Mass Customization: The BMW Way
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Case Details:
Case Code : OPER051
Case Length : 12 Pages
Period : 1990-05
Organization : BMW Group
Pub Date : 2005
Teaching Note : Available
Countries : Germany
Industry : Automobile
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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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Excerpts
Mass Customization at BMW
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BMW's reputation was built on cars that combined great styling with exceptional
performance. However, one of the main criticisms levied against the company in
the 1990s was that all BMW cars looked alike - 'like sausages cut to different
lengths." This was one of the drivers of the customization program that BMW
introduced in the 1990s.
In addition to this, BMW understood that, as a maker of luxury cars, it had to
offer extra value to customers to be able to make an impact on the market. "The
average price of a BMW is close to $40,000. For that, we'd like to make sure
that customers can receive exactly the car they want," said Vic Doolan (Doolan),
president of BMW of North America (BMWNA)...
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Benefits and Challenges
Analysts said that the main reason for BMW's global success, despite being
much smaller than auto giants like GM, Toyota Motor Corp (Toyota), Ford,
Volkswagen AG and DaimlerChrysler AG in terms of annual sales volume was
that the company offered personalized cars. BMW offered customers a wide
variety of options while allowing them to get their car manufactured exactly
the way they wanted it. Because of this, customer satisfaction with a BMW
purchase was higher than what they obtained by buying a mass produced car.
This enhanced the company's image in the auto industry...
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The Future of Mass Customization
Analysts said the driver of mass customization was the gap between what the
customer wanted and what a company could supply. Mass customization was used
with great efficacy by Dell Inc in manufacturing computers. While it was
simpler to mass customize computers than cars analysts were of the opinion
that the auto industry could benefit from building products to order.
It was said that more than 50 percent of the cars built did not have a
potential consumer when they rolled off the final assembly line... |
Exhibits
Exhibit I: Location of BMW's Facilities
Exhibit Ii: Annual Financials
Exhibit Iii: The Profitability of the Top Five Car Manufacturers and BMW
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