Category: BMW

The core customer value for BMW luxury cars are prestige and hi-tech performance in their endeavors. Having full understanding of the specific needs of their target group, BMW has largely considered the psychographic factors of its customers.

As it has been revealed, BMW targets active individuals who have achieved success at their early age, desiring prestigious and super-performing luxury cars like themselves. Notably, the customers of BMW are technology oriented and very active in their life-time, as they pursue success in their ventures. In this regard, the brand seeks to establish strong relationship with its customers by providing them with the driving experience they desire in their life-time.

As it has been revealed, the luxury cars having the BMW brand name are in three series including MBW 3, MBW 5 and MBW 7. These three series of the MBW brand are the ultimate core aspects for maintenance of customer loyalty to the BMW luxury cars.

More specifically, the MBW 3 series provides its users with extra-ordinary performance as it is made to facilitate self actualization among the customer target base. Precisely, BMW 3 series seeks to establish trust and loyalty with its customers by offering splendid personalized experiences with the product. After the users of BMW 3 advance into more experience with BMW luxury cars, they move further to acquire BMW 5, which is more expensive, but maintaining the outstanding performance of BMW luxury cars

. On the other hand, BMW 7 series is meant for the already established customer base for BMW luxury cars as it propels higher the user-oriented experience with the BMW products through its advanced features to facilitate prestige and higher performance than 3 series. It is important to note that, 7 series is much more expensive that 3 series since it is mainly meant for company’s loyal customers who have had prior experience with the former series.

Following the currently competitive global markets, the development of products to achieve competitive advantage forms a real of success among brands marketers. Since the customers’ needs of BMW products are based outstanding performance, more innovations of the existing products need to be done to come up with more superior luxury cars capable of competing with potential competitors like Mercedes Benz among others.

More so, powerful advertisements based on psychographic factors of the customers’ needs to be made. For instance, creation of short films showing the uniqueness of BMW products on the context of other competitors may be quite appealing. Since visual advertisements are more accurate and highly effective, the films will be able to attract target customers’ attention largely. As a result, success and efficiency in marketing BMW products will be realized.

Further, a variety of channels in marketing the BMW luxury cars would be more appropriate to reach wider customers base. Since the target customers for BMW are always busy and very active, the use of precise and direct advertisements over the internet would be quite effective so that the customers don’t waste time interpreting information of the advertisement.

It can also be recommended that, the product promotion uses the internet to collect information about the needs of their customers with respect to the specific aspects of the luxury cars which need to be improved. By having enough data about the accurate needs of the target customers, it would be easier for the company to modify the cars to intersect with the specific needs of the customers.

The knowledge on the behaviors that consumers portray assists an organization improve their strategies of promotion by understanding the consumer’s psychosomatic individuality. It is necessary for the producer to study individuals and their methods of selection of products, and how these methods of choice eventually influence normal activities in the society (Perner).

Clients have preferences on the types of automobiles they would like to acquire. These preferences principally arise from the strategies used in promotion of products and behavior that their acquaintances display. The BMW EfficientDynamics is a new eco-friendly car that BMW plans to launch, and for it to be successful, conduct of potential consumers must be examined in detail (Pulman).

Clients carry out both an inner and outer investigation for information on solutions that can unravel their troubles. For example, when the brakes of a car do not synchronize properly a customer will consider that before making another purchase. Internal search involves making out alternatives based on memory while an external search necessitates more involvement in examination of product quality. The consumer will retrieve information from hisher memory in making decisions on products and their alternatives.

The elementary information sources are through individual familiarity, communal, and commercial bases. Information on the selection of goods can be through personal experience and what product or service was stored in their memory. A consumer may also depend on news reporting or consult friends on their partiality before making a conclusion. It occurs when an individual perceives something through receiving, choosing, organizing and interpreting data, hence creating an evocative image of a product.

The consumer searches for this information in order to evaluate the available substitute methods to decipher the problem. For example, one may buy a new car or may choose to commute by bus. After settling for a decision, the consumer proceeds to purchase the product of choice. A consumer is thus able to identify the available types of brands and their differences. The quality and price of a product comes into question, and the purchaser may be observed to be more inclined on what is being currently advertised.

Before initiating a product it is necessary to know whether there will be enough consumers in the market to hold up the venture (Pakroo 204). It would be very difficult to make profits if there are not enough clients to purchase the products on offer. The surest way of getting the consumers attention is through education about the product.

Consideration and comprehension begins as soon as exposure of the product occurs. New goods are usually adopted by a few consumers before they begin spreading in the market. Surveys and personal interviews are among the common methods of getting information to consumers about a product.

Learning what they really want and expect from the manufacturer is essential in order to create and dispense it according to their preferences (Perner). The interpretation processes entail exposure to the news and the behavior people demonstrate towards the information.

Exposure to a product can happen either unintentionally or on purpose. Identifying the target consumers involves an inexhaustible circular process which involves satisfying regular clients wile maximizing the unintentional advertising of the new series (Pakroo 204). The interpretation process involves awareness and knowledge of what is necessary. The knowledge, beliefs and meanings that the society teaches an individual, determine whether conception will be deep or small-minded.

Increasing the amount of advertising in a surrounding commonly increases the intensity of comprehension. A shallow level of comprehension focuses on material and tangible meanings while a deep level involves more hypothetical importance. Through exposure consumers will identify the intrinsic value of the product.

There is the need for consumers to be attentive, aware and provoked. There is a preconscious contribution level and a controlled awareness level. Consumers strive to achieve the highest value for the money they have. Some are persuaded by complex product information while others prefer a more simple approach in advertisement. The new BMW series is an eco-friendly EfficientDynamics technology that has efficient resistance tyres and a sharp alternator (Pulman).

The future of driving cars which reduce fuel use and toxic waste levels without affecting the pleasure of driving is here in the form of the BMW EfficiencyDynamic model, which is known for satisfying consumers who demand performance and lavishness. Their lifestyle is characterized by profusion and over-spending.

There are occasions when individuals perceive incongruous implications about the same product. The representational significance that consumers place on a product is crucial for any organization to identify what drives purchaser’s activities (Henry 157). It is important to learn how the interactions of people and the environment give rise to specific experiences. The relationship between the end user and the maker must be understood in order to incorporate purpose and the symbolic denotation of the new BMW model.

The use of the BMW EfficiencyDynamic will show concern for the environment (Pulman). The term ‘efficiency’ is presently being used to describe products that are environmentally friendly. This car model aims to reduce the pollution of the surroundings through expulsion of noxious emissions by a great percentage.

Consumers tend to make purchases that represent their image and personality. The mental and social process involved while choosing a product must be analyzed in order to identify the end user behavior. For example, the friends who accompany a prospective purchaser and the availability of time to sample alternatives may influence preferences of a product.

The personality of an individual creates uniqueness, and this desire will evidently affect purchase of the new model. The behavior of a buyer is greatly influenced by the family unit and personal relations with relatives. Personality may either be hereditary or obtained from personal experiences. The type of car that one drives identifies his/her traits. How the customer views and perceives herself influences decision on the preferred choice of brand (Ferrell & Pride 188).

The lifestyle of a customer is characterized by her activities and interests. The way people interact with others and the way they spend their time will influence which products they prefer (Ferrell & Pride 189). Age, education and levels of income pressure problem recognition, brand preferences and locations of purchase.

The best model that predicts choice is the ‘AIDA’ sequence which involves awareness, interest, desire and action (Armstrong and Stephens 149). A person recognizes something is lacking, develops an interest in finding alternatives to the solution and finally takes action by purchasing the product (Perner).

There are diverse roles that persons can play while buying a product which are all important in there own aspects. There is an architect, influencer, decider, purchaser and consumer role shared among friends and family members. The initiator suggests the idea of buying a car while the influencer will convince the prospective buyer on the value of the commodity. The decider determines the brand and quality of the product and when and where to buy it.

For example, the bread winner of a family will usually be the decider concerning the purchase of luxurious family objects. The person who makes the pays for the car is the buyer, who may also be the one who initiated, influenced or made the decision. The user is the person who in reality makes use of the product.

Relatives and friends have traditionally had a significant impact in the buying process (Ferrell and Pride 190). Most children get influenced by their relatives purchasing behavior, and end up growing with a particular brand preferences. Churches, community clubs and groups play a significant role in brand preferences of their supporters. These groups bring out the comparison between alternative options and act as an information source for its members (Ferrell and Pride 191).

The flow of information is involved before the procurement of a product. Word of mouth is the fastest and cheapest unprofessional means of getting information across. A happy result in a product results in the shopper giving an encouraging word, while disenchantment leads to the reverse. Word of mouth usually flows through peer influence and critique among friends.

The BMW EfficiencyDynamics will be presented in selected sales area and in all retail branches owned by the company. Different cultures espouse different products at dissimilar rates therefore the timing on when to release or advertise a product must be considered. Physical distance from the product and modernity manipulate preferences of persons. Similarities between cultures determine how easily the acceptability of the product would be.

The environment and the prospects that the sales person faces have often been a challenge to manufacturers hence it is necessary to tilt the home, neutral and away environment to the company’s advantage (Ferrell and Pride 191). The distance traveled and the location that the manager and the clients meet greatly influences the result of the transaction.

Segmentation, knowing the target market and creating a good setting is important in optimizing the sales of the new BMW series. Knowing which customers exist, selecting the ones who the company will efficiently serve, and implementing the segmentation procedure distinguishes and identifies customers (Perner). Our brand has always insisted on providing comfort and satisfying the luxurious lifestyles of our clients. The target segment is a wealthy audience who emphasize on comfort and luxury.

Though the market has always targeted the affluent, the new model has incorporated environment aspects. The high-income market has historically wanted to stand out through being unique. This is depicted by the desire of some groups to associate themselves with others while some prefer not to be compared to other cultures.

This market continues to grow, and their display of loyalty to brand is evidenced in the growing market. A rapidly growing segment generally increases more competition and necessitates market expansion. The design appeals to fleet buyers and environmentally conscious citizens (Pulman).

Several segments exist in the market hence it is important for the company to identify their target audience. Segmentation engrosses the manufactures on research about the existing consumers and their needs. The process splits up the market into groups based on different segments like sex, maturity or interests.

Segmentation will allow the company to meet the widest market with the most customized good hence expand sales and obtain a viable advantage. Segmentation considers who the product benefits, psychographic attitudes and perceptions or socioeconomic standing of the market.

Exploiting the undifferentiated approach in which all the consumers receive equal treatment has sometimes proven to be successful. Segmentation calls for hard option hence the need to identify early who the BMW EfficiencyDynamics targets. It is more difficult to satisfy a segment which is already receiving good service than those who are not getting the product (Perner).

The organization’s marketing efforts are directed towards developing a wider consumer base of environmentally conscious customers. The new model intends to save the consumers money with its astounding CO2 production (Perner).

The market is undergoing globalization and the need for efficient and environmentally friendly automobiles is in the interests of the whole populace. Consumers are becoming more responsive of the temperature changes occurring due to the discharge by vehicles.

Therefore, repositioning is necessary to change the consumer’s perception of the brand and educate consumers on the advantages of the new brand. Any organization must develop what the consumer want, advertise it, price it accordingly, and avail it where the consumers prefer to shop (Ferrell and Pride 3).

Satisfying the needs of everybody using a particular product is at times very difficult, hence the need for segmentation. Specializing in one division has proven to offer more profits to a business than those who try to satisfy all the segments (Perner).

With increased awareness of environmental concerns, more people who can afford the brand will make purchases. The BMW EfficientDynamics is cleaner, greener and more fuel-efficient than any other BMW series (Pulman). This is bound to increase the target market hence include more subdivision available in the market.

Works Cited

Armstrong, Michael & Stephens, Tina. A handbook of management and leadership: a guide to managing for results. London: Kogan page publishers, 2005. 148-160

Ferrell, O & Pride William. Foundations of marketing. Boston: Cengage learning, 2007 180-190

Henry, Paul. Qualitative market research: consumption, culture and consumer life-choices in Australia. Bingley: Emerald group publishing limited, 2006. 157-163

Perner, Lars. Consumer behavior: the psychology of marketing. USC Marshall. 2008. Web. Available at http://www.consumerpsychologist.com/index.html

Pulman, Ben. BMW 320d EfficientDynamics (2010) car review. Car. 2009. Web. Available at https://www.carmagazine.co.uk/car-reviews/bmw/bmw-320d-efficient-dynamics-2010-review/

When observing the outcomes of the team’s survey (considering segment 1-low involvement), it is possible to draw considerable conclusions and recommendations about the concerned products, as well as their consumers. Foremost, it is notable that Mercedes Benz has a relatively higher average score on reliability and safety compared to its rival, BMW.

There is also comparison of safety attributes between BMW and Mercedes-Benz. Herein, the difference of the eventual score of safety multiplied by the belief strength of safety in this context is-0.575. Concurrently, the difference in their eventual scores for reliability multiplied by their belief strength (of reliability) remains -0.175. The general indication of these associations is clear that consumers in low involvement sections feel that BMW performs poorer than Mercedes-Benz in safety, a fact that is relative to reliability.

It is notable that a considerable number of consumers would prefer Mercedes-Benz to BMW while considering safety issues. On the contrary, the correlation of the △ErBr and the △EsBs indicates that a given percentage of consumers would prefer BMW to Mercedes-Benz on reliability and viability grounds.

According to this survey, there is a significant demonstration of the concerned association (from higher to lower values). Basic attitudes are tested, and it is recommendable to form a viable matrix, which relates to reliability, performance, quality, safety, and style. The highest BMW’s attribute is safe at 1.15 values. Conversely, the phenomenon is low at 0.4 values.

It is also critical to note that BMW has the most significant or highest attitude strength valued at 2.8375 relative to its competitor’s Mercedes-Benz attitude strength of 2.0925. From the analysis, it is obvious that safety remains the most significant attribute which influences consumers within the low segment’s purchases decision. However, it is notable that, within the segment 2, consumers give high estimate to BMW. BMW’s entire BiEi of all attributes score remain higher than Mercedes-Benz.

Thus, it can be seen that as long as the company, BMW, performs excellently in high involvement segment, there should be great focus on the low involvement consumers. Therefore, there is a specific need for the brand managers to intervene and pay a great deal of attention to the lower involvement segment consumers in order to increase the volume of sales. This indicates the viability of the concerned organizations in the realms of business and other considerable provisions.

Apparently, within the high involvement segment, BMW already holds the whole market share and Mercedes-Benz lacks some competitive advantages. This explains the reason for choosing to adopt one marketing strategy for both segments. In the low involvement segment, BMW Company is considerably disadvantaged. BMW still remains inconvenienced even though its overall attitude score is higher.

This is because its competitor, Mercedes Benz, enjoys a high average score on reliability as well as safety, unlike BMW. The overall depiction of correlation is that consumers in low involvement segment feel that BMW performs minimally compared to Mercedes-Benz. This is a considerable observation in the entire business contexts.

However, the demerits experienced by BMW might also help them to establish and embrace numerous competitive advantages. This is because there is a greater chance for the BMW Company to increase its total amount of sales. Therefore, it is important for the brand manager to adjust marketing strategies focused on low involvement consumers. Evidently, the favor remains practical.

Introduction

The Sharpe BMW is an automobile dealership company that survives chiefly like what most companies survive on: automobile sales and services such as maintenance. The company has experienced a new fall over the years which Sharpe BMW have predicted to have been caused by the changing of the headship in which the company has experienced victory.

The adjustment in the management allegedly reduced client rankings and the revenues and profit margins of the automobile dealership company.

However, latest improvements made an immediate change when the top management decided that it required an adjustment in the company in order that it would be capable of meeting the sector margin and preferably, the victorious margins that the firm has attained previously under the headship of the former service boss.

Tom Dunn, the service manager and Bob Deshane, presented a proposal to the firm administration that would absolutely return the years when the Customer Satisfaction Index (CSI), which has been infecting Sharpe BMW, was strong. The CSI was identified as a cause of low service quality in the automobile dealership industry in the region.

Among the issues that should be solved in the plan, the technicians feel that the plan was an excellent concept the sole problem of which is the bonus would be so inadequate on their side. Adding a supplementary reality were the observations of Sharpe BMW technician that he would be comfortable performing more warranty tasks as this would provide him with more salary.

The other employee, however, was positive concerning the new plan. The technician remarked that the Customer Satisfaction Index offers extra details and concentrates on an aspect that is not actually useful as that aspect is beyond the reach of the technicians.

He as well commented that the new plan in addition granted the employees a more than congratulate recognition that further encourages the employees (Kenneth & Whitten 2007).

To add more trouble to Bob Deshane’s problem is that the task ahead of him specified that his work’s requirements comprise the focus on growing the service section’s income and on increasing the Customer Satisfaction Index ranking of the service unit.

Deshane understood then that the assignment ahead of him is in line with the new plan, but would include the amending of a number of items that are associated with the service section.

Deshane’s predicament includes that the integration of the plan would not be assured to work and bring an excellent result and that everybody would be pleased. To make things harder, Deshane think of the likelihood of that the plan or the integration would have a number of flaws and would have a likelihood that it would not work.

Background

As the issue comprises the plan and the judgment that must be made by the director, Bob Deshane, the initial step that the report has to focus on would be the company situation and the new plan’s merits and demerits.

In an attempt of stemming deteriorating service unit incomes and low CSI scores, Bob Deshane, the Service Director of Sharpe BMW had created an action plan that alters the way technicians are paid (Herrnstadt 2007).

The task of executing the bonus plan falls to Tom Dunn, the freshly recruited Service administrator. Dunn must develop an extensive plan for implementing such organizational change. The setting of the case – a small car dealership – offers both familiarity and sympathy, with the role faced by the service manager.

There are two key objectives here. First, has the compensation plan been structured in a suitable way and does the organizational procedure seem right? Second, what is the complexity of the assignment ahead of employees who have to bring a change in the service department?

Objective of the report

The report is an attempt of developing an outline of implementation which discuses the exact steps that Dunn ought to follow with a view of ensuring that Deshane’s strategy is effectively executed. The report will focus on:

• Providing a chance to use performance administration solutions, particularly a compensation system change.
• Diagnosing and applying design process to a pay system intervention
• Designing a change management plan

Discussion queries

The case involves two queries. These include:

• What do you see as the merits and demerits of the suggested bonus strategy?
• Based on the details in the Sharpe BMW case, prepare an execution strategy for Dunn to follow?

Analysis of the current plan

Prior to embarking into such significant queries, it is worth organizing the case scenario into an organized change process format. Particularly, how did the service manager find himself in this scenario and does that create issues? The case involves the following issues:

• Service department’s revenues
• Dealership’s customer satisfaction index
• Service technician’s labour market

The case offers an assortment of details concerning the current compensation plan in addition to some pieces of information regarding how the evaluation (although non-formal) was carried out.

The current pay plan exists in a more enormous performance coordination model context. Specifically the present plan of warranty reward and client payment is closely associated with the client satisfaction index plan (Hassin 2010; Long 2006).

We can borrow and adapt the procedure for a successful employee appraisal plan in addition to the procedure for a successful compensation plan in assessing the association of these two criteria.

Pros and cons of the current CSI

The customer satisfaction index model can be evaluated as follows:

• Relevance – the client satisfaction index method ranks well on relevance as marks are transferred to the company every four weeks (Mclean 2009).
• Exactness – the precision of the client satisfaction index score can be disputed. It includes survey feedbacks. Only one of eight queries associates with technician attitudes and only four of five bring about a rating of 85%. A client bringing his or her vehicle in for a warranty fix, in the best scenario, cannot be a pleased client and thus the probability to rate the general service experience as excellent (100%) cannot be high regardless of how good the technicians perform (Chew & Cheng 2006).
• Recognition – there is little recognition of the client satisfaction index plan as an applicable dimension. Under the present plan, an employee is not paid at all for good client satisfaction index score, so there is slight opportunity he or she would agree being controlled by it (Magal & Word 2012).

Generally, the client satisfaction index plan does not have lots of inspiring potential as a performance response model, particularly for the technician.

Pros/ cons of the current pay plan

The present compensation plan can be evaluated as follows:

• Relevance – even though no particular details are available, it is possibly reasonable in assuming that under the present model, a technician is remunerated on a monthly basis. Relevance of the pay is consequently judicious.
• Availability – here the query is whether remunerations are available. Based on the old model, the response is that there is no an extra incentive or appreciation awarded beyond the present hourly remuneration rate. Not to be assumed, however, is the actual uncertainty that a qualified technician is hard to get and there is an opportunity for the technician in other service enterprises.
• Performance possibility – is there a link between remuneration and good service. The response here is no. A technician in the new plan is simply rewarded based on the job he or she performs (warranty payment versus client payment)
• Equity – the plan seems to be fair as far as intrinsic and extrinsic equity is concerned.
• Visibility – the current plan lacks visibility. However, it is perhaps realistic in assuming that a non-formal plan in the service unit exists (Stinson & Smith 2007).

A technician perhaps knows who gets what job and if or not some people are receiving higher proportions of warranty versus customer pay job. In general, the current reward plan is possibly average in its inspiring potential. The most fragile factors are performance possibility and availability.

The configuration between the current plan and new plan is not good. Basically, the communication model determines the worker attitude that is not being paid but for which top management is being recognized. It is no doubt the top managers at Sharpe BMW have selected the pay plan as the primary switch for change.

It is not likely that the managers would be capable of changing Sharpe’s business model. As far as the analytic process is concerned, the Sharpe BMW case leaves the tough feeling that the analysis was performed approximately totally by Bob Deshane (Burke 2011).

As an outcome, we can forecast that the technical employees will probably be doubtful and show as a minimum some resistance to the execution of the current pay plan. The senior technician’s comment in the case is suggestive of this resistance (Bloodgood & Morrow 2003).

Executing the new pay plan

Given the merits and demerits of the existing performance coordination approach and the way the analytic phases were carried out, we can resort to the query of execution.

Dunn’s responsibility in execution

As a service administrator in a car dealership, Tom Dunn is a central administrator. For Dunn, top managers want improved CSI scores, while his workers want to be fairly rewarded for their contribution.

Dunn’s work is that of finding a common ground, of getting a technician to understand the need for a reward alteration system (or the significance of precisely executing Deshane’s system) and, at the same time, assure that the new system attains top managers’ objective of advanced CSI scores.

Basically, Dunn is the change executor and therefore must balance the requirements of the management as well as anticipations of the workers (the technicians).

Execution plan

There are 2 methods to think regarding the establishment of an execution design. In the first scenario, the service manager can conduct a force-field investigation and generate a change approach derived from that investigation. On the other hand, Dunn can follow a change implementation design (Zhu & Meredith 2003).

Table 1: Force-field investigation

The new plan brings in another measure – CSI scores – that influences technicians’ bonuses, and that ranking is not in their favour. As an outcome, it is possible that a technician would oppose.

Managing change

Once the service manager has understood the scope of the change via a force-field assessment, Dunn must craft an execution strategy.

Dunn may have to choose whether he would conduct a pilot execution (comprising, say a single technician) or an entirely fledged execution comprising all technicians. Dunn then must develop a successful method of communicating this strategy to the technicians (Barlett & Ghosai 2007).

Reflections

Any strategy of execution that Dunn utilizes ought to stress the following core aspects:

1. Communication – he must explain the new system completely in a way that any technician can know its impact on him or her. Dunn must start by explaining what encouraged the company towards adopting the bonus plan and the outcomes that the managers expect once the system is executed.

Dunn must emphasis the gains (although small) that would go to the technicians based on the plan. Dunn as well should be specific to explain what is anticipated of the technicians, for example higher interest to warranty works. He should understand that good communication is critical to the victory of the plan.

2. Monitoring and response – after the reward system is implemented, Dunn should track it to see its result and offer response to the workers. It may encourage the workers if the manager can make public success episodes (increased CSI ratings) in addition to the bonus that a certain technician has got due to more focus on warranty job.

Conclusion

The case analysis aimed at assessing the current situation of Sharpe BMW and the new plan’s pros and cons. In an effort of stemming deteriorating service unit incomes and low CSI scores, Bob Deshane, the Service Director of Sharpe BMW had created an action plan that alters the way technicians are paid.

A technician has to vividly know the underlying principle for the alteration, what he or she has to do to obtain the reward, and what type of modified attitudes are anticipated of him. It may seem right for the service manager to develop real figures and indicate how technicians can increase their present salaries by enhancing their CSI ratings.

Recommendation/ solution

Regardless of the reward plan’s slightly better structure, executing such change may not actually assist the Sharpe BMW in the long term. The solution is to sustain customer satisfaction index ratings at an echelon satisfactory to Sharpe BMW and to senior managers.

References

Barlett, C & Ghosai, S 2007, Managing across borders: The transnational solution, Harvard Business School Press, Boston.

Bloodgood, J & Morrow, J 2003, ‘Strategic organizational change: exploring the roles of environmental structure, internal conscious awareness and knowledge’, Journal of management studies, vol. 40 no. 7, pp. 1761-1782.

Burke, W 2011, Organization Change Theory and Practice, 3rd edn, SAGE Publication, United States of America.

Chew, M & Cheng, J 2006, ‘Managers’ role in implementing organizational change: case of the restaurant industry in Melbourne’, Journal of global business and technology, vol. 2 no.1, pp. 58-67.

Hassin, A 2010, ‘Effective diagnosis in organization change management’, Journal of business systems, vol. 5 no. 2, pp. 23-29.

Herrnstadt, O 2007, ‘Are international framework agreements a path to corporate social responsibility’, Journal of business and employment law, vol. 10 no. 1, pp. 187-223.

Kenneth, G & Whitten, D 2007, ‘Organisational culture of customer care: market orientation and service quality’, International journal of services and standards, vol. 3 no. 2, pp. 137-153.

Long, R 2006, Strategic compensation in Canada, 3rd edn, Thomson Publication, Toronto.

Magal, S & Word, J 2012, Integrated business processes with ERP systems, Wiley, Cambridge, MA.

Mclean, G 2009, Organization development principles processes performance, Berrett-Koehler Publishers, California.

Stinson, V & Smith, S 2007, ‘The CSI effect: reflections from police and forensic investigators’, The Canadian journal of police & security services, vol. 5 no. 3, pp, 125-133.

Zhu, Z & Meredith, P 2003, ‘Defining critical elements in JIT implementation: a survey’, Industrial Management & Data Systems, vol. 95 no. 8, pp. 21-29.

Company history

The BMW Group has positioned itself amongst the 10 largest car manufactures globally

The BMW Group was established in 1917 and has managed to position itself amongst the 10 largest car manufacturers globally. Initially, the firm’s core operations entailed designing and production of aircraft engines.

Over the past few years, the firm has undergone significant growth. The growth has arisen from implementation of Strategy Number One which was formulated in 2007. The strategy is aimed at attaining two main goals which include;

1. To boost the firm’s long-term value growth.
2. To attain a high level of profitability and returns.

Mission statement

The firm is guided by a clear mission as stated below;

• To become the world’s leader in provision of premium services and products in order to enhance individual mobility.

Values

The firm’s operations are guided by a number of core values which have been the cornerstone of its success. These values include;

• Responsible action
• Long-term thinking
• Environmental protection
• Social and ecological sustainability

Corporate governance

The firm’s corporate governance strategy is aimed at enhancing its ability to attain the set goals, objectives and values. The BMW Group has incorporated a comprehensive corporate governance strategy that is comprised of a set of principles, systems and processes.

The firm’s corporate governance strategy is aimed at enhancing its ability to attain the set goals, objectives, and values. Moreover, the firm intends to maximize shareholders’ wealth through corporate governance.

The Group is cognizant of the fact that its success will be dependent on the effectiveness with which its operations are managed. As a result, the firm’s management team is constituted of two main organs which include;

1. The Board of Management
2. The Supervisory Board

The two boards are constituted of experienced individuals who ensure that effective decisions are made. A high level of trust is ensured between the Board of Management and the Supervisory Board. As a result, the degree of collaboration is improved significantly.

Additionally, the BMW Group has formulated its code of operation on the basis of the German Corporate Governance Code. This has enabled the firm to effectively address the shareholders and other stakeholders’ needs.

Corporate sustainability

Currently, sustainability is one of the most important aspects that firms should consider in their quest to remain competitive. Elmaraghy (34) is of the opinion that adherence to sustainable development determines an organization’s long-term success.

Elmaraghy (35) cites three main aspects that contribute towards sustainable development. They include; environmental sustainability, economic sustainability and social sustainability.

The firm’s commitment towards economic sustainability is evidenced by incorporation of a value-added supply chain

Environmental sustainability

The BMW Group appreciates the importance of developing sustainability in its quest to attain long-term and profitable growth. One of the sustainability issues that the firm focuses on is environmental sustainability.

Environmental sustainability is concerned with improving and safeguarding human welfare for example by conserving the environment within they operate. In the course of its operation, the BMW Group is committed towards environmental sustainability by ensuring gentle and efficient resource utilization.

Adoption of product diversification strategy is motivated by the need to generate profitable growth.

Social sustainability

According to Elmaraghy (35), a firm attains social sustainability by respecting the needs of the society which it operates. In line with social sustainability, the BMW Group appreciates the fact that there are risks associated with failure to adhere to social sustainability.

Such risks may result in loss of reputation and hence the firm’s long-term survival. The BMW Group has developed a strong relationship with the society within which it operates.

The BMW Group encourages its employees to be involved in social activities. In 2012, the firm awarded some of its employees for their commitment to the society (Tricker 12).

Economic sustainability

This aspect of sustainability involves developing a firm’s long term economic viability and profitability. The firm’s commitment towards attainment of economic sustainability is evidenced by incorporation n of value-added supply chain.

In 2012, the BMW Group was ranked 2^nd on the basis of the Dow Jones Sustainability Index.

Products

The firm has incorporated a comprehensive financial services portfolio. In the course of its operation, the BMW Group appreciates the fact that the market is characterized by varying product and service tastes and preferences. Consequently, the firm has integrated the concept of product diversification.

Adoption of this strategy is also motivated by the need to generate profitable growth. The firm specializes in production of premium car and motorcycle brands. Some of the premium car and motorcycle brands that the firm produces include;

1. BMW
2. BMW-Mini
3. BMW Motorrad
4. Rolls-Royce Motor Cars.

The BMW Group top premium brands include Rolls-Royce, Mini and BMW. On the other hand the two main motorcycle brands include Husqvarna and BMW (BMW Group 1)

The firm’s motivation to generate profitable growth is one of the factors that drive the firm to expand its product range and to strengthen in global market position.

The firm’s production processes are guided by innovation, high performance and engineering excellence. The Group’s products are ranked amongst the best automobile brands in the world.

Services

The BMW Group is focused towards profit maximization. Consequently, it has incorporated a comprehensive financial services portfolio. The financial service portfolio developed by the firm is based on appreciation of the fact that financial services constitute an essential component in the success of the mobile world.

The BMW Group Financial Services is composed of a number of services which mainly relate to provision of financial information. The Group provides financial services in approximately 50 countries globally.

1. Multi-brand financing
2. Leasing
3. Insurance
4. Asset management
5. Dealer financing
6. Company car pools
7. Banking

In The BMW Group is cognizant of the global changes that are currently being experienced. One of the elements that the group appreciates relates to mobility. Demand for new individual mobility solutions within the society has increased significantly.

However, the global economy has become very volatile as evidenced by increased economic uncertainty thus affecting the group’s operation.

One of the ways through which the firm intends to achieve profit growth is by investing in continuous product improvement. Despite these challenges, the BMW Group is committed towards attainment of its goals and objectives. One of the ways through which the BMW Group intends to achieve this is by investing in continuous product improvement.

The product improvement process is conducted on the basis of three main product aspects which include technological, cultural and structural aspects.

In its product development process, the firm ensures that its products and services appeal the target customers. The Group achieves this by offering superb products that are characterized by;

1. A high level of aesthetic appeal
2. Innovative and modern technology
3. High quality
4. Dynamic performance

Human capital

The BMW Group considers human capital as one of the cornerstones in its future success. The BMW Group considers human capital as the most important factors in its future success. Consequently, the firm has developed a comprehensive employee development policy.

The policy is aimed at developing a dedicated and motivated workforce. In 2012, the firm increased the number of apprentices by 10%. Additionally, more than 1,376 young individuals were signed into the firm’s one year training program.

This increased the number of employees on the apprenticeship program to 4,266.The firm spent approximately €280 million on professional and vocational training. The training program is aimed at developing the firm’s competitive edge in an environment that is characterized by technological change.

By investing in human capital development, the BMW Group is able to maintain its competitiveness with regard to technological excellence and innovation.

For example, the firm’s research and development team is able to incorporate the consumers taste and preferences when designing their new automobile models (Deschamps 54).

Earnings and performance

Increment in sales

The BMW Group has managed to sustain its profit growth over the past few years. However, 2012 was the most successful financial year in the firm’s history. During this year, the firm’s sales for BMW, Rolls-Royce and Mini premium brands increased to 1,845,186 units, which represent a 10.6% increment compared to 2011.

The sales increment has enabled the firm to continue at the helm of the premium brand market segment. By adhering to Strategy Number ONE, the BMW Group intends to sell over 2 million MINI, Rolls-Royce and BMW brand vehicles.

The projection underscores the fact that the firm’s future success is anchored on its profitability.

Growth in financial services segment

Investment in the financial services segment also contributed towards an increment in the level of profitability. An additional 117, 000 customers were added to the firm’s customer base.

The Chart below illustrates the firm’s earnings over the past two years.

Source: (BMW Group 52)

Sales and distribution networks

The sales strategy adopted by a firm has a significant impact on the sales revenue generated. The BMW Group has adopted an effective sales strategy which entails establishment of sales subsidiaries. Currently, the firm has a sales network of 41wholly-owned sales subsidiaries.

Moreover, the firm’s distribution network is also composed of over 3,000 dealerships. To satisfy international demand, the BMW Group has also incorporated the concept of exportation. Approximately 100 countries around the world are supplied by local importers.

Production and assembly locations

The BMW Group is cognizant of the fact that the premium car brand market is becoming competitive. Consequently, the firm has established 13 assembly and 24 production plants around the world. This has enabled the firm to effective and efficient in meeting the global demand.

The production plants are located in Germany, South Africa, Austria, Italy, and China. On the other hand, assembly plants are situated in Russia, Egypt, Thailand, India, Indonesia and Malaysia. The assembly plants are mainly operated in collaboration with external partners. For example, in Austria, the firm has entered into a contract production with Magna Steyr Fahrzeugtechnik AG & Company.

Investment in research and development

The BMW Group has established a comprehensive research and development network in various countries such as the US, China, Germany and Austria. Its commitment in research and development enables the BMW Group to be effective and efficient in aligning its products and services with market trends.

The firm’s quest to achieve profitable growth motivates its investment in research and development. In 2012, the BMW Group invested €3.9 billion in research and development in order to secure its future growth.

The BMW Group has been leading with regard to incorporation of new information technology options in its car models

The firm has been at the forefront in integrating new technology in its car models. Some of the technologies that the firm has incorporated include BMW ConnetedDrive and the iDrive.

Controversies

The BMW Group was accused of launching pre-production prototype in the market (Herron para. 5). In line with its commitment towards environmental sustainability, the BMW Group invested in a program that was aimed at electrifying its Mini brand.

However, the firm was accused by Marc Geller and Plugged In America that it did not comply with the CARB regulations. On the contrary, the firm introduced the new model in a rush in order to meet the deadline set.

Moreover, the firm was accused of introducing a pre-production prototype which means that the new model was not a properly designed electric vehicle.

Succeeding in the premium car brand industry is a challenging task. Consequently, firms in the industry have to ensure that they invest in research and development. Additionally, firms have to ensure that they continuously improve their products and services in order to align with the market changes.

Works Cited

BMW Group: Brands2013. Web.

BMW Group: Annual report 2012. Web.

Deschamps, Jean. Innovation leaders: how senior executives stimulate, steer and sustain innovation, New York: John Wiley and Sons, 2009. Print.

Elmaraghy, Hoda. Enabling manufacturing competitiveness and economic sustainability, Heidelberg, New York: Springer, 2012. Print.

Herron, David. BMW mini e-program has major problems. 6 July 2009. Web.

Tricker, Ian. Corporate governance: principles, policies and practices, Oxford: Oxford University Press, 2012. Print.

During the period of 2003-2004, the business environment as well as the automobile marker in Europe and globally developed according to the ideas of more progress and innovation, providing the necessary conditions for the significant competition within the industry on the question of price.

Thus, price, brand image, and the company’s reputation became the key factors to determine the customers’ attitudes and the competitive advantage of firms within the market.

To overcome the depressed demand, the companies focused on the principles of differentiation, brand image and identity, building of emotional connections with customers in order to attract them to buy the products because the factor of quality ceased to play the main role to determine the customer’s choice.

Much attention was paid to brand image and appeal and design in order to differentiate the products and influence the customers’ buying behaviours. These factors became to affect the competitiveness within the industry significantly.

BMW took the leading positions within the European and US markets during the period of 2003-2004, while producing luxurious or high performance automobiles. To analyse the competitiveness within the industry and market in 2004, it is necessary to refer to Porter’s five-forces framework.

Potential Entrants

The threat of entrants can be discussed as rather high, if the possibility of the world successful companies to produce the new models of luxurious cars is taken into consideration. In this case, the entrant abilities depend on the effectiveness of branding in relation to Ford, Toyota, or Lexus models.

Potential Substitutes

The potential threat of substitutes for BMW luxurious automobiles can be discussed as medium or high, if the idea of changing the signs of luxury is discussed.

From this point, buying luxurious BMW automobiles, customers prove their high financial status and satisfy the needs in relation to luxury, but these needs can be also satisfied with references to the other products symbolising the elements of the luxurious life. Furthermore, customers can choose the other vehicles instead of luxurious automobiles in order to respond to their needs.

Power of Buyers

The power of buyers can be discussed as low because they cannot influence the process of the company’s development and process of producing luxurious automobiles significantly. The success of BMW automobiles depends on reputation and effective price and quality policies.

Power of Suppliers

BMW focused on developing the close relationships with suppliers which guarantee the effective control over them provided by the company. Moreover, such relationships are based on providing BMW with the whole set of instrumentation by one or two suppliers, and this fact limits the suppliers’ power. Thus, the level of the suppliers’ power can be discussed as low.

Competitive Rivalry

The competition within the industry is high, and it is rather difficult to develop a strategy according to which the definite brand can become leading within the market because of decreasing the importance of such factors as design and quality.

As a result, price remains to be one aspect to affect the competition within the market. To rely on the further extreme development of the brand identity, it is necessary to provide a unique model, but innovations are associated with many products within the industry.

Future Changes

The focus of BMW on the US and Asian markets in 2003 is closely connected with the further orientation on many new markets, while proposing the innovative models. To realise this strategy, it is necessary to pay more attention to differentiation and identification.

The intentions to produce smaller cars in order to attract new customers are important for the company’s development as well as the tendencies to intensify the brand identity and the concentration on the whole consolidation of the industry. Being highly competitive, the industry can develop only with references to the companies’ cooperative ties.

The critical success factors which are necessary to operate within the industry are correlated with the BMW company’s competencies and strategies directed to forming the competitive advantage. It is important to determine such factors as the effective policy in relation to providing the quality of the product, orientating to customers, controlling the supply chain, and reducing costs.

Thus, the stable high quality of products is based on the effective relationships with suppliers and on the complete control of the supply chain because of the possibilities of such large company as BMW. Moreover, the effective company’s image and brand play important role in increasing the competitive advantage.

BMW’s sources of competitive advantage depend on the route or strategy of differentiation chosen by the company for progress. To respond to the principles of this strategy, BMW focuses on improving the product, on contributing to creation of the brand awareness and use of the brand reputation in order to promote new models.

Thus, BMW is inclined to draw the customers’ attention to the important fact that the company’s products differ from the others significantly because of their high and proved quality along with the innovative approaches and because of the brand reputation.

As a result of the prolonged process of performing within the competitive market successfully, BMW developed two main effective strategies oriented to product and market development. Product development is associated with implementing innovations in models and using new technologies in order to improve the quality of products.

Thus, the significant strategy to launch new models during several months was proposed in 2003 in order to increase the competitive advantage in relation to the premium automobiles. The effective market development strategy is based on exploring such new markets as Asian markets in order to find more buyers and respond to their needs with references to the local differences and possible changes in demands.

The corporate strategy issues associated with BMW are connected with the implementation and management of strategies to control a range of products. Thus, the work with different groups of products and promotion strategies require various approaches to realising them. As a result, the company needs effective strategic management in order to operate effectively within the market and industry.

For instance, it is important to avoid the fact of cannibalising the 3 series models with 1 series ones because of implementing more effective strategies for promoting these automobiles within the market. Furthermore, it is important to regulate the problematic financial questions and to overcome the pressure on costs with the help of adequate policies realised by the strategic managers within the company.

The next issue is connected with the question of controlling all the company’s departments and with the problem of the associated control of market segments. The increase of competitive advantage also depends on the effective management and control.

Company Background

BMW of North America (BMW NA) is one of the leading automobile manufacturers and marketers in the United States. The corporation was established in the year 1975 (Madlani and Ulvestad 12). Initially, the firm’s business model focused on the production of luxury and high-performance automobiles. In 1980, the firm began to import and distribute a wide range of motorcycles from the parent company in Germany. The firm distributed its first line of trucks in the region in the year 1999. Currently, BMW NA is headquartered in Woodcliff Lake, New Jersey. It has several manufacturing firms in different locations such as Nazareth and Port Jersey (Jefferson 8). The parent company began its distribution in the U.S. after winning distribution rights (Jefferson 12). To emerge successfully, the new firm focused on the changing needs of the targeted customers. The gathered information made it easier for the company to deliver first-class cars and trucks that met the needs of the targeted clients.

Within the past forty years, the company has managed to acquire and distribute superior cars to the greatest number of people. The firm has established the best relationships with different communities, distributors, and clients. The leaders at the company have always focused on technology, elegance, beauty, and utility (Madlani and Ulvestad 18). These values have continued to resonate with the wishes and expectations of the targeted customers. Unfortunately, the performance of BMW NA has been characterized by a wide range of challenges. For instance, policies focusing on air emissions, safety standards, and fuel economies have dictated the business models of many companies in the industry. BMW NA has been on the frontline to address the issues and deliver quality cars that meet the needs of the customers.

To become a leader in the automobile industry, BMW has come up with a powerful vision statement that guides every business process. The current vision for the company is “to become a successful manufacturer of first-class automobiles in the industry” (Madlani and Ulvestad 16). The vision is used as a model that empowers different stakeholders and employees to deliver quality care to targeted customers. BMW NA’s mission statement is “to remain the world’s leading manufacturer and provider of superior services and automobiles that support individual mobility” (Madlani and Ulvestad 5). With this kind of mission, every process is re-engineered to ensure premium cars are available to the greatest number of customers in the United States and Canada.

Several goals guide the company to empower targeted customers. The vision of the company is treated as a goal that should be taken seriously. This is the case because the firm implements and supports appropriate processes that can deliver premium automobiles (Madlani and Ulvestad 18). The firm empowers its stakeholders and employees to embrace the power of research and development (R&D). This strategy has defined the company’s business model.

BMW NA has unique values that dictate a wide range of practices. For instance, the firm believes strongly that the driver or customer should eventually receive an ultimate driving machine. The cars are designed in such a way that they deliver the intended driving pleasure. This value is promoted by the BMW Group’s ability to combine dynamic performance and sporting (Madlani and Ulvestad 19). The combination “delivers quality cars that win hearts and turn heads” (Jefferson 49). The issue of sustainability is also taken seriously as a core value at BMW NA.

External Analysis

BMW NA Industry Environment: Porter’s 5 Forces

BMW in America is currently operating in a competitive environment. The industry is currently dominated by various automobile manufacturers and distributors. The sector is also facing competition from companies that produce, market, and distribute motorcycles. Porter’s Five Forces framework can, therefore, be used to analyze the nature of this industry. The first attribute or force is the threat of new entrants (Madlani and Ulvestad 83). Lewin indicates clearly that the threat of newcomers in the automobile manufacturing and distribution sector is extremely low (17). This is the case because companies that want to invest in the industry will require a lot of financial resources. The industry is closely monitored and regulated by the government.

The second force is the bargaining power of buyers. The customers in this industry have high bargaining power. This is the case because they can purchase cheaper or superior cars. Consumers or buyers have access to information. These aspects explain why brand loyalty might change within a short period. The third force is the bargaining power of suppliers (Dawar 2). This power is extremely high because many suppliers have what it takes to dictate the future of the industry. The suppliers are limited thereby forcing different companies to meet their needs.

The fourth factor is the availability of substitutes. BMW’s industry is characterized by many cars and transportation options. However, the company is a leading manufacturer of luxury cars. The current economic conditions are also making it impossible for many people to purchase their favorite cars. These attributes explain why the impact of this force is medium (Dawar 3). The fifth force is a competitive rivalry. The level of rivalry is extremely high. This is the case because the existing firms are capable of competing directly and shifting customer loyalty.

Factors in the Macro-environment

There are various factors in BMW’s macro-environment. To begin with, political factors dictate the performance of many companies in the industry. The political stability in the USA supports the company’s business model. Some numerous policies and regulations must be fulfilled by companies in the industry (Beatty and Samuelson 12). The social factors experienced in the country affect BMW’s performance. For instance, many people today want to lead better lifestyles. These changes are making it easier for BMW NA to market its products.

The economic situation experienced in the United States dictates the firm’s performance. The current economic growth will support targeted goals. However, a Trump presidency might result in numerous economic changes that might affect the firm’s profitability. Environmental factors are also impacting the company’s model. Issues such as sustainability and economic protection have gained attention in the industry (Dawar 3). BMW must produce fuel-efficient and sustainable cars to remain competitive. The legal factors are also transforming the industry (Madlani and Ulvestad 56). The companies in the industry must focus on consumer protection, safety, workplace, compensation, environmental conservation, and sustainability laws.

Opportunities and Threats

The industry is characterized by several opportunities that can make BMW NA successful. The current technological changes and social media networks can promote the company’s marketing strategy. More customers are currently in need of superior and safe cars. Modern technologies will result in the development of elegant and premium cars (Dawar 3). However, some threats such as increasing industry rivalry, changing economic times, numerous regulatory requirements, and availability of cheaper (but quality) cars in the market are evident in this company.

Internal Analysis

BMW’s value chain activities are attributable to its competitive advantage. To begin with, there are primary activities that ensure quality automobiles are available to the targeted customers. The concept of inbound logistics is taken seriously to add value to the firm’s performance. This goal is achieved by minimizing logistical expenses. Sourcing of specific raw materials is done competently to promote quality. The major suppliers are located in convenient locations to reduce costs and minimize disruptions throughout the supply chain. The second “category of primary activities is operations” (Lewin 38). The firm has distinctive operations focusing on motorcycles, automotive, and financial services. Each operation is managed systematically while at the same time focusing on a common goal.

Outbound logistics are executed professionally. BMW Group has come up with a unique distribution network that comprises of many dealerships (Dawar 8). Such dealers monitor the needs of the targeted customers and develop adequate channels to achieve targeted goals. Marketing is supported using powerful strategies. Movies, popular culture, and advertisements are used to ensure the marketing process is implemented successfully (Beatty and Samuelson 49). The issue of service defines the effectiveness of BMW’s business model. From the very beginning, the needs of the customers are considered to engineer and market quality products using superior service delivery channels. Whenever undertaking the above primary activities, support functions are implemented such as the use of technology, procurement, provision of effective HR practices, and construction of adequate infrastructure (Madlani and Ulvestad 102). That being the case, the core functions undertaken at BMW have led to a competitive advantage in the industry.

The above activities of the value chain are managed properly. Research and development (R&D) are embraced to ensure new ideas and concepts capable of revolutionizing the products are developed (Lewin 72). The marketing process is informed by the changing needs and expectations of the targeted customers. Consequently, the firm has managed to realize most of its business potentials.

From this analysis, it is agreeable that some unique strengths and weaknesses define BMW NA’s internal processes. The first strength is the use of effective HR practices. These approaches make it easier for managers to address the emerging needs of the employees. HR managers implement powerful models that have the potential to promote performance. The second strength is the company’s business model. Every activity is designed in such a way that it supports the company’s vision and mission. The R&D team presents powerful concepts and products that can fulfill the needs of the customers (Beatty and Samuelson 41). The firm’s infrastructure, superior designs, and technological resources continue to support its business performance. The workforce is diverse thereby promoting innovation.

BMW NA is associated with several weaknesses that might affect its business performance. For example, the company has been relying on specific suppliers to achieve its business goals. Unfortunately, the occurrence of disruptions in the supply chain affects business performance. Since the firm is based in America, the issue of diversity has not been taken seriously (Lewin 87). A new strategy aimed at addressing this problem has the potential to support the firm’s business model. The firm has been concentrating on several superior cars. Although this approach has led to a competitive advantage, it has also become a weak point that is used by the other players in the industry to deliver cheaper but quality automobiles.

Business-Level and Corporate-Level Strategy

BMW is one of the multinational firms whose business strategies have led to a differentiation strategy. Using the approach, the firm implements a powerful model that has the potential to promote performance. The corporation concentrates on the best measures to produce superior, unique, and elegant cars that resonate with the expectations of the customers. The firm has developed a unique business model that focuses on various competitive advantages such as effective distribution, production of superior products, and promotion of sustainable business practices (Lewin 92). To achieve this goal, the firm takes the issue of innovation seriously. The R&D team uses feedback and reviews from analysts and customers to come up with revolutionary cars that can compete successfully in the market. Modern technologies are used to ensure the targeted products meet the changing needs of the customers. By focusing specifically on the luxury market segment, BMW has managed to implement potent programs that can deliver positive results.

BMW has differentiated itself from the major competitors in the industry by using cutting edge technologies. The R&D team has been on the frontline to ensure the changing needs of the customers are met. Continuous improvement is also taken seriously to promote sustainable growth and performance (Lewin 101). In terms of performance and product, BMW uses its resources to produce premium cars that revolutionize the experience of the driver.

Unfortunately, the differentiation strategy embraced by BMW NA has led to several challenges. For instance, BMW’s business model faces a major challenge from different competitors such as Mercedes Benz, Toyota, and Volkswagen. The reduced price phenomenon is a potential risk that can put BMW out of business (Madlani and Ulvestad 126). This is the case because these competitors have the potential to launch premium cars that can affect BMW’s performance. Modern technologies are currently making it easier for different companies to come up with new cars every day (Jefferson 37). This development can make BMW’s differentiation strategy unsustainable.

Business ethics is another issue that is taken by companies that want to remain competitive in the industry. BMW has been focusing on the best strategies to promote the idea of sustainability. The firm implements powerful measures to ensure its logistical operations do not affect the natural environment. The produced cars are designed in such a way that they meet the minimum emission requirements (Hwee 30). The firm goes further to support the welfare of the surrounding communities. These measures have continued to support the welfare of many customers. Shareholder value has also been maximized through the use of adequate CSR practices. The short-term goal has been to address the needs of these stakeholders. The long-term goal is to create a sustainable business model while at the same time safeguarding the natural environment.

Recommendations

BMW NA is a leading company that imports and distributes premium cars to its customers in North America. The company’s business model is guided by its mission and vision statements. The current environment indicates that BMW has the potential to pursue its business goals and eventually realize its business potential. However, BMW NA faces stiff competition from several leading players companies in the industry such as Mercedes-Benz, Audi, and Volkswagen. Toyota and General Motors (GM) continue to pose numerous challenges to the company’s business model (Hwee 31). The company’s differentiation strategy is threatened by different firms that are currently providing superior automobiles in different parts of the world.

The current situation should, therefore, be a wakeup call for BMW NA to remain profitable and competitive in its industry. The first recommendation is to consider the emerging concerns and ethical needs of many stakeholders. This means that the concept of CSR will be taken seriously to attract more customers. The firm can also identify the major technological changes experienced in the world today (Jefferson 42). This approach will ensure the marketed vehicles are superior and capable of empowering the targeted clients.

BMW NA can undertake numerous studies to monitor the emerging trends in the American automobile market. The collected information will be used by the firm “to secure a competitive share in the market segment” (Jefferson 71). The company can also implement powerful measures and models that have the potential to improve efficiency and minimize operational costs (Hwee 31). BMW NA can engage in R&D to promote emission reduction (Dawar 7). Environmental risks and concerns should be addressed to ensure the company’s business model improves the trust of every customer. The collaboration with different marketers and dealerships in North America will make it easier for BMW NA to become the pacesetter in the automobile industry.

Works Cited

Beatty, Jeffrey, and Susan Samuelson. Legal Environment. Cengage Learning, 2013.

Dawar, Niraj. “When Marketing is Strategy.” Harvard Business Review, vol. 1, no. 1, 2013, 1-14.

Hwee, Eileen. “Building & Sustainability Strategy: Bayerische Motoren Werke (BMW) – Automotive Industry.” TMC Academic Journal, vol. 10, no. 1, 2015, pp. 29-46.

Jefferson, Marilynn. From Whence We Came. Author House, 2014.

Lewin, Tony. The BMW Century: The Ultimate Performance Machines. Quarto Publishing House, 2016.

Madlani, Jalpesh, and Jens Ulvestad. “A Fundamental Valuation of the BMW Group.” Copenhagen Business School, vol. 1, no. 1, 2012, pp. 1-170.

Introduction

The automotive industry is a worldwide industry that involves itself in the manufacture of motorcycles, trucks, vans, buses, and coaches. There are many companies involved in this industry, including BMW, general motors among others.

In this section, I will take a look at the motor cycle section of the motor industry.

The motorcycle industry has experienced worldwide growth in production, sales, and also profit margins for the past four years. Almost all industry players including Harley Davidson, Honda, Kawasaki, and Suzuki among others recorded modest to remarkable sales within this period of time.

Shifts and the price elasticity of supply and demand

The responsiveness of consumers to a price change is measured by a product’s price elasticity of demand. Some products are highly responsive to price changes while others are not. In some commodities Modest price changes cause very large changes in the quantity purchased, Economists say that the demand for such products is relatively elastic or simply elastic. For other products Substantial price changes cause only small changes in the amount purchased, the demand for such products is relatively inelastic or simply inelastic.

In the view of the industry, the industry products are relatively inelastic; this is due to the fact that many products in this industry are luxury goods. The products have some kind of a ‘snob appeal’ and this is why that even though the prices of products have been rising steadily demand has also increased relatively. A recent survey of the American market showed a statistical trend as the one below.

American market share is as follows:

• Harley-Davidson 34.8%
• Honda 23.7%
• Suzuki 14.6%
• Kawasaki 13.6%
• Yamaha 10.0%
• BMW 2.3%
• Ducati.9%
• Moto Guzzi.1%

The pie chart below represents this information.

To improve on market share every company uses its own strategy. But in any industry, there are four core elements of marketing strategy. These four elements are strategies that involve the product, pricing, promotion, and distribution. All firms within the industry seem to employ a different mix of the four elements in order to achieve their growth or industry projections.

Positive and negative externalities

An externality is ca cost or benefit borne out of an economic transaction to parties not directly involved in the transaction. In the motorcycle industry, some of the positive externalities include an increase in technological advancement not only in the industry but also in other industries. Through increased inventions, technology has become readily available and this has resulted in cheaper products.

In addition, there has been a remarkable reduction in transportation costs, especially in China and India where increased use of motorcycles and scooters in transportation has reduced traffic congestions as well as reducing the public expenditure on transport.

In the same context, there has been an increase in negative externalities including smoke pollution, noise pollution, and water pollution as a result of industrial waste among others. Due to the increased pollution, The American Motorcyclist Association (AMA) has announced that the review of the Environmental Protection Agency “Letter of Guidance” on the issue of motorcycle emissions rules has been completed.

The AMA had sought clarification of EPA regulations for “kit” and “custom” motorcycles in use within the country. Under the regulations, a person will be allowed only one kit motorcycle in their lifetime that will be exempt from meeting EPA emission requirements. For custom motorcycles, a manufacturer will be allowed to create and sell up to 24 bikes a year that doesn’t meet EPA emission requirements. In addition, these bikes will be specifically labeled that they are exempt, and these bikes will be show bikes that will be rarely ridden.

Wage inequality

Just like in many other industries the motorcycle industry is faced with the problem of wage inequalities. These inequalities have three dimensions. The first dimension involves different wages for workers in the same firm, e.g. the managers of a certain firm may be paid more than the engineers in the same firm.

A recent example of this was in the Harley-Davidson firm where early this year workers went on a two-week strike demanding an increase in their wages, and especially a proportionate proportion of the profit margin commission. On February 2, 2007, upon the expiration of their union contract, about 2,700 employees at Harley-Davidson Inc.’s largest manufacturing plant in York, PA went on strike after failing to agree on wages and health benefits.¹ During the period of the strike, the company refused to pay for any portion of the striking employees’ health care.²

The second dimension involves workers being paid less or more depending on the factory location. In this case, due to cheaper labor in the third world and china, many companies have relocated their factories to these economies so that they end up paying less to their workers. This has prompted many workers, especially in Latin America to go on strikes regularly demanding equal pay with their equivalent workers based in Europe and America.

The third dimension involves different wages depending on sectors. In this regard, you might find that a certain industry e.g. the motorcycle industry might end up paying less to their workers as compared to another sector like the banking sector.

Monetary and fiscal policies

In order to promote the industry, many governments have adopted different monetary and fiscal policies. There is no single policy that has been adopted industry-wise. To improve the sector the South Korean government has encouraged the chaebols’ to specialize their operations in order to be more efficient. In addition the government has ensured that there exists a low interest rate to help the chaebols acquire loans cheaply. In other economies like Vietnam, the fiscal policy involves deficit financing for the industrial sector in order to maintain the booming economy.

Generally, for the development of this sector, there is a need to have an expansionary monetary policy regime that should be compounded by a contractionary fiscal policy regardless of the geographical location of the specific firm.

Conclusion

The automotive industry is a value-adding sector in any economy. This means that the industry is very important for the growth of the economy. Thus its economic importance lies both in the scale and complexity of its direct and indirect interrelationship with other industries in the economy. The economy of a country and of the global village is of ultimate importance to the growth of the industry.

Since the industry produces non-basic goods (luxury goods) it is important that the disposable income arising from productive work in other sectors is sufficient to allow for the public to purchase goods from this sector. In addition, the size of the population and its purchasing power are important to the development of the industry. The correlation of the industries e.g. how the other industries supply the industry with raw materials or purchase finished products from the firm goes a long way in supporting the industry.

Economic influences that can affect the industry in a negative way:

There are many economic situations that can negatively impact the industry. These scenarios may originate from the local economy of where the firm is located or it may arise from the global market. In the local economy, increased taxation of exports, increased interest rates, and changes in the political arena, an unprecedented appreciation or depreciation of the local currency may all negatively hamper the industry. In addition, global depression of the world economy may hamper negatively on the development of the industry.

References

1. Development of Supporting Industries for Vietnam’s. 2007.
2. Mankiw, N. G. (2004), Principles of economics (3rd Ed.), Chicago, ILLIOIS: Thomson South-Western
3. Philip Hardwick (1982), an Introduction to Modern Economics, Longman, U.K
4. Thai Industrial Strategy: An Overview, 2007. Web.

Footnotes

1. Strike shuts down Harley-Davidson plant, Company suspends production of motorcycles amid a contract dispute,” U.S. Business, MSNBC.com (2007)
2. Striking Harley workers take hits in the pocketbook,” The York Dispatch (2007).

Introduction

Bavarian Motor Works (BMW) is an independent German car manufacturer that was founded in 1916. It is a global manufacturer of luxury automobiles as well as high-performance automobiles. The company also has manufacturing plants for motorcycles, and it has subsidiaries such as the Rolls-Royce car brands and the Mini. The company began with the manufacturing of aircraft engines, after which it switched to motorcycles in 1923 before embarking on the manufacture of automobiles in 1928. (Friedman, 2008)

The most important achievement of the company in its early stages was the formation of the aircraft power plant BMW IIIa which was mostly preferred by many customers for its performance in high altitudes. In 1994 the company, through its acquisition strategies, bought the British Rover Group that consisted of the Land Rover, Rover, and the MG marques. Due to persistent losses from Rover, the company decided to sell the combine. The greatest shareholder of the BMW is the Quandt family since 1959, which owns 46% of the shares, with the rest being in public float. (Grahl, 2006),

Capacity planning

The company anticipates increasing its plant’s production capacity from 160,000 units to over 240,000 units by the year 2012. This is to be done through its expansion plans which will cost the company over $750 million. Due to this, the Spartanburg plant is expected to start its operations with the production of the sports activity vehicles (SAV), and it is also anticipated that the plant will necessitate the manufacture of the hybrid version of the X6 SAV.

By the year 2010, the production of the X3 SAV is also expected to be shifted from Austria to Spartanburg in order to allow for a wider customer base and easy entry into the market. According to the capacity plans laid down by the company’s management, the United States is unlikely to get in the near future supply of Minis. This is because the company does not have any plans to increase the production of Minis in the United States. (Hurst, 2006)

However, the Oxford plant in England where the Mini is still manufactured is at its full capacity, and therefore no need to increase more plants because while it seems to make sense fiscally to build as many cars, the task is not simple. According to the report that has been published about the company’s capacity planning, the mini dealers who are short of inventory will not get relief because the company does not anticipate increasing the production of the mini brand.

According to the Company’s North America vice president of corporate communication, despite the high record sales and high demand that has been recorded on the small fuel-saving hatchback, BMW is not likely in the near future to approve any more production of the mini brand in the United States. This is due to the fact that any increased capacity will necessitate an increase in costs, and this will trickle down to the forecasting accuracy.

Since the mini manufacturing plant is at its full capacity, then it means that an expensive undertaking in the expansion of the plant is required in order to accommodate any additional manufacture of the brand, something that has been strongly opposed by the company’s management. The company is anticipating increasing the price of its luxurious vehicles by a small margin that may not be felt greatly by its consumers. The German production capacity is anticipated to remain the same, and the company expects to have vehicles produced in German plants reach 1.8 million by the year 2012, and by the year 2020, the number is expected to be 2 million.

According to the company’s spokesman, the important issue is not about shifting the capacity out of the country, but it is about ensuring that the production capacity increases in the country. Through its capacity planning, the company expects to increase its production capacity in the Spartanburg plant from 140,000 to 240000 vehicles by 2012. Without additional investments, BMW expects to increase the capacity of the Mini plant in England to two hundred and sixty thousand per year. In China, the company expects to increase capacity from 30,000 to 44,000 per year.

Control planning

In its efforts to ensure that the company’s operations are up to date and working effectively, BMW anticipates adopting new technology in order to improve its ability to carry out its numerous operations in the most cost-effective manner as well as more securely and efficiently with the aim of managing its PC fleet effectively.

Being the world’s largest manufacturer of premium automobiles and owner of world-class vehicles and Rolls-Royce BMW will use the new Intel®Active management technology in order to be able to manage its 100000 PC’s in all of its global operations. The company’s core information technology department has increased its control system in order to boost its technical staff efficiency.

The company’s remote management ability is set to improve significantly with the new technology integration into the company’s operations. This is seen as an important step forward into strengthening the security of the operations in the company. The impact of the control planning that the company has adopted is an increase in the security of the company’s PC fleet and an increase in the cost-effectiveness of the company’s operations.

The relentless of the company in pursuit of manufacturing excellence, innovation, and engineering precision through its control planning strategies has enabled the company to emerge with remarkable success as compared to its competitors in the same industry. The manufacture of premium vehicles has been necessitated by the technological leadership which has been used to design its vehicles. (Morris, 2005),

As a result of this, the central information technology department in the company has relentlessly striven to improve the effectiveness and efficiency of the operations in the company and its performance. The information technology department has turned its attention recently in designing how best it can support and manage the 100000 PC’s which are being used by the company’s employees who are spread all over the company’s operational points in the world.

The central areas the information technology department wishes to address in its control planning strategies include increasing the efficiency in the deployment of the operations software because the current software has been a source of inconveniences since it requires to be switched on in order to receive updates on the happenings in the company’s operations. Using the new technology in its control planning, BMW has been able to significantly avoid user downtime through the deployment of software in all BMW’s company operation points.

The deployment of the software is usually undertaken overnight, and this depends upon whether the users have left their PCs switched on. Hence only a small portion of PCs miss the upgrading cycle in the initial stages. The second area that attracts the attention of the information technology department in its control planning strategy is improvement in security through undertaking measures that are directed to the protection of the company’s information by avoiding any misuse or access of vital company data.

Therefore the company seeks reliable methods which can ensure that the virus definition files and anti-virus software are up to date on all platforms. Control planning was undertaken by the information technology department also aims at reducing PC downtime and desk-side visits. This is because the much time wasted by the employee’s productivity in resolving the PC’s problems translates into great costs incurred by the company. (Slack et al. 2007)

Through its control planning strategy, the company is keen to reduce this wasted time due to software failure by speeding up the success of its software in its operations. The company has gone into the depths of acquiring more detailed, faster, and accurate hardware and software inventories in order to assist with virus protection as well as in troubleshooting and ensure more reliable maintenance contracts and software licenses as well as ensuring more compliance. The company has therefore been able to face out its manual inventory costs through its control planning that has enabled the adoption of the new Intel®vPro™technology.

Performance objectives

The first performance objective of BMW Company is to fully integrate the new technology in its operations all over the world in order to ensure that the operations are carried out more effectively and efficiently, thus reducing the time wasted in handling various problems that arise in the operations. The second performance objective of the company is to ensure that the company produces vehicles that are environmentally friendly, and this is true from the company’s objective of producing Mini in Oxford that is environmentally friendly according to the European Union requirement of reduction of carbon emissions. (Podobnik, 2008)

The next performance objective of the company is the increase in profitability of its cars by 2012 and this is to be achieved through saving six billion euros and also through selling two million more vehicles. In addition, the company expects to cut down its production, development, sales, and marketing as well as administration costs in the coming years. (Bird and Walker, 2005)

The next performance objective is keeping the production in Germany the same by increasing capacity in the country without shifting capacity out of the country. In addition, the company plans to step up production in North America, especially in the United States, in order to deal with the Euro that has been growing stronger with time.

The other performance objective is to increase the capacity of production in Spartanburg from 140,000 to 240,000 units by the year 2012. It also anticipates raising the Mini plant capacity in England to 260,000 units per year. Furthermore, it plans to increase units produced in China from 30,000 to 44,000 units because the market in China seems promising, and growth is expected to shoot up drastically due to the high demand for BMW vehicles in China.

Competitors’ actions

Mild to exotic modifications has been a worldwide market activity that has been going on through auto-tuning. Companies have been formed that modifies vehicles beyond the original manufacturing design. Alpina, Hamann Motosport, Dinan Cars, Hartge and Schnitzer are the major competitors who rival BMW. These companies have adversely affected the company’s capacity strategy because they modify new cars, thus reducing BMW’s market share, which has had trickledown effects on the number of vehicles the company is producing in its plants. (ZForums, 2007). It has also affected the number of units the company is selling in the market because the modified vehicles have gained a significant market entry because of their competitive prices.

DaimlerChrysler Company and Subaru manufacturers being some of BMW’s competitors, provides the same motorsports to the customer, which has also had detrimental effects on BMW’s capacity strategy. (Stiglitz and Charlton 2006). Audi is also another top competitor of BMW, which offers packages similar to those of BMW, and customers have taken these packages as optional equipment to those of BMW. As a result, BMW’s efforts to increase its capacity have been affected by the competitiveness of similar packages that originate from Audi and other competitors. (Bhagwati, 2004)

Effect of product life cycle on capacity planning

The strategy aimed at gaining the competitor’s customers and convincing the current customers to stay in the company is an uphill task that requires the company to offer its customers a product with a reasonable product life. To penetrate into a new market, the company needs to acquire the trust of its new customers so that they can, in turn, go back to the company in the future for more products. BMW has products that satisfy all different kinds of customers in the market, starting from products with a long lifespan to those that have a short lifespan.

This is done with the aim of necessitating market penetration and market expansion. Diversification of its products depending on the product life ensures that the company can satisfy the needs of the customers in all market segments. Vehicles with a long lifespan are manufactured and sold at high prices than those with a short product life. This is because the longer a product stays in the hands of a customer due to the long time it takes before it becomes obsolete, the less the company can sell in the market.

On the other hand, the less time the product takes in the hands of the customer, the more the company sells. To compensate for the time taken by the customers who purchase goods that have a long lifespan, BMW fixes prices with higher profit margins than it does with products that have a short lifespan. The company’s product recovery operations found in the reverse supply chains encounters rapid demand that is continuously changing due to the escalating number of product that are offered and which have reduced lifecycles.

The capacity planning strategy is, therefore, a vital tool for the company’s profitability of closed-loop supply chains. Product lifecycle affects BMW’s optimal policies in regard to contraction and expansion of manufacturing capacities as well as collection capacities. Numerical example results that have quite different return patterns and lifecycles have shown that the best possible collection, contraction, expansion, and contraction policies of remanufacturing depend upon the type of the lifecycle and the product’s usage time. This is in contrast with the expansion capacity policy on remanufacturing, which does not depend on these factors. The results have also indicated that remanufacturing capacity and collection capacity policies are not sensitive to product demand.

Globalization

BMW has been at the forefront in the expansion of its production activities throughout the world as compared to most of its competitors. Currently, the company has manufacturing plants in Africa, North America, Europe, Asia, and Australia. In Africa, the company has strategically set itself in South Africa, with most of its products being consumed by many people in Africa. (Daly, 1999).

Apart from its original home in Germany, BMW has also set its operations in England, where it has put up a manufacturing plant for the Mini brand. The company has also started its operations in Asia, especially in China, due to the potential market growth which has resulted from the growing demand for the company’s products. In North America, the company has established itself in the competitive United States market. Globalization has been one of the company’s expansion strategies that have enabled BMW to expand and increase its customer base. (Axel, 2007),

It has also been a source of security for the company in terms of profitability because when one market segment becomes unfavorable, the company has been able to continue with its operations in other market segments. The company intends to penetrate into new markets such as South America and many countries in Asia such as India, which is deemed to be a potential market for the company’s products. More countries in Europe such as France, Spain, and Switzerland are also easy targets that the company intends to capitalize on in the globalization of its operations.

Many supply chains have also been established in different parts of the world to enable the company’s products to reach areas that are hard to reach. In this perspective, the company has managed to distribute its products in 90% of the various parts of the world. Globalization has also enabled the company to compete effectively with other firms in the same industry, such as Hamann Motosport and DaimlerChrysler Company. Effective competition has been necessitated by large sales volumes that the company has recorded from its different market segments. As part of its delocalization plans, BMW has focussed majorly on increasing and expanding overseas production by putting up new plants and expanding the existing plant’s capacity. (Sheiley, 2003)

The company has also adopted the vision 2006 strategy aimed at accelerating globalization while at the same time bringing sustainability in market leadership, especially in Japanese markets. Globalization is also a company’s escape route from domestic problems such as choosy customers, excessive capacity, and surplus workforce, as well as intensified competition in the German market. From the profitability figures, it has been shown that 80% of the company’s profits originate from markets other than Germany, which is the reason why the company has intensified its globalization strategies.

BMW strategic fit

The company has at the forefront looking for partnerships in order to be able to penetrate new markets. As a result, the company has used the capability, compatibility, commitment, and control criteria to establish the type of partnership and the companies that can fit in its goals in order to complement its strengths and weaknesses.

Application of these criteria between potential buyers and BMW cars, the company has been able to identify new and reasonable partners who fit in its goals. The strategic fit between BMW and its future buyers has enabled the company to single out the most credible buyers than less credible buyers in regard to the traits which fit BMW’s cars. The fit has also been assessed in order to know whether a new buyer desires to be a manufacturer or not. This criterion has been used to single out a specific company out of a set that would be the most reasonable buyer.

Recommendation

In order to achieve the 50 percent medium-term expansion, the BMW management board should concentrate on carrying out the forward expansion by entering into unexploited markets in order to reduce competition. This will ensure quick penetration in these new markets. The board should also move quickly to ensure that proper infrastructures are put in place to enable the emerging market to operate at par with the already developed and established markets. In addition, to achieve 50 percent expansion in the medium term, the company should seek to partner with smaller struggling companies or even acquire them in order to take advantage of their presence in different markets, after which the company should move with speed to expand its wings in those markets.

Conclusion

Bavarian motor works (BMW) needs to strategically place itself in the ever-growing competitive market through capacity planning and control planning. This will enable the company to effectively overcome the stiff competition that it is currently facing from its competitors, such as Audi. The company’s management has to establish the competitor’s actions and their effects on its capacity strategies in order to set new performance objectives and look for new ways of achieving them through control planning. The company has to take advantage of globalization in its efforts to become a world-class company in the manufacture of vehicles. This again goes back to its control planning strategies that have to be adequate in the management of the company’s subsidiaries in the world.

References

Axel, D. (2007), measuring globalisation: Gauging Its Consequences in motor industry, (New York, New York Press).

Bhagwati, J. (2004), performance of BMW and its competitors, (Oxford, Oxford University Press).

Bird, J. and Walker, M. (2005), a sustainable future for BMW, (New York, New York Press).

Daly, H. (1999), “globalization versus Internationalization in BMW, (Karachi, Karachi Press).

Friedman, T. (2008), the reality of internal business with BMW, (New York, New York Press).

Grahl, C. (2006), BMW at its early stages of operations, (Oxford, Oxford University).

Hurst, E. (2006), capacity and strategic planning in the motor industry, (New York, New York Press).

Morris, D. (2005), control planning in BMW, (Berlin, Berlin Press).

Podobnik, B. (2008), BMW’s performance objectives, (Berlin, Berlin Press release).

Sheiley, L. (2003), globalization and BMW operations, (Oxford, Oxford University Press).

Stiglitz, J. and Charlton, K. (2006), the effects of competitor’s actions on BMW’s performance, (Oxford, Oxford University Press).

ZForums, C. (2007), what are the direct relationships between BMW and its competitors? (Oxford: Oxford University Press).

Slack, N. et al (2007), operations management, 5th edition, (Harlow, Prentice Hall).

BMW’sin relation to Subaru it core competitor. 2008. Web.

BMW has adopted many strategies for the multi-product. Among the strategies BMW has used in their Multi-product in price differentiation for different market segments. This is attributed to the fact that people with high disposable income tend to spend more on a prestigious good. Secondly, some markets like Africa, part of South America, Asia and Europe people have low disposable income, which the company cannot sell the product at higher prices like in areas where there is high disposable income.

There are many risks and advantages associated with the marketing strategies adopted by BMW while market their products. BMW have tried to use technological economies scale and scope to produce multiproduct that is actually meets the customer needs in various market segment. The company has chosen product approach where capital and labor are employed to reduce economies of scale. Under this method, fixed cost associated with the production are sold in a market where people have high disposable income, while people with less disposable income goods are sold to them at variable cost only.

BMW in their strategic policy has chosen differentiation as strategy for positioning in the market. In some markets have produced a sleek car that is expensive while other markets have produced different car that meets the market standards. They managed to sell the car which economic, reliability, functionality performance, elegant, sleek design sporty, aggressive fun emotional competitive appeals hard charging for the German and Europe market while a similar vehicle that fits Africa market where the disposable income is low. BMW is not using volume in their production but they use differentiated Although BMW clearly competes on a generic strategy based on differentiation focus, through these, they are able to be market leaders. Through this, they are able to build; quality of BMW cars was for different market and different cost and charges different prices. This has made them more competitive.

Using the strategy cube above BMW have followed porters argument of differentiation in which he argues that in order to achieve good benefit, you have to incur some costs which are more than average to attain higher profit. For example, the BMW Company produces a costly vehicle, which is sold to the market with higher disposable income. The same vehicle can be sold to people with low disposable income excluding the cost of non-production activities.

Another position that BMW can adopt is the position with high benefits at the same time high cost but low price. This is when the company is incurring long-term economies of scale. Variable cost is considered leaving fixed cost. As well as BMW can also adopt the strategy where high benefit, which is, associated wit low cost but high price. This is where the product is well known to be doing well and the market client has high disposable income.

Again, the other position that can be adopted is the cost of incremental where they reduce the cost/benefit ratio so that they can remain competitive. From the cube if the company launches a product that is a motor vehicle for sports at a lower price, then the market will move towards the product giving them a competitive advantage. That is from F to D meaning previously price was at a low price since people have come in the price will go up increasing the benefits and production will be higher reducing the cost of production.

References

Jenkins W (2004): towards a strategic framework for competition in multi-product consumer markets: international J management and Decision making Volt 5, Nose 2/3.

Jenkins W competing times of evolution and revolution An Essay on long-term firm survival. Web.