BMW SWOT Analysis
BMW started off as an aircraft manufacturing company in Munich which is the capital of Bavaria. Karl Friedrich Rapp a manufacturer of airplanes components, especially aircraft engines needed an external financial supporter for the expansion of his company. The company’s name was changed from Rapp Motoren Werke to Bayerische Motoren Werke which is the current (BMW). However, he got some troubles while expanding his business as the growth of his company was too rapid, which resulted to him leaving the company. Subsequently, Franz Josef Popp who was an industrial tycoon laid the groundwork of BMW in the absence of Rapp. From 1928, they produced “Dixi” which was the first automobile of BMW. It was preferred by majority of people and helped in its success. During World War II they were forced to stop all their aircraft productions. In the 1950s they improvised to produce new cars which were well received, that helped them through those times. After the war, it has been developing and evolving internationally while expanding its empires to companies such as Rolls-Royce and Mini.
BMW tries to make an effort to produce environmentally friendly motors. It has manufactured almost 20 different types of automobiles which emit CO2 at only 140g per km. BMW also continues to manufacture more efficient cars as well as exploring new kinds of fuels that are more eco-friendly and cost efficient. Apart from BMW’s devotion to protect the environment, they are also committed to labors and society coordination. For instance, BMW invests huge sums on employees’ checkups, improvement of proportional working life, accepting requirements from suppliers and trying to reduce wastages at their plants.
BMW is known as one of the automobile manufacturing companies that produce luxurious types of cars. However, a huge amount of expenditure is being used for employing experienced labor in order to produce vehicles of a higher quality compared to its competitors like Mercedes Benz, Toyota and Volkswagen. Due to the fact that most cars in BMW are made with premium automobile parts and requires skilled workforce, BMW’s products tend to be priced higher in contrast to their competitors in the automobile manufacturing industry..
Recent stringent changes in laws regarding vehicle emission standards can serve as an opportunity for BMW. The firm currently manufactures environmentally friendly vehicles that utilize hydrogen fuels which do not emit CO2. Thus, BMW would not have to invest additional resources to deal with the regulations. However, other competing companies may need to devote a large amount of money in an effort to adhere to the law which may result in a heavy loss of profits.
The competition between BMW and its competitive firms are increasingly intense with the competition focusing on motors prices apart from other discerning factors. With the growing the intensity of competition among automobiles companies, it is very difficult for any other automobiles firms to penetrate and settle in the global market. In addition, the supply of shale gas is increasing rapidly which would result in cheaper prices of future fuels causing a negative impact on electric cars and other kinds of environmentally friendly automobiles. Thus, it would probably lead to an enormous loss of profits to the main projects of BMW like the development of hydrogen cars and electric automobiles.
One of the most classy cars across the world, known for its quality and design is BMW. The brand is known to be adaptable and has cars which are in the ultra premium segment as well as cars which are pretty much affordable as far as luxury cars go. Here is the SWOT analysis of BMW.
Strengths in the SWOT analysis of BMW
- BMW group: Group consist of 3 brands namely BMW, MINI &Rolls Royce all positioned in the premium segment. Also BMW is not only a car maker, they are one of the world leaders in motorcycle production, aircraft engines and marine engines.
- Innovation & technological advancement: Continuous process improvement & technological advancement in its R&D has made it a market leader in the premium segment for car sales. The Brand is known for its quality, reliability & superior customer service support. And more importantly for the lovely design of its range of cars.
- Renowned brand in automobile industry: With its innovative advertising campaigns company has succeeded in positioning it as a premium brand resulting into High TOMA (Top of mind awareness).
- Workforce: It has created a pool of 100000+ highly skilled employees who continuously work in 100+ countries to differentiate BMW’s offering from their rivals.
- Productportfolio: BMW have diversified product portfolio from SUV’s to Luxury Sedans to sports cars. The product line and product depth are fantastic in terms of quality and design.
- Asian markets: There is very little to work upon in matured and developed economies. BMW has made the smart move by starting early in developing economies. And it is now the top selling luxury car in developing economies like India and China (in terms of total number of vehicles sold in a year).
- Plans for hybrid models: BMW has plans to launch models which run on alternative fuels like Electricity and natural gas. These plans show that the company is making inroads to be prepared in the future where fuel might become a problem.
Weaknesses in the SWOT analysis of BMW
- Cars recalled: Controversies relating to recall of cars on account of some technical functionality or non abidance to govt. led rules is becoming very common, most recent one is BMW recalling 1.6 million cars due to airbag concerns. For a brand like BMW it is affecting its brand image.
- Strategic alliances: BMW group has very few strategic alliances. This gives the competitors an edge over BMW. BMW is capable of good R&D but the implementation of the researched vehicles takes strategic alliance with different companies which BMW lacks.
- Younger generation less brand conscious – The younger generation is more likely to spend the money on electronic appliances then saving it for a premium car.
Opportunities in the SWOT analysis of BMW
- Increasing product portfolio: By increasing their product portfolio and introducing new series in different segments they can increase their sales as there will be more choices for customers under the same brand. Off course, this is the best opportunity for any brand in the market.
- Strategic Alliances: This can prove a smart strategy for BMW. BMW can use other company’s specialized capabilities to differentiate their offerings.
- Changing lifestyle & customer groups: With changing customer lifestyle and more & more inclination towards premium brands it is certain that this segment is growing fast. In developing nations the growth rate is even as high as 33% YoY.
- Market expansion: Entering new markets will help the company to increase their targeted revenue. This is the only way to ensure that they remain on top of the revenue chain for developing economies.
Threats in the SWOT analysis of BMW
- Competition: Low cost car companies with their stylish & inexpensive offerings will be major threat to the company. Also Stiff competition from other companies in premium segment like Audi, Mercedes is a determining factor.
- Price factor: More and more people are becoming price conscious and with the younger generation on an electronic purchasing spree, there is threat that in the near future luxury cars will stop receiving as much attention.
- Rising fuel problems – BMW needs to strongly adapt to the need of green fuel and green machines so that it can absorb the potential customers who are looking for green car solutions, especially in the mature markets.