STRATEGIC OPTION RECOMMENDATION

STRATEGIC CYCLE: 2000 – 2005

Team MarsSpring 2008

Bayerische Motoren Werke

Presentation Outline

Introduction X Objective of case study, Company Background

Analysis 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 poolsOthers

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