BMW automobiles Essay Example | Topics and Well Written Essays - 1500 words

BMW automobiles - Essay Example Introduction: During the 1990’s BMW had managed to established itself as one of the most profitable automobile manufacturer in the world. Ranking right after the BIG 5 in the automobile industry i.e. General Motors ,Ford , DaimlerChrysler , Toyota and Volkswagen. Originally Aero-space engine manufacturer the BMW had somehow manage to position itself amongst the top luxurious and stylish automobile producer competing with the top car producers in the world. BMW by 2000 through its class and elegance made itself actually what it claimed , ‘The ultimate driving machine.’ A style icon BMW had three brands operating under the group name , BMW which was the last contributor to the sales of automobile , MINI a remake and rebuilt version of the famous English style icon and the Rolls Royce. In the mid of 90’s the BMW group acquired the UK owned Rover. This take over did not prove a successful one at all as it brought a lot of financial damages to the group along wi th that defaming the face of the group. Along with this the size of the company and range of cars also became an issue. To tackle this issue Rover was sold. Quandt family’ the major share holder of the group applied pressure on the group to stop over 900million Euro worth of yearly losses caused by Rover. As a result the CEO resigned and a New CEO was appointed. The new CEO faced a tough situation where threat of Quandt family disposing of its share will leave the group open for Acquisition though the group was fair in size in comparison with Big 5. In 2002 Helmut Panke a nuclear physicist took the post of CEO and decided to turn the wheels by choosing aggressive approach so as to increase market share and become market leader. Factors Effecting Market There were various factors effecting the automobile marketing causing the autmobile manufactures to make a shift if strategies. The economies had been hit by recession effecting buying power of customers. Hence they’ll g o for cheaper options. To stay in the market BMW has to Reduce cost but reducing cost mean earning less marginal profits which previously was quite easy to earn. Environmental concerns: Global warming and greenhouse gases are increasing day by day, BMW cars are on petrol which is a contributor to green house gas. Geopolitical tensions: The war in the middle east and the disturbance in the rich Arab world which would be high contributors to BMW sales globally. BMW group has to look for ways to compensate for these sales. Fuel consumption and efficiency: The war in the middle east lead to fluctuations and dramatic increase in oil prices hence making the gas consumption uneconomical for most engines . Purchases in the asian markets for automobiles increased: The economy depressed in the USA and European markets where BMW sales were high but an increase in sales in Asian countries was observed. Porters 5 Forces Model 1) Competitive Rivalry The competition would grow tough as the focus w ill be on Asian markets with their already being rivals there eg Honda, Toyota, Suzuki etc Though they don’t match BMW on the class and elegance scale but these makers are much less expensive then BMW. 2) Power of suppliers There wont be no significant change but there will be more suppliers willing to negotiate terms as productions have been slowed down or cut down. 3) Power of buyers The customers will become powerful as few of them will be buyers