BMW SWOT Analysis

SWOT Analysis of BMW automobiles  (2016) Premium vehicles brand

Presented here is a SWOT analysis of BMW – BMW ‘s popularity and success are not a secret. It is a name people around the world cite with awe. From product quality to marketing and technology, it excels in all spheres. The manufacturer of luxury cars and bikes has its headquarters at Munich, Germany. The brand was founded in the year 1916 and employs 122,244 people. This year, its rank on the Fortune 500 list is 68th. In most parts of the world, BMW enjoys a high level of popularity and brand awareness.

[ READ THE LATEST SWOT ANALYSIS OF BMW for 2019. ]

Ranked among the best luxury cars, BMW is known as the  favorite ride of the spoilt. People love its cars not just for their stylish looks. It is because they are packed with luxury, comfort, style and technology. Hollywood has also played its own important role in making BMW popular. There are three important areas that BMW has continuously excelled in. They are technology, product quality and a highly skilled workforce. These are also the main reasons behind its success.

 

(Strengths):

  • Brand awareness
  • Stylish but environment friendly vehicles
  • High quality and technology standards
  • Strong brand presence in several parts of the world including Asian markets
  • Large and skilled workforce

BMW has got a strong brand image. Its brand awareness is high in several parts of the world including Asian markets. In the Indian and Chinese markets, it is among the top ten luxury car brands. In Asia, Audi is a major competitor of BMW. The BMW cars are known for their stylish looks. However, they are also environment friendly. Technology and quality  are their most important features. Its cars have both excellent technology and stylish looks.

They are equipped with best comfort and security features. These features make them one of the most elegant rides. Apart from that,  presence of BMW is high in the Western markets including US where it is among the most loved brands. BMW excels in several other areas as well. It has a  workforce of 122,244 highly skilled professionals. Its focus on technology gives it a competitive edge in most markets. BMW’s name has come to signify sheer driving pleasure. It has invested in several CSR projects. This enabled it to acquire a distinct brand image based upon its social activities. It supports several philanthropic activities in education and environment. Overall, BMW makes great cars. However, it has maintained a very good reputation for its products, technology and social responsibility.

Weaknesses:

  • High prices of products
  • High production costs
  • Perception of a costly brand
  • Very few strategic partnerships

High prices of its products is its most important weakness. However, since it is a luxury car brand, BMW products’ prices are bound to be high. Still, in the times of economic turmoil, this can prove a major weakness and hurt sales badly. The production costs at BMW compared to its rivals are also high. It is because it invests a lot in technology plus employee training and management. BMW hires only the best talent. However, its focus on quality in all areas generally drives the costs high.

The popular perception of BMW as a luxury and costly brand is also a weakness that can hurt sales. Recently, it introduced low cost variants of its products in several markets to change this perception. BMW has mostly grown based on its investment in technology and quality. It formed very few strategic partnerships of importance to increase its hold on particular markets.  Neither has it tried to acquire other brands nor formed any long term strategic partnerships. Both these things would be essential for market expansion.

 

 Opportunities:

  • Growing demand of environment friendly vehicles
  • Expanding brand portfolio
  • Including more low cost variants

BMW vehicles are known to be environment friendly which is a major advantage. The demand for such vehicles around the world is growing. Governments encourage environment friendly models through subsidies. Currently, BMW can expand its product portfolio. It will increase the variety of products available under its brand name. This could help it better satisfy customer needs and address a larger customer base. The brand has made its foray into lower price segment, introducing a few products in the category. It should now focus on forming local partnerships. These partnerships can help it increase its hold on the less developed markets. BMW can also reduce production costs with the help of local brands.

 

Threats:

  •  Intense Competition
  • Rising costs of raw materials
  • Currency fluctuations

The competition  grows more and more intense for BMW. In the Asian markets, Audi is its most formidable competitor. As the market for luxury cars grows saturated in the Western markets, the competition grows more intense. The production costs are already high at BMW. Moreover, costs of raw materials are rising. BMW does not believe in compromising on quality. So, the rising price of the raw materials can be a threat for it. Currency fluctuations and a strengthening Euro can also be a major threat to its profits .

Recommendations:

BMW needs to focus upon the emerging markets, mainly the Asian markets. Apart from focusing upon competition, it needs to remain ahead of the market trends to beat its competition. Reducing  costs is another crucial area for BMW to focus upon. Partnering local brands in the Asian markets will also help it establish production facilities there. It can potentially reduce the production costs. BMW is in a very good position based on its brand image and technological innovation. However, it will still need to focus upon competition in the Asian markets. The rival brands are focused on innovation and style. It could do better in the Asian markets by introducing mid-priced cars there. Overall, it has some major strengths that it could use to better its position in the world market.

[Why conduct a SWOT?]

In short, the reason is to manage strategically. SWOT analysis is a strategic analysis of a business’ internal and external factors. Internal factors include the strengths and weaknesses while external ones are the opportunities and threats. A company should not make a strategic move without knowing its current position. Every business move is important. However, the first thing is to decide if company has the right resources to make a particular move. A SWOT analysis can also help to know the reason of under-performance in a particular area. After having conducted the analysis it can be easier for the managers to mitigate the business threats. Opportunities particularly require businesses to remain ready. It can be done only if businesses know their strengths.] Other SWOT examples, you can check, COSTCO,  Apple, Nike, Walmart, Microsoft, Coca Cola, Toyota.

Abhijeet Pratap

Abhijeet has been blogging on educational topics and business research since 2016. He graduated with a Hons. in English literature from BRABU and an MBA from the Asia-Pacific Institute of Management, New Delhi. He likes to blog and share his knowledge and research in business management, marketing, literature and other areas with his readers.