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Introduction to Consulting - Course Work WT10 Market Analysis BMW Julia Schmidt, Lorenz Illing, Michael Fröse
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Introduction to Consulting - Course Work WT10

Market AnalysisBMW

Julia Schmidt, Lorenz Illing, Michael Fröse

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1) Introduction

2) Market

3) Competitve landscape

4) Company´s positioning

5) Conclusion

23.11.2010 © Julia Schmidt, Lorenz Illing, Michael Fröse

AGENDA

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23.11.2010 © Julia Schmidt, Lorenz Illing, Michael Fröse

1) INTRODUCTION

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• founded in Munich,1917

• Acquisition of Rover Group in 1994

• Acquisition of Rolls-Royce in 2003

• 2009

• 1,3 mio cars sold

• 96,230 employees

• Revenue 50 € b

• most sold car : 3´ series

1) INTRODUCTIONBMW Group

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23 production and assembly plantsin 13 countries

1) INTRODUCTIONProduction

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12 R&D plants in 5 countries

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1) INTRODUCTIONResearch & Develpoment

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1,341,048 cars worldwide

23.11.2010 © Julia Schmidt, Lorenz Illing, Michael Fröse

21% Germany

21%USA 14% India

GB 11%

24% Restof Europe

7% China

7

1) INTRODUCTIONSold Cars in regions

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23.11.2010 © Julia Schmidt, Lorenz Illing, Michael Fröse78%

16%

6%0%

BMWMiniMotorcyclesRolls Royce

1,043,829213,67082,631

918Total 1,341,048

2009

8

1) INTRODUCTIONSold Cars in brands

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23.11.2010 © Julia Schmidt, Lorenz Illing, Michael Fröse

2) MARKET ANALYSIS

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23.11.2010 © Julia Schmidt, Lorenz Illing, Michael Fröse

product-oriented:

all companies that offer a combination of luxury and powerful cars with a high level of quality and service

customer oriented:

car manufactureres such as Lexus (Toyota), Audi (VW), Porsche (VW), Merzedes-Benz (Daimler).

2) MARKET ANALYSISMarket definition

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23.11.2010 © Julia Schmidt, Lorenz Illing, Michael Fröse

• The respective market for BMW consists out of the premium segments of the global passenger car and motorcycle market.

• BMW is one of the leading luxury car manufacturers in the world.

2) MARKET ANALYSISMarket definition

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23.11.2010 © Julia Schmidt, Lorenz Illing, Michael Fröse

RivalryAmongExisting

Competitors

Threat of New Entrants

BargainingPower of Suppliers

BargainingPower of Buyers

Threat of Substitute P & S

2) MARKET ANALYSISPorters 5 Forces

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Rivalry among existing competitors:

+ some competitors of the same size

+ Low industry and market growth rates

+ Barriers to exit are high (production facilities)

→ High

23.11.2010 © Julia Schmidt, Lorenz Illing, Michael Fröse

2) MARKET ANALYSISPorters 5 Forces

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Threat of New Entrants:

+ high initial investments and fixed costs

+ limited access to specialized suppliers

+ existing players have close customer relations (e.g. long-term service contracts)

+ customer loyalty

→ Low

23.11.2010 © Julia Schmidt, Lorenz Illing, Michael Fröse

2) MARKET ANALYSISPorters 5 Forces

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Bargaining Power of Buyers + Buy large volumes (e.g. company car for many large

companies)+ Switching to an alternative product is relatively simple and not

related to high costs+ Products are undifferentiated and can be replaced with

subsitutes− Product itself of strategic importance to customer− Customer knows about the production

cost of the product→ Medium

23.11.2010 © Julia Schmidt, Lorenz Illing, Michael Fröse

2) MARKET ANALYSISPorters 5 Forces

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Bargaining Power of Suppliers:

+ Supplier’s products are customized and valuably differentiated

+ high switching costs to alternative suppliers

+ JIT production

− Market is dominated by many suppliers (sub suppliers)

→ High

23.11.2010 © Julia Schmidt, Lorenz Illing, Michael Fröse

2) MARKET ANALYSISPorters 5 Forces

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23.11.2010 © Julia Schmidt, Lorenz Illing, Michael Fröse

2) MARKET ANALYSISPorters 5 Forces

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Threat of Substitute Products & Services:

+ close customer relationship

+ brand loyalty of customers is high

− No penalties or low switching costs for customers

− Current trends

→ medium

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• retailers network

• military services

• company carpool

• franchise system

23.11.2010 © Julia Schmidt, Lorenz Illing, Michael Fröse

2) MARKET ANALYSISDistribustion Channels

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2) MARKET ANALYSISMarket Trends

-4

0

4

8

11

15

2009 2010 2011 2012 2013 20140

25

50

75

100

% growth million vehicles

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23.11.2010 © Julia Schmidt, Lorenz Illing, Michael Fröse

• branding

• brand loyality

• brand awareness

• global positioning

• positioning in established markets

• positioning in growing markets

• innovation rate

• differentiation

• hybrid

2) MARKET ANALYSISKey Success Factors

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3) COMPETITIVE LANDSCAPE

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World Ranking of manufactureres in cars sold 2009 in thousands

23.11.2010 © Julia Schmidt, Lorenz Illing, Michael Fröse

1. Toyota2) G.M.3) VW

4) Ford5) Hyundai

6) PSA7) Honda8) Nissan

9) Fiat10) Suzuki

...12) Daimler

...14) BMW

...41) Porsche

0 2.000 4.000 6.000 8.000

Cars Commercial Vehicles

3) COMPETITIVE LANDSCAPEMarket Structure

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• no clear market leader

• more than 50 competitors worldwide

• many local car manufacturers

3) COMPETITIVE LANDSCAPEMarket Structure

Toyota12%

G.M.10%

VW10%

Ford8%

Hyundai8%

PSA5%

Honda5%

Nissan4%

Fiat4%

Suzuki4%

2%2%

Rest27%

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3) COMPETITIVE LANDSCAPEDirect Competitors

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3) COMPETITIVE LANDSCAPEIndirect Competitors

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• founded in Stuttgart in 1931

• ca. 100,000 cars sold in 2009

• 11,910 employees worldwide

• Revenue 7,3 b € in 2006

• Merged with VW in May 2009

• most sold car : Porsche Cayenne Diesel in 2009

23.11.2010 © Julia Schmidt, Lorenz Illing, Michael Fröse

3) COMPETITIVE LANDSCAPEPorsche

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• founded in 1989

• ca. 216,00 cars sold in 2009

• Revenue 12,6 b € in 2007

• division of its parent company Toyota Motor Corp.

• most sold car : Lexus RX

23.11.2010 © Julia Schmidt, Lorenz Illing, Michael Fröse

3) COMPETITIVE LANDSCAPELexus

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• founded in Stuttgart in 1926

• ca. 1,300,000 cars sold in 2007

• 256,000 employees worldwide

• Revenue 52,4 b € in 2007

• division of its parent company Daimler AG

• most sold car : CLK/SLK

23.11.2010 © Julia Schmidt, Lorenz Illing, Michael Fröse

3) COMPETITIVE LANDSCAPEMercedes

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• founded in Zwickau in 1909

• ca. 920,000 cars sold in 2010

• 60,000 employees worldwide

• Revenue 29,84 b € in 2006

• wholly owned subsidiary by VW since 1966

• most sold car : Audi A4

23.11.2010 © Julia Schmidt, Lorenz Illing, Michael Fröse

3) COMPETITIVE LANDSCAPEAudi

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3) COMPETITIVE LANDSCAPECars sold (2009)

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0 325.000 650.000 975.000 1.300.000

85.900

310.000

975.000

1.183.000

1.280.000

Porsche

Lexus

Mercedes

Audi

BMW

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3) COMPETITIVE LANDSCAPENet sales in mio € (2009)

23.11.2010 © Julia Schmidt, Lorenz Illing, Michael Fröse

0 12.500 25.000 37.500 50.000

7.466

12.680

41.318

29.840

50.000

Porsche

Lexus

Mercedes

Audi

BMW

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3) COMPETITIVE LANDSCAPEEmployees (2009)

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0 25.000 50.000 75.000 100.000

12.202

11.520

97.000

58.011

100.041

Porsche

Lexus

Mercedes

Audi

BMW

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4) COMPANY`S POSITIONING

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4) COMPANY`S POSITIONINGStrategy

• The BMW Group is the leading provider of premium products and premium services for individual mobility.

• New strategy Number ONE• standing for 'New Opportunities' and 'New Efficiency'

• BMW Group's activities comprise • the development, production and marketing of

motorcycles• as well as comprehensive financial services for private and

business customers: 34

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23.11.2010 © Julia Schmidt, Lorenz Illing, Michael Fröse

STRENGTH:• Strong brand image• Strong R&D capabilities (DM)• Strong product innovation• High employee productivity• Motocycle as niche product• US military service• High quality suppliers• Steady decrease in Co2

emissions• Strongest product: 3 Series

4) COMPANY`S POSITIONINGSWOT Analysis

WEAKNESSES:

• Poor performance of BMW in asian markets

• Declining production and deliveries

• Lack of scale compared to competitors

• High wages

• Too less strategic alliences35

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23.11.2010 © Julia Schmidt, Lorenz Illing, Michael Fröse

OPPORTUNITIES:

• Car industry on road to recovery

• Poised to benefit from increasing demand for hybrid electric vehicles

• Growth in Asia

• Growing used car market in UK

• Moderate growth in global cars market

• Rising green awareness

4) COMPANY`S POSITIONINGSWOT Analysis

THREATS:

• Competition in the global automotive market

• Currency risk

• Environmental protection regulations

• Recession in US and Europe

• Rising green awareness

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5) CONCLUSION

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4) COMPANY`S POSITIONINGTOWS Matrix

O T

S

•focus on BRIC countries by using brand image

•considering green awareness to invest in hybrid technologies

•investments in new products for leasing- increase leasing contracts

•enter UK used car market with leased cars (3` series)

•high global presence → reduce currency risk

•new innovations to match EU vehicle regulations

•strong brand image helps BMW to overcome recession

W

•use BRIC countries to outweigh low performance in these countries

•car industry is growing again → increase production

•build new production facilities in Asia to lower wages

•Lower wages → stay competitve

•lack of scale to competitors reduce EU dependence on EU vehicle regulations

•M&A to overcome lack of scale compared to many strategic alliences of competitors

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New product development in China• 1 series or 3 series on cost leadership basis

‣ diversification strategy according to Ansoff Matrix

5) CONCLUSIONPossible Recommendation

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5) CONCLUSIONReferences

• (2007). Annual Report Porsche Automobil Holding 2007

• (2009). Annual Report Bayreische Motoren Werke AG (BMW Group).

• (2009). Annual Report Toyota Motor Corporation (Toyota)

• (2010). Company Spotlight: Bayerische Motoren Werke AG. MarketWatch: Automotive, 9(4), 17-23. Retrieved from Business Source Premier database.

• (2010). DATAMONITOR: Bayerische Motoren Werke AG (BMW Group). Bayerische Motoren Werke AG SWOT Analysis, 1-9. Retrieved from Business Source Premier database.

• Amrioul, N. (2009). Das Image von Automarken: Eine empirische Studie von Audi, BMW und Mercedes Benz. VDM, Verlag Dr. Müller.

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Thank you for your attent ion.

QUESTIONS?

© Julia Schmidt, Lorenz Illing, Michael Fröse