The background of bmw marketing essay

1. 1Introduction

Business environment is talking about description and identification of the strategy that manager can using it to get the better performance and competitive advantage to their company. Business environment is including those factors that affect an organization operation management, and also includes stakeholder, customer, supplier, regulation, competitors and etc. a good business environment can bring an organization to a stable situation. A smart manager can use it to analysis of the general and competitors’ environment so that can make a right decision at the first time. Business environment has two components thatare internal environment and external environment. Internal environment is related to management, performance and the business strategy inside the company, an organization’s internal environment actually composed by multiple elements within the organization, including management, employees’ performance and most importantly corporate culture, which eventually judge the employees behavior and performance. On the other hand, external environment in marketing is related to customer, supplier, competitors, government and bank (financial consultant).

1. 2Background of BMW

Although BMW’s current fame and reputation as one of the greatest automobile manufacturers can be mostly linked to models produced in the last two decades, the history of the marque stretches back almost 90 years and contains numerous achievements that have established it as a benchmark. Since 1913, BMW companyendeavor to develop aircraft engines by a famous engineer, that is Karl Friedrich Rapp, a Bavarian who had been a well-known engineer in a German aircraft company. After a period of effort, in 1917, BMW’s first aircraft engine went into production. After the Treaty of Versailles was signed in the same year, prohibiting BMW from building aircraft engines production switched to air brakes for railway cars. The current BMW logo introduced in 1920 was based on the circular design of an aircraft propeller. (http://www. fantasycars. com/sedans/column/sedans2_bmwhistory. html).

1. 3 Definition of the context of Business Strategy

Business strategy is important for an organization. It is also important in the public sector areas such as education. Basically, business strategy can divided into 2 types, that is: business analysis and business planning process. Business strategy is involved PEST analysis, SWOT analysis, and Porter’s 5 forces and so on. These are using for helping organization to analysis their business situation. This few business strategy is simple but powerful tools, it’s easily to use and can clearly understand the organization position. These few business strategies will explain in the following task. Besides, business planning process is also a business strategy tools for helping organization to make their decision. Organization can use strategy formulation before decide to purchase something, that is planning, evaluation, selection and implementation.

Planning

The first step is planning. Let me give an example to explain the business strategy process. Mike is a CEO; he had driven Lexus for some time. Now he was consider to change a new car. He needs to plan and identify the car type. He was deciding to buy a sedan, but he doesn’t know which brand he wants to choice for. He was planning to compare all the cars performance and factor.

Evaluation

After planning, Mike is going to evaluation the car performance for each of the car. He gets the brochures for a range of luxury car makes. He identified the major factor that were Important to him and considered the entire performance indicator for each of the car against these. The analysis told him that a BMW or a Mercedes might be a better choice that a Lexus.

Selection

After evaluation, the next step is selection. Mike evaluation the Mercedes Benz and BMW performance. From the evaluation of performance, mike decided to purchase BMW, he felt BMW more suitable his requirement. Mike also felt that BMW performance better than Mercedes Benz. Finally, he decided to purchase a new BMW to replace his Lexus.

Implementation

After selection, the last step is implementation. Implementation is the carrying out, execution, or practice of a plan, a method, or any design for doing something. Mike need to implementation his decision after make selection, that mean mike need to pay the deposit of the car.

1. 4 Porter’s 5 Force Analysis

Porter five force is simple tool but very powerful tool for understand the business situation. This is very useful, because it help organization to understand their strength of current competitive position. With a clear understanding where power is, organization can take advantage of a situation of strength, improve the weakness of organization, and avoid taking mistakes. This makes it an important part of planning tool.

Bargaining power of Customer

Bargaining power of customer is the one of the porter five forces. Most customers are requirements organization to provide a higher quality of products or services in lower prices; it will affect the profitability of existing enterprises in the industry. In general, customer meet the following conditions may have strong bargaining power. The first of conditions is less the total of buyer, and each purchaser to buy a large amount of product, it is occupy for a large percentage of seller sales. These types of customer have strong bargaining power, this is because the customer is big customer for seller, and it is also occupying larger percentage of sales, it has power to bargaining with seller. If there are no agreements reached, buyer is not a big deal to find another seller. Furthermore, purchased by the consumer basically is a standardized product, even though they are no agreement reached with the seller, the buyer still can purchase the same quality and also same product from other supplier, so this will also a reason why the customer have a strong power to bargaining. Bargaining power of supplier will also affect the profit of BMW Company, some time, customers are bargaining with our Company when they are purchase more than one car. The profit of BMW Company will decrease when bargaining happen between company and customer.

Bargaining power of supplier

The bargaining power of supplier mainly through the raise prices of input factors and reduces the unit value of quality to affect the profitability of existing enterprises in the industry and the competitiveness of their products. The strength of supplier depends mainly on what they was provide to the buyer is the price of material constitute a large percentage of the total cost of the purchaser of product, the buyer of the production process is very important, or seriously affect the quality of the buyer of the production. When all of this happened, the potential bargaining power will greatly enhanced. In general, the supplier group will be meet the following condition have relatively strong bargaining power. The first condition is supply-side industry has a relatively strong market position and not intense market competition in the market, the supplier have many customer, so that each individual buyer are unlikely to become the important customer of supplier. This will lead the supplier have a very strong bargaining power. Furthermore, the supplier enterprise product have certain characteristic, that the purchaser is difficult to find other supplier to supply the same characteristics product, this will cause the supplier have a very good condition to bargaining with customer.

Threat of New Entry

New entry of the industry to bring new production capacity, new resources, and will hope to win a place in market has been carved up by existing enterprises, which may occur competition with existing enterprise in the raw materials production, eventually lead to reduce the existing level of cooperate profits in industry. The worst case, there is likely to endanger the survival of these enterprises. The past few years, BMW Company is facing many challenge of new entrants, many company is release new series car is potential to threaten BMW Company’s sales. For example: in this few past years, Volkswagen is changing their target market to high-income group. Volkswagen is release many new series of car that can threaten BMW series car, even though Volkswagen is cheaper but their quality is almost same with BMW Company. The main selling point of Volkswagen is cheaper and good quality, Volkswagen is hoping to win a place and reputation in automobile market. This new entry of market will affect the BMW Company’s sales.

Substitutes

Two enterprises in the same industry or different industries, may be due to the production of product are substitutes to each other, which occur competing between them. First, the invasive of substitute’s goods producers will make existing enterprise to improve product quality or to reduce the price by reducing the cost of produce to reduce the selling price. Overall, if the substitute good’s price lower, and also have better quality, the switch cost will be lower, this will give other competitive pressure. BMW Company have facing the substitute problem, this is because various brand of car is have potential to become the substitute of BMW series car. For example: Mercedes Benz, Audi and etc. this few brand of car is almost same quality, same function and almost same price. This will cause the BMW Company facing substitute problem in badly situation, it will affect the BMW Company sales.

Rivalry

Enterprise in most of the sectors between the interests is closely linked, as part of the overall strategy of the enterprise competitive strategy, its goals is to make their own business the advantage relative to competitors, so in the implementation is will have generate conflict and confrontation phenomenon, these conflicts and confrontation constitutes a competition between existing enterprise. The existing competition between enterprises is often reflected in the price, advertising, product introduction, and after sales service, the competitive intensity is related to many factors. Every enterprise in the industry more or less has to deal with the threat posed by these various forces, and customers will face a competitor in the industry. When an organization to determine their strengths and weaknesses, the organization need to find out their situation, in order to capitalize on the trend, rather than damage by expected changes in environment factors, such as product life cycles, the industry growth rate and etc. The organization can ready to deal with other companies challenge.

1. 5 PEST analysis

PEST analysis is a useful tool for understanding the market growth or decline, as suck the potential, position and direction for a business. PEST is a tool for helping organization to measurement their situation. PEST is neutralizing by Political, Economic, Social and Technology, which is use for assess the market for business or organization unit. PEST analysis is for review a situation, and can also like SWOT analysis, and porter’s five forces model, be use it to review the position, strategy or direction of company. Complain a PEST analysis i very easy. Use PEST analysis for business strategy, product development and research report. PEST analysis similar with SWOT analysis, it is easy and quick.

Political

Political plays a main role in an organization. Political brings a big effect for every organization, especially auto mobile industry. Why does political bring a big effect to BMW Company (automobile industry)? This is because our country (Malaysia) needs to protect our domestic auto mobile industry, so the government will charge a high tax towards the oversea automobile industry. Normally, the taxes of oversea automobile are not less than 100%. For BMW Company, the government is raising tax from BMW Company 200% for each car; this is because all BMW series car is being classified as luxury car. On the other hand, BMW series car road tax is averagely higher than other brands of car. The main reason which contributes to the high road tax of BMW car is the price and the horsepower. Thus, the road tax relatively will be charged higher. This will indirectly affect BMW Company’s sales due to the consideration made by our respective customer.

Economic

Basically, the neither economic growth nor crisis will determine the survival of the car industry because people must have the buying power to make purchase of the product. Industry that faces the hardest time during economic downfall will be the luxury car industry such as BMW Company because consumer isn’t affords to purchase such expensive item during the economy crisis.

Social

Social in PEST analysis is talking about population. When the population of country growth, the economic will growth too. If the population increased, the average of purchase luxury car relatively increases. Otherwise, the economies of country will decline that is because population decreases. Besides, lifestyle trends also the reason why the product sales decline, this will indirectly affect the company. For example: assume nowadays, most people tend to buy four- wheel- car vehicle, but four- wheel- car vehicle is not BMW Company specialty, Most people will switch to other automobile company to fulfill their demand.

Technology

The last but not least, this is Technology. Technology can bring a big effect to an organization. Regarding to automobile company, technology is the most important thing for produce a good product. An advance technology application can produce a high technology product that other automobile company didn’t have. On the other side, the BMW Company can minimize the cost whereby the technology can replace the labor force. The last point for technology is innovation potential. BMW Company needs to generate new idea in order to attract the customer so that they can survival in the ever-changing world.

Task 2

2. 1 value chain of BMW Company

The value chain concept is proposed by Professor Michael porter of the Harvard business school in 1985. Value chain is description about the connectivity of the product process. Each enterprise is combining the various activities in the process of design, production, sales send and assisted product, so all of these activities can be used to show that in a value chain. The creation of enterprise value chain through a series of activities. These activities can divided into two categories, that is basic activities and support activities, basic activities including internal logistic, production operation, external logistics, market, services and etc. Each link in the chain, the channel participant will follow the demand of customer to add some value for the product. For example: the raw materials must be someone production, collection or exploitation. These factors of production- wool, cotton, chemicals, produce step by step, and finally made clothing. The clothing produced marketers must promotion, distributors must transport, and retailers must sell to consumers.

Inbound Logistics

The fist of value chain is inbound logistics. The company is received goods from company’s supplier. The goods are stored until they are needed on the production line. When decided to product a product, the raw material will take out from the stock and moved around the organization. The BMW Company is purchase raw material from all around the world. In order to maximize the available of raw material BMW Company maintain good relationship with their supplier, BMW use JIT (just in time) approach for handling of raw material.

Operations

Operation is including processing, packaging, assembly, equipment maintenance, testing, and all other resources input into product output value creation activities. This is where goods are manufactured or assembled. Operations refer to assemble the components and tune new car’s engine. BMW Company is known for their reliability which comes from efficient operations.

Outbound logistics

Thirdly is outbound logistics. The purpose of this activity is to reach the end-product consumers, including warehousing, order fulfillment, transportation, and distribution management and so on. Outbound logistics is happen when the goods are now finished, and the company need to send along the supply chain to wholesalers, retailers or the final consumer. BMW Company manage their own showroom in different country to easily assess able their product at the first time.

Marketing and sales:

Marketing and sales including a series of activities to encourage consumers to purchase products: channel selection, advertising, marketing, promotion, sales, pricing, and retail management and so on. At this stage, BMW Company is prepared to offering to meet the needs of targeted customer. The BMW Company are effort to promote their car with advertisement. This area focuses strongly upon marketing communication and the promotion mix.

Service

After sale service including a series of activities to maintain and increase the value of the production: user support, repair services, installation, training, spare part management, upgrades and so on. BMW Company is provided the best service to customer such as final checking, after-sales service, complaints handling, training and so on. BMW is value their customer, in this stage, BMW Company for their after sale service has always been self-confidence and pride.

2. 2 SWOT Analysis

One of the most critical processes of management of any company is the formulation of a strategy. Therefore, strategy planning must be combine the internal and external factors putting in mind how these factor affect the performance of the company. The strength, weakness, opportunity and threats (SWOT are some of these very critical factor that must be put in consideration to effectively strategize. For many year now, SWOT analysis has proven as an important start point to analysis the performance of organization. SWOT is combination by Strength ( S ) , Weaknesses ( W ), Opportunities ( O ) , Threat ( T ). (http://www. mindtools. com/pages/article/newTMC_05. htm)

Strength

The first is strength of the company. BMW Company is a well-know company with a high status branding that has a very high recognition factor. The strength of BMW Company is brand reputation, BMW brand is the third most valuable automobile company in the world, and it’s valued at 29 billion. Furthermore, BMW Company is release environment friendly vehicle in this few years, the company tried to develop the best develop environment friendly cars by making them more efficient. BMW Company is offer nearly 20 models that emit C02 as low as 140/KM. to make BMW cars more environment friendly firms engineers developer new type of fuels, such as hydrogen, too. (http://www. essays. com/essays/business/about-bmws-swot-analysis. php). Another Strength of BMW is high quality products; BMW is providing good quality and good service for every customer. BMW to recall their cars less often and at lower numbers than its competitors. They also have high skilled labor, as BMW is a big company. They need highly skilled labor to make their product to maintain their product quality.

Weaknesses

Weakness of BMW Company is got strong competition from other luxury manufacturers. BMW need do planning to promote their car to win the market sales. Other than that, the service fee of BMW is expensive, this will cause BMW company lose their customer, even though the BMW services is good. Besides, weakness of BMW series car is high price. BMW manufacture luxury sedan cars, all of that is require good quality material, skilled labor and a great brand image. All of this will cause the car price become high, that are often considered as too expensive compare to other car price. Other than that, the BMW spare part and accessories is expensive. When car spoil and need to repair, the spare part is costly, this will cause customer consider change to other brand luxury car that cheaper spare part and accessories.

Opportunities

Opportunities are what BMW Company can do the improvement. BMW Company can target to medium income group, medium income group market is bigger than high income group market. BMW can try to release economic car to get the good sales from medium income group. Secondly, BMW Company can consider releasing hybrid car. Nowadays, petrol is expensive; hybrid car can save money of petrol and also can helping to environment friendly. Other than that, BMW can do the research from citizen and get the result from population to know their demand. This can reduce the risk of loss. When the company knows the demand of population, they can get the good performance and fulfill the needs of customer. The last opportunity is using BMW reputation to get the new customer. BMW is an international brand, its symbol luxury life. BMW Company can use this point to promote their car with their international brand, this is because more inclination of affluent customer to purchase international brand.

Threat

The first threat and also the most critical threat of BMW Company is intense competition. Nowadays, automobile industry is facing increasing competition from its direct competitors and now tends to compare on price. Moreover, the markets of luxury cars are good in the developed economies, thus intensifying competition. Lastly, the price of raw material is increased. Increasing prices of raw material will life the cost for automobile manufacturers. This will lead the profit of BMW Company decrease.

Task 3

3. 1 Better strategy for BMW Company

In Malaysia, BMW Company is in the stable situation. BMW Company is selling luxury sedan, their reputation and quality is getting confirm by everyone. BMW Company is targeted high income population. They have a very good marketing to helping them to achieve their target. BMW Company is aims to provide the good quality product and good services to every customer. BMW Company can get the good result is because of their good strategy. They are targeting to high income population, the branch of BMW Company are decided to operate in the town area. The existing strategy for BMW Company is stability strategy. BMW are continually offering good service and high quality product to same type of customer. BMW Company is getting stability since 2007. In my opinion, I think the business strategy of BMW Company is not good enough. According to my research, in this few years, the economics of Malaysia is getting bad situation are caused much of customer switching to other brand car. Besides, other automobile company is started changing their target market one by one. That is many competitor of BMW Company, which is Volkswagen, Toyota, and Honda and so on. I think BMW Company need to changing their existing strategy to growth strategy to avoid be elimination from this market. Growth strategy is aims to increase the amount of business undertaken by expanding the range of products and service. BMW Company needs to expense their business to other state for getting good sales in the market. BMW Company can open new branch in developing regions to attract new customer in different regions. The advantage of open branch in developing regions is can make customer to more understand our product detail and service. Other than that, BMW Company also can consider to import their company cheapest product into Malaysia market. In Malaysia market, BMW Company only imports certain product from head quarter in other country. The cheapest car in BMW company is BMW series one. In this economic situation, BMW Company can seize the chance to import their cheapest car into Malaysia. This is because Malaysia never imports BMW series 1 car into market. I think this can help BMW Company to attract the medium income group consider to purchase their product. In additional to import cheapest car into Malaysia market, BMW Company also can offer the good service with free in first time to attract the new customer. BMW Company can readjust the price of service to affordable by all people, because the prices of service also a consideration before purchase a new car.

Conclusion

I believe, BMW Company will getting better in this badly economic situation with the new strategy. BMW Company need to keeping with the strategy’s four pillars: Growth, Shaping the future, Profitability and Access to technologies and Customer. (http://www. bmwgroup. com/e/0_0_www_bmwgroup_com/unternehmen/unternehmensprofil/strategie/strategie. html)