BMW Going on the Offensive
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Case Details:
Case Code : BSTR065
Case Length : 13 Pages
Period : 2003
Organization : BMW
Pub Date : 2003
Teaching Note :Not Available
Countries : Germany
Industry : Auto and Ancillaries
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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"To revive what skeptics have dubbed 'the English patient,' BMW is pouring money and talent into a make-or-break turnaround effort. But some worry that by diverting resources, BMW will ultimately risk losing more market share."
- A BusinessWeek Article, in January 2000.1
"We are raising the BMW Group to a completely new level with regard to sales, turnover and returns."
- Helmut Panke, Chairman, BMW, in November 2002.2
Introduction
In early 2003, the BMW Group (BMW), a leading business conglomerate based in Germany and the tenth largest player in the global passenger car industry, announced its financial results for fiscal 2002.
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The company had earned revenues of €42.28 billion,3 a 9.9% increase over the previous year. The net profit had also increased by 8.3% to €2.02 billion, exceeding the €2 billion mark for the first time in its history. The year 2002 had clearly been one of the most successful for the BMW Group. Company sources attributed this record performance largely to the restructuring exercise undertaken in mid-2000. As part of this exercise, BMW had sold off its Rover and Land Rover businesses. The company had also implemented a product offensive strategy, under which it planned to launch new products in rapid succession (in the premium segment of the passenger car market, where it already was one of the leading players).
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In line with the above strategy, BMW launched many new vehicles in rapid succession from 1999 onwards, taking the market by storm (Refer Table I).
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BMW's objective was to establish itself in every sub-segment of the premium segment, from entry level to the top level. According to BMW sources, the product offensive strategy was aimed at increasing the sales of BMW cars to over 1.3 million by 2006, from 950,000 in early 2003.
Given the company's strong research and development (R&D) infrastructure, production facilities, efficient workforce, extensive dealer network, and above all, the renewed vigor, analysts expected it to pose a serious threat to other players like Toyota, General Motors (GM), DaimlerChrysler and Porsche (Refer Exhibit I for a brief note on the automobile industry's premium segment). |
BMW Going on the Offensive
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