BMW SWOT & PESTLE Analysis

Strengths

1. High Focus on Research & Development leading to high quality products: BMW relies heavily on technological development for its product development. For the Financial year ended 2015, the Research & Development expenses were € 5.169 Billion. A total of 12,669 people were working at over 13 BMW R&D centres, in 2015. The company focuses on developing electric vehicles and automated driving software and technology, which ultimately gives the company a boost in its market position and sales figures.

2. Geographically diversified Target markets helps in expansion and to keep risks low: BMW has a highly diversified target market for its automobiles and motorbikes, as it has a strong market in its home country Germany, the USA, and Europe and Asia. The group’s biggest market is China with 20% of the sales, followed by the USA with 18%. As such, in today’s world where there are great risks in having a limited target market, BMW scores heavily because of its geographically diverse markets, which helps to keep its risks low.

3. Diversified Portfolio caters to a wide range of customers: The BMW has a solid array of cars and motorbikes under its belt. It sells SUVs, electric vehicles, luxury sedans and sports cars. These products are brilliant in terms of design and quality, with the much famed German Engineering at its heart. The BMW Motorcycles or the Motorrad produces bikes across 6 family categories, spanning numerous models, providing the customers the latest of the motorcycle world.

4. Distinct multi brands such as Rolls Royce and MINI caters to many segments: The BMW owns two of the very recognizable auto brands of the globe, i.e. - Rolls Royce and MINI. As both of these brands are legacy names, the Rolls Royce name spanning over a century, and the MINI brand being more than 50 years old. These 2 brands are also premium cars, and their strong performances further boost the BMW group profitability. In 2015, the MINI brand sold more than 338,400 vehicles and Rolls Royce over 3785 vehicles, making the year as one of the best in these two brand’s history.

5. Sponsorship of Global Sports events lead to goodwill and awareness: BMW has a history of associating itself with various sports tournaments. It has partnered with the 2016 Australian Motorcycle Grand Prix and with Horse Racing events. It also is the sponsor of BMW Golf Cup, which is played annually since 1982. Such associations provide the brand with tremendous goodwill and help them to get the top of the mind brand recall from potential customers.

Weaknesses

1. Limited Brand portfolio causing untapped sales in commercial vehicle segment & mid income segments - The BMW group is heavily dependent on sales of BMW luxury cars for its revenues, as it earns 92.8 % from there. Also, the group doesn’t have any automotive brand that is specifically targeted to the low income or mid income customers who can’t afford premium priced cars. And the company doesn’t produce light and heavy commercial vehicles or buses or pickup trucks, unlike many of its competitors. This is a huge untapped market for BMW, and the one where it can get revenues from in times of recession.

2. Takata Air Bag inflators’ issues causing Cars recall - BMW has been embroiled in numerous product recalls over the last few years. It had to recall more than 1.6 million cars because of defects in its Takata air bag inflators. Also, it had to pay over $40 million for the slow recall of MINI cars, in 2015. Such big recalls could negatively impact the brand’s products which would adversely impact its brand image. Also, expenses and fines cost the company significantly in terms of financial figures.

The unpublished sections of the entire BMW SWOT analysis is available in the 'Complete Report' on purchase.

References

[1]- BMW Group- https://www.bmwgroup.com/content/dam/bmw-group-websites/bmwgroup_com/ir/downloads/en/2016/BMW_Factbook_June_2016.pdf

https://www.bmwgroup.com/content/dam/bmw-group-websites/bmwgroup_com/ir/downloads/en/2015/12784_GB_2015_engl_Finanzbericht_Online.pdf

Fortune- https://fortune.com/2016/03/16/bmw-technology/

[2]BMW https://www.bmw-motorrad.com/com/en/index.html

[3]- BMW https://www.bmw.com.au/en/topics/world-of-bmw/events_partnerships/events_partnerships_sport.html

[4]- BMW Group https://www.bmwgroup.com/content/dam/bmw-group-websites/bmwgroup_com/ir/downloads/en/2015/12784_GB_2015_engl_Finanzbericht_Online.pdf

[5]- BMW https://www.bmw.in/en/all-models.html

BMW Group -https://www.bmwgroup.com/content/dam/bmw-group-websites/bmwgroup_com/ir/downloads/en/2015/12784_GB_2015_engl_Finanzbericht_Online.pdf

[6]- Business Insider-https://www.businessinsider.com/r-bmw-to-recall-16-million-cars-worldwide-for-airbag-concerns-2014-16?IR=T

[7]- NASDAQ-https://www.nasdaq.com/article/the-rise-of-electric-vehicles-by-the-numbers-cm595564

[8]- PR NEWS WIRE-https://www.prnewswire.com/news-releases/global-automotive-elastomers-market-expected-to-grow-at-6-cagr-during-2016---2022-ps-market-research-585452241.html

[9] BMW Group- https://www.bmwgroup.com/content/dam/bmw-group-websites/bmwgroup_com/ir/downloads/en/2015/12784_GB_2015_engl_Finanzbericht_Online.pdf

Technological

1. Strong R&D spending with focus on innovation: Spending in research and development is a key factor for achieving technology innovation. BMW has stated that it will continue to maintain high levels of research and development (R&D) spending over the next three years till 2019 amounting to 5-6% of its annual revenues. In 2016, the company spent 5 billion euros or 5% of its revenue in R&D. The investments will be directed towards electric, autonomous and connected cars; and digitization and streamlining of its manufacturing processes.

2. Collaboration with leading technology players: Automakers are gearing forward to develop autonomous-driving capabilities and superior technology competence will be a key differentiator for success in this area. BMW has partnered with Intel to develop highly automated vehicles - BMW 7 Series. The vehicles will also be using Intel’s, Mobileye vision technology for Advanced Driver Assistance Systems (ADAS). The automaker has also collaborated with Accenture and Google to develop BMW i Visualiser, an augmented reality solution which will redefine the car-buying experience.

The unpublished sections of the entire BMW PESTLE / PESTEL analysis is available in the 'Complete Report' on purchase.