BMW Case Study

Introduction

BMW has consistently aspired to create a unique product that is capable of withstanding the test of time. As a car manufacturer, the development of qualitative, flawless machinery has been a fundamental goal for the company. The product-oriented perspective has seen numerous resources being invested in the development of cars that are capable of giving customers the best service and experience in the market. BMW’s various product development phases, including design, engineering, and manufacturing have been carefully undertaken to ensure that company remains consistent in its endeavor of providing fluent and flawless products.

Summary of Facts

• BMW is among the leading car manufacturing companies in Europe.
• The development of cars at BMW takes “years of painstaking iterations between hand-drawings and hand-built clay models” (Thomke, 2001).
• The company has remained a niche player in the automobile industry that is constantly changing.
• BMW “exports two-thirds of all its cars and three-fourths of its motorcycles and has six subsidiaries across six continents” (Thomke, 2001).
• Customers demand more choices at reduced prices; hence car manufacturers must respond with accelerated production of new models and increase their variations.
• In spite of technological developments, BMW has still prided on its craftsmanship.
• Given the prevalence of high fixed costs, the company sought to squeeze sales from each car model for longer periods than its competitors.
• Technology advances and changes in the market made the seven to eight-year life cycles difficult and challenging; hence costing the company market share.

Analysis

Though BMW is a car manufacturing company that is widely known across the world, its success is not without various challenges that have impacted its business model and profitability. Significant issues, including the presence of competitors in the market, shifting production dynamics and the need to adapt to market changes and consumer preferences have been a factor in BMW’s bottom-line.

Since its foundation, the company has made cars through various manual operations that require the application of human skills and efforts to achieve perfection in the creation of various car models. In essence, BMW is described as an engineering company that emphasizes on unique product designs and development processes through innovation, craftsmanship and managerial strategies. Significantly, the company’s management style has enabled it to integrate the various production units with the aim of enhancing parallel development of the product in the respective departments and branches. This strategy has given the company an opportunity to reduce the waiting time for product development.  It is evident that the company’s painstaking car production processes led to the development of high-end car that appealed to individuals in need of cars that offered more than the value for money.

Hence, the company’s global success in sales of cars led to an expansion strategy that helped BMW establish operations in various countries in the world. In essence, a significant percent of the company’s revenues were derived from car sales in international markets. However, the company controlled 1.5% of the market and competitors including Mercedes-Benz controlled 98.5% of it (Thomke, 2001). The company’s production strategy that required comprehensive product development process had been undertaken over long periods of time, thus it took years to complete it in order to be attributable to the low representation in the market. The need for perfection and creation of a flawless car that remained relevant for years was an integral aspect of BMW’s development strategy. However, competitors were developing their cars in less time and covered a wider niche in the market. Though BMW’s prime products were the sports car and subsequently high-end cars that could withstand the test of time, it was unable to cover the various niches in the market.

Therefore, reduction of development time through reallocation of resources to new technological developments enabled competitors to take the lead in the market. BMW’s designers, developers and engineers were resistant to change arguing that their traditional development process ensured the production of cars that outlived competitors’ wares in the market. The changes in market dynamics, consumer preferences and technological advances in the industry made it necessary for BMW to consider adapting to change in car development processes if the company remained relevant and competitive in the market.

Change and retention of product quality, integrity and development precision remained critical. Hence, the company began adapting to change through the acceptance of computer-aided design (CAD) that reduced the time and resources that were traditionally used in designing and creation of prototypes. However, BMW’s change process was significantly slow,thus competitors continued to lead the market.

Recommendation

The company’s challenges in the market, declining profitability and market share are attributable to its resistance to changes in the industry, market and consumer preferences. Evidently, the quality and integrity of BMW’s cars are impeccable; however, the company must recognize the modifications in the environment and adapt to them accordingly. Since manufacturing processes have integrated computerized systems in designing, developing and testing products, BMW should not be an exception to change. The company should conduct a comprehensive market analysis to determine the modifications in consumer preferences and attempt to integrate them in its cars. In addition, the concept of the digital car should not be implemented since preferences are shifting towards digitized products. Various industrial processes have been digitized leading to increased cost savings, accuracy, efficiency and increased productivity.

The company should reduce the product development cycle by more than 50% in order to remain relevant in the market through integration of new technologies and innovations that are constantly revolutionizing the car industry (Thomke, 2001). Though BMW is premised on quality and integrity of its cars, there is a need to incorporate new techological advances to ensure that the company is not left behind. Failure to change will cause the company to lose market share, and its products will be considered as obsolete which will be the case if it continues to take years in its development of new models.

Conclusion

It is evident that BMW’s various product development phases, including design, engineering, and manufacturing have been carefully undertaken to ensure it remains consistent in its endeavor of providing fluent and flawless products. However, changes in manufacturing, technological developments and shifts in consumer dynamics are inevitable. The company must restructure its production strategy to incorporate these modifications in order to remain competitive; hence it will become irrelevant in the market.