“A project report on SWOT analysis of BMW Group”

Auro University

(India)

The School of Management & Entrepreneurship

Bachelors of Business Administration

Name: - Priyesh Patel

Enrollment No.: - 02201116

Course: - BBA

1

IndexExecutive Summary 3

1 Company Profile 4

SWOT Analysis 52 Strength 52.1 Strong Brand Image 52.2 Strong Research & Development Capabilities 52.3 Strong Product Innovation 52.4 Employee Productivity is high 62.5 High Quality Suppliers 62.6 Constant decrease in CO2 emission 62.7 Strongest product: 5 Series 7

3 Weakness 73.1 Poor performance in Asian markets 73.2 Decrease in production and deliveries 73.3 High wages to employees 83.4 Luxurious cars affordable by higher class of society 8

4 Opportunity 84.1 Hybrid vehicles like electric car and hydrogen car 84.2 Growth in Asia 84.3 Fuel efficient vehicles 94.5 Online Presence 94.6 Rising green awareness 9

5 Threats 105.1 Competition in the global automotive market 105.2 Currency Risk and Changing Government policies 105.3 Recession in US and Europe 105.4 Rising Green Awareness 10

6 Recommendations 11

Reference 12

2

Executive SummaryThis piece of work will make you understand

about the internal and external environment of BMW group. It will help you to know the sustainability of BMW group in Automobile Industry. This report is made so that one can understand the position of the company and can also have a better look on the market and financial aspects of the company. Analysis of internal and external environment can be easily done with the help of SWOT analysis.

3

1 Company ProfileTraded as – FWB (Frankfurt Stock Exchange): BMW (Bayerische

Motoren Werke AG)

Industry - Automotive

Predecessor(s) - Bayerische Flugzeugwerke AG (BFW)

Founded - 21st July, 1917

Founder(s) - Franz Josef Popp

Headquarters - Munich, Germany.

Area served - Worldwide

Key people - Norbert Reithofer (CEO), Joachim Milberg (Chairman of

the supervisory board)

Products - Automobiles, motorcycles and bicycles.

Revenue - € 68,821 million (2011)

Operating income - € 7,077 million (2011)

Profit - € 4,907 million (2011)

Total assets - € 123,429 million (2011)

Total equity - € 27,103 million (2011)

Employees - 100,306 (2011)

Subsidiaries - Rolls-Royce Motor Cars, MINI, Husqvarna, and BMW

Motorrad.

Website – http://www.bmw.com/

4

SWOT Analysis2 Strengths

2.1 Strong Brand Image:

BMW Group consists of three premium brands BMW - sheer driving pleasure, MINI - The world’s most exciting premium small car brand and Rolls-Royce - The pinnacle of automobile luxury. BMW is renowned all over the world because of its three luxury brands and it is also well-known for its motorcycles. It provides the quality which its customers can never forget. BMW is one of the leading luxury car manufacturers in the world. It is one of the world’s largest luxury cars selling company. It is spread all across the globe providing the best service in automobile industry.

2.2 Strong Research & Development Capabilities:

BMW Group is a premium company. Therefore it has a best research and development facility which constantly works for product development and increasing the quality of its cars and bikes. They are also trying to preserve maximum amount of resource and thus they are heading towards optimum use of resources. With the increase in there quality they are also trying to improve the engines by making them capable of giving more speed and less consumption of fuel.

2.3 Strong Product Innovation:

Innovation is not inventing, both the words have big differences. With the help of their best research & development facility they are bringing innovative concepts. Their current innovative concepts are i3 and i8 cars which are made of material 50% lighter then metal and also stronger then metal. They have used recycled plastics in making some parts of the car.

5

2.4 Employee Productivity is high:

Employees working in BMW are highly paid and that is one of the major reasons for high productivity. The employees have their trust in brand therefore they are motivated by this trust. From top management to the bottom management the employees of the company have unity in them resulting in high productivity. Company has a great compensation system setup by the board of management and supervisory board. Company provides with bonuses on the basis of performance and also if there is a surplus in profits. So these are some of the reasons for high employee productivity.

2.5 High Quality Suppliers:

BMW outsources its resources for manufacturing of its cars and bikes. It has the best suppliers of raw materials which help in increasing and maintaining the quality of its products. One of its supplier and manufacturer of the main part of a BMW car i.e. its engine, is Volkswagen. Volkswagen manufactures and supplies engine to many automobile companies like BMW, Porsche, Skoda, etc. and it also manufactures its own cars. So, it has many high quality suppliers for making a high quality car.

2.6 Constant decrease in CO 2 emission:

BMW cars are capable of less consumption of fuel and thus helping in decreasing the amount of polluting gases it emits. They are coming up with electric cars capable of delivering more speed at less energy consumption. They are trying to help the environment by constantly reducing the amount of CO2 and other gases that come from cars. They have launched the efficient dynamics concept. They are coming up with the new ‘i’ project that will help in preventing the pollution.

6

2.7 Strongest product: 5 Series:

5series is the strongest product because it consists of luxurious cars at minimum price. 5series fits properly in many people’s budget because it’s not so costly.

3 Weaknesses3.1 Poor performance in Asian markets:

BMW experienced best year of its corporate history in 2011. There was good increase in its market all over the world but it fails to perform well in Asian markets for a period of years. From 2006 to 2010 it had the minimum sales in Asian markets compared to other regions. BMW is a premium luxury brand and most of the countries in Asian market are developing economies and therefore there is less number of people who can afford such luxury cars. It concentrated more on European market. Earlier there was to manufacturing outlet of BMW in Asian region.

3.2 Decrease in production and deliveries:

BMW’s production before 2010 was not acceptable. It was not able to reach the public demand and therefore there was loss of customers. The deliveries were made late because the production was at slow pace especially in the case of Rolls-Royce. It takes more than two months to manufacture a complete Rolls-Royce Car. It also faced recession in 2009 which increased the prices of raw materials which gradually decreased the production due to less availability of raw material at cheaper rate. There were currency risks and many other problems during this recession which slowed down the production process of BMW.

7

3.3 High wages to employees:

Compared to other companies BMW pays higher wages to its employees which decrease the profit of the company. Other companies pay nominal wages and take maximum productivity in return and BMW pays high wages and takes maximum productivity in return. So it should work on its compensation model.

3.4 Luxurious cars affordable by higher class of society:

BMW group is a manufacturer and seller of premium cars in automobile industry and therefore they are having higher price than ordinary cars. It produces such cars which has great comfort zones for the higher class of the society. These cars are not for an ordinary person. Servicing of the car is also very expensive. The parts in these luxury cars are best quality parts and therefore they are very expensive. So there is lack of affordability.

4 Opportunity4.1 Hybrid vehicles like electric car and hydrogen car:

BMW should come over with some more innovative projects like hydrogen cars. They are still working on the electric car and making them much more efficient than any other electric car. They should grab the opportunity of making the hydrogen car like its competitors. Mercedes is about to launch its hydrogen car and BMW should grab the opportunity of launching its electric car so that it can sustain the competition.

4.2 Growth in Asia:

BMW is having a huge demand in Asian markets to overcome this demand it should try producing more cars and give a competition to its competitors. MINI is known all over the world for its compactness and power. It is the most powerful car amongst all the hatchback cars and therefore it has a huge demand all over Asia. But still it has no presence in

8

India and many other countries where there is huge demand of such cars. Rolls-Royce is also having a huge demand in Asia but due to less production and to maintain the status it fails to fulfill the demand. Therefore, the competitors are successful in taking over this market.

4.3 Fuel efficient vehicles:

Due to rise in the fuel prices people are switching on to fuel efficient vehicles. BMW is capable of making fuel efficient vehicles but it is not able to supply and not able to meet the demand. There are only few models which are fuel efficient and therefore it fails to meet the public demand. A fuel efficient car uses less fuel and gives more power. These cars also help in protecting the environment by emitting less amount of carbon and other gases. Therefore, such cars are in more demand.

4.4 Online Presence:

BMW is having poor online customer care compared to the competitors. It is not having enough information about the cars online. It lacks in E-mail communications because there are unnecessary attachments and lots of spelling errors. This reduces the brands prestige. BMW site has more corporate information than information which customer is looking for. BMW should try to grab this opportunity and improve over the online methods and that will help in increasing the sale.

4.5 Rising green awareness:

Other companies are less focused over the green awareness but people are more focused over green awareness. So, BMW should more focus on raising the green awareness so that it can increase its sale of fuel efficient vehicles. Grabbing this opportunity will help BMW to improve on its fuel efficient vehicles and also the brand prestige will increase. It should come up with some more green revolutionary or eco-friendly projects.

9

5 Threats5.1 Competition in the global automotive market:

Main competitors of BMW are Lexus, Porsche, Mercedes and Audi. These companies are in direct competition with BMW because they also sell luxury cars. All of the competitors are having highly innovative projects.

5.2 Currency Risk and Changing Government policies:

This is the major threat to the company because it is globally present and has to deal with different types of governments and their policies which keep on changing. Currency risk is basically the exchange rates between different currencies of different countries. This all will lead to fluctuation in prices of raw materials.

5.3 Recession in US and Europe:

If recession strikes in US and Europe than it will heavily affect the BMW Market because these two countries are having largest market of BMW and it is a company that is listed on Frankfurt stock exchange that is in Europe. When recession was there in 2008 & 2009 people in USA and Europe started preferring second hand cars and that is the biggest threat to BMW if the recession strikes again.

5.4 Rising Green Awareness:

Due to the rising green awareness government is imposing many rules and regulations related to pollution from vehicles and manufacturing industries. BMW is constantly trying to improve in its technologies, due this it has to do heavy investments and huge amount of renovations in its projects. This all will decline the production and deliveries, which will indirectly affect the profits of the company.

10

6 RecommendationsIt should mainly focus on BRIC (Brazil, Russia, India and China) countries with the help of their strong brand image. So that they can outweigh the low performance in these countries.Development of more production facilities in Asia. So, that they can decrease the wage rates because Asia is heaving cheaper labor than any other regions.Lowering the wages so that it can sustain the competition.As the automobile industry is growing rapidly. Thus, increase in production is needed.More investment in hybrid technologies to increase the green awareness and also increase the sustainable development.It should enter the used car markets of US, Europe and UK with its 3 series so that it can overcome this market during recessions.

11

Reference• BMW annual report 2009, 2010 and 2011.

• http:// www.slideshare.net/whalewolves/marketing-toyota-and- bmw

• http:// www.wikiswot.com/SWOT/4_User_Generated/ BMW_SWOT_Analysis.html

• http:// www.wikiswot.com/SWOT/4_User_Generated/ BMW_SWOT_AnalysisS.html

• http:// www.slideshare.net/thats4u83/b-m-w-assignment

• http:// www.slideshare.net/jawachter/bmw-3-situation-analysis

• http:// www.reuters.com/article/2011/05/17/idUS152322+17-May- 2011+BW20110517

• http://www.gotessays.com/essays/1701/index.php

12