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“A project report on SWOT analysis ofBMW Group”Auro University(India)The School of Management & EntrepreneurshipBachelors of Business AdministrationName: - Priyesh PatelEnrollment No.: - 02201116Course: - BBA1

IndexExecutive Summary3Company Profile4SWOT AnalysisStrengthStrong Brand ImageStrong Research & Development CapabilitiesStrong Product InnovationEmployee Productivity is highHigh Quality SuppliersConstant decrease in CO2 emissionStrongest product: 5 Series555556667WeaknessPoor performance in Asian marketsDecrease in production and deliveriesHigh wages to employeesLuxurious cars affordable by higher class of society77788OpportunityHybrid vehicles like electric car and hydrogen carGrowth in AsiaFuel efficient vehiclesOnline PresenceRising green awareness8889995.15.25.35.4ThreatsCompetition in the global automotive marketCurrency Risk and Changing Government policiesRecession in US and EuropeRising Green 52

Executive SummaryThis piece of work will make you understandabout the internal and external environment of BMWgroup. It will help you to know the sustainability of BMWgroup in Automobile Industry. This report is made so thatone can understand the position of the company and canalso have a better look on the market and financial aspectsof the company. Analysis of internal and externalenvironment can be easily done with the help of SWOTanalysis.3

1Company ProfileTraded as – FWB (Frankfurt Stock Exchange): BMW (BayerischeMotoren Werke AG)Industry - AutomotivePredecessor(s) - Bayerische Flugzeugwerke AG (BFW)Founded - 21st July, 1917Founder(s) - Franz Josef PoppHeadquarters - Munich, Germany.Area served - WorldwideKey people - Norbert Reithofer (CEO), Joachim Milberg (Chairman ofthe supervisory board)Products - Automobiles, motorcycles and bicycles.Revenue - 68,821 million (2011)Operating income - 7,077 million (2011)Profit - 4,907 million (2011)Total assets - 123,429 million (2011)Total equity - 27,103 million (2011)Employees - 100,306 (2011)Subsidiaries - Rolls-Royce Motor Cars, MINI, Husqvarna, and BMWMotorrad.Website – http://www.bmw.com/4

SWOT Analysis22.1StrengthsStrong Brand Image:BMW Group consists of three premium brands BMW - sheer drivingpleasure, MINI - The world’s most exciting premium small car brand andRolls-Royce - The pinnacle of automobile luxury. BMW is renowned allover the world because of its three luxury brands and it is also wellknown for its motorcycles. It provides the quality which its customers cannever forget. BMW is one of the leading luxury car manufacturers in theworld. It is one of the world’s largest luxury cars selling company. It isspread all across the globe providing the best service in automobileindustry.2.2Strong Research & Development Capabilities:BMW Group is a premium company. Therefore it has a bestresearch and development facility which constantly works for productdevelopment and increasing the quality of its cars and bikes. They arealso trying to preserve maximum amount of resource and thus they areheading towards optimum use of resources. With the increase in therequality they are also trying to improve the engines by making themcapable of giving more speed and less consumption of fuel.2.3Strong Product Innovation:Innovation is not inventing, both the words have big differences.With the help of their best research & development facility they arebringing innovative concepts. Their current innovative concepts are i3 andi8 cars which are made of material 50% lighter then metal and alsostronger then metal. They have used recycled plastics in making someparts of the car.5

2.4Employee Productivity is high:Employees working in BMW are highly paid and that is one of themajor reasons for high productivity. The employees have their trust inbrand therefore they are motivated by this trust. From top managementto the bottom management the employees of the company have unity inthem resulting in high productivity. Company has a great compensationsystem setup by the board of management and supervisory board.Company provides with bonuses on the basis of performance and also ifthere is a surplus in profits. So these are some of the reasons for highemployee productivity.2.5High Quality Suppliers:BMW outsources its resources for manufacturing of its cars andbikes. It has the best suppliers of raw materials which help in increasingand maintaining the quality of its products. One of its supplier andmanufacturer of the main part of a BMW car i.e. its engine, isVolkswagen. Volkswagen manufactures and supplies engine to manyautomobile companies like BMW, Porsche, Skoda, etc. and it alsomanufactures its own cars. So, it has many high quality suppliers formaking a high quality car.2.6Constant decrease in CO2 emission:BMW cars are capable of less consumption of fuel and thus helpingin decreasing the amount of polluting gases it emits. They are coming upwith electric cars capable of delivering more speed at less energyconsumption. They are trying to help the environment by constantlyreducing the amount of CO2 and other gases that come from cars. Theyhave launched the efficient dynamics concept. They are coming up withthe new ‘i’ project that will help in preventing the pollution.6

2.7Strongest product: 5 Series:5series is the strongest product because it consists of luxurious carsat minimum price. 5series fits properly in many people’s budget becauseit’s not so costly.33.1WeaknessesPoor performance in Asian markets:BMW experienced best year of its corporate history in 2011. Therewas good increase in its market all over the world but it fails to performwell in Asian markets for a period of years. From 2006 to 2010 it had theminimum sales in Asian markets compared to other regions. BMW is apremium luxury brand and most of the countries in Asian market aredeveloping economies and therefore there is less number of people whocan afford such luxury cars. It concentrated more on European market.Earlier there was to manufacturing outlet of BMW in Asian region.3.2Decrease in production and deliveries:BMW’s production before 2010 was not acceptable. It was not ableto reach the public demand and therefore there was loss of customers.The deliveries were made late because the production was at slow paceespecially in the case of Rolls-Royce. It takes more than two months tomanufacture a complete Rolls-Royce Car. It also faced recession in 2009which increased the prices of raw materials which gradually decreasedthe production due to less availability of raw material at cheaper rate.There were currency risks and many other problems during this recessionwhich slowed down the production process of BMW.7

3.3High wages to employees:Compared to other companies BMW pays higher wages to itsemployees which decrease the profit of the company. Other companiespay nominal wages and take maximum productivity in return and BMWpays high wages and takes maximum productivity in return. So it shouldwork on its compensation model.3.4Luxurious cars affordable by higher class of society:BMW group is a manufacturer and seller of premium cars inautomobile industry and therefore they are having higher price thanordinary cars. It produces such cars which has great comfort zones for thehigher class of the society. These cars are not for an ordinary person.Servicing of the car is also very expensive. The parts in these luxury carsare best quality parts and therefore they are very expensive. So there islack of affordability.44.1OpportunityHybrid vehicles like electric car and hydrogen car:BMW should come over with some more innovative projects likehydrogen cars. They are still working on the electric car and making themmuch more efficient than any other electric car. They should grab theopportunity of making the hydrogen car like its competitors. Mercedes isabout to launch its hydrogen car and BMW should grab the opportunityof launching its electric car so that it can sustain the competition.4.2Growth in Asia:BMW is having a huge demand in Asian markets to overcome thisdemand it should try producing more cars and give a competition to itscompetitors. MINI is known all over the world for its compactness andpower. It is the most powerful car amongst all the hatchback cars andtherefore it has a huge demand all over Asia. But still it has no presence in8

India and many other countries where there is huge demand of such cars.Rolls-Royce is also having a huge demand in Asia but due to lessproduction and to maintain the status it fails to fulfill the demand.Therefore, the competitors are successful in taking over this market.4.3Fuel efficient vehicles:Due to rise in the fuel prices people are switching on to fuel efficientvehicles. BMW is capable of making fuel efficient vehicles but it is notable to supply and not able to meet the demand. There are only fewmodels which are fuel efficient and therefore it fails to meet the publicdemand. A fuel efficient car uses less fuel and gives more power. Thesecars also help in protecting the environment by emitting less amount ofcarbon and other gases. Therefore, such cars are in more demand.4.4Online Presence:BMW is having poor online customer care compared to thecompetitors. It is not having enough information about the cars online. Itlacks in E-mail communications because there are unnecessaryattachments and lots of spelling errors. This reduces the brands prestige.BMW site has more corporate information than information whichcustomer is looking for. BMW should try to grab this opportunity andimprove over the online methods and that will help in increasing the sale.4.5Rising green awareness:Other companies are less focused over the green awareness butpeople are more focused over green awareness. So, BMW should morefocus on raising the green awareness so that it can increase its sale of fuelefficient vehicles. Grabbing this opportunity will help BMW to improve onits fuel efficient vehicles and also the brand prestige will increase. Itshould come up with some more green revolutionary or eco-friendlyprojects.9

55.1ThreatsCompetition in the global automotive market:Main competitors of BMW are Lexus, Porsche, Mercedes and Audi.These companies are in direct competition with BMW because they alsosell luxury cars. All of the competitors are having highly innovativeprojects.5.2Currency Risk and Changing Government policies:This is the major threat to the company because it is globallypresent and has to deal with different types of governments and theirpolicies which keep on changing. Currency risk is basically the exchangerates between different currencies of different countries. This all will leadto fluctuation in prices of raw materials.5.3Recession in US and Europe:If recession strikes in US and Europe than it will heavily affect theBMW Market because these two countries are having largest market ofBMW and it is a company that is listed on Frankfurt stock exchange that isin Europe. When recession was there in 2008 & 2009 people in USA andEurope started preferring second hand cars and that is the biggest threatto BMW if the recession strikes again.5.4Rising Green Awareness:Due to the rising green awareness government is imposing manyrules and regulations related to pollution from vehicles andmanufacturing industries. BMW is constantly trying to improve in itstechnologies, due this it has to do heavy investments and huge amount ofrenovations in its projects. This all will decline the production anddeliveries, which will indirectly affect the profits of the company.10