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BMW-Bavarian Motor Works

Paper Type: Free Essay Subject: Marketing
Wordcount: 1742 words Published: 1st Jan 2015

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RAPP MOTOREN WERKE was founded an air craft-engine factory in Munich in 1916.where it changed to BMW in 1917.in 1923 BMW built first motorcycle. Where in 1928 BMW bought the car factory at Eisenach, Thuringia with the license to build a small car name called the DIXI. DIXI was the first developed car in Munich. In 1932 BMW 3/20 was developed in Munich, in 1933 BMW came up with six cylinder’s 303.

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In 1973 the first BMW started France and northAmerica.In1979BMW made first digital engine electronics and began R&D on hydrogen engines. In 1984 the first European models with catalytic converters appear. BMW Group Company is powerful international company represented all over the world with more than 94.000 employees and over one million vehicles sold every year. Importers in 120 countries represent the BMW and worldwide sales organization comprised 24 sales subsidiaries. BMW has worldwide subsidiaries and manufacturing plants in Germany, UK, South Africa, Mexico, USA, Malaysia, Egypt, Thailand, Brazil, Indonesia, and Austria.

The BMW group has a optimized internal process to such a level that changes according to the customer wishes regarding engine capacity, co lour can be accommodated up to ten working days before the start of the production without affecting the delivery.

Main of BMW is for sustainable growth as a broad market leader in the automobile industry as well as for segment management. In automobile and segment sector the automobiles of BMW will play a key part. BMW is made with the other companies to built their car, they offering well training to their employees they are introducing latest technologies and training them to their employees to improve company operations and quality. Network for both the local and international BMW automobiles. If a market is already in the control of other automobile companies, BMW devotes its attention towards the development of a premium segment with its various automobiles. The work of BMW is to secure the growth of the business in a sustainable way, as at the same time constantly improving the company’s success. The strategy to get this involves four elements:

determined in order to reach a leading position in attractive markets

Working in order to improve the company’s efficiency and cut costs in operations.

. Focusing on securing a competitive share of the automotive market segments

Continuous growth through selective acquisitions for as long as they are able to create shareholder value.

BMW formed in to the segments those are

1. BMW Automobiles

2. Rovers Automobiles

3. BMW motorcycles and financial services.

Where assembling of parts, selling motorcycles, spare parts and accessories done by the BMW automobiles and Rover Automobile. These are main part of activities in the group.BMW motorcycles segment develops, manufactures sells motorcycles as well as spare parts and accessories.

Financial segment focuses on the taking leasing of automobiles and financing credit for the customers and dealers.

Product offensive Strategy:

In the beginning of the year 2000 BMW has started to restructure the business. They focused on the strengthening its position as the market leader in the premium segment of automobiles across the world.BMW adopted product offensive policy by aiming at flooding the automobile market with new launches. By the offensive strategy they produce new products every three months. Research and development section of BMW increased its expenditure by 53% to support the offensive strategy.

the models like Mini Copper, Mini One, new BMW 7 series and Z4Road star all these model are developed with the product offensive strategy.

BMW fallowed market niche before 2001 its successes is attributed to the development of consistency marketing policy.



The latest technologies are:

Valvetronic (Fully variable valve train)

High Pressure Diesel injection 2nd Generation with 1600 bar injection pressure

6-speed automatic transmissions

Aluminium chassis to reduce weight


BMW uses different types of quality systems depending on the stage of the project. “in development, systematic methods like fault-tree methods and system, design and process FMEAs are used. These systems are only fully successful if the associates responsible categorize themselves with the quality subject. “At the beginning of the development stage, the quality-related tasks were recognized and executed one after the other under the management of the project managers that were in charge of the respective sub-areas. The aim was to execute all tasks (around 1,000 of them) and find solutions before the beginning of series production.

During development, the production plant associates who were to assume responsibility for quality at a later stage already belonged to the team so that the points relating to the production process could be directly integrated into production.


If we see the performance segment wise the result of BMW Automobile segment was up by 5.1% to 2.106 million Euro. Generated by BMW automobile ROI has improved from 20.46% in 1998 to 20.83% in 1999. This segment also generates the maximum income on sales 8.56% in 1999. when it comes to Sales in BMW Motorcycles segment rose drastically by 17.8% to 769 million Euro. This allowed an progress of the operating result up by 12.5% comparing to the earlier year.

Sales in the Rover Automobiles was up by 2% over the previous year to 8 368 million Euro. The losses in the Rover Automobiles due to the market conditions and currency effects were up by 250 million Euro to 1 207 million Euro or 26.1%. The ROI drops from -16.77 % in 1998 to – 19.23% in 1999. The return on sales declines from -11.30% in 1998 to -13.97% in 1999.


BMW long-term strategy focuses on hydrogen – the only carbon free fuel – as replacement for fossil fuels. This strategy is called the BMW Clean Energy Strategy.


The target of the short-term strategy of BMW follows the path of higher efficient internal combustion engines. Higher efficiency reduces the fuel consumption with the result to preserve the finite fossil fuels.


Threat of New Entrants:

Threat for new entrants are not so strong since establishing a manufacturing company for automobiles is quite needed big amount of capital. Emergence of competitors requires the capital, required technologies, and management skills. However, there are still possibilities of new entrants in the industry, because of the high profit margin any existing car company would like to enter into the premium segment.

Threat of Substitutes:

Substitutes are main influences the company profit and its effectiveness ,companies has to be mind the substitutes should be low, there are lot of public transports which are train ,bus ,vehicles all these comes to substitutes. Where it comes to BMW we can say it is threat of substitutes is high.

Bargaining power of buyers:

The bargaining power of consumers is weak even customers are more challenging and more complicated. Customers may be move with the presence of foreign cars and price aware, their bargaining power is till weak since they do not purchase cars in huge quantities. So bargaining power of buyers is high to BMW.

Bargaining power of suppliers:

Bargaining power of supplier is low because there is a low switching cost and the supplier’s are not concentrated. Forward vertical integration is not possible and here BMW as a buyer can be its own suppliers so backward vertical integration is very much possible to an extent. But BMW has good relationship with supplier to ensure their brand is not affected.

Competitive Rivalry:

Competitive rivalry is high because for automobile industry fixed cost are very high and exit barriers are also high because it is not easy to divert or close.

Value Chain:

In order to check the supply chain in BMW, the company uses many information systems. Some of the information systems that provide the greatest value for BMW are e-business solutions, Application Service Provider (ASP solution), and Extensible Markup Language (XML).

BMW SWOT Analysis:


Brand Awareness

different ranges of Products like BMW, MINI and Rolls-Royce

they have the Strong Cash Flow Position

Increase turnover and trading profits

Maintaining Strong Balance Sheet

World’s leading Premium Quality Automobile Manufacturer

effective employee resources, training


Environmental issues like economic crisis, pollution

High range of price

Customer disinterest

Buyer complexity and knowledge


They can come with new products

Customers demand change to more comfortable and relevantly cheap cars


Market shift to globalization

Innovation & Alliances

New Technologies in Automobiles


New & existing competition like Mercedes, Audi

High Price of Fuel

Consequences of the oil crisis

Changes in the environment, political issues

Economic recession

Takeover bids

Market shift to globalization

Low level of Natural resource like steel, iron


Based on the economical conditions it is better to concentrate to stability in the economy and avoid dullness in the economy.

As a business it is there are still threats of competition and changing consumer demand.

The company should considered sustainable competitive advantage to be able to stay in the business.

Differentiation of product and their range should be identified. Based on the social changes like environmental, crisis can affect the company so they need to more focus on that.

Implementation of comprehensive and efficiency program. Increasing the level of automation process in the production system and measuring flexibility.



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