BMW Logistics

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Transcript of BMW Logistics

International Distribution and Logistics, UV IMBADr. Marta Frasquet Del Toro

BMWs Description and Evaluation of the Distribution and Logistics Strategies

April 2011

Prepared by Gubanov Andrey Suslova Daria Malikova Julia Rodriguez Adrian

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i w t m bil t Trends 1.2 C st mer Habits 1.3 C m etiti n 2. The BMW C m any Portfolio 2.1 The Com any Srt t re 2.2 BMW Overseas subsidiaries 2.3 BMW Positioning 2.4 Environmental record 2.5 BMW Strategies 2.6 Worldwide Sales 2.7 BMWs line Up 3. Target Audience 3.1 Analysis of the Target Customer Segments 3.2 Service Outputs Demanded 4. Distribution 4.1 Distribution Channel Structure 4.2 Market Coverage 5. Channel Evaluation 5.1 Channel efficiency 5.2 Gap Analysis 5.2.1 Demand Gaps 5.2.2 Supply Gaps 5.2.3 Closing Gaps 6. Power imlementation 7. Conflict in distribution channel 8. Overview of logistics and supply chain management. 8.1 Logistics as a part of the Overall Strategy 8.2 Supply chain structure 8.3 Passing of Property 9. Competitive advantage Conclusion Appendixes References

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Introduction

The automobile industry produces automobiles and other gasoline powered vehicles, such as buses, trucks, and motorcycles. The automobile industry is one of the most important industries in the world, affecting not only the economy but also the cultures of the world. It provides jobs for millions of people, generates billions of dollars in worldwide revenues, and provides the basis for a multitude of related service and support industries. Automobiles revolutioni ed transportation in the 20th century, changing forever the way people live, travel, and do business. The automobile has enabled people to travel and transport goods farther and faster, and has opened wider market areas for business and commerce. The auto industry has also reduced the overall cost of transportation by using methods such as mass production which is making several products at once, rather than one at a time, mass marketing which is selling products national ly rather than locally, and globali ation of production that pertains to assembling products with parts made worldwide. As a result of easier and faster transportation, world economies have become dependent on the mobility that automobiles, trucks, and bu ses provide. This mobility allowed remote populations to interact with one another, which increased commerce. The transportation of goods to consumers and consumers to goods has become an industry in itself. The automobile has also brought related problems, such as air pollution, congested traffic, and highway fatalities. Nevertheless, the automobile industry continues to be an important source of employment and transportation for mill ions of people worldwide. Alternative energy sources for cars, such as natural gas, electricity, ethanol, vegetable oil, sunlight, and water, will compete with the traditional energy sources in the future. Many large automakers are now adapting fuel cell technologies: fuel cells are cleaner, quieter, and more energy efficient than internal-combustion engines. We have chosen the BMW company, because it is one of the W orlds super brands in automobile production and as the years proved they are very efficient not only in it, but also in marketing, distribution and logistics. The company has a lot of competitive advantages, such as the high level of customi ation, broad line up, high level of after-sale service and a wide variety of highly trained official dealers. All these factors provide an outstanding image of the BMW Compa ny and contribute to the strong brand loyalty among the customers.

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1. Industry Overview

1.1 Automobile industry trends After the first practical automobile was built by Karl Benz in 1885 (Germany), the Automobile Industry has developed a lot. The automobile industry includes design, development, production, and selling motor vehicles, and is one of the world's most important economic sectors by revenue. Todays automobile industry is characterized by several major trends, which we would like to list below: y After the II World War the companies all over the world started becoming global very intensively. The globalization didnt pass the automobile industry over. Car and parts manufacturers are merging and take over their competitors; component design and manufacture are now frequently outsourced. Meanwhile, all biggest, most successful automobile producers have become totally global in nature. y Shifting to emerging markets, in particular to Asia and BRIC countries (which happens by 2 reasons: the production costs in these countries is significantly lower and, on the other hand, the demand on cars in not satisfied there so there is a market in that countries is not occupied entirely). What is more, this enables leaders of the industry to compete with local auto manufacturers that were flourishing in absence of quality competition. 1 y The manufacturers tend to work together in joint ventures on designing platforms, engines, electronics (it could be everything except for exterior and interior design of the models). After the project is finished, companies continue working separately on the design of the models. y Automobile producers tend to work with exclusive dealers and service centers, which are authorized by the companies headquarters. It helps to control the quality of the entire distribution chain and of all contacts with consumers. y Being green, ecologically friendly is not just a trend - it is a lifestyle for a constantly growing number of people. So, automobile producers try to meet the needs of customers and produce eco -friendly cars. y Automobile producers tend to expand the customer segments (and consequently the product line). In particular, companies focus on production of low-priced cars. y E-commerce has had a strong influence on the car industry. Before purchasing a car, consumers use the Internet to become better informed with the models and the services. Automobile manufacturers now use the most up-dated ecommerce methods to deal with their supply chains. Besides there are various online organizations that steer millions of car buyers toward specific dealers and

Article. Auto Industry Trends Economy. Watch - online economics community that publishes economy, investment & finance reports. http://www.economywatch.com/world-industries/automobile/auto-industry-trends.html4

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even deliver competing bids for cars, offer insurance and financing in such a way that lowers costs and improves satisfaction among consumers. 2 y The franchisee type of contracts arise in many spheres in automobile industry: production of motor vehicle parts , supply stores, equipment rental and leasing, tire dealers and repair and also maintenance franchises. The automotive franchise industry (excluding dealers) generates around $25 billion in sales annually and employs over 175,000 people in 35,600 franchise e stablishments (according to the International Franchise Association sponsored study "Economic Impact of Franchised Businesses: Vol. 2" by PricewaterhouseCoopers, March 2008) 3 y In coming years, auto experts believe that among the following trends in the automotive industry the most significant is fuel efficiency from both ecological and economical sides. 1.2 Customer Habits In order to have the whole image of the trends in the industry, it is necessary to have the understanding of consumer buying habits, which are as follows: y Ecological issue: as the Planet is facing serious problems with the Global Warming, Carbon Dioxide Emissions, Pollution and other environmental problems, it is becoming more and more popular to buy the products and use the services of green companies. y Price consciousness: many people are not in the race for expensive cars and there is a great demand on low-priced cars for everyday use (particularly of Asian automobile producers, like Kia, Hyundai, and Cherry). y Innovation: people enjoy it to use cutting-edge technologies in a car, such as Wi-Fi, TV connection, entertainment, autopilot system and so on. y Tendency to use small cars, because of their mobility, which is extremely relevant in big cities. 1.3 Competition Here are the main competitors of BMW according to their positioning on the market 4 : 1) Mercedes-Benz competes with BMW in almost every single segment and both try to catch up with each other, starting from designing and production and finishing with marketing and distribution. Nowadays, this tendency is changing, but not very fast. Russians consider Mercedes as a classy and stylish brand forhArticle. Overview of Plunkett's Automobile Industry Coverage. Plunkett Research, Ltd. the organization that deals with industry statistics, trends and in-depth analysis of top companies. http://www.plunkettresearch.com/automobiles%20trucks%20market%20research/industry%20an d%20business%20data 3 Article. Automotive Industry Trends - Automotive Franchises. Franchise Direct web portal http://www.franchisedirect.com/automotivefranchises/automotiveindustrytrendsbusinessreportii/ 7/249 4 BMW goes ahead/together with Mercedes-Benz52

individuals who achieved everything, but the company doesnt provide as many services as BMW. Another problem of Mercedes, is that they provide customers with cars within a long period of time (about 4 to 6 months) and prices for additional packages are very high. What is more, Mercedes doesnt have the production in Russia, which is quite a relevant issue from the point of view of Russian economy. 2) Volkswagen Group in general, and Audi brand in particular, are considered by the Russian consumers as not very innovative and classy. Audi offers the same level of customization for the customers, but the Audi cars (along with Mercedes) are not produced in Russia. Besid