Essay on Bmw Five Forces

5078 Words Jun 12th, 2009 21 Pages
Table of contents

BMW: case study analysis

Q1: Business environment and main trends in 2004
The global car market started decline in 2003, led by market falls in North America and Western Europe. Other regions of the world led by East Asia are seeing further car market expansion in 2003. In 2004, projections for livelier economic growth underpin the resumption of car market growth in Western Europe and North America. (Langley 2004, p691-711)
Although the more stringent laws can eat away at companies' earnings, they also provide the stimulus to develop new technologies and markets. Another major external factor affecting the current situation of BMW is that industry structure is becoming more and more concentrated. In this era of
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Whilst in the past, BMW's strength was in smaller cars, the current product portfolio competes directly with Mercedes's middle- and upper-class luxury cars. (Vaara 2004, p1-36)

Q: 2 Competitiveness in the automobile industry with perspective to BMW using Porter 5 forces
The structure of an industry and ability of firms to act strategically depend on strength of five forces, their analysis allow develop the competitive advantage of the organisation. Year on year incumbents in the car industry grow in size as well as their scale of production which reduce costs of production and final price of output. In order to survive in the market firms have developed strong customer knowledge, branding, special levels of service and access to distribution channels which create high barriers. (McLaren 2004 p191-201)

Threat of new entrants
Analyse shows that threat for new entrants is low mainly due to huge capital and cutting-edge technology. Car industry is highly depended on their suppliers, because of advancement of technology and materials needed to build car. Even though all firms produce cars, no two firms are totally different and no two firms are exactly the same. Strategic group maps display different competitive positions that rival firms occupy. Based on Information contained in perceptual map it is easy to notice that more and more firms are going into all sort of alliances which help to offer more and more cheap cars. Additionally,

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