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(BMW) Group – 2013

Headquartered in Munich, Bavaria, Germany, BMW is a large automobile, motorcycle and


engine manufacturing company founded in 1917. BMW is the parent company of Rolls-Royce
Motor Cars. With about 100,000 employees, BMW produces motorcycles under the Motorrad
and Husqvarna brands and sponsored the 2012 Olympics in London. Financial services bolster
BMW's bottom line, including purchase financing and leasing, asset management, dealer
financing, and corporate fleets. About 3,000 dealers worldwide sell BMWs, including the Mini,
the 3, 4, 5, and 6 Series.

Strengths

1. In June 2012, BMW was listed in Forbes magazine as the #1 most reputable company
in the world.
2. BMW owns and produces the Mini marque, and is the parent company of Rolls-
Royce Motor Cars and produces motorcycles under the Motored and Husqvarna
brands, led by the K 1200 GT, R 1200 RT, and F 800 S models,.
3. BMW Group operates 29 production and assembly facilities in 14 countries and has
a global dealer network in more than 140 countries.
4. BMW's premium lineup includes sedans, coupés, convertibles, and sport wagons in
the 1, 3, 5, 6, and 7 Series, as well as the M3 coupe and convertible, the X5 sport
active, and the Z4 roadster.
5. In calendar 2012, BMW Group sold 1.85 million cars and nearly 117,000 motorcycles
worldwide, the highest annual total ever for the company and an increase of 10.6%
over the previous record year in 2011.
6. Success was led by the highly successful BMW 1 Series, with a total of 226,829
vehicles sold in 2012, an increase of 28.6% over the previous year. The BMW X1 also
did very well in 2012 with a total of 147,776 vehicles sold, up 16.9% over the prior
year. The BMW 3 Series Sedan did best though with 294,039 vehicles delivered, an
increase of 22.4% over 2011.
7. In early 2013, BMW Group and Toyota Motor Corp. extended their long-term
collaboration agreement for the joint development of a fuel cell system, joint
development of architecture and components for a sports vehicle, joint research and
development of lightweight technologies, and collaborative research on lithium-air
batteries with a post-lithium-battery solution.
8. China led all nations with 30,000 BMW vehicles sold in 2012, 50% higher than the
20,000 sold in the USA.
9. “BMW Genius Everywhere” program will began in the USA in late 2013, with a full
launch by early 2014, which is when the new BMW i3 electric car is due to go on
sale.
10. Total revenue increased 13% in 2012.

Weakness

1. BMW only sold 2,311 units in Russia in 2012.


2. Over 50% of all motorcycle sales come from Europe.
3. Note that BMW is the smallest firm (between Daimler, Toyota, GM, Nissan, and
Volkswagen) in terms of # of employees, but has the second highest EPS.
4. USA only accounts for 18% of all BMW automobile sold.
5. USA only accounts for 10% of all BMW motorcycle units sold.
6. No meaningful sales are derived from developing countries on motorcycles.
7. Inventory turnover of 5 vs the industry average of 10.
8. Quick ratio of 0.66 vs an industry average of 1.0.
9. Debt-to-equity of 1.24 vs. and industry average of 0.70.
10. Only uses premium gas, and cost of repairs can be higher than normal.

Opportunities

1. Growth in sales of luxury vehicles exceeds growth in all other automobile categories.
2. Formula One, NASCAR, Indy Racing, and other racing organizations are outstanding
ways to promote products.
3. Growing middle and upper class in China, India, Eastern Europe and Latin America.
4. Financially well to do people are less effected by down turns in the economy than
middle and lower class families.
5. Growing desire for hybrid style cars among customers.
6. BMW head of sales and marketing recently said “We are confident of healthy sales
growth especially in Asia and the Americas.”
7. Ford and GM saw sales drop by around 10% in Europe.
8. Growing demand for diesel engines and trucks in China and other developing
markets.
9. Ford and GM continue to struggle in the USA and international markets.
10. Germans take a sense of pride in their subject matter and want to be as well
prepared as possible, so they can contribute and make key points during the
meeting. In general, the German worker is well skilled.
Threats

1. Volkswagen (VW) is the largest car manufacturer in Germany and aims to double its
USA market share from 2% to 4% by 2014, and aims to be the world's largest
carmaker by 2018.
2. VW introduced diesel-electric hybrid versions of its most popular models in 2012,
including the Jetta, followed by the Golf Hybrid and the Passat. VW owns Porsche.
3. Mercedes-Benz is active in three forms of motorsport racing: Formula Three, DTM,
and Formula One. The parent, Daimler AG, holds a 60 percent stake in Formula One
team Mercedes-Benz Grand Prix
4. Mercedes-Benz’s U.S. sales surged 11% in January 2013, in its effort to overtake
BMW in luxury-auto deliveries for all of 2013.
5. Lexus sales (owned by Toyota), were up 23% in the USA in 2012 through November,
and are expected to gain at least 10% in 2013.
6. Audi designs, engineers, manufactures and markets automobiles and motorcycles
and competes heavily with BMW on luxury cars.
7. Rising gas prices and pressure to produce more fuel-efficient automobiles and
growing concern over emissions and pollution.
8. Public transportation is fairly common in much of Europe and large cities in the USA.
9. “Looking ahead, we expect the headwinds in Europe to remain,” said Ian Robertson,
BMW’s head of sales and marketing.
EFE Matrix

Opportunities Weight Rating Weighted Score


1. Growth in sales of luxury vehicles exceeds growth in all other 0.10 4 0.40
automobile categories.
2. Formula One, NASCAR, Indy Racing and other racing 0.04 3 0.12
organizations are outstanding ways to promote products.
3. Growing middle and upper class in China, India, Eastern Europe 0.05 4 0.20
and Latin America.
4. Financially well to do people are less effected by down turns in 0.05 4 0.20
the economy than middle and lower class families.
5. Growing desire for hybrid style cars among customers. 0.03 2 0.06
6. BMW head of sales and marketing recently said “We are 0.07 3 0.21
confident of healthy sales growth especially in Asia and the
Americas.”
7. Ford and GM saw sales drop by around 10% in Europe. 0.07 4 0.28
8. Growing demand for diesel engines and trucks in China and 0.05 2 0.10
other developing markets.
9. Ford and GM continue to struggle in the USA and international 0.08 3 0.24
markets.
10. Germans take a sense of pride in their subject matter and want to 0.04 3 0.12
be as well prepared as possible, so they can contribute and make
key points during the meeting. In general, the German worker is
well skilled.

Threats Weight Rating Weighted Score


1. Volkswagen (VW) is the largest car manufacturer in Germany 0.06 3 0.18
2. VW introduced diesel-electric hybrid versions of its most
popular models in 2012, including the Jetta, followed by the Golf 0.03 2 0.06
Hybrid and the Passat. VW owns Porsche.
3. Mercedes-Benz is active in three forms of motorsport racing:
Formula Three, DTM, and Formula One. The parent, Daimler 0.04 3 0.12
AG, holds a 60 percent stake in Formula One team Mercedes-
4. Mercedes-Benz’s U.S. sales surged 11% in January 2013, in its
0.06 3 0.18
effort to overtake BMW in luxury-auto deliveries for all of 2013.
5. Lexus sales (owned by Toyota), were up 23% in the USA in 2012
through November, and are expected to gain at least 10% in 0.05 3 0.15
2013.
6. Audi designs, engineers, manufactures and markets automobiles
and motorcycles and competes heavily with BMW on luxury 0.07 3 0.21
cars.
7. Rising gas prices and pressure to produce more fuel-efficient
0.02 4 0.08
automobiles and growing concern over emissions and pollution.
8. Public transportation is fairly common in much of Europe and
0.03 2 0.06
large cities in the USA.
9. “Looking ahead, we expect the headwinds in Europe to remain,”
0.06 3 0.18
said Ian Robertson, BMW’s head of sales and marketing.
TOTALS 1.00 3.15

BMW is performing very well across the board on all external issues with a score of 3.15.
IFE Matrix
Strengths Weight Rating Weighted Score
1. In June 2012, BMW was listed in Forbes magazine as the #1
0.03 3 0.09
most reputable company in the world.
2. BMW owns and produces the Mini marque, and is the parent
company of Rolls-Royce Motor Cars and produces motorcycles
0.03 3 0.09
under the Motorrad and Husqvarna brands, led by the K 1200
GT, R 1200 RT, and F 800 S models,.
3. BMW Group operates 29 production and assembly facilities in
14 countries and has a global dealer network in more than 140 0.09 4 0.36
countries.
4. BMW's premium lineup includes sedans, coupés, convertibles,
and sport wagons in the 1, 3, 5, 6, and 7 Series, as well as the M3 0.09 4 0.36
coupe and convertible, the X5 sport active, and the Z4 roadster.
5. In calendar 2012, BMW Group sold 1.85 million cars and nearly
117,000 motorcycles worldwide, the highest annual total ever for
0.08 4 0.32
the company and an increase of 10.6% over the previous record
year in 2011.
6. Success was led by the highly successful BMW 1 Series, with a
total of 226,829 vehicles sold in 2012, an increase of 28.6% over
the previous year. The BMW X1 also did great in 2012 with a
0.08 4 0.32
total of 147,776 vehicles sold, up 16.9% over the prior year. The
BMW 3 Series Sedan did best though with 294,039 vehicles
delivered, an increase of 22.4% over 2011.
7. In early 2013, BMW Group and Toyota Motor Corp. extended
their long-term collaboration agreement for the joint
development of a fuel cell system, joint development of
architecture and components for a sports vehicle, joint research 0.05 3 0.15
and development of lightweight technologies, and collaborative
research on lithium-air batteries with a post-lithium-battery
solution.
8. China led all nations with 30,000 BMW vehicles sold in 2012,
0.08 4 0.32
50% higher than the 20,000 sold in the USA.
9. “BMW Genius Everywhere” program will began in the USA in
late 2013, with a full launch by early 2014, which is when the new 0.03 3 0.09
BMW i3 electric car is due to go on sale.
10. Total revenue increased 13% in 2012. 0.05 3 0.15

Weaknesses Weight Rating Weighted Score


1. BMW only sold 2,311 units in Russia in 2012. 0.04 2 0.08
2. Over 50% of all motorcycle sales come from Europe. 0.03 2 0.06
3. Note that BMW is the smallest firm (between Daimler, Toyota,
GM, Nissan, and Volkswagen) in terms of # of employees, but 0.04 2 0.08
has the second highest EPS.
4. USA only accounts for 18% of all BMW automobile sold. 0.08 2 0.16
5. USA only accounts for 10% of all BMW motorcycle units sold. 0.02 2 0.04
6. No meaningful sales are derived from developing countries on
0.02 2 0.04
motorcycles.
7. Inventory turnover of 5 vs the industry average of 10. 0.05 1 0.05
8. Quick ratio of 0.66 vs an industry average of 1.0. 0.05 2 0.10
9. Debt-to-equity of 1.24 vs an industry average of 0.70. 0.04 2 0.08
10. Only uses premium gas and cost of repairs can be higher than
0.02 2 0.04
normal.
TOTALS 1.00 2.98

BMW is doing very well in addressing internal issues, but needs to focus on increasing market share in the USA
market.
BWM Major and Minor problem

Main problem:

How to insure market share growth and become market leader in luxury cars’ category

Minor problems:

 How to win over new and old competitors?


 How to increase brand loyalty?
 How to maintain high level of creativity and productivity of marketing campaigns?

SWOT

SO Strategies

1. Increase presence in the USA by 20% by 2016 for €1 billion (S3, S4,S6, O1, O6, O7).
2. Establish 50 new dealerships in China by 2016 for €25 million (S2, S4, S6, O3, O8).
3. Build 4 new production facilities (Georgia, USA; Southeastern China; Northeastern
China; Czech Republic) for €100 million each (S2, S4, S6, O3, O8).

WO Strategies

1. Open 20 new dealerships in Russia, mostly in Moscow and St. Petersburg (W1, O4,
O8).
2. Spend €10 million on advertising motorcycles in Brazil (W2, W6, O3, O6).
3. Spend €25 million on advertising motorcycles in the USA (W5, O6).
4. Spend €100 million to redevelop engines to accommodate gas of lesser octane
ratings (W10, O10).

ST Strategies

1. Spend €50 million promoting the advantages of BMW over Audi in the USA market
(S1,S4, T7).
2. Offer free sunroofs on all cars sold in the US market in 2014 for a cost of €75 million.
(S1, S4, T2, T5, T6, T7).
3. Establish 50 new dealerships in China by 2016 for €25 million (S2, S4, S6, T6).
WT Strategies

1. Add heated seats in the back seats of all BMW 1 Series cars in 2014 for €25 million
(W3, T1, T2, T3, T4, T5).
2. Reduce the amount of cars provided to European dealerships in 2014 and 2015 by
10% each year (W7, W8, T8, T9).
3. Spend €25 million on advertising motorcycles in the USA (W5, T7).

Space Matrix

Internal Analysis: External Analysis:


Competitive Position (CP) Industry Position (IP)
Market Share -3 Growth Potential 5
Product Quality -1 Financial Stability 6
Customer Loyalty -2 Ease of Entry into Market 6
Technological know-how -2 Resource Utilization 5
Control over Suppliers and Distributors -2 Profit Potential 5
Competitive Position (CP) Average -2.0 Industry Position (IP) Average 5.4
Internal Analysis: External Analysis:
Financial Position (FP) Stability Position (SP)
ROE 4 Rate of Inflation -3
Debt/Equity 4 Technological Changes -2
Net Income 6 Governmental Regulations -3
Revenues 6 Competitive Pressure -7
Company Worth 5 Barriers to Entry into Market -2
Financial Position (FP) Average 5.0 Stability Position (SP) Average -3.4
FP
Conservative Aggressive
7

CP IP
-7 -6 -5 -4 -3 -2 -1 1 2 3 4 5 6 7
-1

-2

-3

-4

-5

-6

-7
Defensive Competitive
SP

While BMW is smaller than its larger competitors, it still is a large firm, offering an excellent product and should
continue to expand into USA and China, moving forward.
The Internal-External (IE) Matrix
The Total IFE Weighted Scores
Strong Average Weak
4.0 to 3.0 2.99 to 2.0 1.99 to 1.0
4.0 I II III

3
High 1

3.0 IV V VI

The
EFE
Total Medium
Weighted
Scores

2.0 VII VIII IX

Low

1.0

BMW is a well-balanced company with revenues fairly consistent across regions. With
the high euro and lower transport costs, it is assumed the Germany would have the
highest profit margin, resulting in that segment being in the upper right corner even
though it has fewer revenues. The firm also produces motorcycles, but only 2% of total
2012 revenues were derived from these operations.
QSPM

Build Four
New
Increase
Production
Dealerships
Facilities in
in China and
China, USA,
Russia
and Eastern
Europe
Opportunities Weight AS TAS AS TAS
1. Growth in sales of luxury vehicles exceeds growth in all other
0.10 3 0.30 4 0.40
automobile categories.
2. Formula One, NASCAR, Indy Racing and other racing
0.04 0 0.00 0 0.00
organizations are outstanding ways to promote products.
3. Growing middle and upper class in China, India, Eastern Europe
0.05 3 0.15 4 0.20
and Latin America.
4. Financially well to do people are less effected by down turns in
0.05 4 0.20 3 0.15
the economy than middle and lower class families.
5. Growing desire for hybrid style cars among customers. 0.03 4 0.12 2 0.06
6. BMW head of sales and marketing recently said “We are
confident of healthy sales growth especially in Asia and the 0.07 4 0.28 3 0.21
Americas.”
7. Ford and GM saw sales drop by around 10% in Europe. 0.07 4 0.28 2 0.14
8. Growing demand for diesel engines and trucks in China and
0.05 4 0.20 1 0.05
other developing markets.
9. Ford and GM continue to struggle in the USA and international
0.08 2 0.16 3 0.24
markets.
10. Germans take a sense of pride in their subject matter and want to
be as well prepared as possible, so they can contribute and make
0.04 0 0.00 0 0.00
key points during the meeting. In general, the German worker is
well skilled.
Threats Weight AS TAS AS TAS
1. Volkswagen (VW) is the largest car manufacturer in Germany
and aims to double its USA market share from 2% to 4% by 2014, 0.06 3 0.18 1 0.06
and aims to be the world's largest carmaker by 2018.
2. VW introduced diesel-electric hybrid versions of its most
popular models in 2012, including the Jetta, followed by the Golf 0.03 0 0.00 0 0.00
Hybrid and the Passat. VW owns Porsche.
3. Mercedes-Benz is active in three forms of motorsport racing:
Formula Three, DTM, and Formula One. The parent, Daimler 0.04 0 0.00 0 0.00
AG, holds a 60 percent stake in Formula One team Mercedes-
4. Mercedes-Benz’s U.S. sales surged 11% in January 2013, in its
effort to overtake BMW in luxury-auto deliveries for all of 2013. 0.06 3 0.18 1 0.06

5. Lexus sales (owned by Toyota), were up 23% in the USA in 2012


through November, and are expected to gain at least 10% in 0.05 3 0.15 1 0.05
2013.
6. Audi designs, engineers, manufactures and markets automobiles
and motorcycles and competes heavily with BMW on luxury 0.07 0 0.00 0 0.00
cars.
7. Rising gas prices and pressure to produce more fuel-efficient
0.02 0 0.00 0 0.00
automobiles and growing concern over emissions and pollution.
8. Public transportation is fairly common in much of Europe and
0.03 0 0.00 0 0.00
large cities in the USA.
9. “Looking ahead, we expect the headwinds in Europe to remain,”
0.06 2 0.12 4 0.24
said Ian Robertson, BMW’s head of sales and marketing.
Build Four
New
Increase
Production
Dealerships
Facilities in
in China and
China, USA,
Russia
and Eastern
Europe
Strengths Weight AS TAS AS TAS
1. In June 2012, BMW was listed in Forbes magazine as the #1
0.03 0 0.00 0 0.00
most reputable company in the world.
2. BMW owns and produces the Mini marque, and is the parent
company of Rolls-Royce Motor Cars and produces motorcycles
0.03 0 0.00 0 0.00
under the Motorrad and Husqvarna brands, led by the K 1200
GT, R 1200 RT, and F 800 S models,.
3. BMW Group operates 29 production and assembly facilities in
14 countries and has a global dealer network in more than 140 0.09 4 0.36 3 0.27
countries.
4. BMW's premium lineup includes sedans, coupés, convertibles,
and sport wagons in the 1, 3, 5, 6, and 7 Series, as well as the M3 0.09 0 0.00 0 0.00
coupe and convertible, the X5 sport active, and the Z4 roadster.
5. In calendar 2012, BMW Group sold 1.85 million cars and nearly
117,000 motorcycles worldwide, the highest annual total ever for
0.08 0 0.00 0 0.00
the company and an increase of 10.6% over the previous record
year in 2011.
6. Success was led by the highly successful BMW 1 Series, with a
total of 226,829 vehicles sold in 2012, an increase of 28.6% over
the previous year. The BMW X1 also did great in 2012 with a
0.08 0 0.00 0 0.00
total of 147,776 vehicles sold, up 16.9% over the prior year. The
BMW 3 Series Sedan did best though with 294,039 vehicles
delivered, an increase of 22.4% over 2011.
7. In early 2013, BMW Group and Toyota Motor Corp. extended
their long-term collaboration agreement for the joint
development of a fuel cell system, joint development of
architecture and components for a sports vehicle, joint research 0.05 0 0.00 0 0.00
and development of lightweight technologies, and collaborative
research on lithium-air batteries with a post-lithium-battery
solution.
8. China led all nations with 30,000 BMW vehicles sold in 2012,
0.08 4 0.32 3 0.24
50% higher than the 20,000 sold in the USA.
9. “BMW Genius Everywhere” program will began in the USA in
late 2013, with a full launch by early 2014, which is when the new 0.03 0 0.00 0 0.00
BMW i3 electric car is due to go on sale.
10. Total revenue increased 13% in 2012. 0.05 3 0.15 4 0.20

Weaknesses Weight AS TAS AS TAS


1. BMW only sold 2,311 units in Russia in 2012. 0.04 1 0.04 4 0.16
2. Over 50% of all motorcycle sales come from Europe. 0.03 3 0.09 2 0.06
3. Note that BMW is the smallest firm (between Daimler, Toyota,
GM, Nissan, and Volkswagen) in terms of # of employees, but 0.04 4 0.16 3 0.12
has the second highest EPS.
4. USA only accounts for 18% of all BMW automobile sold. 0.08 4 0.32 1 0.08
5. USA only accounts for 10% of all BMW motorcycle units sold. 0.02 4 0.08 1 0.02
6. No meaningful sales are derived from developing countries on
0.02 4 0.08 3 0.06
motorcycles.
7. Inventory turnover of 5 vs the industry average of 10. 0.05 0 0.00 0 0.00
8. Quick ratio of 0.66 vs an industry average of 1.0. 0.05 0 0.00 0 0.00
9. Debt-to-equity of 1.24 vs an industry average of 0.70. 0.04 0 0.00 0 0.00
10. Only uses premium gas and cost of repairs can be higher than
0.02 0 0.00 0 0.00
normal.
TOTALS 3.92 3.07
Both strategies are attractive, but building new production plants, especially two new
ones in China and one in the USA, should be undertaken first.

Recommendations

1. Build 4 new production facilities (Georgia, USA; Southeastern China; Northeastern


China; Czech Republic) for €100 million each.
2. Open 20 new dealerships in Russia, mostly in Moscow and St. Petersburg for a cost
of €10 million.
3. Spend €10 million on advertising motorcycles in Brazil.
4. Spend €25 million on advertising motorcycles in the USA.
5. Spend €100 million to redevelop engines to accommodate gas of lesser octane
ratings.
6. Spend €50 million promoting the advantages of BMW over Audi in the USA market.
7. Offer free sunroofs on all cars sold in the US market in 2014 for a cost of €75 million.