The Swot analysis is a concise analytical method used to assess the strength, weakness, opportunities and threat in a company. The internal factors to the company can be categorised as the strengths and the weaknesses of the company while the external factors to the company can be categorised as the opportunity and threats. These four elements are more or less the four factors of success in a business.
The swot analysis helps evaluate the strategic position of a company by analysing both the external and internal factors that could be favourable or unfavourable to the aims and objectives of the company. It is essential that this analysis include non-marketing components and cost as variables.
ORGANISATIONAL STRENGTHS •Respectable Reputation for their refined quality, reliability and also their good customer service. •BMW possess various array of products that do not overlap such as BMW, Rolls Royce and the Mini. •BMW have maintained a strong Financial Position over the years •Strong focus on development of product.
•Through media and movie industry BMW have been able to have an impact on the consumers. •BMW spends a large sum of their income on R&D ORGANISATIONAL WEAKNESSES •High manufacturing cost due to BMW’s heavy cost German base. •They only assembly the vehicles in their plants.
OPPORTUNITIES •BMW can capitalize on the growth of some E U countries and China to improve its profit gain. •BMW can start using raw materials by merging their assembly plants with manufacturing. •The acquisition of Rover will enable BMW expand their market target.
THREATS •The rising cost of raw materials is likely to negatively affect the company’s income. •The on going drop of the dollar against the Euro might decrease the company’s profit.
STRENGTHS BMW has a reputation for luxurious quality and reliability, they are also resected as one of the most superior driving machines, prominent for their whole range of classes, and BMW is constantly trying to forge ahead of their counterparts. BMW is none for their engineering record, as they are of only carmakers but they are also one of the universal front-runners in motorcycle production, marine engines as well as aircraft engines. This emphasises BMW’s long history of delivering one of the potentially best engineering in the market. BMW’S facilities, suppliers and industries are known to be the most flexible and most productive in Germany with a very skilled workforce.
BMW’s zeal to constantly keep improving their customer service has driven the car company to offer a four year warranty, inclusive of maintenance and service at purchase of the car, which helped to eliminate the general complaints that the less than frequent technological malfunctions of the brand were too expensive to maintain.
BMW is one of the top most and leading superior multi brands car manufacturers in the industry, being the only car company to boast 3 non overlapping top quality brands in their collection (BMW, MINI and Rolls Royce). With the Rolls Royce Phantom grasping the number one spot in the super luxurious division of the car industry.
Based on the large percentage of resources that BMW spends on R&D, which is one of the highest in the industry, BMW has been able to develop a significant range of new models over the years. This, coupled with BMW’s enthusiasm for growth, development and innovation has been able to develop an advanced selection of engines such as the Hydrogen –H2R (1 and 2), Hydrogen combustion engine, straight six petrol engines.
WEAKNESSES BMW’s heavy cost German base may lead to less profit for the company, as the cost involved in developing their High quality German based products is likely to counterbalance the profit of the company sooner or later. BMW may find themselves having to consult other less expensive countries for product development like their other competitors do, as well as still preserve their reputation for their German engineering excellence in other to maintain cost competiveness.
Also the BMW does not manufacture product in their plants they only assemble the vehicles. BMW’s manufacturing cost when compared to the manufacturing costs of other car companies are a lot higher therefore making its product development cost higher. This has the potential to cut into their general profit in the long run as there is a lot of cost incurred in purchasing the manufactured products they need from their German base
OPPORTUNITIES The European Union is one of the world’s biggest trading federations, with a population of millions; this is due to the European union’s constant expansions. With BMW having a strong position in the premium car segment in Europe because of its German roots, it is likely that BMW would be able to target a larger market share across the new and expanding markets.
BMW’s launch into the Chinese Luxury car market seems to be a promising venture, as china already ranked 12th in the BMW market in 2002 and 3rd largest market for BMW’s 7 series luxury limousine, with a little more robust growth china is predicted to be amongst the 7th largest markets in the coming years ahead, which is an opportunity for BMW to enjoy an increase in its profits.
In order to cut cost, it would be more profitable to BMW, if they manufactured their own products and raw materials. This is because BMW already spends a lot of resources on its manufacturing costs, product development, and purchase of some of the products they need in order to assembly the kind of luxury cars BMW are known for. The acquisition of the Car brand Rover if managed properly could have been able to increase their market share and target a wider range of consumers. Based on the fact that Rover was similar to BMW in terms of their volume unit by acquiring rover, BMW would be able to maintain its independence and possible increase it economy of scale.
THREATS The prices of raw materials such as steel and rubber seem to be increasing daily, with BMW not being able to produce their own raw materials, the company will be spending a relatively large sum on purchasing the quality of raw materials they need, this in turn might equipoise BMW’s profits in the long run.
The instability of the American dollars against the Euro is a possible threat to the profit and earnings of the BMW Company. BMW’s major national market is the United States, as the dollar keeps declining against the euro while the euro keeps rising; this poses a threat to the income of the company.