BMG872 Global Strategy Development and Implementation Assignment Sample
BMG872 Global Strategy Development and Implementation Assignment Sample
Introduction
This particular report has been conducted to analyse the global market strategy development and implementation to grow BMW’s product sales and revenue. BMW is a leading automobile manufacturing business organisation that manufactures premium motorcycles and automobiles, with premium financial and mobility services.
BMW has 149475 employees all over the world, it has 30 production centres in more than 140 countries, and in 2022 the overall turnover was around 142.6 billion euros. In the current situation, BMW wants to grow its business in more countries, boost its customer base, and increase revenue. Therefore, this report has analysed the market competition external market environment to identify the required strategies to achieve the organization’s objective.
Competitor’s analysis
The automotive industry is the most complex and interesting business sector in the global market. As per the opinion of Liu (2022), BMW has become the world’s most successful automotive product-manufacturing organization and it has created strong competitive advantages in the tube global market. Manufacturing 100% electric cars and other creative thinking has created a competitive position in the market. Therefore, to know the overall market position and market competition this study has conducted Porter’s five force analyse for BMW.
| Porter’s forces | Impact | Justification |
| Competitive rivalry | High | There are different market competitors of BMW such as Mercedes, Audi, Tesla and more in the UK market. They are trying to increase their market share by attracting new customers by providing the best services. Therefore, the market competition is high in the UK market (Comparably.com, 2023). |
| The threat of substitute products | Moderate | Due to increasing awareness about the environment customers are shifting towards purchasing an electric vehicle, but it will take time to gain recognition. Therefore, still, there are fewer organizations that provide electric vehicles in the UK. |
| Customer’s power | High | The increasing awareness of the customer boosting the intention to purchase electric vehicles nowadays. In future it will boost more, Therefore, the customer’s power will increase and it will provide positive outcomes for BMW in the UK. |
| Supplier’s power | High | BMW maintain quality raw materials to manufacture its products, and they have more than 1200 suppliers across the world (Investopedia.com, 2022). The strong collaboration of the supplies will provide a strong opportunity to grow business in the UK. |
| Threat of new entrance | Low | Threat of new entrance is quite low in the automobile sector as it is a complex and large sector. Moreover, due to having less knowledge and research most of the organizations fails to take a step to create new electric vehicles that can defeat BMW. |
Table 1: Porter’s five forces (Source: Self-Created)
The above table 1 depicts Porter’s five-force analysis of BMW group that has helped to analyse the current competitors and market position of this organization. It has been identified that BMW has different market competitors such as Mercedes, Audi, Tesla and more in the UK market and they are typing to boost their market growth by providing quality services to the customers.
BMW can use the available and upcoming advanced technologies such as Artificial Intelligence, Machine learning, Cloud computing and more to make electric vehicles more advanced and attractive which will help to create a market competitive advantage in the UK market and helps to defeat the market competitors (Joachimsthaler, 2020).
Moreover, it has been analysed that BMW has adopted a unique idea and providing electric vehicles to the customers, which has created an opportunity to take the maxim market in the UK and there is a moderate chance to have market rivals in the UK.
BMW carefully choose their suppliers as they always maintain quality in the product, in the current time BMW has 1200 raw material provided all across the globe and they are providing quality material to manufacture electric vehicles which will be a strength to grow the market in the UK. As per the statement of Rasiah (2021), in the coming years, people will become more aware of nature and they will prefer to use electric vehicles rather than fuel-engine-operated vehicles.
Therefore, this will create an opportunity for BMW to grow its business in the UK by raising awareness among the people. As the value of establishing an electric vehicle industry is high and it has high risk most of the rivals failed to invent it, it has decreased the chase of the new entrance in the market and will help to establish the BMW brand in the UK market efficiently.
BMW can continuously improve their product by analysing the feedback provided by the customers, It will help to develop the product and increase the customer satisfaction rate. Moreover, there is high differentiation in the UK market, customers’ bargaining power is still high and it needs to be focussed upon to get high success in future business growth for BMW.
Competitive advantage of BMW using Value Chain and VRIO analysis
VRIO analysis
| Resources | Valuable | Rare | Imitable | Organized | Result |
| Technology | Yes | No | Yes | Yes | Unused competitive advantage |
| Legal obligations and talent to manage regulatory | Yes | No | Needs to be imitated | Yes | Not a critical factor |
| Positions among retailers and wholesalers | Yes | Yes | Difficult to imitate | Yes | Sustainable competitive advantage |
| Pricing strategy | Yes | No | Regularly imitated in the industry | Yes (corporation has a pricing analytics engine) | Temporary competitive advantage |
| Access to cheap capital | Yes | No | Can be limited | Not been exploited completely | Not advantageous in creating a competitive advantage |
Table 2: VRIO analysis of BMW (Source: Self-developed)
VRIO analysis is a framework used to evaluate the resources and capabilities of a company. VRIO stands for Value, Rarity, Imitability, and Organization. Analysis that is mentioned in the above table shows a total of five effective resources of the organisation that provide relevant support in the process of development of a marketing plan.
The organisation can increase its growth rate by concerning goods and services and that enables them to minimise the cost and value creation in the organisation successfully. Those five resources are completely different from each other. For example, technology provides an unused competitive advantage whereas support chain network flexibility provides a sustainable competitive advantage to this automotive company.
BMW’s technology and manufacturing processes are difficult to imitate due to the company’s investments in research and development. However, some competitors, such as Audi and Mercedes-Benz, also invest heavily in innovation and design, which means that BMW’s advantage is not completely impenetrable. With the continuous and stable development of the economy of the UK, the theory of integrated marketing communication is increasing in the automobile sector (Yang, 2022).
One potential competitive advantage that BMW could leverage more effectively is its expertise in electric and hybrid vehicle technology. BMW has been investing heavily in this area and has developed several electric and hybrid models, including the i3 and i8. However, the adoption of electric and hybrid vehicles in the UK has been slower than expected, and BMW has not yet fully capitalized on its expertise in this area.
BMW could differentiate itself from competitors by highlighting its electric and hybrid vehicle technology, which would appeal to environmentally conscious customers. The company could also invest more in marketing and promoting its electric and hybrid models, and expand its charging infrastructure to make it easier for customers to charge their vehicles.
This would give BMW a unique advantage in the UK market and help the company to stay ahead of competitors as the demand for electric and hybrid vehicles increases in the coming years. BMW has a legal obligation to comply with various regulations related to safety, emissions, and other environmental standards which are not critical factors.
In this way, by complying with these regulations, BMW can avoid fines and legal penalties, which can be costly and damage its reputation. Nonetheless, the production of manufacturing processes is completely different and is not uniform by an emphasis on long-term growth (Zhao et al. 2020). BMW’s strong relationships with retailers and wholesalers can help it reach a larger audience of potential customers in newer markets such as the UK, who may not have considered buying a BMW otherwise.
Organisation has the ability to manage regulatory resources and which can effectively ensure that it complies with regulations while minimizing costs and maintaining its reputation for quality and safety. The automotive industry is highly regulated, and complying with regulations can be a challenge for automakers.
However, compliance can also spur innovation. BMW has demonstrated its talent for managing regulatory resources by developing innovative technologies that meet or exceed regulatory requirements. For example, BMW has developed efficient engines that meet strict emissions standards, and it has also developed advanced safety features that improve occupant safety and reduce the risk of accidents.
Moreover, access to cheap capital can be considered not as much competitive advantage and not having a perfect exploitation strategy might be one of the main reasons behind it. In this way, the firm needs to maintain a strong relationship with all the wholesalers and retailers and needs to imitate channels concerning their competitors.
Value chain analysis
| Support Activities | ||||
| Firm Infrastructure | BMW maintains a network of manufacturing facilities, research and development centres, and distribution channels to support its global operations.
Overall, BMW’s value chain emphasizes its commitment to design and engineering excellence, technology leadership, and customer service. The company’s investment in research and development, supply chain management, and marketing has helped it establish a strong brand and a loyal customer base. |
|||
| Human resource management | BMW recruits, trains, and manages its workforce, including engineers, designers, sales representatives, and technicians. | |||
| Technology development | BMW invests heavily in research and development to design and engineer new technologies for its vehicles, such as electric powertrains, automated driving systems, and advanced safety features. | |||
| Procurement | BMW manages its relationships with suppliers to ensure the quality and reliability of its raw materials and components. | |||
| Primary Activities | ||||
Inbound logistics
|
Operations
|
Outbound Logistics
|
Marketing and Sales
|
Service
|
Table 3: Value chain Analysis (Source: Self-developed)
Value chain analysis is a tool used to identify and analyze the various activities and processes involved in creating and delivering a product or service. In the case of BMW in the automotive industry, the value chain can be divided into primary and support activities.
Primary activities are directly concerned with creating and accomplishing a product successfully and can be grouped into five major important areas such as inbound, outbound logistics, operations, marketing and sales along with services. In the automotive sector, competition has significantly increased. For automotive brands, technology is a key source of competitive advantage.
The company is well known for its performance, creativity, and design. Due to its substantial market position in the UK’s luxury auto sector, BMW has a valuable brand name. As a leading carmaker, the BMW group invests a lot in technical advancement. Germany is home to six of the company’s 16 research and development facilities.
Every year, BMW invests a sizable sum of money on R&D. In 2018, the company spent €6,890 million on research and development, which was a 12.8% increase over the previous year. It is exploring autonomous driving in addition to investing in electric transportation (Kukkamalla et al., 2020). The range of electric and hybrid vehicles offered by BMW has grown dramatically in recent years. The business plans to broaden its selection to better fulfil the expanding demand on a worldwide basis.
BMW sources high-quality raw materials and components from suppliers around the world and has established efficient logistics networks for transporting these materials to its UK manufacturing facilities. This enables BMW to maintain a consistent level of quality while minimizing costs, which can provide a competitive advantage.
BMW’s UK manufacturing facilities are equipped with state-of-the-art technology and staffed by highly skilled workers, allowing the company to produce high-quality vehicles efficiently and effectively. This can help organizations to offer competitive pricing while maintaining profitability. BMW has established an efficient distribution network in the UK, including partnerships with reputable retailers and wholesalers, to ensure that its products reach customers quickly and reliably.
This can provide a competitive advantage in terms of speed-to-market and customer satisfaction. As a champion of EV and clean energy, the brand’s better growth and sustain a competitive market value are inevitable green revolutions within the overall industry (Thumiger, 2021). BMW’s strong brand reputation and marketing campaigns help to differentiate its products from those of its competitors, and its partnerships with retailers and wholesalers provide a wider distribution network for its products.
This can help BMW to capture a larger share of the market. BMW offers high-quality service and support to its customers through its network of authorized dealers and service centres, which can help to enhance customer loyalty and satisfaction. This can provide a competitive advantage over competitors who may not offer the same level of service and support.
Impact of the external environment and challenges
As BMW is a luxury car manufacturing industry it faces a huge amount of challenges and issues to perform its business tasks and to achieve its business objectives. As per the opinion of Salamaiet al. (2019), external business factors such as political, environmental, legal, technological, social and economic factors need to malaise to get proper business growth after the market expansion. Using the PESTEL analysis the external environment can be easily understood and the threats and opportunities can be identified easily which will help to grow BMW in the UK in an effective way.
| PESTEL | Factors | Impact |
| Political factor | ● High political stability around 0.54 (The global economy. com, 2022)
● Brexit has created uncertainty ● Effective parliamentary support for small and big business organizations ● Corruption rate was under control around 73.0 in 2022 (Tradingeconomics.com, 2022)
|
Positive |
| Economical factor | ● GDP growth was high around 2.2 trillion dollars in 2022 (Statista.com, 2022)
● Economic growth rate of the UK was 7.6% in 2021. ● Moderate Tax-to-GDP 33.5% in 2021. |
Positive |
| Social factor | ● High population growth is estimated to reach 72 million by 2045 (Migrationobservatory.ox.ac.uk, 2023)
● UK average expenditure to purchase a vehicle is around 1.9% ● High employment rate around 75.7% (Ons.gov.uk , 2023) |
Positive |
| Technological factor | ● Technological growth rate is high around 7% each year in the UK (Gov.uk, 2022)
● Effective technologies available ● Investment in Research and development around £20 million (Iuk.ktn-uk.org, 2022) |
Positive |
| Environmental factor | ● UK AQI is 22 (Uk-air.defra.gov.uk , 2022)
● Challenging atmosphere |
Negative |
| Legal factor | ● UK Government strictly follows Employment Act 1996 (Gov.uk, 2023)
● Government of UK follows “Equal Act 2010” that protect from discrimination in the UK |
Positive |
Table 2: PESTEL analysis (Source: Self-created)
The above table 2 depicts the PESTEL analysis of the UK that can be helpful to malaise the external business factors that can impact the business growth of BMW in the UK. It can be seen that the UK government is stable and the corruption rate was low around 73 points (Tradingeconomics.com, 2022). That can be an opportunity to get help and support from the UK government to grow the BMW business in the UK.
Moreover, high GDP growth ($2.2 trillion) and the Tax-to-GDP ratio were also low (33.5%) can help to provide the opportunity to grow BMW in the UK. Moreover, the rate of purchasing vehicles in the UK is 1.9% and the employment rate is 75.7% (Ons.gov.uk, 2023). Therefore, it can be a good sign but it also can be effective t grow the market of BMW in the UK.
On the other hand, the high air pollution rate and the unstable atmosphere change can create challenges for the logistics and supply chain maintenance system of BMW. As per the opinion of Moellerset al. (2019), UK vehicle manufacturing industries are suffering from labour issues, due to the Covid-19 situation no workers are ready to work and it has created a labour shortage in the UK. Therefore, it can create challenges to performing manufacturing and other works in the UK.
Recommendation
- BMW need to choose the UK market as it can provide more stability and advanced technological support that can grow the BMW business at a higher level. As per the opinion of Skeeteet al. (2020), UK has the advanced technological support that can provide a great impact to boost the manufacturing quality and production of electric cards. Therefore, it will be suitable to grow BMW’s business in the UK market. BMW can leverage its existing brand recognition and reputation, but it should also adapt to local market conditions to appeal to UK customers.
- It will be also important for the organisation to consider expanding its product line to include models that are popular in the UK market. This may include models that are more fuel-efficient or smaller in size and that help it understand the local customers’ preferences, buying behavior, and cultural differences and effectively tailor their products and marketing efforts to the local market as well.
- BMW should target the medium to high-income people in the UK market to get more sales benefits. As per the statement of Hollebeek et al. (2019), BMW normally targeted customers with high income, in the UK market. Therefore, BMW needs to perform mass manufacturing of products that can reduce the product cost and it will be easier to target the medium customer segmentation in the UK market.
Conclusion
The overall report has concluded the market growth and development of BMW. It has been analysed that BMW has many market competitors in the market such as Mercedes, Audi, Tesla and more. Therefore, BMW needs to improve product quality by utilizing advanced technology and support to make competitive market advantages.
Moreover, it has been analysed that the changing atmosphere and changing vehicle rate can create challenges to improve business growth in the UK market. Moreover, it has been recommended to choose the UK market to potentially boost the business growth and to target medium-income customers to attract more customers in the UK.
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