The Strategy followed and the competitive forces affecting the automobile industry: The success of BMW was not an accident but a combined effort where in lots of discussions went into identifying which markets to enter, how should be the positioning of the products, the way a close touch has to be maintained with the suppliers, dealers and the manufacturers. This is a sequence of related and necessary events which needs to be implemented and this creates a drive to maintain a relationship and liaison between the firm and the environment.
Smart environmental awareness and reliability create an emotional quotient which creates and conveys an image of the “ultimate driving machine” that sets a model for general perceptions and the emotional associations related to the brand. There were three major issues which concerned the competitive strategies set by BMW that have been discussed below. The environmental issues which are addressed are with regards to the volume and the level of output planned by the organization which is required to create a niche for the purpose of brand identity that needs to be done profitable and handled globally.
Secondly the production aspect also requires some concern depending upon the high margins which are provided to the manufacturers, dealers and the suppliers. The premium price levels interested BMW to create a niche in generating higher profitable levels which helped new entrants clearing a way into the organization structure thus generating a competitive scenario by making the products price competitive. The final concern was that of quality which deals with the basic aspects and the issues of costs the concern for risk factors are bound to rise.
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Success Story of BMW - Taking Porter’s Five Forces Model into consideration it is essential to understand the business strategy that helps in analyzing the customer needs and the wants. Speaking about the automobile industry which BMW is competitive in, it is evident that BMW is the largest company of Germany which is successful in its arena of car segment.
This model is known for its quality and the technological nature of the products which are proven for innovation and the model styling which is said to be traditional in consideration to the design of the cars which is presumed to be conventional in nature. BMW is also known to be strong in maintaining skilled labor force from Germany and hence the success factor of BMW is built over two important factors. The company generates and intends building up its quality based on the engineering aspect in the car production section while most of the car assembly sectors have been replaced by robots or the workers who charge lower wages there by meeting up with economies of scale.
The turning point and the breakthrough in this regard were in relation to the identification of the market which exploited its capabilities in its totality that was known for its high performance saloon cars. A brand was established in the European markets which was targeted and differentiated towards the young, affluent group and the European professionals where in an identity has been mounted in a distinctive manner. The key aspects which BMW emphasizes on is the system of production which allows the company to have its competitive edge in the given market segment specified above that highlights on the product quality and the aims and the aspirations of the customers which makes the automobile manufacturing industry a profitable one for BMW.
Another advantage for BMW car segment is the profit margins which are set relatively high for the strong distribution network channel partners that motivate them to promote the product more aggressively. This thus helps identification of the market segment and provides support and control for the brand image conceptualization. BMW is also known to be positive in its buyer-supplier relationships, pricing, advertising and branding strategies which facilitates in building recognition there by strongly adopting customer relationship management process. The environment on which BMW builds its network is on the ground of sound strength of the brand and the substance that persists in the product category.
Johnkay (1993), The Structure of Strategy, Business Strategy Review, Retrieved July 2, 2008 from http://www.johnkay.com/strategy/124
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