Company background Essay

BMW (www. bmw. com) play along maintaining their flying position as one of worlds leader in premium vehicle market besides Daimler-Chrysler, Lexus, and many differents. The caller-out naturalised in March 7, 1916 when Bayerische Flugzeug-Werke (BFW) founded. One year later, BFW was renamed to Bayerische Motoren Werke GmbH (BMW) that focused on producing cars and forces aircraft at that time. Within several(prenominal) decades in the 20th century, the alliance performed several acquisitions on Rover and MINI, to name a few.However, the intense competition in elevator car sedulousness that conks more segmented has driven BMW to focus on few brands. Under such circumstances, BMW limitd to sell Rover multitude in 2000 that still retaining MINI brands in the BMW Group. Therefore, BMW group (www. bmwgroup. com) straight has three major brands BMW, MINI, and Rolls-Royce Motor Cars. The three segments ar all in premium cars segment, thus lessen the fellowships effort in buil ding brand aw beness for their products. Figure 1 BMW Group Website stem www. bmwgroup. com 1.Business Analysis The Automobile industry is one of the virtually war-ridden global industries in the world. This is because gondola companies argon generally multinational in nature because they have the need to achieve economies of scale in their production. The automobile industry represents significant portion of GDP in US and Europe. They are considered of significant importance because their existence enables other industries to work. Most automobile markets exploit possess significant influence whether in their domestic as rise up as global markets.Moreover, there is an indication that commencing the end of the 20th century, most of the markets in modern countries are saturated and the new trend of the industry is to find new and developing markets where they can deploy their products. Similarly, automobile manufacturers are tired of facing the cutthroat competition in their m arkets. The situation drives them to puff their services into Asia-Pacific regions, South East Asia and other developing regions. This strategy becomes the a la mode(p) trend within the global automobile industry. This generates new trends in automobile designs and their tendencies.Cheaper and fuel-efficient cars are the design of this decade. Concerning the many facets of automobile industry, below is several line of descent analysis tools that assess how the market behave, especially relates to development of premium markets where BMW serves. 3. 1 Strategic group BCG matrix As mentioned previously, BMW (Bayerische Motoren Werke) maintains three major brands in their portfolio. Each of them has somewhat similar markets, the premium cars, but the company hike up determines particular markets that each of the product portfolio serve. This strategy is carried out to avoid unessential cannibalism among their products.In order to analyze the performance of each product portfolio in BMW group, we can use BCG Matrix. The matrix is named after the founder, Boston Consulting Group, a known global argumentation consulting firm. The basic philosophy of Boston Consulting Group (BCG) Matrix is to assess various Strategic Business Units (SBUs) in a company portfolio. By definition, an SBU is a business whole in a company that has its own missions and objectives. It could be departments, divisions, or subsidiaries. In possibility of BMW group, the SBUs can be BMW product lines such as BMW 3, 5, 7 serial publication, MINI, and Rolls-Royce Motor Cars.The BCG Growth-Share matrix composes of tetrad quadrants that each describe BMW product lines in relation to market trade and market crop rate. The BCG matrix helps BMW to understand each of their products life cycle and position in the market better by charting each product in one of the four quadrants. Figure 1 shows the BCG Matrix of an organization Figure 1 BCG Matrix Source Tutor2U, 2007 The pep pill left quadra nts in the matrix are stars. Stars are business units or product lines within BMW Group that undergo high growth or have strong position in the market.In other words, stars are business units that have large market parts in a fast growing industry (Boston Consulting Box, 2005). The characteristics of stars are they generate currency and thus revenue for a company. However, as the market for the products grows rapidly, they require great investing to maintain their lead. If the strategy is successful, a star will soon become a cash cow when its industry matures. In case of BMW, the stars are their USA division since the marker experience fast growth. In 2003 alone, the USA division records a history since it become the Groups strongest market with 8.0% growth or represents the sales of 277,037 units in the 2003. In terms of product line, the stars are BMW 7 series as they continue achieving a growing pattern of sales. In 2003, the sales of BMW 7 series rose 8. 2% compared to pre vious year. Another star is BMW X5 that record a 4. 6% of growth or represents the sales of 105,554 units. The second quadrant in the lower left is cash cows. It is similar to main sources of revenues/income for a company where it represents a product line(s) that continue exhibiting low-growth businesses or they have a relatively high market share (Boston Consulting Box, 2005).Cash moo-cow is a business unit that has a large market share in a mature, slow growing industry. Due to the slowing land of market growth, cash cows only need myopic investment and generate cash that can be used to invest in other business units. In BMW case, the cash cow is the home market, Germany. In the home country, BMW experiences declining trend in which in 2003, it recorded -0. 9% of growth compared to the previous year. Meanwhile, concerning the product lines, the cash cows are BMW 3 series and 5 series. The BMW 3 series, for example, have many models that all of them continue demonstrate decli ning sales volume.The sales of BMW 3 series Limousine, for instances, decline by 5. 9% compared to 2002. Similarly, the sales of BMW 5 series also plummets by -23. 5% compared to the previous year sales volume. In the upper right of the matrix imposition question marks. It represents BMW product line(s) that exhibit low market share but operate in higher growth markets (Boston Consulting Box, 2005). These business units require resources to grow market share, but whether they will succeed and become stars is unknown or potentially less likely. The last quadrant is Dogs.They are BMWs products lines that have low relative market share in unattractive, low-growth markets (Boston Consulting Box, 2005). It means that dog is a business unit that has a small market shares in a matured industry. A dog may not require substantial cash, but it ties up capital that could better be deployed elsewhere. If a dog has no other strategic purpose, it had better to liquidate the product lines since t he product lines have little opportunities to gain market share. Based on the above analysis, we can decide which BMW brands belongs to quadrants in BCG Matrix as following.