BMW CASE ANALYSIS

INDEX

Background3-4General Business Strategy.....5-6Format and content7Finance......8-9Marketing..9-10Distribution and logistics..10-12Recommendation......13Conclusions...14Exhibits.....15-18Bibliography.19

BackgroundBayerische Motoren Werke (BMW) was established in 1918 in Germany as a successor of Rapp Motorenwerke, an engine supplier for military aircraft. The first BMW engines set more than 30 world flight records meaning that the quality of the engines were outstanding and making quality a symbol of BMW products; the BMW logo was first introduced in 1920 as a circular design of an aircraft propeller using the two Bavarian national colors (blue and white) which shows a nationalistic aspect of the company.Over the years BMW has positioned in several countries such as Germany and USA as a car manufacturer which provides luxury, technological and unique cars although after the WWI it had a bad time because it couldn't produce armed aircraft, tanks, or armored cars as a restriction for Germany; this shutdown didn't end with the company because in 1922 the BMW motorcycles were introduced to the market and in 1928 the first BMW car which sold more than 18000 units meaning a new turn in the company market; also during the WWII most of the factories were destroyed which caused a three-year ban on engine production and a downsizing in manufacturing capacity but the company subsisted by selling repairs to USA. The innovation of the company at that time was and has been outstanding because they launched their BMW 3, 5 and 7 Series in 1970 which are the beginning of BMW dynasty.This company has made innovations in order to continue being the number one option for customers and also its established as a premium brand with the acquisition of Mini and Rolls-Royce; and also it improved its Efficientdynamics Concept showing a friendly environment role which could also be interpreted as revolution to the automotive industry. In 1975 it established in U.S. and grew considerably fast because in 2011 it sold the full product line of all three BMW Group brands putting U.S. as the biggest market for the BMW Group with the X3 as the most popular model.Although the company changed its name in 1972 to Bavarian Motoren Werke Motorsport Gesellschaft fr individuelle Automobile the ideals and cars haven't changed; at the present time, BMW is the second best auto brand in the world with an increment of 7% and a value of 25,700 md, according to Forbes magazine, this increment is the result of the solid sales and the differentiation it has in the market focusing in athletic performance, excellent dynamic and outstanding power.The purpose of this business plan is to upgrade the company strategy according on the several problems that the company faces such as competition, profit, sales, and customers loyalty but most of all we attempt to maintain BMW image as one of the best automotive company in the world.

General business strategyBMW business strategy is ruled for what they call Strategy Number ONE which is is based on two main targets, to be profitable and to enhance long-term value in times of change, considering the technological, structural and economic aspects.Their main pillars are Growth, Shaping the future, Profitability and Access to Technologies and Customers emphasizing the premium segments of the international automobile markets.

VisionWe treat you like F.A.M.I.L.YFamily treatmentAttitude is keyMore tan the customer expectsIndividual attention with enthusiasmLike an honored guestYou make the difference

Mission

We will provide our clients with the best customer treatment experience. We will underpromise and overdeliver in all we do. We will sell and service our products with the highest quality and integrity. We recognize that the greatest asset in achieving our Mission is the individual effort of each employee.All of our staff will be indoctrinated with our vision. Further, they will be asked to define, and therefore to understand, what their role in the accomplishment of that mission is. Their own definition, from a customer's point of view, can then be applied in their own personal job description on a daily basis.

Business segments

BMW is one of the most successful car and motorcycle manufacturers in the world, it owns three of the strongest brands in the automobile industry and has activity in more than 150 countries for example in research BMW has: BMW Group Research and Innovation Centre, BMW Group Car IT, Innovation and Technology Centre at Landshut Plant in Germany; BMW Group Designworks, BMW Group Engineering and Emissions Test Center, BMW Group Technology Office in USA; BMW Motoren GmbH Steyr in Austria; BMW Group Technology Office in Japan; BMW Group Development Office in China. In Production, BMW has 30 manufacturing facilities in 14 countries and in Sales and Marketing it has subsidiaries in Argentina, Australia, Austria, Belgium, Brazil, Canada, Denmark, Finland, France, Germany, Greece, Hungary, Indonesia, Ireland, Italy, Japan, Luxembourg, Malaysia, Mexico, Netherlands, New Zealand, Norway, Singapore, Poland, Portugal, Russia, South Africa, South Korea, Spain, Sweden, Switzerland, Thailand, U.K., U.S.A. (See exhibit 1)

Format and content

STRENGTHS:Good working environment,Good positioning of the brand worldwideBrand loyal marketDiversification of the productsWell structures marketing strategiesBackgroundWEAKNESSES:High Price in the carsHigh cost of investment in other countries Poor acquisition number

OPPORTUNITIES:The GDP growthMarket expansionThe Corporate Social Responsibility imageThe consumer's life standardTHREATS:The GDP variance in the market incomeCompetitionDecrease in fuel pricesThe rise in the production materials

FinanceIn 2008, there was a financial crisis because fuel prices reached 4 dollars per gallon and consequently SUV sales went down 55%; so in this year, selling cars was difficult for all companies including BMW (see exhibit 2 and 3). In 2009, the idea of customization came when the financial crisis hit but BMWs sales plummeted 30% compared to 2008. In 2008 auto sales in the U.S. dropped 37% compared to 2007 and in this year automobile companies had to apply for loans that would help to avoid laying off up to three million people. There were programs to stimulate sales but the automobile companies accelerated the production of more efficient vehicles in exchange of these loans. It was in 2010/11 that auto market started showing recovery, in 2011 there were 12.7 millions of units purchased and it increased in 2012 with 13.8 million units sold.BMW opened a plant in Spartanburg, South Carolina, July 1994 which produced 297,065 vehicles; production increased 73% over the years and BMW became the largest exported to the non-NAFTA countries. By 2012 the plant capacity increased to 350,000 cars per year, exporting vehicles all around the globe.In 2009 BMW sold 242,000 vehicles in U.S. and only 15% were customized, compares to Europe where half of the sales were customized. BMW made a program to increase customization on a 40% by 2015 called Dream It. Build It. Drive It., they choose the X3 for this project and it became one of the best-selling models in 2011, selling 27,793 cars in the United States. The total of sales in North America by year from 2009-11 were:2009 241,727 were sold (2009)2010 265,766 were sold (2010)2011 305,418 were sold (2011)As we can see, the sold vehicles from 2009 to 2011 increased thanks to the Dream It. Build It. Drive It. Program, meaning customization worked for BMW.Its important to notice that the GDP growth for 2014 was beneficial for the company because it means that the customers have more money to spend and in the companies analysis, it means that there would be more sales.

MarketingFor BMW a successful brand needs to have a good image, a sense of belonging but most of all an identity that marks the behavior of the brand; BMW applies the behavioral branding to strengthen the relationship with their clients, this branding implies 4 main factors: the product, the environment, the communication and the behavior.In order to achieve the behavioral branding its necessary to prepare the workers to pay special attention to the client; with this method the company achieved client orientation, adaptability of the workers to different circumstances, solve the clients problems effectively, style and to surpass the clients expectations.The most common way where the brand promotes its cars is in movies, for example the Z3 was James Bond car in Golden Eye movie, since then many BMW cars had appeared as the vehicle of 007; also in other projects such as The hire, Mission Impossible 4 where its important to recall that the X3 was the main character with the futuristic i8 by its side.Another important aspect of BMWs marketing strategy is the sponsorship in F1, Americas Cup among other races which is crucial for the positioning of the brand in other markets.For BMW its important to make just one thing clear, that they produce something completely different to the market and that the cars they sell are not just that but the experience and the luxury combining the tradition that precedes the company and the technological innovation that is needed nowadays.

Distribution and logisticsTo make sure that the right numbers of the right parts are in the right place at the right time - and that these parts meet the required quality standards, is only one of many central tasks mastered daily by BMW logistics specialists. Important to mention that they also oversee product and process targets to make sure these are efficiently achieved by the people.Logistics have a big importance not only for stablishing production, but also for efficient transportation throughout the network, between customers, dealers, suppliers, and plants around the world. This is possible through the "Customer-oriented sales and production process" (COSP), which ensures that customers can change their orders even shortly before their vehicles go into production without affecting the delivery deadline.The Dream it. Built it. Drive it. program was an ambitious program to BMW group, first of all we have different variables to analyze, the most important is that first they had different markets to cover; Americans are very different from the rest of the world, meaning that if they want something, they want it immediately. Thats why BMW had to create something different from the European custom strategy.

We needed something different. -Joseph Wierda, BMWs X3 Product Manager

And also they had to consider the time reduction, which was the key factor of what they really wanted to achieve with the program. Its important to mention that the implementation of the program required significant adjustments at the plant in Spartanburg, South Carolina, in BMWs supply chain, and its IT system. Therefore BMW moved the complete production of the redesigned X3 from Europe in order to reduce the delivery time for the U.S. As a result, the delivery time for the new X3 in the U.S. dropped from seven to two-to-three weeks.The Dream It. Drive It. Build It. Program was focused on mass customization that was commonly known as using flexible processes and organizational structures to produce varied and individually customized products and services at the price of standardized mass-produced alternatives. With this mass customization idea BMW will have problems that had to be solved, for example critical success factors in achieving the vehicle customization at lower costs included flexible manufacturing systems, product modularity, and reconfigurability in order to reduce time-to-market, enhance product appeal, and maintain costs at the lowest possible level; all of these problems were solved in mode and time to achieve the goal of BMW, being the most popular model in the luxury compact SUV segment.Another operational challenge was managing the pool of suppliers who had to be able to combine flexibility and short lead times for customized products at reasonable costs. At the same time, the potential range of optional choices had to be carefully monitored in order not to explode the number of product variants beyond a manageable or cost efficient number. A successful transition to customer-driven business also involved the ability to streamline communication between everyone involved in manufacturing and to solve supply problems in real time. Rapid communication with strategic trading partners had to include the intelligence to direct relevant data to assigned units and respond immediately to orders, changes in configuration, and fluctuating demand.The goal of BMW was finally complete with the success of the program, the X3 model with the mass customization idea was very well accepted by the customers. Now BMW have more problems should the program be extended across all BMW product lines? And what this meant for the regional and global manufacturing strategy, sales and distribution strategy, and the overall competitive positioning of BMW? This kind of problems are the ones that distinguishes leading companies from others, is here when is not just about being the only one but being the best one; its required to be in constant change in order to satisfy the customers needs.

RECOMMENDATION

According to this analysis, the company should continue with the behavioral branding and also with the Dream it. Build it. Drive it. campaign to launch the X4 because the customization costs have been made and the difference between the X3 and the X4 is not much (see exhibit 4 and 5); also is important to consider that theres a expected a growth in the GDP which means a higher marginal propensity to consume (see exhibit 6) therefore the sales would increase in high numbers and also the fuel Price decreases so this is another advantage to consider. The North American sales rebounded the market with the concept of the Dream it. Build it. Drive it, of the X3 model by sales of 30% more to past years. As we can see, the sold of vehicles from 2009 to 2011 also increased thanks to the program. Its important to notice that the GDP growth for 2014 (see exhibit 7) was beneficial for the company because it means that the customers have more money to spend and in the company's analysis, it means that there would be more sales.In order to prove that the X4 launch with the Dream it. Build it. Drive it., during 2014 BMW had an increase of 7.9% to 2015 and sold over $81,034, meaning it was a total success for the company; it combined the small size, sporty image and the customization, although this last aspect meant a strong investment for the other models (X3, X5, X5M, X6 and X6M), we think is worthed because the profit we'll be more and the customer would be satisfied.

ConclusionsIn conclusion, BMW is a really important brand and it's well positioned in the market because over the years it has shown that it's worthed to buy a car of the brand and that is not just about the car you buy but about who you are as a customer and what you want to feel like with the car you own. We think this way of thinking is the base of customers preference and loyalty because the service that BMW offers makes the difference among the other automotive companies because they truly care about the customer satisfaction and about the constant innovation that cars should have in order to be unique.Also is important to notice that the customer satisfaction impacts on the sales and the profit that the company has, because there were complains about some models such as the X6 so the company decided to make changes and implement a customization plan; which as our recommendation says is the best option for the SUV's sector because it doesn't require a lot of investment of the company and because the X4 and X5 are the most similar among BMW's SUVs

Exhibit 1

Exhibit 2

Exhibit 3

Exhibit 4

Exhibit 5

Exhibit 6

Exhibit 7

BibliographyHistoria de BMW M. BMW MXICO. From: http://www.bmw.com.mx/mx/es/insights/corporation/mgmbh/history.html(April, 2015). El top 10 de las marcas de autos ms valiosas. FORBES MXICO. From: http://www.forbes.com.mx/el-top-10-de-las-marcas-de-autos-mas-valiosas/Historia de BMW. PUBLISPAIN. From: http://www.publispain.com/bmw/historia_del_bmw.htm(April, 2010). BMW, de la identidad al comportamiento de la marca. From: http://www.marketingdirecto.com/actualidad/marketing/bmw-de-la-identidad-al-comportamiento-de-marca/(April, 2012). Company portrait. Strategy. From: http://www.bmwgroup.com/e/0_0_www_bmwgroup_com/unternehmen/unternehmensprofil/strategie/strategie.htmlBmw X3 Performance. Autoexpress. From: http://www.autoexpress.co.uk/bmw/x3/performance

Dmitry Alenuskin Andreas Schotter. (2012). BMW of North America: Dream It. Build It. Drive It. Purchased by: Giovanni Maria Baldini on February14, 2014 , de Thunderbird School of Global Management. From: http://gbaldini.weebly.com/uploads/2/3/3/0/23305232/bmw.pdf

Vision and Mission. VISTA BMW COCONUT CREEK. From: http://www.vistabmw.com/Jobs-mission-statement.html 2