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Strategic Management of the BMW Proposal


Introduction

Success in a company depends on the quality of the strategies that the company management put in place. Notably, the company strategies could be modified from time to time to make the respond to the company’s physical and economic environment. Often, rigid management strategies may not led to organisational prosperity because such policies cannot help the company during international financial dilemma.

Therefore, the paper presents the strategic analysis of BMW Company, point out the organisational strategic capability and the stakeholder expectations. It also discuses impacts of external environment on the company strategy before giving the strategic alternatives and recommendations. Finally, the paper presents swot analysis and strategic options then a conclusion.

Overview of the BMW

The company is multinational, meaning that it has outlets in many countries around the globe. In other countries such as South Africa, the company has become so popular due to its involvement in corporate social responsibility (Eichier 2011, p. 2).

For many years, since its inception, the company has witnessed tremendous growth with a sales turnover of about 1.46 million cars in 2010, posting an increase of 13.6 percent from the previous year (Eichier 2011, p. 3).

Strategic Analysis

The company positions itself strategically to reap from the growing world market in other places, especially the Asian market. This could be realised from the global market recovery (Barney & Hesterly 2009, p. 41). Though the strategy focuses on the emerging markets, Europe and the United States basically remain the primary targeted market for BMW products (Eichier 2011, p. 3).

The management of the company understood the fact that the global market would develop and that it was necessary for the company to be innovative and develop strategic policies to remain viable in the market. This is justifiable by the positive feedback that the product’s users have shown over a long time as well as the company strategic and development policies (Besanko, Dranove & Shanley 2004, p. 55).

Notably, the proliferation of cheap models in the market affected the strategic operations of BMW, yet the company still command a large number of potential high class buyers (Diana 2011, p.12).

The products were comfortable for people in the top market, thus the company maintained this market through changing the operation strategies that allowed it to reduce their cost considerably, without affecting its profitability. Therefore, the strategic planning that the company has employed has been instrumental in maintaining the brand’s name and success around the globe (Global Autos, 2009, p. 8).

The strategic operations of the company has targeted European, America and Asian market has become a priority for the company because of the purchasing power of the people in such areas, leaving the majority in developing countries to opt for relatively cheaper models from other companies (MarketWatch, 2008, 16).

This approach although important, threatened the strategic operations in the company because the middle and low income population form the majority, thus BMW could not attract them to buy its cars.

In fact, the company found it extremely difficult to shift its strategic policies to manufacture cars that could be affordable to the masses (Diana 2011, p. 14). This was because its strategic planning continued to focus on improving the quality of the cars, thus translating to increased cost of acquiring the cars.

With the upcoming of Toyota and its cheap models, the strategy and priority of BMW’s management will be to develop quality cars, which are relatively affordable to a large number of people from the UK, US, Asia and other parts of the world market (Elop 2011, p. 17).

The Organisational Strategic Capability

One of the strategic capabilities lies on the company’s stability that has enabled them to get financial assistance from the global financial institutions. This has become possible due to the increasing favourable capital conditions.

Since the company was able to come out of the global crisis and regain its position to even a much better level, it has created a reputation among the public, thus showing the organisation’s capability and strategic management (Muller & Lechner, 2005, p. 66).

The second strategic capability of the organisation is its focus on premium brands, which are very strong (Eichier 2011, p. 4). This creates special preference for the brands across the world, especially among the middle and high income class. Notably, these groups of consumers prefer durable products that the company is capable of producing.

Certainly, the company looks into the future with confidence because its premium models present an excellent growth projection in the core European market zones and in other parts of the globe (Eichier 2011, p.5). As a result of their quality, premium cars have great demand because they present individuality and a sign of affluence.

The other strategic capability of the company is its ability to use the modern and appropriate technology in manufacturing the cars (Datamonitor, 2011, p. 25). As a result of technological application, the company produces the state-of-the-art cars that appealing to the potential users.

Moreover, the company employ the finest engineering techniques in its manufacturing and most of the workers are of top quality and with relevant experience in car making. This is a strategic capability that the organisation uses for its progress and further success.

Expectations of Stakeholders

There are various expectations of the company stakeholders. For instance, the car users expect efficient dynamics and efficient engines (Eichier 2011, p. 4). This efficiency makes the cars dependable among the high class people who are driven by reliability. Indeed, efficient engines last long and not prone to frequent breakdowns making the people of higher social status to prefer the BMW models.

The customers also get attracted to the charisma that is associated with the desirable brands among the people sharing similar social class (Verlag 2011, p. 18). This consumer expectation must always be upheld o make sure that they become emotionally connected to the brands.

Often, the consumers are pleased about the quality and the level of innovation used in creating the different brands of BMW, which are of premium status (Eichier 2011, p. 4). When the car quality meets the customers’ expectations, they become willing to pay more, and this is the reason justifying the preference for the cars among the people of high social class.

Secondly, the consumers expect emotional value-addition and since the BMW models offer such qualities, they are more likely to identify with the company products than hoping for alternatives (Eichier 2011, p. 4).

Impacts of External Environment on the Company Strategy

The environmental analysis is very critical to the company as it could lead to prosperity or affect the operations at the organisation. Obviously, the company has both internal and external environments, which interrelate to make it either fail in its objectives or be successful. For this case, the focus is on impacts of the external environment on the company strategy (Elop 2011, p. 21).

Since the BMW products came into the market, the company started interacting with the external environments, which had great affect on its strategic operation. Some of the company cars were specially designed for those who like luxury and provided them with the comfort they desired.

The slogan for the product is “Premium segment will continue to grow” (Eichier 2011, p. 5). Eventually gave birth to the premium brands, which began to be used as the common trade name of the company. Notably, BMW brands gained acceptance and popularity in the market and high income people all over the world began to use them as the preferred cars.

As a result, it increased the company interaction with the external environment that interfered with the ethical relationships among the internal players, by exerting pressure and influence on the company operations (Iancu, Popescu & Popescu 2010, p. 253).

The external environment that affected the operations at the company included the competitors, customers, suppliers’ attitudes and the government influence. The major competitors of the company have been Toyota, and Mitsubishi. Literally, Toyota exited the global market because of its cheap cars, which interfered with the internal operations of BMW.

For instance, since Toyota cars are cheap, they have dominating thee market. However, BMW brands are still globally recognized brands because of their high quality and unlike Toyota; the company manufactures a range of luxurious cars to suit the high class in society (Porter 1985, p. 105).

The other external environment that had relative influence on the company strategy was the consumers and suppliers. The products and services that the company offered have, for a long time, been both innovative and stylish so that they could satisfy the market demands, thus attracting many users who specifically preferred them to other brands (Johnson &Whittington 2005, p. 46).

The suppliers were also part of the external environment that played a role in affecting the strategic operations of BMW. Though the suppliers maintained the operations of the company through supplying the materials needed for manufacturing the cars, the management of BMW had to uphold the company strategies so that it could minimise the affects on the company (Pettigrew & Whittington 2002, p. 32).

The suppliers and distributors also found the products to be of high demands, thus able to sustain the supply to and distribution from the company respectively. Definitely, the products gave the company the necessary mileage to become one of the most recognized brands all over the world, in the motor industry.

In marketing, the influence that the government exerts on the business in terms of the rules and regulations affect the company operations makes the latter changes its strategic approach to the company operations (Steinmann & Schreyogg 2005, p. 34).

For example, the government might initiate market regulations, which are thought to be important for the management of the company in the coming years, yet such regulations may turn to be inappropriate for the organisation. Therefore, the company had to develop strategies to exploit the market in order to make the brand more visible (Pettigrew & Whittington 2002, p. 33).

Strategic Alternatives

One of the strategic alternatives is that while understanding that Competition from the rival companies is ever rising over the years, BMW should be able to counter this assumption through strategic planning, enacting strategic policies. Secondly, the company should embrace the improvement of technological application.

Therefore, the situation calls for a proper evaluation of the strategies that the company intends to capture the top market in order to avoid failures (Bazerman & Banaji 2004, p. 114).

Strategic Recommendation

The main strategic recommendation for the company is to focus on manufacturing luxurious cars of premium quality at relatively lower cost to attract the prospective buyers who are only limited by their level of income (Hosmer 2007, p. 26). This would be the sure way of achieving success in the company.

Therefore, in cases were the external environment posed a great threat to the internal affairs and strategies of the company, especially this engaged in the car manufacturing industry and market, the management should adopt competitive policies, which would help it fight off the competition in the market (Clegg, KornBerger & Pitsis 2005, p. 23).

Certainly, this would lead to the advancement of innovative products and the use of effective marketing strategies to minimise the affects.

SWOT Analysis

Strength

The company is the leader in the global premium car market. Basically, it draws its strength from the revelation that the premium products will continue to stay in the global market. The second strength is that those high quality products such as the BMW cars will maintain and possibly increase growth internationally.

The other factor that strengthens the operations of BMW is rate increase rate of growth of premium cars compared to the ones of demanded in mass market (Mintzberg, et al., 2005, 48). The company has various product ranges to offer. Moreover, it places special importance on technological development of the various segments such as the cars and big vehicles. T

he company thrives on innovation. BMW has well-developed marketing strategies. The company management is experienced in the car manufacturing sector, thus gives hope for its development (Palmer &Hardy 2000, p. 49).

Weaknesses

The prices of the products are on the higher sides, thus blocking other interested buyers living in the lower income category. The economic conditions in the Europe, America and Asia, which constitute the larges and primary market, have deteriorated in recent years due to unprecedented financial crisis (Loch et al., 2010, p. 102).

Indeed, such changes have affected the operations at the company, and have contributed to its weaknesses. The company has not been able to promote its other products other than the small cars segment, thus not been able to attract a larger market from the business communities using large tracks.

Opportunities

The high-class population in the Europe, United States, Asian and the rest of the world is increasing, thus the company is sure to receive pressure due to probable increase demand the product in the coming years. Technology in the company has also developed indicating that the company will benefit from promotion (Kotler, Berker & Bickhoff 2010, p. 37).

The emerging world market provides a great opportunity for the company on a global platform. The company’s incubation of efficiency dynamics presents and opportunity for future growth. In addition, the company has established market in many parts of the world that forms its security and opportunity for further development.

Since the world grows towards low carbon dioxide cars, the company has opportunity for future growth because its cars low emission of carbon dioxide (Audi 2007, p. 601). Furthermore, the people always demand luxury, and since most of the company cars depict this quality, it has opportunity for further growth and development.

Threats

The rules and regulations of the car industry have changed, thus provides a challenge for the company. There has been a rise in regional and international competitors such as Toyota, Mitsubishi and others.

The price of raw materials for manufacturing cars is expected to rise in the future, thus threatens the company operations. The other threat to the company includes the lifecycle factors, global economic downturn, international depression and financial crisis among others (Brenkert 2010, p. 704).

Strategic Options

As the company strive into the future, it should take keen interest on a number of strategic options. For example, the company should focus on global economic development so that it could change with the trends. This is important for the company’s success in all its business initiatives.

Secondly, the company should strategically monitor the global monetary policies so that it could adjust based on the provisions of such regulations. The company should also be able to detect international weaknesses and capitalise on them.

This strategic option indicates that the company has to be agile and flexible in its operations so that it could capitalise on global business dynamics. The company should avoid unnecessary sceptics in its strategic mission. This means the company could change its mode of operations to suit the state of economic affairs.

Conclusion

In summary, BMW Company has been greatly successful due its strategic approach and innovation of luxurious cars. Indeed, this has enhanced the organisational strategic capability and promoted the stakeholder expectations about the company products.

Through the company’s strategic policies, adoption of technological ways of manufacturing cars, BMW has been able to produce high quality cars, which meet the consumer demands. This has also helped the company to minimize the impacts of external environment on the strategy. Finally, thought the company has weaknesses and potential threats from the competitors, it relies on its strengths and the opportunities in the global market.

References

Audi, R 2007, Maximization and Distribution as Criteria in Managerial Decisions”, Business Ethics Quarterly vol.17, no. 4, pp. 593-611.

Barney, J & Hesterly, W 2009, Strategic Management and Competitive Advantage: Concepts and Cases, Prentice Hall, London.

Bazerman, M & Banaji, M 2004, “The Social Psychology of Ordinary Ethical Failures”, Social Justice Research vol. 17, pp. 111-15.

Besanko, D., Dranove, D & Shanley, M 2004, The Economics of Strategy, John Wiley, New York.

Brenkert, G 2010, “The Limits and Prospects of Business Ethics”, Business Ethics Quarterly vol. 20, no 4, pp. 703-9.

Clegg, S., KornBerger, M & Pitsis, T 2005, Managing and Organisations, Sage, London.

Datamonitor, 2011, Bayerische Motoren Werke AG (BMW Group), Datamonitor plc, New York.

Diana, K 2011, “BMW plans small models, family of EVs”, Automotive News vol. 86.6484, p. 33-33.

Eichier, F 2011, “BMW Group: Investor Relations”, International Launch Event BMW 6 Series Convertible, Cape Town.

Elop, S 2011, Strategic Management, John Wiley & Sons, New York.

Global Autos, 2009, BMW: Efficient Dynamics – Powerful Example of Technology Branding, Bernstein Global Wealth Management, London.

Hosmer, L 2007, The Ethics of Management, McGraw Hill, New York.

Iancu, A., Popescu, L & Popescu, V 2010, “The Moral Aspect of Business Decisions”, Economics, Management & Financial Markets, vol. 5, no. 2, pp. 250-56.

Johnson, S &Whittington, R 2005, Exploring Corporate Strategy: Text and Cases, Prentice Hall, London.

Kotler, P., Berker, R & Bickhoff, N 2010, The Quintessence of Strategic Management: What You Really Need to Know to Survive in Business, Springer, New York.

Loch, C., et al., 2010, “How BMW id Defusing the Demographic Time bomb”, Harvard Business Review, pp. 99-103.

MarketWatch, 2008, Company Spotlight: BMW, Datamonitor plc, New York.

Mintzberg, et al., 2005, Strategic Safari – A Guided Tour Through the Wilds of Strategic Management, Free Press, New York.

Muller, S & Lechner, 2005, Strategic Management, Free Press, New York.

Palmer, I &Hardy, C 2000, Thinking about Management, Sage, London.

Pettigrew, T & Whittington, R 2002, Handbook of Strategy and Management, Sage, London.

Porter, M 1985, Competitive advantage: Creating and Sustaining Superior Performance, Free Press, New York.

Steinmann, H & Schreyogg, G 2005, “Management”, Harvard Business Review vol. 1, pp 29-46.

Verlag, S 2011, Strategic Management, Prentice Hall, London.

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IvyPanda. "Strategic Management of the BMW." May 15, 2019. https://ivypanda.com/essays/strategic-management-of-the-bmw-proposal/.

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IvyPanda. 2019. "Strategic Management of the BMW." May 15, 2019. https://ivypanda.com/essays/strategic-management-of-the-bmw-proposal/.

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