Automotive industry Essay Example

1. Brand reputation. BMW brand is the third most valuable automotive industry brand in the world valued at $29 billion. In 2012, Forbes has also listed BMW as the most reputable business in the world. 2. Environment friendly vehicles. The company tries to develop environment friendly cars by making them more efficient. It offers nearly 20 models that emit CO2 as low as 140g/km. To make BMW cars more environment friendly firm’s engineers develop new types of fuels, such as hydrogen, too. 3. Quality products. BMW is valued on its engineering capabilities, skilled workforce and quality products.

BMW recalls their cars less often and at lower numbers than most of its competitors do. 4. Highly skilled workforce. Quality cars require premium materials and skilled workforce and BMW employs only the most skilled workers to produce its vehicles. BMW sets up its assembly plants at the countries, such as USA and Germany, where there is only the most skilled vehicle assemblers. 5. Corporate Social Responsibility (CSR). BMW is strongly committed to the environment protection, employee and community well-being and sustainability programs. The company invests large sums in

employee health management, programs promoting balanced work life, sustainability requirements for its suppliers and producing zero waste at its plants. 6. Strong brand presence in China. Over the last few years, BMW has seen strong sales growth in China, the largest automotive market in the world. In 2012, BMW sold 326,444 vehicles there. Weaknesses 1. High cost structure. Producing quality cars and hiring skilled workforce results in high costs for the business. BMW cost structure is higher than of its biggest competitors such as Toyota, GM and Volkswagen. 2.

Weak brand portfolio. BMW Group manufactures and sells only 3 brands: BMW, MINI and Rolls-Royce. Although these brands perform well in their segments, they are unable to serve larger market needs. Therefore, BMW has to introduce more brands to its portfolio to meet diverse consumer needs. 3. High prices. BMW manufactures luxury cars that require best quality materials, skilled workforce and a great brand image. All this results at a higher car prices that are often considered as too pricey compared to other car prices. 4. Too few acquisitions and strategic partnerships.

90% of BMW growth is organic and only 10% is from acquisitions. Without acquisitions, the company finds it hard to grow even with exclusive engineering capabilities. Thus, if the company wants to grow significantly, it has to acquire more brands and enter into more strategic partnerships. Opportunities 1. Increasing fuel prices. Increasing fuel prices open up large markets for BMW hybrid and hydrogen cars as consumers shift towards cheaper fuel types. 2. Positive attitude towards “green” vehicles. Today consumers are more aware of the negative effects (air pollution) caused by cars fueled by petrol and diesel.

Large quantities of CO2 emissions intensify greenhouse effect and negatively impact the life on earth. Thus, consumers are more likely to buy new hybrid and hydrogen fueled cars that emit less or no CO2 at all. 3. Expand brand portfolio. In order to grow at a higher rate, BMW should expand its brand portfolio to meet more needs and to satisfy larger consumer market. The company could introduce new models that aren’t currently included in its range. 4. New emission standards. A new wave for stricter regulations on vehicle emission standards would positively affect BMW position in automotive industry.

The firm produces one the most ecological vehicles and has introduced hydrogen fuels that emit zero CO2. New vehicle emission regulations would mean 0 additional investment for BMW while its competitors would have to invest large sums of money to comply with regulations and lose a share of profits. Threats 1. Intense competition. BMW faces increasing competition from its direct competitors and now tends to compete on price rather than differentiation. Moreover, the markets for luxury cars are saturated in the developed economies, thus intensifying competition. 2.

Rising raw material prices. Rising prices for raw metals will lift the costs for auto manufacturers and result in squeezed profits. 3. Decreasing fuel prices. Due to increasing extraction of shale gas, future fuel prices should drop and make electric, hybrid and hydrogen cars less attractive. This creates huge losses for BMW most ambitious projects, hydrogen fueled and electric cars. 4. Growing euro exchange rate. BMW earns part of its profits outside the euro zone. Exchange rate fluctuations threaten BMW profits if the euro will start appreciating against other currencies