BMW CASE ANALYSIS

INDEX
Background3-4
General Business Strategy.....5-6
Format and content7
Finance......8-9
Marketing..9-10
Distribution and logistics..10-12
Recommendation......13
Conclusions...14
Exhibits.....15-18
Bibliography.19

Background
Bayerische Motoren Werke (BMW) was established in 1918 in Germany as a
successor

of Rapp Motorenwerke, an engine supplier for military aircraft. The

first BMW engines set more than 30 world flight records meaning that the quality of
the engines were outstanding and making quality a symbol of BMW products; the
BMW logo was first introduced in 1920 as a circular design of an aircraft propeller
using the two Bavarian national colors (blue and white) which shows a nationalistic
aspect of the company.
Over the years BMW has positioned in several countries such as Germany and
USA as a car manufacturer which provides luxury, technological and unique cars
although after the WWI it had a bad time because it couldn't produce armed
aircraft, tanks, or armored cars as a restriction for Germany; this shutdown didn't
end with the company because in 1922 the BMW motorcycles were introduced to
the market and in 1928 the first BMW car which sold more than 18000 units
meaning a new turn in the company market; also during the WWII most of the
factories were destroyed which caused a three-year ban on engine production and
a downsizing in manufacturing capacity but the company subsisted by selling
repairs to USA. The innovation of the company at that time was and has been
outstanding because they launched their BMW 3, 5 and 7 Series in 1970 which are
the beginning of BMW dynasty.
This company has made innovations in order to continue being the number one
option for customers and also its established as a premium brand with the
acquisition of Mini and Rolls-Royce; and also it improved its Efficientdynamics

Concept showing a friendly environment role which could also be interpreted as

revolution to the automotive industry. In 1975 it established in U.S. and grew
considerably fast because in 2011 it sold the full product line of all three BMW
Group brands putting U.S. as the biggest market for the BMW Group with the X3
as the most popular model.
Although the company changed its name in 1972 to Bavarian Motoren Werke
Motorsport Gesellschaft fr individuelle Automobile the ideals and cars haven't
changed; at the present time, BMW is the second best auto brand in the world with
an increment of 7% and a value of 25,700 md, according to Forbes magazine, this
increment is the result of the solid sales and the differentiation it has in the market
focusing in athletic performance, excellent dynamic and outstanding power.
The purpose of this business plan is to upgrade the company strategy according
on the several problems that the company faces such as competition, profit, sales,
and customers loyalty but most of all we attempt to maintain BMW image as one of
the best automotive company in the world.

General business strategy

BMW business strategy is ruled for what they call Strategy Number ONE which is
is based on two main targets, to be profitable and to enhance long-term value in
times of change, considering the technological, structural and economic aspects.
Their main pillars are Growth, Shaping the future, Profitability and Access to
Technologies and Customers emphasizing the premium segments of the
international automobile markets.

Vision
We treat you like F.A.M.I.L.Y
Family treatment
Attitude is key
More tan the customer expects
Individual attention with enthusiasm
Like an honored guest
You make the difference

Mission

We will provide our clients with the best customer treatment experience. We will
underpromise and overdeliver in all we do. We will sell and service our products

with the highest quality and integrity. We recognize that the greatest asset in
achieving our Mission is the individual effort of each employee.
All of our staff will be indoctrinated with our vision. Further, they will be asked to
define, and therefore to understand, what their role in the accomplishment of that
mission is. Their own definition, from a customer's point of view, can then be
applied in their own personal job description on a daily basis.

Business segments

BMW is one of the most successful car and motorcycle manufacturers in the world,
it owns three of the strongest brands in the automobile industry and has activity in
more than 150 countries for example in research BMW has: BMW Group
Research and Innovation Centre, BMW Group Car IT, Innovation and Technology
Centre at Landshut Plant in Germany; BMW Group Designworks, BMW Group
Engineering and Emissions Test Center, BMW Group Technology Office in USA;
BMW Motoren GmbH Steyr in Austria; BMW Group Technology Office in Japan;
BMW Group Development Office in China. In Production, BMW has 30
manufacturing facilities in 14 countries and in Sales and Marketing it has
subsidiaries in Argentina, Australia, Austria, Belgium, Brazil, Canada, Denmark,
Finland, France, Germany, Greece, Hungary, Indonesia, Ireland, Italy, Japan,
Luxembourg, Malaysia, Mexico, Netherlands, New Zealand, Norway, Singapore,
Poland, Portugal, Russia, South Africa, South Korea, Spain, Sweden, Switzerland,
Thailand, U.K., U.S.A. (See exhibit 1)

Format and content

STRENGTHS:

WEAKNESSES:

Good working environment,

High Price in the cars

Good positioning of the brand High cost of investment in other countries

worldwide

Poor acquisition number

Brand loyal market

Diversification of the products
Well

structures

marketing

strategies
Background
OPPORTUNITIES:

THREATS:

The GDP growth

The GDP variance in the market income

Market expansion

Competition

The

Corporate

Social Decrease in fuel prices

Responsibility image

The rise in the production materials

The consumer's life standard

Finance
7

In 2008, there was a financial crisis because fuel prices reached 4 dollars per
gallon and consequently SUV sales went down 55%; so in this year, selling cars
was difficult for all companies including BMW (see exhibit 2 and 3). In 2009, the
idea of customization came when the financial crisis hit but BMWs sales
plummeted 30% compared to 2008. In 2008 auto sales in the U.S. dropped 37%
compared to 2007 and in this year automobile companies had to apply for loans
that would help to avoid laying off up to three million people. There were programs
to stimulate sales but the automobile companies accelerated the production of
more efficient vehicles in exchange of these loans. It was in 2010/11 that auto
market started showing recovery, in 2011 there were 12.7 millions of units
purchased and it increased in 2012 with 13.8 million units sold.
BMW opened a plant in Spartanburg, South Carolina, July 1994 which produced
297,065 vehicles; production increased 73% over the years and BMW became the
largest exported to the non-NAFTA countries. By 2012 the plant capacity increased
to 350,000 cars per year, exporting vehicles all around the globe.
In 2009 BMW sold 242,000 vehicles in U.S. and only 15% were customized,
compares to Europe where half of the sales were customized. BMW made a
program to increase customization on a 40% by 2015 called Dream It. Build It.
Drive It., they choose the X3 for this project and it became one of the best-selling
models in 2011, selling 27,793 cars in the United States. The total of sales in North
America by year from 2009-11 were:
2009 241,727 were sold (2009)
2010 265,766 were sold (2010)
2011 305,418 were sold (2011)
8

As we can see, the sold vehicles from 2009 to 2011 increased thanks to the
Dream It. Build It. Drive It. Program, meaning customization worked for BMW.
Its important to notice that the GDP growth for 2014 was beneficial for the
company because it means that the customers have more money to spend and in
the companies analysis, it means that there would be more sales.

Marketing
For BMW a successful brand needs to have a good image, a sense of belonging
but most of all an identity that marks the behavior of the brand; BMW applies the
behavioral branding to strengthen the relationship with their clients, this branding
implies 4 main factors: the product, the environment, the communication and the
behavior.
In order to achieve the behavioral branding its necessary to prepare the workers
to pay special attention to the client; with this method the company achieved client
orientation, adaptability of the workers to different circumstances, solve the clients
problems effectively, style and to surpass the clients expectations.
The most common way where the brand promotes its cars is in movies, for
example the Z3 was James Bond car in Golden Eye movie, since then many BMW
cars had appeared as the vehicle of 007; also in other projects such as The hire,
Mission Impossible 4 where its important to recall that the X3 was the main
character with the futuristic i8 by its side.

Another important aspect of BMWs marketing strategy is the sponsorship in F1,

Americas Cup among other races which is crucial for the positioning of the brand
in other markets.
For BMW its important to make just one thing clear, that they produce something
completely different to the market and that the cars they sell are not just that but
the experience and the luxury combining the tradition that precedes the company
and the technological innovation that is needed nowadays.

Distribution and logistics

To make sure that the right numbers of the right parts are in the right place at the
right time - and that these parts meet the required quality standards, is only one of
many central tasks mastered daily by BMW logistics specialists. Important to
mention that they also oversee product and process targets to make sure these are
efficiently achieved by the people.
Logistics have a big importance not only for stablishing production, but also for
efficient transportation throughout the network, between customers, dealers,
suppliers, and plants around the world. This is possible through the "Customeroriented sales and production process" (COSP), which ensures that customers can
change their orders even shortly before their vehicles go into production without
affecting the delivery deadline.
The Dream it. Built it. Drive it. program was an ambitious program to BMW group,
first of all we have different variables to analyze, the most important is that first
they had different markets to cover; Americans are very different from the rest of

10

the world, meaning that if they want something, they want it immediately. Thats
why BMW had to create something different from the European custom strategy.

We needed something different. -Joseph Wierda, BMWs X3 Product Manager

And also they had to consider the time reduction, which was the key factor of what
they really wanted to achieve with the program. Its important to mention that the
implementation of the program required significant adjustments at the plant in
Spartanburg, South Carolina, in BMWs supply chain, and its IT system. Therefore
BMW moved the complete production of the redesigned X3 from Europe in order to
reduce the delivery time for the U.S. As a result, the delivery time for the new X3 in
the U.S. dropped from seven to two-to-three weeks.
The Dream It. Drive It. Build It. Program was focused on mass customization that
was commonly known as using flexible processes and organizational structures to
produce varied and individually customized products and services at the price of
standardized mass-produced alternatives. With this mass customization idea
BMW will have problems that had to be solved, for example critical success factors
in achieving the vehicle customization at lower costs included flexible
manufacturing systems, product modularity, and reconfigurability in order to reduce
time-to-market, enhance product appeal, and maintain costs at the lowest possible
level; all of these problems were solved in mode and time to achieve the goal of
BMW, being the most popular model in the luxury compact SUV segment.
Another operational challenge was managing the pool of suppliers who had to be
able to combine flexibility and short lead times for customized products at
11

reasonable costs. At the same time, the potential range of optional choices had to
be carefully monitored in order not to explode the number of product variants
beyond a manageable or cost efficient number. A successful transition to customerdriven business also involved the ability to streamline communication between
everyone involved in manufacturing and to solve supply problems in real time.
Rapid communication with strategic trading partners had to include the intelligence
to direct relevant data to assigned units and respond immediately to orders,
changes in configuration, and fluctuating demand.
The goal of BMW was finally complete with the success of the program, the X3
model with the mass customization idea was very well accepted by the customers.
Now BMW have more problems should the program be extended across all BMW
product lines? And what this meant for the regional and global manufacturing
strategy, sales and distribution strategy, and the overall competitive positioning of
BMW? This kind of problems are the ones that distinguishes leading companies
from others, is here when is not just about being the only one but being the best
one; its required to be in constant change in order to satisfy the customers needs.

12

RECOMMENDATION

According to this analysis, the company should continue with the behavioral
branding and also with the Dream it. Build it. Drive it. campaign to launch the X4
because the customization costs have been made and the difference between the
X3 and the X4 is not much (see exhibit 4 and 5); also is important to consider that
theres a expected a growth in the GDP which means a higher marginal propensity
to consume (see exhibit 6) therefore the sales would increase in high numbers and
also the fuel Price decreases so this is another advantage to consider.
The North American sales rebounded the market with the concept of the Dream it.
Build it. Drive it, of the X3 model by sales of 30% more to past years. As we can
see, the sold of vehicles from 2009 to 2011 also increased thanks to the program.

Its important to notice that the GDP growth for 2014 (see exhibit 7) was beneficial
for the company because it means that the customers have more money to spend
and in the company's analysis, it means that there would be more sales.
In order to prove that the X4 launch with the Dream it. Build it. Drive it., during 2014
BMW had an increase of 7.9% to 2015 and sold over $81,034, meaning it was a
total success for the company; it combined the small size, sporty image and the
customization, although this last aspect meant a strong investment for the other
models (X3, X5, X5M, X6 and X6M), we think is worthed because the profit we'll be
more and the customer would be satisfied.

13

Conclusions
In conclusion, BMW is a really important brand and it's well positioned in the
market because over the years it has shown that it's worthed to buy a car of the
brand and that is not just about the car you buy but about who you are as a
customer and what you want to feel like with the car you own. We think this way of
thinking is the base of customers preference and loyalty because the service that
BMW offers makes the difference among the other automotive companies because
they truly care about the customer satisfaction and about the constant innovation
that cars should have in order to be unique.
Also is important to notice that the customer satisfaction impacts on the sales and
the profit that the company has, because there were complains about some
models such as the X6 so the company decided to make changes and implement a
customization plan; which as our recommendation says is the best option for the
SUV's sector because it doesn't require a lot of investment of the company and
because the X4 and X5 are the most similar among BMW's SUVs

14

Exhibit 1

Exhibit 2

15

Exhibit 3

Exhibit 4

16

Exhibit 5

17

Exhibit 6

Exhibit 7

18

Bibliography
Historia

de

BMW

M.

BMW

MXICO.

From:

http://www.bmw.com.mx/mx/es/insights/corporation/mgmbh/history.html
(April, 2015). El top 10 de las marcas de autos ms valiosas. FORBES MXICO.
From: http://www.forbes.com.mx/el-top-10-de-las-marcas-de-autos-mas-valiosas/
Historia

de

BMW.

PUBLISPAIN.

From:

http://www.publispain.com/bmw/historia_del_bmw.htm
(April, 2010). BMW, de la identidad al comportamiento de la marca. From:
http://www.marketingdirecto.com/actualidad/marketing/bmw-de-la-identidad-alcomportamiento-de-marca/

19

(April,

2012).

Company

portrait.

Strategy.

From:

http://www.bmwgroup.com/e/0_0_www_bmwgroup_com/unternehmen/unternehme
nsprofil/strategie/strategie.html
Bmw

X3

Performance.

Autoexpress.

From:

http://www.autoexpress.co.uk/bmw/x3/performance

Dmitry Alenuskin Andreas Schotter. (2012). BMW of North America: Dream It. Build
It.
14,

Drive

It.

2014

Purchased
de

by:

Thunderbird

Giovanni
School

of

Maria
Global

Baldini

on

February

Management.

From:

http://gbaldini.weebly.com/uploads/2/3/3/0/23305232/bmw.pdf

Vision

and

Mission.

VISTA

BMW

COCONUT

http://www.vistabmw.com/Jobs-mission-statement.html

20

CREEK.

From: