Key Factors contributing to the success of the business.
BMW, Germany’s flagship automotive manufacturing company, has gone a long way. About 60 years ago, its primary market (aeroengines) and capital equipment were both inruins. Even during the German recovery periodin the 50s, BMW did not prosper despite economic improvements everywhere. By 1959,BMW was so bankrupt, that a rescue by Mercedes served as its only way of staying afloat(Kay 1993).Today, BMW is one of the most respected companies and recognizable brands in the world. The BMW Group, according to its latest financial report, continues its leadingposition in premium segments of the international automobile markets. Despitepersistently difficult conditions, a total of 341,932 BMW, MINI and Rolls-Royce brandcars were delivered to customers in the period from July to September 2005, 15.4% morethan in the third quarter 2004, according to BMW.com.In the age of globalization, when distinctions between national markets are fading, this isno mean feat. BMW joins other major automotive manufacturers such as General Motors,Ford, Toyota, Honda, Volkswagen, and Daimler Chrysler in operating in a globalcompetitive marketplace.How was BMW able to successfully respond to the challenges of globalization? What arethe critical success factors required by BMW to compete successfully in their chosensegments? What are the competitive advantages that set BMW apart from itscompetitors? These and more are some of the issues that this paper will tackle.Key macro environmental impacting the automotive marketIncreasing global trade hasenabled the growth in world commercial distribution systems, which has also expandedglobal competition amongst the automobile manufacturers, according to the BusinessEconomics ResearchAdvisor (2004). A phenomenon that mostly accelerated in the later half of 1990s,globalization of the automotive industry mostly transpired due to the construction of important overseas facilities and establishment of mergers between giantmultinational automakers (Business Economics Research Advisor 2004). Industry specialists agree that the expansion in foreign commerce in the automobile industry mostly profited the German and Japanese markets and led to increased growth andproduction.In the automotive industry, globalization can have tremendous cost benefits. Automotivemanufacturers have traditionally taken a multinational strategy in forming a globalstrategy, wherein they have traditionally operated separate organizations in North America, Europe, Asia, and South America that for the most part have actedindependently with little if any synergies across organizations (Chandler n.d.). Thisstrategy has resulted in substantial inefficiencies in product development costs and to
lesser extent production costs. Traditionally, the separate geographic organizations within each auto manufacturer has developed and launched overlapping models. Thisoverlapping represents substantial cost savings as these companies spend several yearsand billions of dollars designing and engineering a new car model (Chandler n.d.).To cope with globalization, automobile companies were forced to develop the followingframework and integrate them in the global management strategy: product development;supply systems including factory locations; systems to purchase from the suppliers of parts, components, intermediary material and raw material; production systems atfactories, and automobile sales and distribution systems although they may be differentregion by region (Shimogawa n.d.)
