In this case study, BMW is seen in the maturity stage of the industry life cycle. Although BMW's growth was stagnant, its huge market share and brand identity allowed for standardization of products like the 1,3,5,7 series in mature and developing markets. Despite high barriers to entry in the maturity stage, BMW asset was a relatively high market share and reputation as an engineering excellence. Cycle of competition Page 6 of 26
Cycle of competition refers to the various drifts among competitors over time. In order to counter its competitors in the market, BMW had a progressive rise in its turnover and possessed the adequate technological knowhow. BMW had its competitive advantage engraved in its processes and designs. To gain higher economies of scale can be achieved by implementing the use of scientific technology that BMW restores to. BMW's major rivals in the automobile industry include Volvo group, GM, Lexus, Toyota, Mercedes but its product ranges from a MINI to a Rolls Royce. Therefore, the product range serves the luxury segment to the premium segment in the industry. According to the cycle of competition concept, competitive advantages or core competencies are temporary in nature; such as BMWs closest competitor Toyota Group. Toyota's valuable assets including technology, product range, profit margins and production capacity pose a threat for BMW as Toyota has become proved product in the immature market territory (Kiley, 2004). Therefore, the available option for BMW is to compete through its competitive advantages and core competencies. Strategic drift Drift refers to the change toward a direction irrespective of whether it's a good or a bad to the company. This drift occurs when a company's challenge from environmental changes negatively affect its operations, despite the occasional incremental development from cultural and historical factors. When it outcompeted its rivals BMW emphasized on brand development that had resulted from changes in the market. The acquisition of the English brand Rover was due to the adoption of the path way and the company's need for increased production and the consequential consolidation thereof; a necessary strategic drift. Resources In order for every organization or firm to thrive and survive globally, it requires and must possess certain resources and competencies. According to Gerry, Scholes & Whittington, (2008), every firm has its own strategic capability to endure against all odds. The most common resources include; Tangible resources which include the physical chattel such as the plant, finance and human labor within the organizations Intangible resources includes the non-physical chattel such as information, knowledge and status BMW's resources are categorized as follows; Physical resources which are universally designed and styled technology Supply chain and dealership management Effective market segmentation Page 7 of 26
Financial Resources In 2003, there was turnover of 41.53 billion euro, gross margins of 3.2 billion, 7.4% profit margins and annual surplus of 3.2 billion euro.
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- Fall '16
- Marketing, BMW Group, Bavarian Motor Works, BMW autos, BMW Company Strategic Management