Napier University Edinburgh | Strategic Appraisal Assessment | 08002676 |
Word Count: 20/4/2010 |
Strategic Appraisal BMW Case Study
Introduction
Bayerische Motoren Werke AG now known as BMW was founded in Germany in 1916. The BMW group began as a manufacturer of engines. In the present day now also manufactures automobiles, motorcycles, software and offers financial services. The case study ‘Exploring Corporate Strategy’ prominently deals with the automobile side of The BMW Group. Within this market BMW trade under three different brands BWM, MINI and Rolls Royce. BMW experienced a failure to gain and grow market share in the early twenty first century the group then embraced an imperative strategy of organic Threat of Entry – Within the market that BMW operates in the threat of new entrants in neither high nor low. The industry offers opportunities for entry however in the first few years of the twenty first century the market stepped up price competition. This meant that as the competition was intense it would cause a barrier for new entrants. During this period the European market’s experienced a fall in demand and were all dealing with over supply. These issues led to a fall in profits consequently lowering barriers for new entrants to compete.
Buyer Power – Operating in the luxury car market bargaining power of buyers is not a critical issue for the organisation. When purchasing a luxury car the lower the price the less luxury is expected. The BMW Group’s effective brand has established an emotional connection with consumers and this loyalty means customers are willing to pay the increased prices for the luxury and brand.
Threat of Substitutes – There is one main substitute which poses a large threat to the car manufacturing industry, this being the use of public transport. The rise in fuel costs and parking payments and restrictions has led to more people opting to use the range of public transport available. This has deterred people from driving and therefore not purchasing automobiles.
Supplier Power – Being an established manufacturer like BMW good relationships will have been formed
