Company background Essay Example for Free

Company background EssayBMW (www. bmw. com) expect maintaining their strong position as one of adult males leader in grant vehicle market besides Daimler-Chrysler, Lexus, and many former(a)s. The company established in March 7, 1916 when Bayerische Flugzeug-Werke (BFW) founded. One year later, BFW was renamed to Bayerische Motoren Werke GmbH (BMW) that centre on producing cars and military aircraft at that time. Within several decades in the 20th century, the company performed several acquisitions on Rover and MINI, to name a few.However, the intense tilt in motorcar sedulousness that becomes more segmented has driven BMW to focus on few brands. Under such circumstances, BMW decided to sell Rover theme in 2000 but still retaining MINI brands in the BMW convocation. Therefore, BMW group (www. bmwgroup. com) now has three major brands BMW, MINI, and Rolls-Royce Motor Cars. The three segments are all in premium cars segment, thus lessen the companys effort in building bran d awareness for their convergences. Figure 1 BMW Group Website Source www. bmwgroup. com 1.Business synopsis The Automobile industry is one of the most competitive global industries in the world. This is because automobile companies are generally multinational in nature because they have the use up to achieve economies of scale in their production. The automobile industry represents signifi mintt portion of GDP in US and Europe. They are considered of significant importance because their existence enables other industries to work. Most automobile markets bring possess significant influence whether in their domestic as well as global markets.Moreover, there is an indication that commencing the hold on of the 20th century, most of the markets in modern countries are saturated and the new trend of the industry is to find new and developing markets where they can deploy their products. Similarly, automobile manufacturers are tired of facing the cutthroat competition in their markets . The situation drives them to expand their services into Asia-Pacific regions, South East Asia and other developing regions. This strategy becomes the modish trend deep down the global automobile industry. This generates new trends in automobile designs and their tendencies.Cheaper and fuel-efficient cars are the design of this decade. Concerning the many facets of automobile industry, be low-spirited is several business compendium tools that assess how the market behave, especially relates to development of premium markets where BMW serves. 3. 1 Strategic group BCG matrix As mentioned previously, BMW (Bayerische Motoren Werke) maintains three major brands in their portfolio. Each of them has approximately similar markets, the premium cars, but the company further determines particular markets that each of the product portfolio serve. This strategy is carried out to avoid unnecessary cannibalism among their products.In order to examine the performance of each product portfolio in BMW group, we can use BCG Matrix. The intercellular substance is named after the founder, Boston Consulting Group, a well-known global business consulting firm. The basic doctrine of Boston Consulting Group (BCG) Matrix is to assess various Strategic Business Units (SBUs) in a company portfolio. By definition, an SBU is a business building block in a company that has its own missions and objectives. It could be departments, divisions, or subsidiaries. In case of BMW group, the SBUs can be BMW product lines such as BMW 3, 5, 7 series, MINI, and Rolls-Royce Motor Cars.The BCG Growth-Share matrix composes of four quadrants that each describe BMW product lines in relation to market share and market beatth rate. The BCG matrix helps BMW to understand each of their products life cycle and position in the market better by charting each product in one of the four quadrants. Figure 1 shows the BCG Matrix of an organization Figure 1 BCG Matrix Source Tutor2U, 2007 The upper left quadran ts in the matrix are stars. Stars are business units or product lines within BMW Group that undergo high growth or have strong position in the market.In other words, stars are business units that have bulky market shares in a fast growing industry (Boston Consulting Box, 2005). The characteristics of stars are they generate cash and thus revenue for a company. However, as the market for the products grows rapidly, they require extensive investment to maintain their lead. If the strategy is successful, a star will soon become a cash terrify when its industry matures. In case of BMW, the stars are their USA division since the marker experience fast growth. In 2003 alone, the USA division records a history since it become the Groups strongest market with 8.0% growth or represents the sales of 277,037 units in the 2003. In terms of product line, the stars are BMW 7 series as they continue achieving a growing pattern of sales. In 2003, the sales of BMW 7 series rose 8. 2% compared to p revious year. Another star is BMW X5 that record a 4. 6% of growth or represents the sales of 105,554 units. The second quadrant in the lower left is cash cows. It is similar to main sources of revenues/income for a company where it represents a product line(s) that continue exhibiting low-growth businesses or they have a relatively high market share (Boston Consulting Box, 2005).Cash Cow is a business unit that has a large market share in a mature, slow growing industry. Due to the slowing down of market growth, cash cows but need little investment and generate cash that can be used to invest in other business units. In BMW case, the cash cow is the home market, Germany. In the home country, BMW experiences declining trend in which in 2003, it recorded -0. 9% of growth compared to the previous year. Meanwhile, concerning the product lines, the cash cows are BMW 3 series and 5 series. The BMW 3 series, for example, have many models that all of them continue showing declining sales volume.The sales of BMW 3 series Limousine, for instances, decline by 5. 9% compared to 2002. Similarly, the sales of BMW 5 series also plummets by -23. 5% compared to the previous year sales volume. In the upper right of the matrix lie chief marks. It represents BMW product line(s) that exhibit low market share but operate in higher growth markets (Boston Consulting Box, 2005). These business units require resources to grow market share, but whether they will succeed and become stars is unknown or potentially less likely. The last quadrant is Dogs.They are BMWs products lines that have low relative market share in unattractive, low-growth markets (Boston Consulting Box, 2005). It means that detent is a business unit that has a small market shares in a matured industry. A dog may not require substantial cash, but it ties up capital that could better be deployed elsewhere. If a dog has no other strategic purpose, it had better to liquidate the product lines since the product lines have little opportunities to gain market share. Based on the above analysis, we can decide which BMW brands belongs to quadrants in BCG Matrix as following.