BMW SWOT Analysis

BMW SWOT Analysis1 150x150 BMW SWOT Analysis SWOT analysis can be described as “a technique for focusing an individual’s or group’s attention on strengths, weaknesses, opportunities and threats. It is useful particularly because strengths and weaknesses can be the cause of potential future risks – both opportunities and/or threats” (Murray-Webster, 2010, p.88).

The following table illustrates the BMW SWOT analysis in relation to the UK market:

Strengths

  • Strong brand image
  • Strong leadership from Chairman of the Supervisory Board Joachim Milberg and Chairman of the Board of Management Norbert Reithofer
  • Strong financial position – record before tax profit revenue of around EURO 7.8 billion for 2012
  • Competitive customer service practices
Weaknesses

  • High level of vulnerability to the future economic crises due to premium pricing strategy
  • Lack of strategic partnerships compared to the competition
  • Weak BMW brand portfolio with only three brands: BMW, MINI, and Husqvarna
  • Lack of operational cost efficiency
Opportunities

  • Increasing revenues through more emphasis on electromobility
  • Formation of strategic alliances with other automobile companies
  • Launch of seventh BMW3 Series generation
  • Increasing presence in Chinese market
Threats

  • Further increases on the prices of raw materials
  • Emergence of new competition from emerging economies
  • Negative impacts from exchange rate fluctuations
  • Damage  to the brand image due to malfunctions

Strengths 

BMW positive brand image is perceived to be its major strengths. The brand image has been cultivated for many years through effective marketing strategies and BMW marketing executives have been successful to associate the brand image with achievement and success on customers’ perception.

BMW has generated record before tax profit revenue of around EURO 7.8 billion for 2012 (Annual Report, 2012), and accordingly, financial position and cash reserve of the company can be specified as its advantages. This is because vast amount of BMW cash reserves can be used for new product development initiatives or increasing competitive advantage of the company in many other ways.

Moreover, strong leadership from Chairman of the Supervisory Board Joachim Milberg and Chairman of the Board of Management Norbert Reithofer contributes to competitive advantage of BMW and additional strengths of the brand relates to its effective and long-term post-sales customer service practices.

 

 Weaknesses

BMW adheres to premium pricing strategy and this fact makes the future performance of the brand vulnerable to economic crises such as global economic and financial crisis of 2008-2010.  In other words, such events usually cause decline in the levels of consumer spending, and have de-motivational impact on consumers in terms of purchasing premium products, such as products offered by BMW brand.

Moreover, BMW portfolio comprises only three brands – BMW, MINI, and Husqvarna, therefore there is a lack of differentiation in brand portfolio with possible negative implications on long-term growth prospects of the brand. Specifically, lack of diversification of BMW product portfolio further increases the level of its vulnerability to external shocks and economic crises.

Additional weaknesses of BMW relate to the lack of strategic partnerships with other organisations within and outside of automobile industry and lack of operational cost efficiency with direct negative effects on profitability.

 

 Opportunities 

There is range of opportunities for BMW to be used to contribute to short-term and long-term profitability of the company and further improve the image of the brand. For example, BMW can improve its long-term growth prospects significantly through increasing the level of its focus on electromobility.

Increasing levels of popularity of electromobility is closely associated with the drive for emission reduction and cost efficiency, and BMW has an opportunity to associate the competitive advantages of its electromobility products with the same aspects of driving to gain benefits on long-term perspectives.

Furthermore, the opportunities of formation of strategic alliances with other automobile companies are still available for BMW and BMW can also increase its presence in Chinese market taken into account. Launch of seventh BMW3 Series generation represent additional opportunity to be used by the company. Specifically, greater attention needed to be paid to environmental impacts of BMW3 Series generation to maximise the chances of its success.

 

 Threats

It is important for BMW senior level management to recognise external threats to the performance of the company and deal with these threats in an appropriate manner. Further increases on the prices of raw materials can be specified as major threats to BMW revenues.

Rapid exchange rate fluctuations are additional threats to BMW taking into account the global scale of its operations. There are also threats of more product recalls for BMW as it was the case in February 2013, when the company had announced the recall of 569,000 vehicles due to battery cable issue (Cohan, 2013).

 

References

Annual Report (2012) BMW Group

Cohan, P. (2013) “After 130,000 in 2010, BMW Recalls Another 569,000 Vehicles” Forbes, Available at: http://www.forbes.com/sites/petercohan/2013/02/16/after-130000-in-2010-bmw-recalls-another-569000-vehicles/

Murray-Webster, R. (2010) “Management of Risk: Guidance for Practitioners” TSO

 

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