Introduction
BMW Group is known for its high-quality products and services. It is a reliable enterprise, which considers its strategy and implements the necessary measures to address the customers’ needs in a feasible manner to sustain the competitive edge and maintain the market share. The purpose of this paper is to conduct an external and internal environmental analysis of the BMW Group to be able to assess its strategy from different perspectives.
External Analysis
It is worthy of mentioning that BMW Group is an enterprise that furnishes diversified operations. In particular, the activities of the enterprise include premium class car and motorcycle production accompanied by the best services. In addition, they deliver software products and financial services that are considered premium quality as well (“Annual Report 2015” 163). Thus, it can be assumed that the company has its focus on high performance. Nevertheless, certain aspects are crucial for its feasibility and success.
PESTEL
In terms of the external analysis, there are certainly political, sociocultural, technological, economic, legal, and environmental factors to consider since they can influence the efficiency of the Group.
Political factors:
- Intense oil and petrol taxation in many countries leading to pricey vehicle surveillance;
- trade regulations in Asian and American markets;
Sociocultural factors:
- falling demand for sports cars;
- raising ecological awareness;
- diminishing demand for premium class vehicles;
Technological factors:
- technologically advanced products (innovative energy, electric cells, and combustion technologies);
Economic factors:
- increased inflation rates
- increasing unemployment
- increasing prices for raw materials
- increasing production costs
Legal factors:
- the possibility of alterations in environmental and safety regulation;
- changes in legislation;
- alterations in work and product safety;
Environmental factors:
- request for cleaner engines;
- need to be environmentally friendly.
Industry
It should be noted that the crude oil price is one of the most important aspects of this industry type. In that matter, the possibility of recession connected to the price volatility might result in a decrease in the demand for such cars. In terms of the industry, overall, it is highly investment-oriented. To be able to sustain the competitive edge, the automobile market requires manufacturers to attract heavy investments. The possibility of new entrants is rather low due to the expenditures linked with the plant and machinery needed to produce cars, distribution chains, and other factors that evidence the large costs for any manufacturer. BMW Group has reached large economies of scale, and its brand image is indeed high; therefore, it can be assumed that it will be extremely difficult for the new entrants to attain the same or at least close market share.
Importantly, the Group outsources parts of production to be able to cut down on expenses, which is also one of its advantages unachievable to other companies that are younger. Moreover, outsourcing ensures the enterprise might concentrate on its core competencies. Some of the countries from which BMW Groups outsources include Austria, India, and Indonesia (“Annual Report 2015” 201).
Strategic Group Maps
In terms of mapping, the main rivals can be assembled according to several different variables. The grouping strategy considers its reputation, price, and performance. The mapping can take the form of the following succession: General Motors and Ford, Nissan and Chrysler, Mazda, Toyota, Hyundai and Suzuki, BMW, and Mercedes, Volkswagen, and Honda. Notably, the farther is the distance on the map – the less rivalry is present. In addition, different positions imply varied pressures, profit potential, and strategies.
Internal Analysis
The internal company resources are both tangible and intangible. The tangible resources include a skilled workforce, flexibility achieved through outsourcing activities, and production facilities. The intangible resources of the enterprise are strategic alliances, customers’ perceptions, settled connections, and premium branding (“Annual Report 2015” 15).
The leading capabilities of the BMW Group include technical design knowledge and an efficient workforce that has been mentioned earlier. It should be stressed out that the company places a strong emphasis on its employees. Further on, the company is highly effective in terms of the marketing strategy and practices and it also has a global sales network. In general, the company executes effective marketing with excellent engineering and design.
Regarding the core competencies, the BMW Group brand is linked to products and services that are considered luxurious. In addition, the reputation of BMW is out of the question. BMW has highly skilled and qualified employees and executes control over the supply chain. Apart from that, it can be stated that the company is liable in terms of production facilities. To be more precise, the company is able to enhance its processes through the production triangle (“Annual Report 2015” 19). This approach has allowed BMW Group to reduce costs, increase production, and surpass one of the rivals in the industry. Needless to say, the company constantly invests in the Research and Development department to boost its performance. For instance, the department has worked on the execution of the hydrogen H2R or Hydrogen combustion engine (“Annual Report 2015” 27).
Conclusion
Thus, it can be stated that BMW Group is an enterprise with effective practices that allow it to sustain the competitive edge and maintain the market share that is, so far, unreachable to the new entrants in the industry. Nonetheless, certain environmental factors can strongly influence its performance in the future since the demand for the types of vehicles and services offered by the Group is diminishing, and the buying power of customers is unstable as well. Therefore, it is advisable that the enterprise considers the way it could retain its position in the market.
Work Cited
“Annual Report 2015.” BMWGroup, Web.