For the following the report, I will be pointing out the current strategic position of the organization, what strategies it currently employs, and what other strategic options it can make for the future. In modern day business, almost all organizations operate according to the context of an external environment, which is usually made up of your competitors and the operations of the industry. Which means when evaluating an organization, the evaluators must not only evaluate what the current internal situations are but also how the organization is dealing with their relations to the external environment.
These evaluations can help point out what the organization’s current strategic position is. Once the evaluation has been done, the organization can assess what its options are and therefore make a decision on whether it needs to change up its strategy or continue with the current one. When developing a new strategy, the strategists will be able to use the evaluations to deal with the opportunities and threats, while using the organization’s strengths.
Performance Motors Limited has been the sole importer/distributor in Singapore of BMW automobiles and motorcycles since 1979 their mission statement is as follow: We are passionately committed to hiring and keeping the best people and empowering them to develop the best business processes and practices in order to deliver proactive and caring services that exceed our customer’s highest expectation.
This will ensure the employees to keep their service standard as high as possible with every customer that they encounter. The organization’s vision will be to relay the vision of BMW itself, which is to make BMW cars become the best premium brand in the car industry, in Performance Motor’s case it would be to make BMW the best luxury car brand in Singapore. According to the Land Transport Authority (LTA) of Singapore and Performance Motors (2011) new vehicle sales in 2010 for BMWs in Singapore was at a record breaking 4,287 units, which is a 21% increase in sales compared with 2009 and it is the first time Performance Motors broke the 4000 units mark in a 12 month period.
With the record sales number, BMW became the top luxury car brand in Singapore beating out direct competitors Mercedes-Benz (4,105 units sold) and Audi (2,199 units sold). Performance Motors objectives are to continue to break sale records year after year, as they have had increased in sales for four consecutive years and also to keep indentifying potential areas of growth and expansion so to always be one step ahead of the competition.
These objectives can be met if they keep their relationships strong with their partners, such as Esplanade and the Singapore government, and to keep their after sales service standards high so existing customers will show support and loyalty. Performance Motors must recognize what the needs and preferences are of their targeted customers, which most likely will be the high level of service that is expected because it is usually the rich that can afford luxury car brands in Singapore, where the same BMW car is at an estimated 4-5 times more expensive compared with U.S prices.
Why did BMW Group decide to authorize Performance Motors to sell their vehicles in Singapore? We will now analyze the factors, PEST, that influence the business environment in Singapore. There are currently more than 7,000 multi-national companies operating in Singapore, which can be consider a lot because of the size of the Singaporean market (population of only 5 million). Nevertheless, Singapore’s market is consider one of the best business environments in the world because it is one of the most competitive and profitable business environments due to its strict but fair government regulations and world-class intellectual property protection and enforcement.
Singapore was once a very attractive place for manufacturing because of its outstanding capabilities in design, development and manufacturing skills in cutting edge products, but due to the emergence of neighbouring developing countries such as China and Vietnam, some multi-national companies that rely on manufacturing have left Singapore in search of lower labour costs to be more cost efficient in their operations. With its high labour wages, Singapore had to transform itself from a manufacturing based environment into a trading and service based environment, very similar to Hong Kong who Singapore models itself after. Political:
Although Singapore is a very young (50 years old) city country, it is very business friendly and the government has several state run departments, such as Ministry of Trade and Industry - their main tasks are to grow the economy and expand trade, that will help organizations in systematic ways. Singapore’s automotive market is restricted by geographic limitations and the government’s regulations on car ownership.
Regulations such as the Certificate of Entitlement – which is a document new car buyers need to have in order to own a vehicle, the Certificate of Entitlement will usually be packaged by the dealerships with the price of the vehicle, but they can be very expensive and even sometimes be the same or more expensive than the price of the car depending on which category it is in. Then the Singapore government will the add a tax call Economic:
Singapore has a free-market economy that was growing at a rapid rate up until the global recession in 2008-2009, but bounced back well in 2010 with a record growth of 14.5% according to the Ministry of Trade and Industry. Singapore’s per capita income is the highest out of all the ASEAN area, which has been possible because of the corruption free environment, well educated workforce, and well established legal and financial business structures. So with the high per capita income, premium car brands such as BMW and Mercedes-Benz have been fairing much better than volume car brands such as Toyota and Honda.
BMW has a variety of prices for several different models to cater to the different market segments. Performance Motors takes it further with having a different branch that only sells second hand BMW approved vehicles, which will assure the potential customers of high quality and reliability of the second hand vehicle that will allow the customers to have trust in the second hand vehicle to have the same benefits as a brand new vehicle. Even though the price of a BMW vehicle in Singapore will usually cost 5 times more than the price in the U.S, sales have continued to increase every year with a record increases.
So with the help of Performance Motors’ distribution network, it has prompted the BMW Group to open their first ever M Performance centre in Singapore in 2010 where they only sell expensive high end performance focused cars, their cheapest car sells for $300,000 Singapore Dollars. This has shown the belief BMW has in the Singapore market where they feel there is still plenty of room to grow. Social:
Performance Motors relays the social responsibility to employees and customers that BMW itself preaches, such as traffic safety training to its customers and the need for constant communication between dealers and customers to improve the overall performance of the vehicle with feedback. BMW also takes social responsibility for the environment very seriously with its sustainability activities. Some of the activities are being a member of the United National Global Compact (this is where international companies align their operations and strategies with principles such as environment safety, labour laws, human rights, and anti-corruption.
Table 1. BMW sustainability approach diagram. BMW.com 2011
As environmental concerns rise due to the high demand for natural resources, it has become more important for consumers to have the choice to purchase more efficient or hybrid vehicles. BMW has implemented a program such as ‘Efficient Dynamics’ where they have reduced CO2 emissions by 25% from 1998 to 2008 and created technologies to reduce fuel consumption in all their vehicles. Technology:
Technological innovation is very important in the automotive industry, where consumers are always looking for the most high tech and advance vehicle to make individual mobility as enjoyable, safe and comfortable as possible. Car manufacturers will need to find out the ever changing customers’ demands and needs to adapt new technology to their vehicles in order to increase sales and take more market share. One of BMWs’ main selling points is the technology they incorporate into their vehicles.
With state of the art technology such as night vision and vehicle status monitors just some of the features that will become standard in the future for all BMW vehicles to maximize the customer’s satisfaction and safety. BMW Group already have developments underway in hybrid vehicles, where an electric motor and petrol motor are both present in a car, where fuel consumption can be increased by 20-30% depending on the model. They also sell full electric cars, under the brand MINI which BMW owns, to the general public in the UK and US. BMW is also the first to have created a production ready car to run on water which they named the Hydrogen 7.
In 2008, Performance Motors invested more than SGD $60million to open a new sales and services centre where it adopts proprietary of BMW cutting-edge technologies to support the comprehensive range of models, this is so customers can receive the best after sales service possible and the service stations in the new centre have all been equipped with technology that will allow for real-time connection with BMW headquarters in Germany which will give Performance Motors instant access to new software upgrades.
SWOT: Strengths: BMW has consistently been one of the top three premium car brands in the world, ranking second in the top performing luxury car brands in the US according to a study done by J.D Power and Associates. Strong brand image and name has been possible because of strong market position, the size of the market share it has, and very loyal customers. BMW has been able to keep its sales levels high because of the continuous investment into research and development. It spend 5.6% of its sales revenue in 2007 (BMW, 2010) on research and development for new models and technological innovations. Customer management has also been one of the strengths of BMW because they create products for various market segments.
Strategic direction must have a TOWS matrix so you will be able to create options. Competitive strategy, strategy clock, BCG, ANSOFF