Nov 20, 2020 in Case Studies

Strategic Management

Strategic Management

BMW (Bayerische Motoren Werte) company is one of the most powerful automobile manufacturers in the modern world. It produces automobiles, motorcycles, engines and bicycles. But the main vector of BMW activities on the world market is, first of all, development and creating of better automobile models. This company appeared in the first years of XX century when united Germany prospered and prepared for the World War I. It produced engines for planes in other words, performed very important mission in militarist state. The twentieth years is the period of development of the company: the first motorcycle and then the first automobile Dixi were produced. BMW concern played important role in supplying the German army during World War II, but with Germany's defeat Allies forced it to stop producing engines for planes, so after the end of the War the company came to its decline. This situation was overcome due to motorcycles and then automobiles manufacturing. Nowadays BMW left that period and every time makes some new steps in the process of development of its production and certainly in simplifying lives of modern people.


The main competitor of BMW is Mercedes-Benz their rivalry lasts from 1959, when Daimler-Benz was in few steps from control over BMW which came to the brink of bankruptcy. Daimler-Benz did not realize these ambitions because some shareholders prevented the independence of BMW company (first of all minor shareholders). Since 1970s BMW became powerful and successful automobile manufacturer which could compete and even fight with Mercedes-Benz for the marketplace. Now these companies are economical giants which can not live together in peace in this world, so they are still rivals. In august 2009 e-magasine published some distinctive features of these companies in the article Great Rivalries: Mercedes-Benz vs BMW with the subtitle Same destination, different routes. Among them we can find some interesting details showing that these companies always compete each with other. Mercedes-Benz goes with superchargers, BMW goes with turbochargers; BMW introduces a V-12 in the 750iL; Mercedes follows with the S600; BMW develops prototype V-16 for Rolls-Royce, Mercedes contemplates V-24 for Maybach; BMW tries C1 city bike, Mercedes launches Smart; BMW waits twenty years, then copies Mercedes-Benz's diesel; BMW favors hydrogen, Mercedes favors everything but hydrogen; BMW shows M1 Homage, Mercedes actually builds gull-wing SLS; Mercedes creates DTM monster 190E 2.3-16, BMW retaliates with E30-chassis M3; BMW introduces high-class X5 to counter low-quality Mercedes ML-class; BMW builds South Carolina plant, Mercedes builds Alabama plant (2009).

This eternal rivalry between BMW and Mercedes-Benz is the reason that production of BMW is always improved in order to get all marketplace. For example, recently created supermini BMW i3 (electric car) incited Mercedes-Benz to produce new model - B-Class Electric Drive.

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Certainly, it is positive moment in business life of BMW company, because after the new model of Mercedes-Benz will appear on the marketplace, BMW will have to create something better in accordance with purposes of their customers. The main causes why they choose the production of BMW and not those of their competitors are high speed of BMW automobiles, their reliability and comfortable design. The most of BMW customers are people of middle and high class so the most important factors in their decision making is comfort and safety. But, as was mentioned, BMW is in unstoppable process of development, so the company offers to the customers the new type of BMW automobiles: electronic cars. Modern problems of oil shortage and air pollutions make this new step very important if not necessary and needed. BMW is a comprehensive and ground-breaking concept for sustainable mobility. It represents visionary electric vehicles and mobility services, inspiring design and a new understanding of premium that is strongly defined by sustainability. And it thrills with its innovative vehicles: the all-electric BMW i3, a locally emission-free car for city driving that is sustainably designed throughout, and the BMW i8 as the most progressive sports car (2013).

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As for opportunities and threats to the company business, we have to mention that the question of electric cars development had become very important today. According to research by IDTechEx, electric industry in 2005 reached the level of sales to 31.1 billion dollars worldwide (including hybrid vehicles ) . By 2015, the electric market will grow by about 7 times and reach $ 227 billion. Some car manufacturers are not going to produce hybrid cars, and immediately begin production of electric vehicles. They fell behind in scientific research, or they can not create a hybrid car by themselves or they think that hybrids have no perspectives. For example, the Japanese company Mitsubishi Motors in 2009, began the commercial production of electric vehicles on the base of Colt. It will contain lithium-ion batteries. Existing prototypes are driving range of 150 km. The work is under way to create a short battery charging time (about 15 minutes), including using nanomaterials. In early 2005, Altairnano company announced the creation of innovative material for the electrodes of batteries. In March 2006, Altairnano and Boshart Engineering have signed an agreement on the joint creation of an electric vehicle. In May 2006, testing of automotive batteries with Li4Ti5O12 electrodes was successfully completed. Rechargeable batteries have a charge time of 10-15 minutes. Due to these changes on the market (caused by just predicted oil shortage, ecological problems, etc., BMW company has to concentrate its power in the field of creating of new model of electric car which will become not so expensive as it is nowadays. In such a way BMW will let every human take care of the Universe.

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In connection with oil shortage the replacement of modern automobiles by electronic green car is inevitable. In such way BMW company could use this situation of uncertainty and marketplace changing and supply a big amount of affordable electric cars. In this case BMW company could act as Henry Ford did, who helped his contemporaries with their purposes and so created his corporation. BMW company should change its strategy and create the special line of comparable cheap electric cars and, in a wider sense of transport for that market segment which has low earnings. BMW will override other companies when all people will begin to change their old automobiles, which need oil for working and pollute environment, to electric cars, which are safe, affordable and do not threaten the nature. That is why the future of BMW company started with manufacturing of electric cars (BMW i3 and BMW ActiveE).

Similar point of view is described on the site of BMW group: The same consistent standards of quality, safety, and processes at all locations guarantee worldwide premium products "made by BMW Group". Careful use of resources is the guiding principle behind all our production planning and an integral part of the entire production process. As a corporation, we take responsibility for society wherever we are. We aim to be an active, fair partner for these regions and their inhabitants (July 12, 2013).


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