Background
BMW is a German automobile company specializing in passenger cars, sports cars, off-road vehicles, and motorcycles. Currently, BMW, which began with a small aircraft engine plant, produces its products at five factories in Germany and twenty-two subsidiaries scattered around the world. BMW is of the few automotive companies that do not use robots in factories since all assembly on the conveyor goes only manually. The output is computer diagnostics of the main parameters of the car, so the vehicle is of high quality and technology. The key to BMW’s success has always been long-term planning and a responsible attitude to all actions taken.
Situational Analysis
Political Factors
It is necessary to start with political factors, and the main one for BMW is, firstly, the escalation of the trade war between China and the United States. Secondly, it is possible to mention the growing political instability in Europe with the UK’s decision to leave the European Union. Since higher taxes are levied on goods sold from China and the United States, this weakens the stock market, which leads to lower prices for shares of the automotive industry (Xu, 2019). In addition, the European Union has also imposed high duties on imports of aluminum and steel to the United States. Finally, the UK’s exit from the EU hurt BMW, as it increased trade restrictions, which led to increased costs and lower production volumes.
Economic Factors
Economic factors primarily relate to macroeconomic aspects, such as consumer demand and exchange rates, which affect international and local markets. Automakers such as BMW need to consider consumer preferences and their incomes when introducing new car models. It should be remembered that the vehicle’s life cycle is constantly shortened. Moreover, the demand for SUVs and small cars has grown lately (Lewin, 2019). Nevertheless, a way out was found, and BMW developed a series of one model that meets consumer expectations for small premium cars, and the X-series models satisfy SUV buyers. In addition, BMW is also planning to release mini SUVs, also known as BMW Urban Cross, so a significant market share belongs to them.
Social Factors
BMW adjusts its marketing and products according to the needs of people and consumers and depending on their cultural differences. This process requires adaptation to each market since using one social and cultural format is not suitable for all approaches. It should be borne in mind that BMW is a manufacturing company operating in the world’s largest countries, such as China, Austria, and South Africa (Lewin, 2019). A company of this size should understand its customers in accordance with the economic and political landscape. An excellent marketing tool is Instagram, which BMW successfully uses and has about twenty million subscribers. The page in this social network is constantly updated with high-quality photos of cars in various cities worldwide.
Technological Factors
Technological factors occupy one of the primary places in the success of a business, as new technologies underlie a unique consumer experience. BMW mainly invests in digital technology to improve the management of its cars and ensure safety. Autonomous driving technology has also helped the company expand its customer base and enter a new consumer segment. Digital technologies, that is, social networks, websites, and blogs, help promote brands and products with high efficiency in many ways (Weiss et al., 2021). BMW uses a variety of channels to advertise its derivatives and global and regional websites to reach consumers.
SWOT-Analysis
As one of the leading companies in its industry, BMW has numerous strengths that help it thrive in the market. These strengths not only help it protect its market share in existing markets but also allow it to penetrate new markets:
- Strong distribution network. Over the years, BMW has built a reliable distribution network that can cover most of its potential market.
- Reliable suppliers. The company has a solid base of a reliable supplier of raw materials, which allows the company to overcome any bottlenecks in the supply chain.
Weaknesses are those areas in which a firm can improve based on its competitive advantages and strategic positioning:
- Limited success outside of the core business. Although BMW is one of the leading organizations in its industry, it has faced difficulties moving into other product segments with its current culture.
- High level of labor attrition. Compared to other organizations in the industry, BMW has a higher level of attrition. Thus, it is forced to spend much more money than its competitors on the training and development of its employees (Xu, 2019).
Among the opportunities for BMW, new customers from the online channel should be mentioned. Over the past few years, the company has invested massive money in the online platform. Soon, the company will be able to take advantage of this opportunity by better knowing its customers and serving their needs through extensive data analysis. In addition, the new technology enables BMW to practice a differentiated pricing strategy in a new market (Weiss et al., 2021). Finally, recent trends in consumer behavior may open up a fresh market for BMW. It provides an excellent opportunity for the organization to build new revenue streams and diversify them into new product categories.
Despite the good organization and high revenue figures, the company faces some threats. For example, the growing strengths of local distributors pose a threat in some markets as competition pays higher margins to local distributors (Weiss et al., 2021). In addition, new technologies developed by a competitor or a market violator can pose a severe threat to the industry in the medium and long term. In addition, changing consumer purchasing behavior from an online channel may threaten the existing supply chain model managed by physical infrastructure. Finally, since the company operates in many countries, it is subject to currency fluctuations, especially given the unstable political climate in several markets worldwide.
Problem
As already mentioned, one of the organizational problems that the company may face in the future is limited success outside of the core business. Competition in the automotive market is constantly growing; therefore, it is advisable to move to other market segments, which is problematic for BMW due to its current organizational culture. It is difficult for its employees to accept innovations and adapt to entirely new products.
Alternatives
Several alternative marketing strategies can be proposed to solve this problem. The first approach is to differentiate products focusing on individual market segments, and an individualized marketing package is used. The second marketing approach involves a focus on mass production, the use of mass marketing in developing a standardized marketing mix. Finally, the third marketing approach is a narrow specialization of production with elements of copying based on mass production. It uses the techniques of concentrated marketing to develop standardized and individualized marketing complexes.
Recommendation (Marketing Strategy)
The second option seems to be the most effective, designed for more standardized and mass production. Thus, specialists from other fields will appear in the company, who will help to adopt innovations and create high-quality products in other areas besides automotive production. In the long term, BMW will achieve great success in different spheres and will be able to direct production in a more narrow and specialized way.
References
Lewin, T. (2019). The BMW century.
Weiss, N., Schreieck, M., Wiesche, M., & Krcmar, H. (2021). From Product to Platform: How can BMW compete with Platform Giants?. Journal of Information Technology Teaching Cases, 11(2), 90-100. Web.
Xu, X. (2019). Assessment of Profitability of the Company BMW AG.