Business Strategy Assignment with BMW (GC0441)
Executive Summary
This paper aims to develop a report on strategic management for business, called BMW. In the first part of this paper, a situational analysis is conducted on the BMW business, where the second part of this paper focused on How BMW can identify and profitability exploit uncontested market spaces. In the first part of this business, the finding of PESTLE analysis shows that BMW getting both opportunities and challenges from political terms, economic terms, social and technological issues, legal and environmental factors. The finding of Porter’s five forces analysis shows that BMW faces high competitive situations and customer bargaining power, wherein other terms it is getting opportunities due to lower threat of entry, substitute, and bargaining power of suppliers. The analysis of McKenis’s 7S model shows that BMW giving higher concentration on strategy, skills, shared values, and style in comparison to structure, system, and staff.
The finding of Ansoff’s growth matrix analysis shows that MBW is mainly focusing on product and market development, rather than penetration and diversification. On the other hand, BMW should focus on the Blue Ocean Strategy to overcome its red ocean’s huge competition in terms of sales and marketing to create uncontested market spaces. Blue Ocean Strategy of BMW must focus on key three corresponding qualities: focus, compelling tagline, and divergence. Gaining these corresponding qualities, it is essential for BMW to be differentiated cluttered that will improve communication along with a high-cost structure. Additionally, MBW should make competition irrelevant, create and capture the new demand, break value cost trade-off, and align the organization with differentiation and low cost to create an uncontested market space.
Table of Contents
Executive Summary.
Part: 1.
1.0 Introduction.
1.1 Company background.
1.2 Environmental analysis of BMW.
PESTLE analysis tool
PESTLE analysis of BMW.
Political factors.
Economic factors.
Social factors.
Technological factors.
Legal factors.
Environmental factors.
1.3 Competitive environment analysis.
Porter’s five forces model
Porter’s Five Force analysis of BMW.
Threats of substitute products/services.
Rivalry in the automobile industry.
Bargaining power of suppliers.
Bargaining power of buyers.
The threat of new entrants.
1.4 Strategic analysis of BMW.
McKinsey 7S model analysis for BMW.
Ansoff Growth Strategy analysis for BMW.
Market Penetration.
Product Development
Diversification.
Market Development
1.5 Conclusion.
Part: 2.
2.0 Introduction.
2.1 How BMW can identify and profitability exploit uncontested market spaces.
Blue Ocean strategy.
MBW’s managers should use four factors for value innovation.
Red Ocean Vs Blue Ocean Strategy.
How BMW can use the Blue Ocean Strategy.
Six Path Framework for BMW…
Strategy Alignment
BMW needs to avoid these six Red Ocean strategy traps.
How MBW can create uncontested market space.
2.2 Conclusion.
References.
1.0 Introduction
According to Johnson et al. (2014), the strategy is the organizational scope or direction that helps an organization to achieve its competitive advantage in its changing environment by maintaining the business resources as well as fulfilling the expectations of the stakeholders. Spender (2016) said that the term ‘business strategy is a set of different actions that are mainly used by a business organization to compete with its competitors successfully by attracting target customers and to achieve the organizational goals and objectives properly.
The selected organization for this assignment is BMW which is the luxurious automobile company in the world. This assignment includes two parts. The first part of this assignment describes the environmental analysis, competitive analysis, strategic analysis of BMW. For environmental analysis, the PESTLE analysis tool is used and for competitive analysis, Porter’s five forces model is used. On the other hand, the McKinsey 7S model, blue ocean strategy, and growth strategy are used. In the second part, this assignment describes how BMW can identify and profitability can exploit the uncontested market spaces.
Our Recommended Resources:
SIM336 Strategic Management_ University of Sunderland London
1.1 Company background
BMW (full form Bavarian Motor Works) is the multinational organization of German that produces high-quality automobiles, motorcycles, and aircraft engines (since 1945). In the year of 1961, this automobile company was first founded where it is headquartered in Munich, Bavaria. Different automobiles and other vehicles are produced by BMW for different countries such as Germany, China, Brazil, South Africa, the UK, the US, and India. BMW has become the 12th biggest motor vehicle producer in 2015 in the world where it produced about 2,279,503 vehicles (BMW Annual Report, 2017).
1.2 Environmental analysis of BMW
PESTLE analysis tool
Farooq (2018) said that PESTLE is the analytical tool for the strategic planning of a business to understand how the external factors influence that business’s operations. PESTLE includes six key factors such as political factors, economic factors, social factors, technological factors, legal factors, and environmental factors. These factors of a business are analyzed effectively through the PESTLE analysis (David, 2018). The PESTLE analysis of BMW is explained as follows:
PESTLE analysis of BMW
BMW is the leading German car manufacturer in the world. This company gains about 2.1 million sales in 2014 as well as holds the sales in the luxury segment (BMW Annual Report, 2017).
Political factors
A number of common political factors including the introduction of new rules, regulations, and policies, different political corruptions affect BMW’s business. As BMW is the leading automobile company, it gains huge profits and has a good brand image for its customers. That means it has a great impact on different government policies for its company growth. About 15 production companies around the world work for BMW (BMW Annual Report, 2017). Though BMW’s manufacturing system is very effective it can be maintained by different rules, regulations, and policies of the government of different countries.
In addition, BMW is affected because of the political instability in two different ways. First of all, political instability can affect the capability of the customers of BMW to directly buy their automobiles because different countries (such as China, Russia, or Brazil) have different political concerns. Secondly, if BMW has invested in political instability in different countries, then the investments in those countries may be at the risk (BMW International, 2019).
Economic factors
BMW takes the top position as a reputable automobile company a few years ago. However, it now battles with Toyota for maintaining its brand title. In 2012, the value of BMW increases by 10% whereas the value of Toyota fells down by 10% (BMW Annual Report, 2017). The global economic fluctuation affects the performance, profits, and valuation of BMW. For example, Europe has a huge impact on the success of BMW. However, the GDP rate has fluctuated in different countries that also affect the performance of BMW. Fluctuation in the currency can make it difficult for BMW to identify the profit and loss for the upcoming year (BMW International, 2019).
On the other hand, tariff rates of different countries can have a great impact on BMW’s performance. It is quite possible to produce a BMW automobile in Mexico and sell this without tariff in Europe but if BMW’s automobile produces in the U.S. and sells to Europe, then BMW faces a 10% tariff. For example, BMW will invest about $600m in a plant of South Carolina where the tariff increases automobiles’ costs because of different parts including aluminum or steel. As of 2017, the cost of steel or aluminum was about $500 million with tariffs, so the ultimate cost of the automobiles will increase by about $106 million (BMW Annual Report, 2017). That means this will decrease the profits of BMW.
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