships in all major continents. Regulatory influences and governmental policy changes: BMW makes sure they comply with what the law states in the country; they make sure that they comply with the regulated standards of the country. The company makes sure they are aware of legal needs of the country so as to keep its current reputation to success in the competitive world. Which companies are in the strongest and weakest positions? Companies in the strongest positions: main competitors are BMW, Audi, Acura, Mercedes Benz, and Lexus. Weakest positions: include the like of Toyota, Honda, and Ford. What are the key factors for competitive success in the sector? The automotive industry needs an efficient dealer organization and tight control of manufacturing costs all these are important success factors, using success factors as a filter; the management can then identify the information that is most important to make critical enterprise decisions. Accordingly the decisions made in this manner should be more effective because they are based on data that is specifically linked to the organization linked to the organizations success factors. Activity 4: Evaluating Company Resources (15 marks) Carry out an analysis of the resources and competitive capabilities from the perspective of your chosen company or organisation: How well is the present strategy working? Porters Generic Strategies: The cost leadership strategy of BMW is focused on making sure that the company earns more and spends less. The cost leadership strategy of the company takes a look at how expenses can be minimized without sacrificing the production of the companys product and the quality of product sold to clients. The differentiation strategy of BMW is focused on making sure that the company produces products that are unique. It makes sure that the logo of the company is not only the one that makes products of the company different. It makes sure that the internal and external characteristics of the product make it unique. The segmentation strategy of the company makes sure that it has a selected market that can provide huge amounts of income for the company. What are their resource strengths and weaknesses? Weakness BMWs heavy cost German base might affect the profitability of the company in the long run as more and more competitors shift product development activities to lower cost countries. BMW might be forced to negotiate a way to maintain cost competitiveness and its reputation for German engineering excellence. The planning procedure required a great deal of effort, limiting the comparison of different strategies and the performance of sensitivity analyses with varying data. Planners needed to consider separately capacity for assembling bodies, which is dedicated to single products, and capacity for the paint shop and final assembly line, which all products share. In allocating products to the global production sites, planners did not consider the effects on the global supply chain, in particular the flow of materials from the suppliers to the plant and the flow of finished cars to the markets. BMW realised the deficiencies of its planning process and research employees worked on the proje ct. In first phase, PETER HENRICH (2002) developed a mixed-integer programming model. In a second phase, Sonja Ferber (2005) extended the model to include investment decisions. Strengths: the BMW Group is one of the most successful multi-brand premium cars manufacturers in the automobile industry. The Rolls-Royce phantom holds the number one position in the super-luxury car segment. Moreover, BMW is the only automobile manufacturer possessing three non-overlapping premium car brands in its portfolio. The BMW group on an average spends part of its revenues on research and development, which is one of the highest in the industry. The keen focus on research and development is evidenced by the number of new models the company has released over the past few years. BMW has also developed an innovative array of engines. A companys strengths is its ability to create unique products and to providing high-level customer service. What are the external opportunities and threats facing them? Opportunities: The expansion of the European Union to foreign countries, has converted the European Union into the worlds biggest trading block with a combined population. This offers ample opportunities for BMW to leverage its strong European position in the premium car segment to garner more market share across new and expanding markets. BMWs concerted forays into the Chinese luxury car market portends to an increase in the earnings of the company over the coming years. China already ranks as the third largest market for BMWs 7 Series luxury limousines. BMW predicts that robust growth will place China among the companys seven largest markets in a few more years. This is a significant improvement over the 12th position held by the Chinese market for BMW in 2002. Threats: The continuing decline of the dollar against the euro threatens to undercut BMWs top line thereby tempering its profitability. The rising price of raw materials such as steel threatens to offset the companys earnings. BMWs Used Cars Help to Sell New Cars. In the meantime, dealer margins on new-car sales are thinner than they used to be because of tougher competition and better-informed customers. Therefore, used cars have become a more  important profit center for luxury-car dealers. From your assessment of the resources and competitive capabilities assess the strength of their competitive position Worldwide, the BMW Group is one of the most successful multi-brand premium car manufacturers in the automobile industry. The Rolls-Royce phantom holds the number one position in the super-luxury car segment. Moreover, BMW is the only automobile manufacturer possessing three non-overlapping premium car brands in its portfolio. The company produce a mass production of quality cars within few consecutive years by coming up with creative innovations to satisfy the customer needs and keeping the pace with technology development. What is your assessment of the culture within the company? Will it be supportive to change or not? Miles and Snow published an early article on the cultural classification of organisations in 1978. They classified companies as either defenders or prospectors: therefore, the culture in BMW Company is described as prospectors because the headquarters is located in Germany with many openings around the world, the managers in Germany are always ready to use ideas suggested by their partners in other foreign companies for the development and future successful profits. The automobile market is characterized high sales and profit potential (Muztagh, 2004. Hence the organization is innovative, values risk in order to succeed. So this shows that the culture and spirit of BMW must be kept to continue in order fully compete in the automotive manufacturing sector. Activity 5: Strategy and Competitive Advantage (10 marks a maximum of 2-3 pages per activity) Review the options facing your chosen company in creating a strategy for the future. Review the generic strategies available to your company. Which would be suitable? Porters Generic Strategies: The cost leadership strategy of BMW is focused on making sure that the company earns more and spends less. The cost leadership strategy of the company takes a look at how expenses can be minimized without sacrificing the production of the companys product and the quality of product sold to clients. The differentiation strategy of BMW is focused on making sure that the company produces products that are unique. It makes sure that the logo of the company is not only the one that makes products of the company different. It makes sure that the internal and external characteristics of the product make it unique. The segmentation strategy of the company makes sure that it has a selected market that can provide huge amounts of income for the company. Looking into the future, how may the company seek to achieve cost competitiveness? On the production front, BMW is all set to vamp up its manufacturing capabilities to aid production of new models over the coming years. Overall, the company is set to invest over million pounds in production facilities in Oxford, UK. Further, the company has decided to invest million Euros in its Steyr engine facility over the coming years .Through the introduction of new models, the Group has gained access to new customer groups. Despite challenging economic conditions, the company is the most successful in its history due to record sales volume and earnings. With respect to the auto industry, while some growth is expected in the traditional markets of Europe and Japan, growth is expected to be flat in the largest luxury car market of USA. However, the major emerging markets of Asia and Latin America are expected to witness a robust growth in terms of total number of vehicles sold. The company predicts that the premium car segment will experience stronger growth than the volume segment over the coming years. In this backdrop, BMW is looking to further expand its presence in both traditional and new markets. The high number of models set to be launched during the years is expected to boost the companys top line. Analyses the current core competencies of the company. Skills in manufacturing a high quality product: One of core competencies is the development of combustion engines. During recent years the company has significantly reduced both fuel consumption and emissions in its engines, while simultaneously increasing performance and torque. The latest milestones from these efforts are the first-ever variable- twin-turbocharger diesel power unit in a road vehicle. After-sale service capability: trained team of after-sales consultants and technicians make up the companys best equipped and most experienced service centre. Our Seasonal Inspection Program With BMWs Value Service Packages pricing program, only original BMW warranted parts are utilized, and all packages include a one-year unlimited mileage warranty on parts and labor. Expertise in gasoline engine technology and small engine design; BMW hydrogen technology has already come a long way. Now, together with politicians and the energy industry, the company turned its vision of sustained mobility into reality. BMWs hydrogen engine for its premium saloon is built for dual mode operation. The company provides superb marketing-distribution skills and Research and Development capabilities. Using the strengths, weaknesses, opportunities and threats identified in Activity 4, develop a SWOT matrix to determine a set of strategic options for the company.