SWOT analysis of BMW

This is the Bayerische Motoren Werke (BMW) AG SWOT analysis for 2013. The original analysis can be found at BMW SWOT analysis. For more information on how to do SWOT analysis, please refer to our article.

Company background
Name Industries served Geographic areas served Headquarters Current CEO Revenue Profit Employees Main Competitors Bayerische Motoren Werke AG Automotive Worldwide Germany Norbert Reithofer 76.848 billion (2012) 5.122 billion (2012) 105,876 (2012) Chrysler Group LLC, Daimler AG, Ford Motor Co., General Motors Company, Honda Motor Company, Nissan Motor, Tata Motors, Ltd., Toyota Motor Corporation, Volkswagen AG and many other automotive companies.

BMW is an automobile and motorcycle manufacturer based in Munich, Germany. The company sells BMW, Rolls-Royce and Mini cars and BMW Motorrad and Husqvarna motorcycles. In 2012, Forbes announced BMW as the most reputable company in the world. You can find more information about the company in its official website or Wikipedias article.

SWOT

BMW SWOT analysis 2013

Strengths
1. Brand reputation 2. Environment friendly vehicles 3. Quality products 4. Highly skilled workforce 5. Corporate Social Responsibility (CSR) 6. Strong brand presence in China

Weaknesses
1. High cost structure 2. Weak brand portfolio 3. Perception of high prices 4. Too few acquisitions and strategic partnerships

Opportunities
1. Increasing fuel prices 2. Positive attitude towards green vehicles 3. Expand brand portfolio 4. Changing customer needs

Threats
1. Intense competition 2. Rising raw material prices 3. Decreasing fuel prices 4. Growing euro exchange rate

Strengths
1. Brand reputation. BMW brand is the third most valuable automotive industry brand in the world valued at $29 billion. In 2012, Forbes has also listed BMW as the most reputable company in the world.

2. Environment friendly vehicles. The company tries to develop environment friendly cars by making them more efficient. It offers nearly 20 models that emit CO2 as low as 140g/km. To make BMW cars more environment friendly firms engineers develop new types of fuels, such as hydrogen, too. 3. Quality products. BMW is valued on its engineering capabilities, skilled workforce and quality products. BMW recalls their cars less often and at lower numbers than most of its competitors do. 4. Highly skilled workforce. Quality cars require premium materials and skilled workforce and BMW employs only the most skilled workers to produce its vehicles. BMW sets up its assembly plants at the countries, such as USA and Germany, where there is only the most skilled vehicle assemblers. 5. Corporate Social Responsibility (CSR). BMW is strongly committed to the environment protection, employee and community well-being and sustainability programs. The company invests large sums in employee health management, programs promoting balanced work life, sustainability requirements for its suppliers and producing zero waste at its plants. 6. Strong brand presence in China. Over the last few years, BMW has seen strong sales growth in China, the largest automotive market in the world. In 2012, BMW sold 326,444 vehicles there.

Weaknesses
1. High cost structure. Producing quality cars and hiring skilled workforce results in high costs for the company. BMW cost structure is higher than of its biggest competitors such as Toyota, GM and Volkswagen. 2. Weak brand portfolio. BMW Group manufactures and sells only 3 brands: BMW, MINI and Rolls-Royce. Although these brands perform well in their segments, they are unable to serve larger market needs. Therefore, BMW has to introduce more brands to its portfolio to meet diverse consumer needs. 3. High prices. BMW manufactures luxury cars that require best quality materials, skilled workforce and a great brand image. All this results at a higher car prices that are often considered as too pricey compared to other car prices. 4. Too few acquisitions and strategic partnerships. 90% of BMW growth is organic and only 10% is from acquisitions. Without acquisitions, the company finds it hard to grow even with exclusive engineering capabilities. Thus, if the company wants to grow significantly, it has to acquire more brands and enter into more strategic partnerships.

Opportunities
1. Increasing fuel prices. Increasing fuel prices open up large markets for BMW hybrid and hydrogen cars as consumers shift towards cheaper fuel types. 2. Positive attitude towards green vehicles. Today consumers are more aware of the negative effects (air pollution) caused by cars fueled by petrol and diesel. Large quantities of CO2 emissions intensify greenhouse effect and negatively impact the life on earth. Thus, consumers are more likely to buy new hybrid and hydrogen fueled cars that emit less or no CO2 at all. 3. Expand brand portfolio. In order to grow at a higher rate, BMW should expand its brand portfolio to meet more needs and to satisfy larger consumer market. The company could introduce new models that arent currently included in its range. 4. New emission standards. A new wave for stricter regulations on vehicle emission standards would positively affect BMW position in automotive industry. The firm produces one the most ecological vehicles and has introduced hydrogen fuels that emit zero CO2. New vehicle emission regulations would mean 0 additional investment for BMW while its competitors would have to invest large sums of money to comply with regulations and lose a share of profits.

Threats

1. Intense competition. BMW faces increasing competition from its direct competitors and now tends to compete on price rather than differentiation. Moreover, the markets for luxury cars are saturated in the developed economies, thus intensifying competition. 2. Rising raw material prices. Rising prices for raw metals will lift the costs for auto manufacturers and result in squeezed profits. 3. Decreasing fuel prices. Due to increasing extraction of shale gas, future fuel prices should drop and make electric, hybrid and hydrogen cars less attractive. This creates huge losses for BMW most ambitious projects, hydrogen fueled and electric cars. 4. Growing euro exchange rate. BMW earns part of its profits outside the euro zone. Exchange rate fluctuations threaten BMW profits if the euro will start appreciating against other currencies.

Sources
1. 2. BMW Group (2013). Insights: The Corporation. Available at: http://www.bmw.com/com/en/insights/corporation/overview.html Interbrand (2013). Best Global Brands 2012. Available at: http://www.interbrand.com/en/best-global-brands/2012/Best-GlobalBrands-2012.aspx 3. Reuters (2013). BMW says China group sales surge 73 pct in December. Available at: http://www.reuters.com/article/2013/01/08/bmw-china-idUSL5E9C82UR20130108 4.

BMW Group (2013). Corporate Social Responsibility at BMW Group. Available at: http://www.bmwgroup.com/bmwgroup_prod/e/0_0_www_bmwgroup_com/investor_relations/ir_services/_pdf/sri_ca pital_markets_day/02_Social_responsibility_at_the_BMW_Group_Feuchtmayr.pdf

5. Wikipedia (2013). BMW. Available at: http://en.wikipedia.org/wiki/BMW#Environmental_record