BMW (Bayerische Motoren Werke) is a German company that specializes in manufacturing and selling automobiles and motorcycles. The company was established in 1916 and initially focused on manufacturing aircraft engines, later expanding to producing motorcycles, farming equipment, and automobiles. Vehicles produced by the BMW company are acknowledged by customers worldwide for their reliability and premium features. Today, the BMW company is presented as BMW Group, a multinational company providing products and services in three business segments: automotive manufacturing, motorcycle production, and financial services.
Financial Performance Data Analysis
To provide a thorough analysis of the company and determine its strengths and weaknesses, one should start by collecting valuable information about the company’s activities and financial performance. According to information provided by the BMW Group website (2020a), the company has 31 production locations in 15 different countries and delivers more than two million (2,325,179) automobiles to customers in one year period. The demand for the BMW motorcycles shows significantly smaller numbers, with close to one hundred and seventy thousand (169,272) motorcycles sold in one year. The revenue data states that in the span of 2020, the company received 98 billion euros in revenue, which stands for approximately 113 billion in US dollars.
As the company’s performance in 2020 might have been negatively affected by the unexpected COVID-19 pandemic, it is necessary to compare its financial performance results in 2020 and 2019. According to the BMW Group Report (2020b), in 2020, the company experienced a decrease in numbers of deliveries in automotive and motorcycles segments with an 8,4% drop in automobile deliveries and 3.4% in motorcycle deliveries. The report’s data states that in 2020, the company experienced significant difficulties, as the company’s profit/loss index lost 26%. The brand owned by the BMW Group that was affected the most by negative consequences of the COVID-19 pandemic with an almost 30 percent drop in numbers of deliveries and production is Rolls-Royce.
However, despite the significant decrease in manufacturing segments, BMW Group’s financial services showed steady development of revenues from 2016, and in 2020 the revenues increased by 1.5%. In the message addressed to the company’s stakeholders, the Supervisory Board Chairman, Norbert Reithofer, stated that the 2020 year was challenging, but the company continues to strive for the future goal of sustainability (BMW Group, 2020b). Currently, the company’s main goal is achieving sustainability in ecological terms as well as in the social and economic spheres. The company implemented the strategy of lowering the vehicle’s CO2 emissions through innovations and increasing the manufacturing of electrified vehicles.
BMW’s Strengths and Weaknesses
Through collecting important information about the company’s financial performance, manufacturing processes, and strategy, the study defined three sufficient points that display BMW’s strengths and weaknesses. First, because of the commitment to the Paris Climate Change Agreement and implementation of sustainability goals into the company’s strategy, BMW Group makes many efforts to develop new innovative vehicle technologies. Therefore, due to the high involvement of innovative technologies, the BMW Group products target the premium automotive segment, significantly limiting the opportunities to reach a wider audience and increase the number of vehicles produced. While the matter does not qualify as a weakness, in the future, the new technologies that lower the CO2 emission in vehicles will become available to competitor manufacturers with bigger production opportunities. Thus, focusing on the luxury segment of the market now could result in competitor weakness in the future.
Next, the study defined Rolls-Royce as the brand owned by BMW Group that was significantly affected by the negative consequences of the COVID-19 pandemic. The matter emphasizes the point made earlier about the possible negative outcomes of focusing on the market’s luxury segment. The data on the number of production and deliveries of Rolls-Royce vehicles illustrates how the demand for luxury products declines substantially in conditions of an unstable environment. Manufacturing for several brands in which the majority target the high-income audience is BMW Group’s weakness.
Lastly, in defining the company’s strengths, the study’s analysis showed that differentiation of the company’s activities in several segments and introducing the segment of financial services brought stability to the company’s financial performance. Through providing different options in automotive leasing and insurance while also creating exclusive products for loyal clients, the BMW Group is trying to bring their products to wider audiences. Therefore, even though the company focuses on luxury automotive vehicles, it acknowledged its weaknesses and addressed the issue by developing a system of financial services that makes its products accessible for customers with average income.
Through analyzing the financial performance data of the BMW Group, the study determined that because of the company’s innovation and technology-oriented mission and strategy, the company targets the luxury segment of the automotive market. In 2020, the COVID-19 pandemic and its negative economic consequences indicated that focusing on manufacturing luxury products is BMW Group’s weakness. However, the company shows strength in acknowledging the problem and implementing methods such as developing a financial services system to address the issue and make their products accessible to a wider audience.
BMW Group. (2020a). Company.
BMW Group. (2020b). BMW Group Report 2020.