Bayerische Motoren Werke
ST R AT EG I C O P T I O N R ECO M M E N DAT I O N
ST R AT EG I C C YC L E :
2000 – 2005
Te a m M a r s
Spring 2008
Presentation Outline
 Introduction

Objective of case study, Company Background
 Analysis

X
Y
Addressing the issue, , External and Competitive Environment, Internal
Environment, Rover Venture
 Recommendation
Z
BMW’s Mission Statement
To be the most successful premium
manufacturer in the industry.
BMW’s Historical Background
 Founded in Munich, Germany in 1916
 Initially concentrated on the development &
production of air craft engines - building a reputation
for reliability & excellence
 Built its first motorcycle in 1923, and first automobile
in 1928
Main Product Segments
 Automobiles

Only auto maker to pursue a purely premium strategy for all market
sectors
 Motorcycles

develop and build the best motorcycles, set standards with regard to
technology, environmental protection and safety, and provide
outstanding customer service in the pre- and after-sales phases
 Financial Services

financing and leasing, asset management, dealer financing and company
car pools
 Others

Insurance, industry-specific strategy & process consulting, solutions
and IT services
BMW Strategies
 Identifying potential and encouraging growth
 Knowing what they represent
 Recognizing where their strengths lie and making the
best use of every opportunity
 Following a clear strategy.
Issue: Whether BMW should remain Independent
 External Environment
 Competitive Environment
 Internal Environment
External Environment
 Global Convergence - Downstream and Upstream
globalization in the auto mobile industry
 Mergers and Acquisition
 E-commerce
 Shrinking profit margins
Competitive Environment
 Volkswagen



well diversified company
interest in consumer’s finance
automobile rental
 General Motors



worlds no. 1 maker of automobiles and trucks
Hughes Electronics, Allison transmission (automatic transmissions)
Gm Locomotives (locomotives and diesel engines), Isuzu Motors (49%), Subaru (20%)
 Daimler Chrysler



No. 3 in sales, No. 5 in volume
BMW’s arch rival
successful diversification
 Toyota

Lexus, best cost provider strategy.
Internal Environment
 Strengths:
 Image – distinctive identity, high performance
 Labor force – highly skilled and qualified labor force
 High profit margins
 Brand management and communication – successful
 Weaknesses
 Technology was advanced but not innovative
 Inflexibility
The Rover Venture
 Objective
 Address their inflexibility, as an attempt to expand
 Overlap strategy
 Broader geographic market
 Downfall
 Inadequate manufacturing
 Poor profitability
 High breakeven point
 Quality overlap
 Brand exclusivity rather than cost efficiency
Recommendations
 BMW should change its corporate strategy of independence;
its size is not big enough to warrant that
 It should acquire other brands despite its ruinous Rover
experience; it’s either acquire or be acquired
 It should hire experienced managers with an extensive
knowledge in acquisitions and diversification
Recommendations
 It should keep pumping $ into R&D in order to maintain its
high margins for its most luxurious models
 It should increase its technological innovation so that higher
differentiation can be achieved
 It should introduce lower cost models to compete with lower
priced luxury vehicles such as Lexus LS 400
BMW at Present
 BMW’s group revenue climbed 14 percent in 2007 to a record
$83 billion ($ 25 billion in 2000)
 The group's vehicle sales in 2007 rose more than 9 percent to
1.5 million units (only 820,000 vehicles in 2000)
 BMW now owns Mini Cooper, and Rolls-Royce
Questions