The automobile industry is the most interesting and complex business sectors in the global framework for analysis. The Japanese cars are now supplemented by luxury models, such as Lexus Infinity and Acura to compete with European cars made by BMW and Mercedes and Audi. In this analysis, I’m going to develop company profile of BMW and its competitors (Lexus and Mercedes-Benz) per Porters criteria.
BMW AG Group
BMW AG was founded in 1916. Today the Company is one of Germany’s largest and most successful car and motorcycle manufacturers in the world. BMW Group owns three of the leading premium brands in the automobile industry: BMW, MINI and Rolls-Royce. They set the highest standards in terms of aesthetics, dynamics, technology and quality, born out by the company’s leading position in engineering and innovation. The Company also has a strong position in the motorcycles industry; BMW Group also offers a full range of financial services. The Company has adoption a strategy to differentiate from others by being the number one.
Long-term thinking and responsible steps have been the cornerstones of business success. The BMW Group has been a sector leader in the DJS Indices for the last seven years”. The brand is named to be top employer worldwide also leads in terms of corporate citizenship. This year the company will launch a sustainability campaign, “What’s next?” Additionally, it has new hybrid model and 100% electric car entering the market in 2012. Their design is consistent with the brand’s trademark. Today’s two of the biggest competitors are Toyota’s Lexus and Daimler’s – Mercedes.
Lexus (division of Toyota Motor Corporation)
Established first in 1980s and launched in 1989, the Lexus marque soon became associated with quality, luxury and excellent customer satisfaction. The brand reputation grew rapidly until, just a decade after its founding. Lexus is now sold globally and Japan's largest selling brand of premium cars and top selling in US. Lexus is a part of the global Toyota family, whose members together comprise the world's third-leading automaker.
Mercedes-Benz (division of Daimler AG)
Mercedes Benz is a German automobiles manufacturer, which traces its origins to Karl Benz's 1886 Benz, known as the first automobile. MBUSA was founded in 1965 and it is responsible for the distribution and marketing of Mercedes-Benz, Maybach, Smarts and Sprinter products in the United States. Mercedes Benz is behind many technical innovations that are standard automotive features today, like the crumple zone (1959), ABS (1978), Airbags (1980), belt pre-tensioner (1980), ESP (1995), and others.
Mercedes-Benz is one of the most known and established automotive brands in the world. It is also the world's oldest automotive brand that still exists today. Mercedes Benz holds, the famous three-pointed star rating that is not only recognized as a symbol of quality and safety, but also denotes a proud heritage.
Analyzing the competitive strategy of BMW with Lexus and Mercedes-Benz Mercedes and BMW clearly have adapted differentiation strategy. The BMW Group’s strategy is to be number one. The strategy was introduced before the financial crisis appeared, in 2007. It is a strategy, which does not only focus on key numbers, but also to ensure customer and employee satisfaction and long-term sustainability.
Mercedes strategy is to continue building the high quality vehicles with top safety rating and environmental features. Lexus originally had overall cost leadership strategy. In the last few years, the company started to different and being innovative. Their current strategy states: Do it right from the beginning. The company is committed to develop the most luxury cars.
Porter Competitive Analysis
Market Share (percent, rank) -BMW (17.9%, First) -Mercedes Benz (17.6%, Second) -Lexus (14.3%, third)
Market Share Trends BMW has responded to consumer demands for more fuel efficient cars by producing smaller vehicles such as the 1-series, Mini Cooper, and compact X3 SUV. The company also introduces two Active E 100% electric concepts i3 and i8. Over the past several years there been sales increases for smaller vehicles. They have been the primary driver for the company's net sales growth.
The trend is BMW to increase its share in the luxury car market, where Lexus has a full range of hybrid vehicles and expects an increase in market share. Mercedes Benz trend is to lose market share for the last decade, and most likely BMW and Lexus will continue to eat Mercedes Benz's lunch in the market. Lexus financial stability is backed by its parent Toyota.
Financial strength BMW Group been named sector leader in by the SAM Group for the DJS Indexes for seven years in a roll. The BMW Group is also the only company in the automotive industry that is listed in this family of indexes every year since it was established in 1999. BMW common stock was the DAX-30 best-performing share last year. Mercedes Benz has the financial stability backed by Daimler AG. There index DDAIF increase to $92 per share after the company reported record annual results.
Profitability BMW and Mercedes profits increased in 2011 while Lexus earnings fall in the last quarters due to the Sendai Earthquake.
Management BMW has a typical corporate structure with several boards. Of those, the most important is the management and the advisory board. The management board is responsible for the daily operations and the strategic development of the organization. It consists of 10 persons, with a different area of responsibility. The advisory board supports the decision making in the management board. The advisory board consists of 20 persons – 10 are employee representatives and 10 are shareholder representatives. Mercedes and Lexus corporate structure is different as they are brands of Daimler AG and Toyota MC.
Technology Position Today BMW is the leader in technology development and ahead of its main competitor Mercedes Benz, who has been a leader for many years.
Map of Competitors Position:
Future goals Mercedes-Benz is planning to build a new version of its A- and B-class compact cars. They will be launched at European dealerships in 2014. Mercedes' current two-car compact lineup will double in the future. This will include the successors to the current B-class, expected in Europe this year and the replacement for the A-class next year. In addition, Mercedes will launch an A-class coupe in 2013, which will be called CLC and will compete against the BMW 1-series coupe.
A year later an SUV, which is likely to be called GLC, should arrive at dealers and compete against BMW X1 and Audi Q3. Lexus are planning to bring at least two new cars to add to their lineup – a coupe and a small SUV, they will also increase their range of sports by presenting a variety of chassis and suspension options for better performance and handling. In addition, they have decided to focus on progressive technology in the future. This will come in the form of an expanded line of hybrid vehicles. Assumptions
Lexus has the confidence that they can overcome long time leaders in the luxury car industry. In 1989, no one in the industry believed that Lexus posed any threat for them. In just a decade, Lexus redefined the customer satisfaction experience and became recognized for producing vehicles with industry leading quality levels. Mercedes Benz assumes they will gain its market shares back as they are extending their manufacturing and distribution network.
Capabilities Mercedes has a strong brand name, and it is a symbol of prestige. The company is definite capable to get back as an innovative leader in automobile technologies. Lexus is known as low cost leader, because of its high volume manufacturing capabilities.
Recommendations I admire BMW Group strategy to be number one. Last year numbers proved that is great. My recommendations are to continue to invest in R&D toward the development of new energy efficient vehicles. With the increasing oil prices, there is huge marked for hybrids, electric and hydrogen driven cars. It is an excellent opportunity for BMW to capitalize of that.
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