Strategic analysis automobile industry

Topics: Automotive industry, BMW, Luxury vehicle Pages: 28 (6486 words) Published: October 22, 2004
Introduction

This assignment will focus on BMW as a whole. BMW is a Public Limited Company (PLC) in the Private Sector and their main objective is to make profit and cover their costs. A board of directors undertakes the day-to-day running of BMW. Being in the private sector they raise most of their capital though the sale of shares and of course their cars.

Using a PESTAL Analysis, Porter Five Forces Framework, Resource Audit and a Value Chain Analysis recommendations will be made to BMW about any opportunities or possible threats there are in the car market.

Key Factors Affecting BMW

There are many factors that are affecting BMW's current situation (see Appendix 1,2,3 and 4), however the focus in this section of the assignment is the main factors from each of the analysis that have been completed.

The following information was collected using the PESTAL framework. "The PESTEL analysis categorises environmental influences into six main types, political, economic, social, technological, environmental and legal. It is particularly important that PESTEL is used to look at the future impact of environmental factors, which may be different from their past impact" (Johnson and Scholes 2002).

Environmental Influences

Political

"'The Government's own analysis shows that keeping motoring costs constant, by increasing fuel prices, will help it meet its targets to reduce congestion and pollution' (Friends of the Earth, 2003). With an increase of prices customers will change to fuel-efficient cars, BMW must take note of this and manufacture those types of vehicles" (Appendix 1). Currently BMW's have large litre engines making them expensive to run.

Economic

"The table below shows that consumer expenditure and savings have been growing in real terms since the mid-1990s along with PDI". This means that the general public has more disposable income to spend on items such as cars.

PDI, consumer expenditure and savings, at 1991 prices, 1991-2001

PDI Consumer Savings Savings GDP

Expenditure Ratio

£Bn Index £Bn Index £Bn % Index %

1998 582.50 143 545.12 148 37.38 6.4 843.73 145

1999 609.30 150 574.56 156 34.74 5.7 871.57 150

2000 (est.) 640.04 158 607.76 165 32.28 5.0 915.28 157

2001 (fore) 673.78 166 634.83 172 38.95 5.8 961.06 165

(Mintel 2003)

(For full table see Appendix 1)

Social

"BMW is to create 700 more jobs with a further investment of £50m at its Mini plant near Oxford (Bized 2002)" (Appendix 1). This will increase productivity for Mini and it shows that BMW is an expanding business, which is good news for its shareholders. It should also help to keep its image high as any company that boosts employment is always seen as a positive input in to the community.

Technological

"If BMW can convert Europeans to automatic cars then they will be able to cut costs, as they will only be making one type of transmission. For the customer a reduced cost in the transmission system, will thereby reduce the overall cost of the vehicle" (Appendix 1). As I have said above standardisation reduces the overall costs but it also reduces choice for the consumer.

"Using the latest computer technology to create virtual BMW's means they do not need to test, for example, structural problems on a mock up car" (Appendix 1). To introduce this technology probably cost BMW a fair amount of money but the benefits out way the cost. It is far cheaper to test hypotheses and theories on a computer generated vehicle than on a test car. It should also decrease the time it takes to create new vehicles.

"A new type of fuel has been introduced it is called Liquefied Petroleum Gas (LPG). A litre of LPG allows a vehicle to travel around 80% of the distance it could travel on a litre of petrol. If BMW could alter current car designs in order to use this fuel, customers would buy it because the operating costs would be lower than driving a conventional petrol car" (Appendix 1). Not only are there...

References: Websites
Anon (2003) ROAD CHARGING NEEDED TO CUT TRAFFIC [online] Available from:http://www.foe.co.uk/resource/press_releases/road_charging_needed_to_cu.html [Accessed 22.10.03]
Anon (2003) Design for the environment [online] Available from: http://www.bmw.com [Accessed 01.11.03]
Anon (2003) Vehicle Certification Agency [online] Available from: http://www.vcacarfueldata.org.uk/e_introduction.htm [Accessed 05.11.03]
Anon (2003) European legislation sets tougher emission standards [online] Available from: http://www.aecc.be/en/aecc.htm [Accessed 10.11.03]
Anon (2002) The Future of car retailing [online] Available from: www.mfbi.org [Accessed 16.10.03]
Anon (2001) Personnel Policy [online] Available from: www.bmw.com [Accessed 20.10.03]
Broadbent T (1993) How 15 Years of Consistent Advertising Helped BMW Treble Sales Without Losing Prestige [online] Available from: www.wcrs.com [Accessed 20.10.03]
Johnson, G. Scholes, K. (2002) Exploring Corporate Strategy. 6th Edition. Essex: Prentice Hall.
Lencioni V (2001) BMW Automobiles. 1st Edition. Middlesex.
Anon (2003) Design for the environment [online] Available from: http://www.bmw.com [Accessed 01.11.03]
Anon (2003) Vehicle Certification Agency [online] Available from: http://www.vcacarfueldata.org.uk/e_introduction.htm [Accessed 05.11.03]
Anon (2003) European legislation sets tougher emission standards [online] Available from: http://www.aecc.be/en/aecc.htm [Accessed 10.11.03]
Anon (2002) The Future of car retailing [online] Available from: www.mfbi.org [Accessed 16.10.03]
Anon (2001) Personnel Policy [online] Available from: www.bmw.com [Accessed 20.10.03]
Anon (2001) European Car Web [online] Available from: http://www.europeancarweb.com/tech/0212ec_bmwtech/ [Accessed 20.10.03]
Anon (2003) Department for Transport [online] Available from: www.dtf.gov.uk [Accessed 28.10.03]
Anon (2000) Oxford Plant [online] Available from: www.bized.ac.uk [Accessed 02.11.03]
McDowell J (2003) The Art of Global Marketing [online] Available from: www.warc.co.uk [Accessed 25.10.03]
Milner, M (2000) MPs lash 'chaotic ' BMW over Rover crisis [online] Available from: www.guardian.co.uk [Accessed 19.10.03]
Brooks, I (1999) Organisational Behaviour: Individuals, Groups and the Organisation. 1st Edition. Essex: Prentice Hall.
Johnson, G. Scholes, K. (2002) Exploring Corporate Strategy. 6th Edition. Essex: Prentice Hall.
Lencioni V (2001) BMW Automobiles. 1st Edition. Middlesex.
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Analysis on Automobile Industry Essay
  • Automobile Industry Pest Analysis Essay
  • Pest Analysis of Automobile Industry Essay
  • Smartphone Industry Analysis Essay
  • Automobile Industry Analysis Essay
  • Strategic Analysis of Smartphone Industry Essay
  • Strategic Analysis of the Newspaper Industry
  • Strategic Management and Industry Analysis Essay

Become a StudyMode Member

Sign Up - It's Free