Marketing BMW - Case Study Example

Marketing Analyse the nature of the organisation’s core competencies and how they help to enhance the performance of the organisation. Consequently describe whether the organisation is proactive or reactive in its dealings with the requirements of the market. Core Competencies From the data given in the case, it becomes clear that the core competency of BMW is design, performance and luxury. It is noted that “The vehicles have long been the essence of sporty driving, combining thoughtful engineering, originality, craftsmanship, speed and handling (Lee, 2008, Pg. 1)”. These factors certainly play into how the organisation works since the chairman of BMW has said that, “BMW builds high-performing products because BMW is a high-performance organisation (Lee, 2008, Pg. 2)”. This viewpoint of the company also becomes obvious in the manner in which it hunts customers. The performance car company looks for high performing customers who are well educated and have a high median income. The rivalry which BMW has with Mercedes is explained quite clearly since BMW is the sportier brand which has the image of an active lifestyle while Mercedes is focused on luxury rather than performance. Even though there is a lot of overlap between the two, the core competencies of both help enhance the organisational performance as well. Proactive or Reactive International competition has driven up consumer’s expectations about their car’s performance, styling, technological innovations, and reliability. Further, the expectations concerning costs have been on a downwards trend. International agreements such as the WTO and even regional trade agreements can help car producers since they can build their cars in one country and sell them in another to gain the benefits of reduced labour costs. This process of global sourcing and international manufacturing is clearly visible in the automobile industry as compared to any other (Baki et. al., 2004). The shifting nature of the market for production as well as sales means that the current players are always trying to find ways in which their cars can be more attractive than the competition. Beyond that, the governments of the world have become ever more concerned with rising pollution levels and the environmental degradation caused by automobiles. The automobile industry itself has come under a lot of pressure to reduce carbon emissions and that result from the use of their product (Motavalli, 2007). However, there is a very delicate balance between the needs of a growing economy and the requirements of the environment therefore tools such as hybrid engines and alternative fuels can certainly help a company gain the advantage (Stein, 2004). The information gathered about BMW, the car industry and the macro environment show that BMW is both reactive and proactive. When the market itself changes, BMW as well as other car manufacturers have to come up with new solutions and alternatives to deal with the changing demands of the market. This reactive answer makes BMW a reactive company and whenever it has been quick about reacting to the market or even anticipating the needs of the market, it has meet with tremendous success. On the other hand, proactive behaviour on part of BMW has had mixed success since there have been times when it has been successful in developing new markets while at other instances its business ventures have been less successful. For example, while BMW is focused on the idea of performance without giving much heed to the idea of having an economical car, the market is certainly demanding cars which can give better mileage than others (Harbour, 2001). For BMW, this would have been rather difficult since it competes more on the idea of performance and a sports image which is difficult to reconcile with the idea of economical mileage. However, for the markets where the car buyers are seeking to economise when it comes to their cars, the MINI brand works quite well if the market segmentation is geared to show how economical and fuel efficient the MINI brand can be. In terms of innovation, Christensen et. al. (2004, Pg. 19) say the value chain evolution theory of innovation is essential for companies like BMW by saying that, “companies ought to control any activity or combination of activities within the value chain that drive performance along dimensions that matter most to customers”. For BMW consumers, while performance may be an important criterion, the fuel efficiency of their cars may also become a critical issue in a few years. The development of the hybrid engine in terms of innovation can certainly be seen as a reactive response to the needs of the market since fuel efficiency and even environmental protection had become a criterion for performance for many automobile buyers in recent years (Motavalli, 2007). As described by Prencipe (2001), in house innovations are often needed for proactive and reactive behaviour which can give a company the competitive advantage it needs. The development of the hybrid engine by Toyota in the 90s gave it such an advantage when it came to the Prius since that innovation has made Toyota the largest seller of hybrid cars in the world. BMW needs to be quick about reacting to the market as well and even though it has created some cars which run on hydrogen as an alternative fuel, a lot more needs to be done by the company before it can be ready to meet the demands of their future consumers and customers. Packard (1996) suggests that innovations are often the result of the needs of the market and as such, the hybrid engine was a perfect response to the demands of the automobile market. While BMW may not cater to this market at the moment, the industry analysis, the rising fuel prices as well as the increase in hybrid sales show us that the market may be experiencing a fundamental shift. However, it is difficult to say which means of providing greater fuel efficiency will win out at the end of the day since companies seem to be trying every possible path which is offered to them. Volvo for example has created a car which can take five different alternative fuels as a proof of concept (Motavalli, 2007). This focus on hybrid engines in cars does not mean that the automobile industry is ignoring the possibility that the cars of the future may be all electric. For example, Toyota has already pointed out that the future development of their Prius model is towards making it an entirely electric car while the hybrid engine itself would be moved to other cars. Ruffino and Acheson (2007, Pg. 21) have noted that, “Toyota plans to produce one million hybrids annually by 2010 and to operate 15 manufacturing plants in North America by 2008”. The industry as a whole certainly knows that there is a lot to be gained by offering cars that have better mileage and is certainly looking towards the future when it comes to more fuel efficient automobiles. Perhaps BMW is being both reactive and proactive when it comes to focusing on the hydrogen economy as a means of providing alternative fuels and as a means of removing our dependency on oil. However, the only thing which is clear from the analysis is that the company certainly has some plans to take the BMW brand forward even if it means shifting their entire product range from petrol to hydrogen. Perhaps this is the future we are all heading towards but only time will decide if the decision was a good one. Word Count: 1,408 Works Cited Baki, M. et. al. 2004, Automotive Industry Analysis - GM, DaimlerChrysler, Toyota, Ford, Honda. AcademicMind.com, [Online] Available at: http://www.academicmind.com/scholarlypapers/business/management/2004-11-000aaa-automotive-industry-analysis.html Christensen, C. et. al. 2004, Seeing Whats Next: Using Theories of Innovation to Predict Industry Change, Harvard Business School Press. Harbour, R. 2001, Small-Car profit strategies, Automotive Industries, vol. 181. no. 1, pp. 13-15. Lee, S. 2008, Case Study of BMW: Innovation and Growth Strategy, KDI School of Public Policy and Management. Motavalli, J. 2007, ‘Cleaner Greener Cars’, E - The Environmental Magazine, vol. 18, no. 2, pp. 26-32. Packard, D. 1996, The HP Way, Harper Collins. Prencipe, A. 2001, ‘Exploiting and nurturing in-house technological capabilities: lessons from the aerospace industry’. International Journal of Innovation Management, vol. 5, no. 3, pp. 299-321. Ruffino, N. and Acheson, J. 2007, ‘The Hybrid Phenomenon’, Futurist, vol. 41, no. 4, pp. 16-22. Stein, J. 2004. GM plans to launch 2 hybrids in China, Automotive News, vol. 79, no. 6116, pp. 16-17. Read More