Assignment on

SWOT ANALYSIS
BMW




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Introduction:
Bayerische Motoren Werke AG is commonly known
as BMW. It translates to English as Bavarian Motor
Works. BMW-AG is a German automobile,
motorcycle and engine manufacturing company
based in Munich, Germany. BMW started as a
manufacturer of aircraft engines in 1913, but in 1919
following the armistice (Treaty of Versailles)
German military was prohibited to produce aircrafts.
Following years saw, the company manufacturing motorcycles due to the Treaty of Versailles
imposed conditions. The first BMW car was manufactured in the year 1928. Currently, BMW
is the parent company of Rolls Royce Motor Cars and MINI. Besides being one of the ten
largest car manufacturers in the world, it also has a strong market position in the motorcycle
sector under BMW Motorrad. BMW AG is one of the German Big 3 luxury automakers
with Audi and Mercedes Benz.
In June 2012, BMW was listed as the #1 most reputable company in the world by Forbes.com
and also the same year, Dow Jones Sustainability Indexes named it the worlds most
sustainable automotive company for the 8
th
consecutive year (first automotive enterprise to be
in the Index). Rankings were based on willingness to buy, recommend, work for and invest in
a company. Since its first motorcycle rolled out in 1923, BMW has been engaged in
motorsport activities as well. BMW has been official sponsor for London 2012 Olympics,
United States Olympic Committee, PGA Championships, BMW Italian Open (Golf) and
Bundesliga (football). It is the charter member of US Environmental Protection Agencys
National Environmental Achievement Track, which recognizes companies for environmental
stewardship and performance. BMW is ranked 3
rd
place in Carbon Disclosure Leadership
index across all industries.




SWOT Analysis:
Strengths:
1. Strong Brand Reputation:
In 2012, BMW was listed as the most reputable business in the world by the Forbes
magazine. The strong brand reputation of BMW is the result of effective marketing
strategies. Consumers perception has been associated with the brand image. With
$29 billion, BMW brand is the third most valuable automotive industry brand in the
world.

2. Environmental Friendly Technology:
BMW is known for its innovation and technological advancements. The company
develops environment friendly cars, with its engineers working on developing new
types of fuels, such as hydrogen. BMW AG offers nearly 20 models emitting CO
2
as
low as 140g/km. In 2013, BMW-AG announced launch of its first fully electric car
range, starting with BMW i3 in 2014.

3. Highly Skilled Workforce:
Quality cars require premium materials and skilled workforce. BMW has set up
assembly plants mainly in USA and Germany, which have the most skilled vehicle
assemblers.

4. Corporate Social Responsibility (CSR):
The company invests large sums in employee health management, balanced work life
programs, zero waste at its plants and suppliers sustainability. It is committed to
employee-community well-being and environment protection programs.

5. Quality Products:
BMW is a world renowned brand for its engineering potentials, skilled workforce and
quality products. BMW aims at technological advancements, green vehicles and
new innovative quality products.

6. Competitive Customer Service:
BMW works efficiently on long-term post sales customer service practices catering to
the needs, problems and any issues faced by its customers. Customers spending so
many amounts of money on quality products look for superior after-sale services,
which BMW knows very well how to fulfill.

Weaknesses:
1. High cost structure:
For production of high-end, luxury products; hiring skilled workforce and new
technological components leads to high costs for the business. BMWs cost structure
is higher than that of its competitors like Audi, Toyota, GM and Volkswagen.

2. High prices perception:
Compared to its competitors, like Audi; BMWs luxury cars requires higher cost
structure. Thus, BMW follows a premium pricing strategy leading to high price in
comparison with other cars.

3. Too few acquisitions and strategic partnerships:
The lack of strategic partnerships with other organizations is another weakness of
BMW-AG. BMWs 10% growth is credited to acquisitions which makes hard for a
company to grow. In order to grow remarkably, a company has to acquire more
brands and enter into more strategic partnerships.

4. Weak brand portfolio (only three brands):
BMW manufactures and sells only 3 brands: BMW, MINI and Rolls-Royce. The lack
of differentiation in brand portfolio may have negative impact on long-term growth of
the company. It may put the company in jeopardy to external shocks and economic
crisis in the future.




Opportunities:
1. Increasing fuel prices:
With the current economic instability and growing fuel prices, large markets can
welcome the new range of BMW hybrids and hydrogen cars. BMW has been working
on developing the i-BMW concept which includes fully electric cars leading to
emission reduction and cost efficient cars.

2. Green vehicles and new emission regulations:
With customers becoming more conscious about the environmental protection and the
negative aftermaths of petrol and diesel cars, BMWs emphasis on green vehicles
will definitely create strong position in the automotive industry in the future. The firm
produces most ecological vehicles which comply with the new reduced vehicle
emission regulations.

3. Changing customer needs:
Unique selling proposition and continuous brand building with the help of new
innovative technologies can help BMW to cater to different target groups. BMW
takes into account the changing customer needs before launching and developing new
products.

4. Strategic alliances with other automobile companies:
BMW can plan to increase its presence globally by taking in to account the possibility
of strategic alliance with other companies. Strategic alliances can help large
companies to explore the markets of countries that have limited themselves to
particular companies.







Threats:
1. Increasing prices of raw materials:
Auto manufacturers are facing issues due to rise in costs or raw materials leading to
lesser profits and higher input costs.

2. New competition:
In developed countries, markets are saturated for luxury cars, intensifying
competition. With increasing competition from competitors like Audi, Mercedes
Benz, Toyota, etc. BMW tends to compete more on price rather than differentiation.

3. Euro exchange rates:
Exchange rate fluctuation can be a major threat for BMW if euro appreciates against
other currencies because a huge part of it profits come from other currencies.

4. Malfunctions:
Another threat for BMW can be the product recalls which compromises its claims of
high-end quality products affecting its brand image. E.g. in July 2014, the company
announced recall of 1.6m 2000-06 3 series models due to passenger-side airbag
issues. Similarly, in April 2014, BMW recalled 156,137 luxury cars and SUVs due
possibility of faulty engine bolts.

5. Shale Gas Extraction:
With increasing emphasis on shale gas extraction, future fuel prices may drop making
electric, hybrid and hydrogen cars less attractive. This in turn can be an area of
concern for the company who is spending a major portion of its reserves and profits in
developing the i-technology electric and hydrogen cars.