Bmw research project

RESEARCH PROJECT:
BAYERISCHE MOTOREN WERKE
STRATEGY AND INNOVATION
ACADEMIC YEAR 2015/2016
UNIVERSITÀ DEGLI STUDI DI MODENA E REGGIO EMILIA
BRETTO LAURA
TORRONI LUCA

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Sommario
1. COMPANY OVERALL PROFILE...................................................................................................3
1.1 Company history: main facts and events relevant to the analysis .............................................3
1.2 Corporate governance and Organizational structure: main elements ........................................4
1.2.1 Corporate governance ....................................................................................................4
1.2.2 Ownership Structure.......................................................................................................5
1.2.3 Organizational structure: ................................................................................................6
1.3 Company’s portfolio..................................................................................................................6
1.3.1 Business segments:.........................................................................................................6
1.3.2 Brands: ...........................................................................................................................7
1.3.3 Products: ........................................................................................................................7
1.3.4 Services ........................................................................................................................10
1.4 International activities.............................................................................................................11
2. CORPORATE STRATEGY (BASICS)............................................................................................15
2.1 Horizontal development..........................................................................................................15
2.2 Vertical development ..............................................................................................................16
2.3 Diversification development....................................................................................................17
3. BUSINESS ANALYSIS AND COMPETITIVE POSITIONING...........................................................18
3.1 Industry analysis......................................................................................................................18
3.1.1 Market shares...............................................................................................................18
3.1.2 Concentration analysis..................................................................................................21
3.2 Short analysis of main businesses............................................................................................22
3.2.1 Car segment .................................................................................................................22
3.2.3 Motorcycle segment.....................................................................................................23
3.3 Key success factors for main businesses..................................................................................25
3.4 Competitive positioning (competitors’ growth rates, competitors’ short analysis) ..................26
4. COMPETITIVE ADVANTAGE....................................................................................................28
4.1 Generic competitive strategies................................................................................................28
4.2 Resources and Competencies analysis – Core and distinctive competencies – VRIO framework
.....................................................................................................................................................30
4.2.1 Resources and competencies analysis...........................................................................30
4.2.2 Core and distinctive competencies ...............................................................................32
4.2.3 VRIO framework ...........................................................................................................32
4.3 Value Chain analysis ................................................................................................................33
5. INNOVATION AND COMPETITIVE ADVANTAGE......................................................................35
5.1 Product innovation..................................................................................................................35

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5.2 production process innovation................................................................................................36
5.3 Innovation of the organizational structure ..............................................................................39
5.4 marketing innovation and web-based innovation....................................................................40
6 Performance ..........................................................................................................................42
6.1 Automotive .............................................................................................................................42
6.2 Motorrad ................................................................................................................................44
7. FUTURE SCENARIOS...............................................................................................................46
7.1 S.W.O.T. analysis ....................................................................................................................46
7.2 Future perspectives.................................................................................................................48

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1. COMPANY OVERALL PROFILE
1.1 Company history: main facts and events relevant to the analysis 1
Figure 1: time line
In this paragraph, we are going to analyze briefly the main events that led BMW to become one of
the most important companies in the car and motorcycle industry nowadays. The primary business
objective of the BMW Group is developing, manufacturing and selling engines as well as all the
vehicles equipped with them.
BMW: These three magic letters stand for Bayerische Motoren Werke, or in English, Bavarian
Motor Works. "Motor" is the core of this acronym and its ground, that is the key part around
which BMW builds every product.
The history of BMW begun in 1916 as an aircraft engines producer. After the WWI, the company
started producing motorcycles and automobiles that are now its most important businesses.
It should be noticed that BMW gained the status of high quality manufacturer and technically
exciting car producer in 1951 thanks to the luxury car BMW 501. From that moment, BMW has
maintained this standard and has developed strategies for territorial expansion. The first
production facility outside Germany was established in South Africa in 1972 and after that, many
other countries followed over the following years, transforming BMW into a company operating
on a global scale.
An important step in BMW’s history is the acquisition of Rover Group in 1994. The group included
different brands with a long heritage such as Land Rover, Rover, MG, Triumph and Mini, yet in
2000, the board of manager decided to sell the Rover Group and to only maintain the Mini brand.
Furthermore, in July 1998, BMW acquires one the pillars of automotive history: the company
obtains the brand and naming rights for Rolls-Royce motor cars (from Rolls-Royce plc.).
From the year 2000, the company choose to focus solely on the premium segment of international
automobile market, with the BMW, MINI and Rolls-Royce motor cars brands. The entire model
range was expanded by new series and versions.
Finally, In 2013 BMW embarked on a new era of electric mobility. With the BMW i3, the new
brand BMWi presented the first all-electric series-production model from the BMW Group.
Considering all this, we can say that the company has always been focused on motors. Thanks to
the high quality of its products and to the management’s decision, the BMW brand is now one of
the strongest brand in the motorcycle and automobile premium sectors.
1 http://www.bmwgroup.com/e/0_0_www_bmwgroup_com/unternehmen/historie/meilensteine/meilensteine.html

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1.2 Corporate governance and Organizational structure: main
elements
1.2.1 Corporate governance
In the followed scheme, the
structure of BMW corporate
governance is shown. It is to be
noticed the presence of both
the Supervisory Board (20
members) and the Board of
Management (7 members). In
addition, the BMW Group has
established a Compliance
Organization equipped with
instruments and measures to
help stakeholders and
managers handling legal risks
and they therefore ensure legal
compliance.
Good corporate governance –
acting in accordance with the
principles of responsible
management aimed at
increasing the value of the
business on a sustainable basis- is an essential requirement for the BMW Group in all areas of
business. Corporate culture within the BMW Group is founded on transparent reporting and
internal communication, a policy of corporate governance aimed at the interests of stakeholders,
fair and open dealings between the Board of Management and the Supervisory Board as well as
among employees and compliance with the law. 2
The BMW Group's corporate culture is characterized by clear responsibility, mutual respect and
trust. Lawful conduct and fair competition are integral to our business activities and an important
condition for securing the long-term success of our company. The BMW primary goal is to avoid
risks which could jeopardize the trust our customers, shareholders, business partners and the
general public place in the BMW Group.
For this purpose, the BMW Group has established a Compliance Organization. Measures to
prevent corruption and anti-trust risks are a particular focus. Together, the BMW Group
Compliance Organization and the BMW Group's environmental and social initiatives form the
cornerstones of our corporate responsibility.3
2 BMW Group Annual Report 2014 , pag 170
3http://www.bmwgroup.com/bmwgroup_prod/e/0_0_www_bmwgroup_com/unternehmen/unternehmensprofil/compliance/com
pliance.html
Figure 2: corporate governance

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1.2.2 Ownership Structure4
In 1959 Financier Herbert Quandt acquires a large number of BMW shares and subsequently
initiates the reorganization of the company, leading to its independence. The majority
shareholder, Quandt is first a member of the advisory board and later sits on the supervisory
board, thus contributing greatly to BMW's rise as a company of global importance. Now the
Herbert Quandt’s heirs keep maintaining the larger part of BMW shares.
In the following figures it is reported th shareholder structure (common shares) in 2015:
Figure 3: shareholder structure
Figure 4: shareholder structure
4http://www.bmwgroup.com/bmwgroup_prod/e/0_0_www_bmwgroup_com/investor_relations/aktien/aktien/aktionaersstruktur.
html

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1.2.3 Organizational structure:
It is quite complex to analyze the BMW organizational structure, so we asked for some
information to a BMW dealer and, thanks to this direct contact, we acknowledged the BMW
structure:
Figure 5: organizational structure
For each geographical area BMW has several divisions:
- Development
- Purchasing and Supplier Network
- Sales and Marketing, Sales Channels BMW Group
- Human resources
- After Sales
1.3 Company’s portfolio
The BMW Group – one of Germany’s largest industrial companies – is one of the most successful
manufacturer of cars and motorcycles in the world. With BMW, MINI and Rolls-Royce, the BMW
Group owns three of the strongest premium brands in the automobile industry. The vehicles
manufactured by BMW set the highest standards in terms of aesthetics, dynamics, technology and
quality, born out by the company’s leading position in engineering and innovation. In addition to
its strong position in the motorcycles market with the BMW brand, the BMW Group also offers a
successful range of financial services.
1.3.1 Business segments:
The main businesses of BMW are the Automobile segment and the Motorcycle segment. In
addiction we have to consider the Financial segment as an accessory one. In our project, we
decided to focus our attention on the main businesses and to do not consider the financial one.

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1.3.2 Brands:
BMW group have three important brands in
the car sector: BMW, Mini and Rolls-Royce.
Each of these brands are characterized by a
particular customer target and different brand
image. For this reason, it is impossible to study
the three brands together: our analysis focuses
on the BMW brand.
Following, the main characteristics related to each brand are listed:
1) MINI: Mini brand is exciting, unconventional and full of ideas. An original with high
recognition value and a distinctive design. 5
2) BMW: BMW brand focus on genuine driving pleasure. BMW managers want to ensure that
it never ends and so they are constantly reinventing it. BMW would always be more
intelligent, more efficient and even more dynamic.6
3) ROLLS-ROYCE MOTOR CARS: This brand is the pinnacle luxury automobile manufacturer in
the world.
Renowned for supreme quality, exquisite hand craftsmanship and attention to the finest
detail.7
In addition to these car brands, BMW owns the BMW MOTORRAD brand that is related to the
motorcycle segment. BMW MOTORRAD is characterized by fascinating products and customised
services, BMW MOTORRAD stands for passion, dynamic performance, design, technology and
innovation. 8
1.3.3 Products:9
In this paragraph, the products of BMW Group will be presented brand by brand, starting from
BMW.
As already said, BMW pay particularly attention on the premium segment. In order to conquer the
luxury segment, the group have always focused on the differentiation of its products. We can give
evidence of this differentiation strategy analyzing the BMW history: the group have renovated and
innovated its products range several times, always increasing its importance on the market.
Examples:
a) In 1999 BMW created the Sports Activity Vehicle: the
BMW X5. This car offered drivers an unprecedented
combination of hallmark BMW dynamics and sporting
ability together with the talents of an all-wheel-drive
off-roader, creating a whole new market segment in the
process.
5
www.mini.com
6
www.bmw.com
7
www.rolls-roycemotorcars.com
8
www.bmw-motorrad.com
9 http://www.bmwgroup.com/e/0_0_www_bmwgroup_com/unternehmen/historie/meilensteine/meilensteine.html
Figure 7: BMW X5
Figure 6: brandss

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b) In 2004, With the BMW 1 Series, BMW applies the hallmarks of the brand – exceptional
driving dynamics and premium quality – to the compact segment. It is the only vehicle in its
class to feature a traditional drivetrain setup, with the engine at the front, and the drive at
the rear. This system ensures a more even distribution of weight, and improves traction. As
such, the BMW 1 Series is unmistakably a BMW model, while offering all the benefits of the
compact segment.
c) In 2011 BMW teamed up with Sixt AG to launch
DriveNow, a modern mobility concept. First introduced in
Munich, this innovative car-sharing scheme was soon
extended to other cities such as Berlin, Hamburg and San
Francisco. DriveNow is offered under the new sub-brand
BMW i.
d) In 2013
BMW embarks on a new era of electric mobility.
With the BMW i3, the new BMW i brand presented
the first all-electric series-production model from
the BMW Group. Propelled by an electric motor –
and thus entirely emission-free – this vehicle
delivers a completely new driving experience that is
compelling for its agility and sheer fun.
We present the product’s portfolio of BMW brand in 2014:10
Figure 10: BMW product’s portfolio
Another important brand of BMW group is MINI. In 2001 the new MINI has been launched by the
BMW Group. It was the first premium vehicle in the small-car segment. The advanced design
10
BMWGroup annual Report 2014, pag 30
Figure 8: BMW DriveNow
Figure 9: BMW i3

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combined with the athletic, cheeky character expressed the lifestyle of an entire generation. The
MINI Hatch made a start in 2001 – and by 2011 the MINI family had grown to six model versions,
with the MINI Convertible, MINI Clubman, MINI Countryman, MINI Coupé and MINI Roadster. In
the following table the Mini models are listed:11
Figure 11: Mini products
With Rolls-Royce brand BMW reaches the high luxury segment, with an exclusive product. Here
are the models:12
Figure 12: Rolls-Royce products
11 BMW Group Annual Report, pag 31
12 BMW Group Annual Report 2012, pag 31

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Concerning the motorcycle segment, BMW Motorrad has a great product portfolio and it serves
several areas: sport, tour, roadster, heritage, adventure, urban mobility.13
Figure 13: BMW Motorrad Models
1.3.4 Services
In order to maintain a main position in the premium segment of the market, it is compulsory for a
company to distinguish among other firms. One of the most incisive method to achieve this goal is
to offer services to customers. BMW has several services that express its uniqueness: after sales
services, driving experiences, mobility services. We are going to analyze more in details these
services in the fourth chapter, studying the differentiation strategy of BMW.
13 http://www.bmw-motorrad.com/com/en/bike/model_overview_new.html

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It is important to highlight the expansion of the range of mobility services: car-sharing is one
option that is particularly appealing to young people. London and Vienna are two European cities
outside Germany that have now been added to our DriveNow offering. By the end of 2014, around
390,000 customers had already registered with DriveNow. 14
In this paragraph, we focus our attention on the financial service, that is the third business of
BMW.
BMW Group Financial Services was established in the U.S. in 1992 to support the sales and
marketing of BMW products. Since then, the Group has expanded to provide service to markets in
multiple countries and continues to evolve as a captive finance unit.
BMW Group Financial Services offers a wide range of leasing, retail and commercial financing and
banking products tailored to meet the needs of the BMW customer. BMW Group Financial
Services employs more than 800 people, including consultants and temporary workers.15
The Financial Services segment, which works together with the sales organization, is represented
in more than 50 countries around the world. The BMW Group’s international multi-brand fleet
business, operating under the brand name “Alphabet”, provides fleet financing products and
comprehensive management services for corporate car fleets in 19 countries. The segment’s range
of products is rounded off by providing support to the dealer organization and offering insurance
and banking services.16
1.4 International activities17
The BMW Group operates on a global scale and is represented in more than 140 countries
worldwide. Its research and innovation network is spread over twelve sites in five countries. At the
end of 2014 the Group’s production network comprised a total of 30 locations in 14 countries.
The worldwide distribution network currently consists of around 3,250 BMW, 1,550 MINI and 130
Rolls-Royce dealerships. In China only, more than 40 BMW dealerships and 30 MINI dealerships
were opened in 2014. Products and services are sold in Germany through BMW Group branches
and by independent authorized dealers. Sales outside Germany are handled primarily by
subsidiary companies and, in certain markets, by independent import companies. The dealership
and agency network for BMWi currently covers 650 locations. The sales network for BMW
motorcycles is organized in a similar way to the automobile business. Currently, there are around
1,000 BMW Motorrad dealerships worldwide.
In this paragraph we are going to analyze 4 graphs presented on the Annual Report in order to
understand the international activities of BMW.
14 https://de.drive-now.com/en/#!/howto
15 http://www.bmwgroupna.com/financial.html
16 BMW Group Annual Report 2014
17 BMW Group Annual Report 2014

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This chart examines the key automobile markets for
BMW group and their percentage of sales in 2014.
BMW generates more than half of its sales in three
countries that are China, USA and Germany.
The fourth biggest market is Great Britain with 9.7
percent of vending.
It is important to underline the 9 percent of demand
is shared equally between Italy, France and Japan,
which make it an important market for the brand.
Other markets, with a sales volume rate smaller than
three, represent the almost 28 percent of the total
sales of BMW.
Figure 14 key automobile market 2014
The following chart examines the key automobile markets for BMW group and their sales volume
in the previous 4 years before 2014 and 2014 included.
The total amount of sales has increased each year and this trend is reflected in every section which
the graph is divided into.
The largest market is represented by Europe, followed by Asia. There, sales are increasing each
year faster than in all the other markets so, most part of the demand’s growth is due to China.
The amount of sales in America has increased of 150.000 units in the last four years, against the
120.000 units in Europe. Therefore, it is possible to conclude that the growth of these two
countries is moving with almost the same speed. Anyhow, it is important to underline that the
growth rate in Americas is bigger than in Europe.
The sales on other markets are increasing as well, but to a lesser extent.
Figura 15 BMW Group sales volume of vehicles by region and market

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We are now presenting all of the production plants of BMW:
BMW Group plant in Munich: here BMW 3 Series and 4 Series models as well as petrol and diesel
engines are manufactured.
Regensburg plant: models of BMW 1, 3 and 4 Series and the Z4 Roadster roll off the production
lines.
Dingolfing plant (The currently largest BMW Group plant): here BMW produces the BMW 3 Series
Gran Turismo, the BMW 4 Series Gran Coupé, models of the BMW 5, 6 and 7 Series as well as
hybrid BMW 5 and 7 Series vehicles. Chassis and drive components are also manufactured at this
plant.
Leipzig plant: covers models of the BMW 1 and 2 Series, the BMW X1 and the electrically powered
BMW i3 as well as the BMW i8 hybrid sports car.
Plant in Rosslyn (South Africa): the BMW 3 Series Sedan is assembled here.
Plant in Spartanburg (USA): The BMW Group is responsible for producing the BMW X3, X4, X5 and
X6 models.
BMW Brilliance Automotive Ltd. joint venture in Shenyang (China): where are built BMW X1 and
models of the BMW 3 and 5 Series, for the Chinese market exclusively.
BMW Group plants in Landshut and Wackersdorf: where components for the worldwide
production network are manufactured.
The Eisenach plant is responsible for toolmaking.
The two production sites in Moses Lake (USA) and Wackersdorf are operated by the SGL
Automotive Carbon Fibers (ACF) joint venture and supply carbon fibre and carbon fibre fabrics for
the production of BMWi models.
Plant in Steyr (Austria)-The BMW Group’s largest engine manufacturing makes petrol and diesel
engines for the various BMW plants and diesel engines for the MINI.
Plant in Shenyang (China): it supplies petrol engines to its neighbouring plants.
The primary function of the BMW Group’s assembly plants is to serve nearby regional markets.
BMW cars are currently being assembled in Chennai (India), Jakarta (Indonesia), Cairo (Egypt),
Kaliningrad (Russia), Kulim (Malaysia) and Rayong (Thailand).
Plant in Araquari (Brazil): production of the BMW 3 Series and the X1, and it will be extended to
include the BMW 1 Series, the X3 and the MINI Countryman by the end of 2015.
Oxford plant (United Kingdom) where The MINI models – Hatch (3- and 5-door), Convertible,
Coupé and Roadster – are manufactured. The UK production triangle also includes the
components plant in Swindon as well as the engine plant at Hams Hall, where petrol engines are
manufactured for MINI and BMW.
In Graz (Austria), Magna Steyr Fahrzeugtechnik manufactures for the MINI Countryman and, since
2012, the MINI Paceman for the BMW Group are located. In 2014 the Dutch car manufacturer,
VDL Nedcar bv (Born) started producing the MINI Hatch on behalf of the BMW Group.
Goodwood plant (United Kingdom): here the Rolls-Royce Phantom, Ghost and Wraith models are
exclusively manufactured.
Plant in Berlin: BMW motorcycle models roll off the production lines here. Car brake discs are also
produced.
Two further motorcycle assembly plants are located in Manaus (Brazil) and Rayong (Thailand).

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Figure 16: vehicle production of the BMW Group by plant
Figure 17:
This chart examines the key motorcycle markets for
BMW group and their sales percentage in 2014.
Germany is the leading market for BMW with a
percentage of 17.6 , followed by USA with only 5
points less.
France and Italy have almost the same purchase rate,
around 9 percent, and still they play a key role in the
brand market. Spain, Great Britain and Brazil have a
percentage between 5 and 6 percent each.
Other markets represent a 35.5 percent of total sales
for BMW.
A remark has to be made to the relationship between
culture and sales. Motorbikes are strictly related to passion so, in countries where people are
more into this field, we can measure an higher rate of sales with respect to other countries that
are bigger, but do not share the same interests in terms of motorbikes.
Figure 167: key motorcycle markets

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2. CORPORATE STRATEGY (BASICS)
The aim of this second chapter is to analyze the development strategies of BMW group: vertical,
horizontal and diversification.
BMW has changed these strategies over the years, in order to create a competitive advantage.
The chapter is divided into 3 different sections, each one listing the operations in chronological
order.
2.1 Horizontal development1819
Horizontal development means taking control of additional business activities that shares the same
rank in the value chain of similar industries. This practice creates a competitive advantage because
it allows the company to expand its borders, to enter in new markets, and to acquire the know-how
of other firms. The horizontal development can be achieved in two different ways: internal or
external expansion.
Starting our research from the beginning of BMW history we discover that the foundation of the
company itself was an operation of horizontal development: it derived from merging two different
companies, that offered the same product -airplanes engines- namely Bayerische Flugzeug Werke
AG (BFW) and Bayerische Motoren Werke GmbH.
The first great operation of horizontal development (HD) for BMW, was the acquisition of the Han
Glas Gmbh with its factories in Dingolfing and Landshut. BMW was first interested in gaining more
profit with the new brand, moreover they wanted to acquire the two production plants due to
their strategic position. After taking over the GLASS for 50 million of marks, BMW carried on with
the production of GLASS’s cars and made great efforts to reinforce the brand. Unfortunately,
despite the new image associated to BMW and the new improved quality of cars, the
aforementioned brand did not achive resounding success, so the production was brought to an
ended. Yet, the acquisition was not a total failure: the two plants were converted into a
manufacturer of BMW drive components. Consequently, in the following years, the demand for
BMW vehicles increased dramatically and in 1973 Dingolfing became a strategic plant. Nowadays,
the 5-series is still built there, and about 21,000 people work at the production sites in Dingolfing.
In 1994 BMW took over Rover, an English car manufacture, in order to increase its profits and
enter a new market, different from that of premium cars. In this case too, the purpose of
increasing the profits failed and even the production of Rover’s car was brought to an end. BMW,
once again, was able to transform this defeat in something positive, as in 2001 they started the
production of Mini, a brand that was formerly part of the Rover group. The new city-car produced
with the brand Mini was truly a great innovation: first of all it allowed BMW to enter a new market
sector, as their portfolio did not include any city-car before. Secondly, Mini, with its high quality
materials, elegant design, high technology innovation (compared to its sector) and interesting
performance created a new segment in the market: it was the first Premium city-car.
The Mini car, as is evident, achived great success and it is still a key brand for BMW.
In 1998 BMW took over Rolls Royce, in partnership with Volkswagen. The later left the partnership
in 2002 and BMW became the only owner of the brand. It is hard to define this operation as
properly horizontal development. It might be also classified as diversification, as the target of
18 http://www.eurocarblog.com/post/975/fiat-and-bmw-officially-confirm-agreement
19 http://www.motorauthority.com/news/1023247_mercedes-and-bmw-already-making-joint-purchases-parts-sharing-next

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Rolls Royce, - the brand produces extremely luxurious cars- is slightly different from that of BMW
producing premium cars. We prefer to classify it under HD in order to underline the aim of the
operation. BMW obviously created new profits and acquired know-how experience, but the
meaning of the acquisition goes above and beyond. With Rolls Royce BMW got access to all
sectors in the premium car market, namely city-cars, middle level, high level.
2008 is a significant year for HD operations in BMW, as two important events occurred. First,
BMW signed an agreement with Mercedes regarding the creation of a joint purchasing. Through
this contract both corporations would have reinforced and had the chance to save money when
paying suppliers or when purchasing any parts.
After that, a partnership with FCA is signed. With this partnership FCA started selling Mini cars in
USA in their Alfa Romeo dealers. That is particularly convenient for BMW, as using existing dealers
is less expensive rather than building new ones. Furthermore, the Mini brand and its values
perfectly fit those of Alfa Romeo, resulting in a very advantageous for both parts.
In 2013 BMW signed a contract with Toyota that has probably been fundamental for the
company’s future. This agreement regards the development of new Low Emission Vehicles (LEV)
and the built of the deriving required infrastructure. The corporates signed in order to share
resources, infrastructures and know-how with the purpose of reducing the extremely high costs
that this new generation of vehicles requires.
2.2 Vertical development
Vertical development is the process which involves the expansion of a company’s business to
areas that are at different points of the production path, i.e. when a manufacturer owns its
supplier and/or distributor. Vertical integration can help companies reducing costs and improve
efficiency by decreasing transportation expenses and reducing turnaround time, among other
advantages. However, sometimes it is more effective for a company to rely on the expertise
and economies of scale of other vendors rather than be vertically integrated. Following the
analysis of such elements, a firm choose whether to externalize or internalize the production. The
final goal is obviously to achieve a cheaper output. The car industry requires a great variety of
parts in the final output, therefore vertical development represents a complex field.
BMW’s sector is that of premium cars, which requires high quality standards. There is always a
tradeoff between quality and price, an externalized product may be cheaper for BMW but lower in
terms of quality. Moreover some parts of the car are considered the key of the perceived quality
of the final product. Externalizing the production of that parts could be dangerous, as competitors
might obtain the technological secrets behind their production to copy them and BMW’s
competitive advantage would be seriously damaged.
BMW selects its suppliers and requires them high quality standards. The branch of BMW
corporation called parts quality management20
inspects the parts provided by external suppliers.
So BMW checks the performance of parts produced from other companies and, when possible,
asks feedback from customers.
20
https://b2bpapp6.bmw.com/public/en/gdz/logistik/ersatzteile/qualitaet/handbuch_qm_kaufteile/Supplied_Parts_Quality_Mana
gement.pdf

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2.3 Diversification development21
Diversification allows a firm to spread into to new markets and allows profits to increase. It
consists in expanding the firm, with its brand or a new one, in sectors that are different from its
main business. It is widely believed that is convenient to expand the firms in areas where they can
share know-how and other resources already present in the company and there are very few
examples in the history of companies that prove it wrong, that is increasing profits by expanding in
completely different sectors from the core business (e.g. Yamaha motorbike-music instruments)
BMW has often diversified its products during the last 100 years.
Brand new BMW produced aircraft. In 1919, following the defeat of Germany in WWI, BMW was
prohibited to produce aircraft. The production than switched to trucks and boats engines, still
using the previous know-how and infrastructures. During the following year, BMW started
manufacturing brake systems for railway cars, office furniture, and workbenches, as well as cut-
down aviation engines for marine and industrial use. Still, the company felt the need to rethink the
production, so BMW starts building motorcycle engines.
1928 is a key moment in the BMW history as it became an automotive construction company: it
started producing cars. The first model was the Dixi 3/15.
In 1940 BMW went back to its first business, restarting the production of aircraft engines by taking
over the Motorenwerke and by buying factories near Berlin. During WWII, BMW also produced
military motorcycles and rockets’ engines. BMW was dismantled after the war because of its
involvement in producing rockets’ engines. In addition, BMW gave up its production of cars during
the war, until 1951.
Behind all these diversifications seem to be built upon a strong desire for survival rather than a
specific strategy.
After 1950 BMW focused its attention on automotive sector. All of the brands it owns produce
cars except for BMW Motorrad -that produces motorbikes-. The link between cars and motorbikes
is evident in term of know-how, technologies and shared brand equity. Moreover, all of BMW
brands produce premium vehicles, so the level of differentiation of BMW is very low today. There
are few accessories services that BMW has developed such as financial services to its customers
and after sales services that are anyways strictly related to the main business. These services have
been developed by BMW to reinforce its main business and we prefer considering them as
accessories rather than pure diversification.
21
http://www.bmwdrives.com/bmw-history.php

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3. BUSINESS ANALYSIS AND COMPETITIVE POSITIONING
This chapter is crucial in our analysis in order to understand the environment of BMW and the
position that BMW holds inside it. Our attention has focused particularly on the Car Industry, but a
brief analysis for Motorcycle Industry will also be proposed. We are going to analyze the key
factors for BMW success in order to better understand the strategies of BMW to face its direct
competitors: in the last part of the chapter, we are going to analyze in detail the direct
competition between BMW, Audi and Mercedes.
3.1 Industry analysis
In this first point, we will analyze the car industry sector where BMW operates, in order to identify
the background where the company is active, before focusing our attention strictly on BMW, its
firms and its closest competitors -starting from a worldwide view, then taking into account the
European market-.
3.1.1 Market shares
The following table presents the history of BMW’s global market share. BMW’s world market
share has sensibly increased in the last fifteen years, starting with a growth of approximately 1%.
The trend has not always been positive, as the global economic crisis resulted into a period of
recession in the whole automotive sector, that BMW suffered in 2008 and 2009. Another gap in
BMW’s growth can be observed between 2011 and 2012 with a loss of 0.35% of market share.
Figure 17: BMW global market share22
It is interesting to remark the connection between the trend of BMW and the number of new model
that it released on the market, which is statistically estimated to 0.49 points. It means that there is
a positive correlation of moderate intensity between the two variables as shown in the following
schemes.
22
http://www.statista.com/statistics/277071/global-market-share-of-passenger-cars-produced-by-bmw/

19
Correlation: 0,49
Other factors might affect BMW’s growth rate, such as innovation regarding marketing and
additional customers-oriented services. We decided not to include such factors in our research due
to their extremely diversification and complexity. It should anyways be noticed that such a research
could be carried in future studies with the purpose of better understanding how those instrument
of innovation, and their combination, affect the brand’s growth.
year % variation Number of new models
1999
2000
Missing data
+0.28%
1
0
2001 +0.27% 5
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
+0.4%
+0.18%
+0.8%
-0.24%
+0.10%
-0.16%
-0.12%
-0.1%
+0.37%
+0.45%
-0.35%
+0.8%
1
2
2
1
1
1
1
2
2
3
0
4
Figure 18: correlation between new models and BMW market share

20
[Position
2014]
[Position
2013]
[Brand] [Delivers 2014] [Delivers
2013]
[variation
2014-13]
[Market
share 2014]
Figure 19: table created by “al volante.it” with data coming from producers reports
The previous table23
shows the global market share of all companies operating in the automotive
industry. We can see that BMW is at the 12/13 place in 2013/2014. Although a market share of 3
percent may seem a low value, it has to be considered within a precise context. BMW produces
leading cars in the premium sector, so BMW’s products that are rather expensive than the average
cars on the market and they guarantee larger profits to the firm if compared with other brands.
In the particular case of BMW, an analysis focused on the European market could be more
meaningful, as this is its core market. When analyzing the market share of BMW in Europe a great
difference can be noticed if comparing the results with the world percentages shown above.
23 http://www.alvolante.it/news/mercato-auto-2014-classifica-mondiale-marche-338748

21
Figure 20: european market share in the automotive industry24
VW is dominant in this market, but BMW is in sixth position with an important market share of
6.4%. Considering again the high price of its premium level products, such a value is interesting to
analyze. It is also important to bear in mind that BMW holds the first position in the market,
compared with Mercedes and Audi that are its direct competitors (direct competition will be
further studied in paragraph 3.4)
3.1.2 Concentration analysis
In order to better understand the automotive industry in Europe, it is useful to estimate the
concentration of this market. Market concentration measures the extent to which sales in a
market are dominated by one or more businesses. The concentration ratio measures the
combined market share of the top firms in the industry. We will compute this value referring to
the six biggest firms in order to include BMW. If the top firms gain a high market share the
industry is said to have become more highly concentrated.
MS: market share of the firm “i” f:
number of the biggest firms of the sector n:
total number of the firms in the sector
Automotive European market concentration ratio:
𝐶𝑅6 =
24.9 + 10.5 + 9.5 + 7.4 + 6.9 + 6.4
100
= 0.656
This value states that the automotive European market is highly concentrate, as not only many
different firms operates in, but also the first six of them share a large part of the total market. If
the market concentration ratio has a value between 0,5 and 0,8 the market reference is likely to
be an oligopoly.
24
http://www.statista.com/statistics/263421/market-share-of-selected-car-maunfacturers-in-europe/

22
3.2 Short analysis of main businesses
In this paragraph, we are going to analyze BMW car and motorcycle businesses. Seeing that the
car sector has been analyzed in detailed in the first part of this chapter and others analysis will
follow in the project we decided to briefly take this sector into account, in terms of Porter analysis.
While regarding the Motorcycle business we’ll present a general analysis of BMW Motorrad and
Motorcycle industry.
3.2.1 Car segment
In order to better understand the importance of BMW in this segment the five forces analysis in
car market should considered, particularly the part of Porter’s model which highlight the
importance of competition and the obstacles that prevent new company to enter the market.
Figure 21: Porter’s model
Regarding the car segment we focus our attention on the BMW brand, because the five forces
model would be a little bit different for Rolls-Royce and Mini brands.
BMW is one of the leading luxury car manufacturers in the world. The market consists of the
premium segments of the global passenger car.
Rivalry among existing competitors:
As already said in the first paragraph of this chapter, the car industry is a very competitive sector:
 several companies of the same size fight for market shares;
 barriers of exit are very high (high sunk costs);
 the sector has already reach the maturity stage and consequently the growth rates is not so
high.
Therefore, it could be stated that rivalry among existing competitors is very high.

23
Threat of new entrants:
When looking at the new entrant side, it’s clear that it is difficult fot a new company to enter this
sector, due to several factors:
 requirement of high initial investment and fixed costs;
 limited access to specialized suppliers;
 existing players have close customer relations;
 customer loyalty.
So, new entrants in the market cannot be considered a sa real threat.
All the aforementioned elements are high market entry barriers, and it is possible to link the low
threat of new entrants to entry barriers presence.
In conclusion, despite the sector growing concurrency , BMW has an important and stable position
in the car market. This is made clear by the market share of Bavarian firms that are continuously
and slightly increasing over the years. In addition, BMW’s strenghtness is enforced by the
presence of high entry barriers.
3.2.3 Motorcycle segment25
BMW Motorrad is the motorcycle BMW brand. It includes a large range of products regarding
several types of motorcycles: sport, tour, roadster, heritage, adventure and urban mobility. All of
them can be positioned on the premium segment of their category.
The BMW Group launched its new brand strategy for BMW Motorrad at the INTERMOT
(international motorcycle show). The brand’s new motto – MAKE LIFE A RIDE – compares
motorcycle riding with the joy of living.26
People tell their (life) stories in documentary-like style
and they raise enthusiasm by airing their emotions regarding all aspects of motorcycle riding. This
ideas association is of great effect considering the importance of the emotional impact in
motorcycle market.
In the graph, BMW sales volume of
Motorcycles are shown. We could noticed a
continuous increase of sales. In a friendlier-
than-expected market environment, BMW
Motorrad in 2014 achieved a solid increase
of 7.2 % with a sales volume of 123,495
units (2013: 115,2153 units). This
performance was therefore better than the
“slight increase” forecast in the Annual
Report 2013. Trustable data concerning
motorcycle segment in 2015 are still not
available, but is very likely that the
Motorcycles segment’s upward trend i
continued, helped by a positive
contribution new models – R 1200 R, R 1200 RS, S 1000 RR, S 1000 XR and F 800 R – presented by
BMW at the autumn trade fairs.
25 BMW annual report 2014
26 http://www.bmw-motorrad.com/com/en/bike/model_overview_new.html
Figure 22: BMW sales volume of motorcycles

24
Motorcycle industry in Germany:27
The last certain and available data on Internet about Motorcycle Industry referred to 2012. We
decided to display the Motorcycle Industry in Germany where BMW is the market leader for all
classes (16.09%) , followed by Honda (13.65%), Yamaha (8.44%), Piaggio (8.04%) and Harley-
Davidson (7.48%). Within the larger motorcycles segment, BMW’s market share increases up to
23.16%.
Figure 23: Global market share in Motorcycle industry
Most of BMW’s success is to attribute to the R1200GS model, the most popular on in Germany as
well as in Europe. As can be seen in the table below, BMW owned 2 models on the top 10 of the
most sold motorbikes in Europe in 2014. In addition, R1200GS has 5000 more units sold than the
second in the rank, a huge gap if compared with those between other positions on the list. 28
27 http://www.statista.com/statistics/291944/motorcycle-market-share-in-germany/
28 http://www.moto.it/news/mercato-europa-2014-vendite-in-ripresa-l-italia-prima-nell-immatricolato.html

25
Pos.Brand Model Units Sold
1 BMW R1200GS 18.013
2 YAMAHA MT07 13.125
3 PEUGEOT KISBEE 50 12.561
4 HONDA SH150AD 8.754
5 YAMAHA XP500 TMAX (530cc) 7.846
6 YAMAHA MT09 7.562
7 PIAGGIO ZIP 50 2T (Cina) 7.161
8 BMW R1200RT 6.625
9 HONDA SH300 6.281
10 KAWASAKI Z800 6.235
It is important to consider that BMW R1200GS and BMW R1200RT are premium models and they
are much more expensive than those of other competitors. This remark permits to better
understand the success of the Bavarian brand. A success that results in huge profits for the
company.
3.3 Key success factors for main businesses
The primary business objective of the BMW Group is the development, manufacture and sale of
engines as well as of all vehicles equipped with those engines.
The BMW Group is one of the most successful cars and motorcycles makers worldwide and among
the largest industrial companies in Germany. Both automotive and motorcycle businesses are very
similar in terms of customer target, brand image and quality of products. Therefore, we can detect
similar key factors for the success of the two business:
1) Branding: thanks to its 100 years of history, BMW has created a strong brand image. As a
consequence, brand loyalty and brand awareness are very important factors for BMW
success.
2) Global positioning: as the chairman of the Board of Management says “Our associates at all
30 BMW Group production sites in 14 countries are our most important success factor.
[…]We continue to aim for a balanced distribution of sales between the three main
economic regions of the world. This allows us to offset fluctuations in individual markets
and avoid overdependence on any single region.”
3) Differentiation. The decision to focus only on premium brand is one of the key success
factors of BMW as we could deduced by its stable position in the industry (car and
motorcycle).
4) Innovation: Norbert Reithofer also highlights that “ The innovation of our engineers and
developers ensures the company’s continued success. In 2014, we invested more than 4.5
billion euros in research and development.”

26
3.4 Competitive positioning (competitors’ growth rates, competitors’
short analysis)
Direct competitors of BMW in
a very hard race are Audi and
Mercedes, as seen in the
previous paragraph. This
strong and direct rivalry
resulted in a sort of
advertising billboard war,
started in 2005, presented
with two examples in the
images on the left.
Despite these three firms
have their products
positioned on the premium
segment and at the same
price level, their brand image
is slightly different. BMW cars
have an elegant soul, the
brand is synonymous of high
quality construction,
luxurious materials and great
elegance.
against this background, it is difficult to find remarkable differences with Audi and Mercedes. All of
them emphasize their German nationality, to implicitly remark the preciseness associated with the
country.
Many differences can be spotted in what is concerned with
sport, as Mercedes is involved in F1 races, and it tend to
emphasizes it in advertisements, to attribute the brand with a
sportive soul. Audi also takes part in important competitions as
reflected in some commercials. However, Audi is less sport-
committed than Mercedes. BMW only takes part in minor series
races so its sportsmanship appeal is even lower. On the contrary,
BMW’s strength is to be found in its elegance and in its class.
These concepts reflects elegant designs both inside and outside
the vehicles. This could be a problem in terms of trendiness, but
the lack is easily filled by lining up the MINI brand.
Figure 24: billboard war 1
Figure 25: billboard war 2
Figure 26: Mercedes

27
The characteristics of the three German brands are summed up in the following a radar chart.
Figure 27: radar chart , our creation
In order to better analyze the position of BMW,
Mercedes and Audi their market share and their
growth rate have to be defined. Their market shares
were almost the same at the end of 2014 with a 5,5%
for BMW and a 5,4 % for Audi and Mercedes.29
This
situation is slightly different from that at the end of
2012, even though BMW has maintained its leadership
and the other competitors are reducing their gaps.
Therefore, their growth rate is larger than BMW’s one
- analyzed in the first paragraph of this chapter-.
29 http://www.acea.be/press-releases/article/passenger-car-registrations-6.1-over-nine-months-6.4-in-september
0
1
2
3
4
5
Trendiness
Price
Sportivity
Elegance
Classicity
Quality
BMW
Audi
Mercedes
Figure 28: positioning of BMW and competitors

28
4. COMPETITIVE ADVANTAGE
4.1 Generic competitive strategies
The two images above are two completely different kind of marketing strategy. The perfection
researched by BMW is far from FIAT’s irony. BMW focuses on premium segment where quality
and excellence are essential features while the price range is very high, as the aim of the company
is to achieve high standards, perfection and high quality .
Therefore, if we consider the aforementioned three generic marketing strategies (differentiation,
cost leadership and focus strategy) we could relate Fiat to a cost leadership strategy, while BMW
to a differentiation strategy, with some elements of focus strategy (in particular the BMW
individual collection). Differentiation approaches include developing unique brand images, unique
technology, unique features, unique channels, unique customer service and so on. That is, the key
to differentiation is obtaining an advantage that is immediately perceived by customers. Increased
costs can usually be passed on to the buyers due to the uniqueness of the product attributes.
In the first chapter, the product differentiation of BMW was presented and this one will examine it
in depth.
Starting from 2007 the company has chosen the Number ONE Strategy that guides all business
activities until 2020 and has already taken the company to a new dimension. This premium
strategy is very clear stated and well-defined in the company website: “Our activities will remain
firmly focused on the premium segments of the international automobile markets. Our mission
statement up to the year 2020 is clearly defined: the BMW Group is the world’s leading provider
of premium products and premium services for individual mobility.” 30
The BMW Group provides the full spectrum of individual mobility, ranging from premium-segment
small vehicles through ultra-luxurious and powerful ones. A distinction has to be made, that is
unhitching from this analysis the Rolls-Royce brand, as it holds a long and distinct tradition in the
ultra-luxury segment that makes the marketing strategy chosen the focus one. The main
characteristic that set Rolls-Royce apart from BMW and Mini is that it is “born to be bespoke” to
serve its narrow strategic target more effectively and efficiently than others broadly based
competitors.
30 http://www.bmwgroup.com/e/0_0_www_bmwgroup_com/unternehmen/unternehmensprofil/strategie/strategie.html
Figure 29: BMW and Fiat marketing

29
With BMW, MINI and Rolls-Royce, the BMW Group owns three of the strongest premium brands
in the automotive industry. These three brands are well known and highly admired around the
world for their innovative technologies and state-of-the-art design. The BMW vehicles set the
highest standards in terms of aesthetics, dynamics, technology and quality. The entire product
range share one big characteristic: efficiency.
The MINI brand is a veritable icon in the premium small car segment, offering unrivalled driving
pleasure in its class.
BMW brand satisfies a broad spectrum of customer wishes, ranging from fuel-efficient, innovative
models equipped with Efficient Dynamics through to high-performance, extremely efficient BMW
M sub-brand vehicles, which bring the flair of motor sport onto the roads.
All BMW vehicles also share something more: their impressive driving dynamics.
The term “premium” has been taken to a new level with the BMWi brand. Inspired by the desire
for even greater sustainability, the BMWi epitomizes the vehicle of the future – with its electric
drivetrain, revolutionary lightweight construction, exceptional design and an entirely newly
designed range of mobility services.
BMW Motorrad also focuses on the premium segment and offers a range of motorcycles for the
Tourer, Enduro, Sport and Roadster segments as well as Maxi-Scooter for urban mobility. A wide
range of accessories and equipment is also available, providing additional safety and comfort to
customers.31
What are the elements of BMW differentiation?
- Innovation:
As already shown in the first chapter of this research, BMW introduced on the market several
innovative cars. The most recent innovation is the BMWi-brand.
- Customer services
BMW offers several services to its customers: BMW checkup and maintenance, BMW repairs,
BMW bodywork and paintwork, BMW care and cosmetic repair, BMW update and upgrade. 32
These services guarantee BMW quality over time. In addiction, BMW offers several driving
experiences which allow everyone to try BMW cars, plus a variety of driving courses.
Moreover, a new approach to communications was born in 2014: #BMWstories. The online
platform www.bmw. com / BMWstories offers a broad spectrum of communication channels. These
include films and photo galleries depicting the special features of BMW models. The online
platform has received more than 3.5 million hits. Over 200 million interactions already took place
in such social medias. The published videos have been viewed over 36 million times.
- Quality
The quality tradition associated with BMW brand permeates all work processes through the
worldwide production network. A comprehensive, multi-level quality management system ensures
high standards in all operations as well as in components and materials, and lastly in products. But
above all, the BMW Group orients its quality management system towards the needs of its
customers.
31
BMW Annual Report 2014
32 http://www.bmw.com/com/en/owners/service/care/workshop_offers.html

30
-Design
One of the main objectives of BMW is the perfect harmony within proportions, surfaces and
details. The typical combination of long wheelbase, short overhangs, long bonnet and e rearward-
positioned passenger compartment provide BMW vehicles with elegance and dynamics. The
individual character of every model is revealed through sophisticatedly surfaces and is defined by
precise contours, fine details and multifaceted accents.
Various distinct design features have, for decades, been shaping the unique style of BMW.
The company was quick to recognize and consistently cultivate those values, which evolution can
be easily recognized in each BMW product, as each model reinterprets the typical features of the
brand, thus underlining their independent character.
- Brand image
Thanks to its 100 years history, BMW has a strong brand image linked to quality and perfection.
This image is an advantage for BMW as it increases the value added to the company by clients.
4.2 Resources and Competencies analysis – Core and distinctive
competencies – VRIO framework
4.2.1 Resources and competencies analysis
In order to better understand the strategy by adopted BMW it is important to highlight its
resources. Superior tangible, intangible and human resources led the firm to gain competitive
advantage. The resources and competencies analysis starts from the study of those three classes:
1) TANGIBLE RESOURCES:
This category fits for physical and financial resources. These are fundamental for BWM which can
definitely be considered an international company thanks to its 30 production sites and assembly
plants located in 14 countries and to many sales subsidiaries worldwide. This network of
production and sales subsidiaries is a strong resource for BMW Group and it is linked to
considerable capabilities such as the same standards of quality, safety and processes at all
locations that guarantee worldwide premium product “made by BMW group”.33
In addition to production and sales plants, it is appropriate to introduce another important
physical resource, that is BMW Welt (BMW World). It is a multi-functional customer experience
and exhibition facility in Munich. The aim of BMW World is to present the current products of
BMW, be a distribution center for BMW cars, and offer an event forum and a conference center.
BMW Welt focuses on strengthening the dialogue with customers and visitors by showing a wide
33http://www.bmwgroup.com/e/0_0_www_bmwgroup_com/produktion/produktionsnetzwerk/produktionsstandorte/standorte/i
ndex.html

31
range of BMW cars and motorcycles, and providing vehicle distribution. BMW Welt also features
shops with BMW auxiliary products, as well as a fully serviced gastronomic restaurant. BMW Welt
offers conference rooms and the opportunity to host media events. The building often presents
exhibitions jointed with new BMW models
and, since 2012, Mini and Rolls-Royce models.
The BMW Welt is an important physical
resource for marketing and communication
strategy: thanks to its 2,93 million of tourists
(in 2013)34
, BMW Welt is a strong link
between company and customers or possible
future customers.
Regarding financial resources, the profit in
2014 was of 9,118 million euros (+14,3% from
2013)35
, which permitted BMW to invest in
several different areas.
2) INTANGIBLE RESOURCES
Intangible resources consist of technological, reputation and cultural resources. One of the most
relevant for BMW is its R&D division. Its research and innovation network is spread over twelve
locations in five countries. Expenses in Research and Development are the third major cost in
BMW group (as it is shown in the table below taken from annual report of BMW) and the increase
every year, proving how the R&D holds a key role in the achievement a long term success for a
premium car manufacturer as BMW is. Huge investments in R&D are the starting point for
innovation and competitive advantage.
Figure 31: BMW cost of sales
Another important principle in the BMW Group’s philosofy sustainability, which also contributes
to economical success, thus creating added value for the business. Manufacturing with efficient
and resource-friendly production processes and offering customers state-of-the-art solutions for
sustainable individual mobility gives the BMW Group a competitive advantage.
In 2014 the BMW Group was able to maintain its position as most sustainable premium
manufacturer in the automotive industry and also gained excellent placings in widely regarded
34 https://www.press.bmwgroup.com/italy/pressDetail.html?title=il-2013-%C3%A8-stato-un-anno-record-per-il-bmw-
welt&outputChannelId=10&id=T0167127IT&left_menu_item=node__4087
35 financial report 2014
Figura 30: BMW Welt

32
ratings. In the Dow Jones Sustainability Indices (DJSI), the BMW Group got the first place in the
Automobiles sector, the ninth time in a row. In the Global 500 rating of the Carbon Disclosure
Project (CDP), we again achieved 100 out of a possible 100 points for transparent reporting and
the best mark for climate protection measures, thus retaining our leading position again in 2014.
Based on this result, the BMW Group is listed with the highest performance score “A” in the global
Climate Performance Leadership.36
BMW Group pay also attention on the education of employees about potential legal risks and so it
created a company-wid Compliance Organization. Another task of this organization is to ensure
compliance with legal requirements at local and international level. We could considered as an
intangible resources this organization. 37
3) HUMAN RESOURCES
Human resources manage skills, know-how and relational capabilities.
An important trait of BMW human resources is the sustainable management system.38
BMW takes
into account personal commitment and employees’ ideas. This peculirity is clear if looking at the
31 € million saved in 2014 together with the ideas management system. In addiction, it should be
underlined the desire for social responsibility within the entire BMW Group’s value chain, plus
social and ecological approaches in internal decision-making processes. Finally, sustainability
management system involves the systematic analysis of external factors and permanent
commnication with stakeholders.
4.2.2 Core and distinctive competencies
It is now easier to understand the most significant competences linked to those resources, as firms
gain competence through the combination and integration of such resources. Competencies and
how they are managed, are central for competitive advantage, in order to create competitive
advantage, and consequently to innovate and maintain it.
By analyzing the resources of BMW it is possible to observe which of them contribute the most to
create distinctive competence for the brand.
4.2.3 VRIO framework
The purpose of VRIO framework is to determine the competitive advantage of a firm over
companies in a specific industry, to identify which resources a company hold and the capabilities
that come along with them.
The VRIO framework test the following characteristics:
Valuable: "Is the firm able to exploit an opportunity or to neutralize an external threat with its
resource/capability?"
Rare: "Is control of the resource/capability in the hands of a relative few?"
Inimitable: "Is it difficult to imitate, and will there be significant cost disadvantage to a firm trying
to obtain, develop, or duplicate the resource/capability?"
Organized to exploit: "Is the firm organized, ready, and able to exploit the resource/capability?"
36 BMW Annual Report 2014, pag 45
37http://www.bmwgroup.com/bmwgroup_prod/e/0_0_www_bmwgroup_com/unternehmen/unternehmensprofil/compliance/org
anisation/index.html
38 BMW Group Annual Report 2014, pag 46

33
In the following table we listed the competitive advantage derived from some previous analyzed
resources:
Resource/Competence Valuable Rare Inimitable
Organized to
exploit
Competitive
Implications
Performance
Implication
BMW Welt yes no no yes Competitive parity Average returns
International plants yes no no yes Competitive parity Average returns
R&D division yes yes yes yes Sustainable advantage Above average returns
Sustainability yes yes yes yes Sustainable advantage Above average returns
Management system yes yes no yes Temporary advantage Above average returns
Table: VRIO Analysis
Notes:
 BMW Welt is a valuable resource for BMW and it is well exploited, especially for what
concerns marketing. However competitors have their own museums too, and so BMW
Welt cannot be considered a unique or inimitable resource.
 International plants is an extemely valuable and well exploited resource for BMW.
Unfortunately for the Bavarian firm, it is common for automotive companies to the set the
production abroad, so it is neither a distinctive resource.
 R&D is a division existing in every car industry firm, but the level of specialization and
innovation of BMW is extremely high. So it is valuable, rare, inimitable and well exploited
at the same time.
 The susteinability is another peculiarity of BMW and it brings both sustainable advantage
and above average returns.
 Sustainable managemnt system is largely developed in BMW and it has many unique
characteristics, bringing large competitive advantage to BMW. On the other hand this
peculiarity is not so difficult to imitate and, as a consequence, the advantage can only be
temporary.
4.3 Value Chain analysis
A value chain is the whole series of activities which contribute to create company’s values at every
level. The total value delivered by the company is the sum of the value built up throughout the
whole company. The purpose of the value chain is separating useful activities (which allow the
company -as a whole- to gain competitive advantage) from the wasteful activities (which hinder
the company from getting a lead in the market). Increasing the value-creating activities could
grant the company many advantages, e.g: charge higher prices; lower cost of manufacture; better
brand image, faster response to threats or opportunities.
In this paragraph we present the value chain of BMW, built up on the basis of the available data. It
is importamt to highlight the primary importance of R&D division, a crucial element to maintain
premium standard and to innovate. Manufacturing, marketing and after sales services are other
primary activities to achieve high quality standards and to develop BMW’s brand image. Such
activities wouldn’t exisist without back-up activities supplied by other departments e.g.: Human
Resources or maintenance of firm infrastructures or Procurement division.

35
5. INNOVATION AND COMPETITIVE ADVANTAGE
In this fifth chapter, BMW’s innovations and the deriving competitive advantage will be analysed.
Innovation is an expensive process and it is full of sunk costs: the development of ideas sometimes
does not stand for a successful product. Still, it is an advantageous operation for a firm -such as
BMW- as it avoid products to became obsolete and help the company not losing attractiveness on
the market. Furthermore BMW’s strategy is focused on differentiation, a strategy which involves a
higher rate of innovation if compared with other companies that focus on how to reduce costs and
to offer a cheap product.
Innovation is quite a wide topic, but talking about a car firm, the first kind of innovation to take
into account -and probably the most important in order to create competitive advantage- is the
product innovation. However another kind should also be considered, that is innovation of the
production process. Furthermore, innovation towards the organizational structure should be
looked at and, last but not least innovation regarding the marketing area of the company.
5.1 Product innovation
BMW has been permanent performing innovations over time since -as we saw in the first chapter
of this study- it has been operating in different industries with a high rate of innovation. It is
widely believed that innovation is inside BMW’s DNA. The Bavarian firm has a huge gamma of
models and its portfolio carries many examples of great innovation both in the past and present.
We will analyze this topic in chronological order focusing our attention on the last 20 years. It
should be remarked that even before the aforementioned period of time, BMW’s car were always
innovative if compared with average cars of the same years.
BMW and Mercedes are the inventors of the SUV segment in the car industry. This type of cars
entered the market in 1957 but they only
covered a small market niche. Thanks to BMW
X5 and Mercedes ML this segment became
popular at the end of the ‘90s, turning into a
leading and profitable sector in the car market
–as it is still nowadays-39
. Consequently to this
large success and to the continuous growth of
the segment, BMW introduces the X3 in 2004
and, released two other SUVs the following
years: the X2 and the X4.
Another great achievement for BMW is the
introduction of a small size car in the premium
segment. At first BMW launched MINI to fulfil this concept and, following the success of this
brand, released on the Serie1, a compact car owning all the characteristics of a premium car in
terms of performance, design and quality.
In 2013, BMW entered in the segment of LEV that stands for Low Emission Vehicles with the i3 and
i8. Those models have an electric engine and a large battery. The BMW i3 is characterized by a
visionary design but is perfect for the everyday life -so it targets families.
39 http://www.motori.it/lopinione/45891/suv-e-crossover-successo-e-profitti-da-record.html
Figure 33:

36
Completely different is the i8, an electric super-car with high performance and a revolutionary
design. The target of this car is the high-end market niche.
Furthermore, there are other characteristics that BMW is now introducing to its models. In
particular the connectDrive, eDrive and the xDrive. The connectDrive is an infotainment system
with internet and smartphone connection. The system permits answering messages and emails
while driving, and working with mobile applications directly from the dashboard. Thanks to the
internet connection, the car is able to provide information about hotels, parking, petrol stations
and more. This innovation will be probably receive high positive feedback from the public.
The BMW eDrive is a complex element which features services and technologies connected to the
new low emissions vehicles of BMW. It consists in a new technology to move the car, a navigation
system that drives the car to the nearest recharging station when needed, and stands for a new
BMW philosophy, which aim is to present a dynamic car but with zero emissions to respect the
environment.
Finally, the BMW xDrive is a high technological system that helps the driver steering with wet
blacktop or in snow and ice conditions.
5.2 production process innovation
Innovations in production process are carried out for many and diverse purposes. First of all, it
means reducing production costs that can translate to selling the final product at lower prices and
higher margins of profit. Also, this kind of innovation means faster delivery to customers and,
sometimes even a more ecologic production which clearly helps improving the perceived image of
the brand.
BMW has recently developed a program called
“industry 4.0” with the aim of obtaining together
both lower energy consumption, greater reliability in
production and higher product quality. All these
benefits are achieved at BMW Group’s production
sites thanks to iEMDS, intelligent energy
management data system. Such system is based on
intelligent electricity meters, which constantly
measure the energy consumption of production
facilities and robots to align them with the
Figure 34: BMW i8
Figure 35

37
company’s central big data network. It integrates perfectly into existing systems that record
energy consumption of building and supply structures, offering a valuable addition. Thanks to
these ‘smart meters’, deviations leading to excess consumption can be identified early on. For
instance, in the case that a facility is using up more energy without any changes in production
parameters, it is rather likely that the cause could be a malfunction or wear out and tear, deriving
from issues such as an overly tight bearing that requires additional power to run the machine. The
great control that BMW holds over its machinery allows the Bavarian company to build products
with the level of quality and perfection that premium cars require.
Moreover BMW is continuously looking for recyclable materials to build its cars in order to make
them more sustainable. Trough those processes BMW has reached a high rate of efficiency on its
production. The following table shows percentages for the employment of recyclable materials,
reduction in water consumption, production of CO2, energy consumption, and waste production
for each vehicle produced in BMW.
Figure 36: share of plastic recycled in vehicles
Figure 37: water consumption per vehicle produced

38
Figura 38: CO2 emissions per vehicle produced
The table on the left proves that more than a half of the energy purchased by BMW is renewable,
while the one on the right displays the reduction of energy consumption per vehicle.
Figure 40: Waste for disposal per vehicle produced
BMW has significantly reduce its consumption
in all these portrayed areas. The following
graph shows the percentage variation for each
item.
Reciclable materials used 5%
Water consumption -9,59%
CO2 produced -34,84%
Energy used -20,89%
Renuavable energy used 23%
Figure 39

39
Figure 41: percentage variation of consumption in each area estimated by us.
Those data are prove that the commitment of BMW in reducing pollution and having a sustainable
development is concrete.
5.3 Innovation of the organizational structure
BMW is looking for a sustainable development, sustainability that comes from the product (5.1),
from the production (5.2) and from the company
itself. For this reason, BMW is innovating its
organizational structure and its relationship with its
employees in order to achieve more efficiency and
sustainability.
BMW exactly knows what is the value of its workers,
their value added to the group is calculated as 47.4
percent in 2014. For this reason, BMW gives them
particular rights and benefits that is impossible to find
in other companies. Acting in this way BMW want to
attract the best capable workers in order to add more
quality to all the process of the company in skilled and
unskilled works both. For instance BMW, after a
recent agreement with IgMetall, gives the same value
to the hours of work inside and outside of the
company. The work done by the employees by phone,
tablet or PC outside the company building will compute.
Furthermore, BMW selects different kind of jobs for its
workers in function of their age. The attention of BMW to
the labor force does not finish inside the company, in fact
BMW requires certain standard of worker directs even to
its partners and suppliers.
In the same way that the BMW Group is committed to
lawful and responsible conduct, it also expects no less from
its business partners. In 2012, the BMW Group developed a
new Business Relations Compliance program aimed at
ensuring the reliability of its business relations. Relevant
business partners are evaluated to identifying potential
criticality. Opportunities and risks in the area of sustainability are discussed by the Sustainability
Reciclab
le
material
s used
Water
consum
ption
CO2
produce
d
Energy
used
Renuav
able
energy
used
Serie1 5% -9,59% -34,84% -20,89% 23%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
Figure 43: BMW Group value added
Figure 42

40
Circle. The strategic options and measures that result for the BMW Group are presented to the
Sustainability Board. Risk aspects discussed are integrated into the Group-wide risk network. The
close ties between the Risk Management and Sustainability Circles ensure that risk and
sustainability management are closely coordinated. It is evident that BMW wants to create a
particular image that surround itself, an image of sustainability and ecology. These ideas are
widely appreciate nowadays by stakeholders and customers as well. Through these innovations
BMW wants to create a competitive advantage in long term creating a new model of industry.40
5.4 marketing innovation and web-based innovation
Even though innovating is an extremely important process for BMW it is equally important that
the consumers can perceive the innovation in order to create competitive advantage for the firm.
The marketing area must make sure that this will happen. All the innovations that BMW has made
in the last 20 years have followed a differentiation strategy, and the latest modernizations of the
Bavarian firm are moving in the direction on a sustainable development. It is fundamental that all
the marketing strategies will represent these two ideas; showing different messages would bring
to a confused image of the brand. This situation is never desirable. Every single element must
bring the consumer to the same idea, all the images, the layout of the website and even the
character chosen for the advertisement are important.
During the analysis of the BMW’s website we did not found anything unexpected, it is exactly what
a premium company is supposed to have. It is well structured, there are a lot information inside
about the brand, the models and articles regarding the company which are usefully for the
stakeholders. Through the website BMW can also have a feedback of the consumer’s needs
analyzing their choices while they are using the car configurator. In conclusion the website is very
well structured and it transmits the idea of differentiation and sustainability that BMW wants to
show but must be said that it offers the same functions and the same quality of other automotive
firm’s websites. So the level of innovation in this sector can be consider high in function of the
quality but can also be considered average if compared with other firms.
Despite this there are services that BMW offers to its customers that differentiate the brand41
. The
Bavarian firm offers the possibility of purchasing travels all around the world renting BMW’s cars
and safety/sport driving course. Those initiative are not so common and they contribute in
creating what in jargon is called tribe. It is a group of people that are passionate on the brand and
are loyal consumers, that kind of tribe is difficult to build because it necessitates of an element of
passion, this experiences offered by BMW have the purpose of creating this feeling inside their
customer. It can be argued that those side services can give the idea of differentiation that BMW I
looking for and they are a perfect example of innovation that brings competitive advantage to the
brand.
40 http://www.bmwgroup.com/com/en/_common/_pdf/BMW_Group_SVR2014_EN.pdf
41 http://www.bmw.co.uk/en_GB/topics/discover-bmw/bmwevents/eventstrackdays/driving-experience-days.html

41
Figure 44: BMW Driving Experience Days

42
6 PERFORMANCE42
The purpose of this chapter is to analyze the financial performance of the BMW Group. The
valuation of BMW Group requires to analyze the more recent performance, which together with
the strategic analysis is an important element in defining the future expectation for the BMW
Group. A financial analysis will also provide a better understanding of the firm’s underlying income
and cost drivers. The basis of the analysis is the annual reports for of BMW Group in 2014. It is
believed that a period of 4 years is enough to reflect any cyclical fluctuation that may have
occurred in the industry. It is important to separate the financial statements between the
industrial business and financial service part of the Group as both parts need to be valued
differently, in fact the financial service firms are valued differently in comparison to industrial
businesses. Given the following arguments, the financial reports of BMW is separated into two
different statements, one in regards to the industrial business (automotive and motorcycle) and
one in regards to the financial services business. Our analysis will be focused on the industrial
segment. We are going to analyze the principal financial performance indicators in the automotive
and motorcycle segments.
6.1 Automotive
The first financial performance indicator to analyze is the company revenue and in the following
graph it could be noticed that this parameter have been increasing of 38.86% between 2010 and
2014.
Figure 45: sales volume between 2010 and 2014
The profits before financial results (EBIT) has followed the same trend, as they have been
increasing of 66.33% in the last 5 years - shown below.
42 BMW Group Annual Report 2012, 2014
1,4
1,5
1,6
1,7
1,8
1,9
2
2,1
2,2
2010 2011 2012 2013 2014
sales volume in thousand units

43
Figure 46: EBIT between 2010 and 2014
These numbers, if not properly analyzed aren’t meaningful, so it’s useful to compute two
important performance indicator in order to better understand these graphs. The principal key
performance indicator for the Automotive segment is return on capital employed (RoCE),
measured on the basis of segment profit before financial result and the average level of capital
employed in operations.
𝑅𝑜𝐶𝐸 =
𝑝𝑟𝑜𝑓𝑖𝑡 𝑏𝑒𝑓𝑜𝑟𝑒 𝑓𝑖𝑛𝑎𝑛𝑐𝑦𝑎𝑙 𝑟𝑒𝑠𝑢𝑙𝑡
𝑐𝑎𝑝𝑖𝑡𝑎𝑙 𝑒𝑚𝑝𝑙𝑜𝑦𝑒𝑑
As can read on the 2014 annual report: “Capital employed corresponds to the sum of all current
and non-current operational assets, less liabilities that do not incur interest. Due to the
importance of the Automotive segment for the Group as a whole, consideration is also given to
additional key value drivers which have a significant impact on RoCE and hence on segment
performance. The most important of them are deliveries to customers, segment revenues and – as
the key performance indicator for profitability – the operating return on sales (i.e. EBIT margin).
Average carbon emissions for the fleet are also taken into account, reflecting their potential
impact on earnings in short term in the form of ongoing development expenses – and in long term
due to regulatory requirements. For these purposes “carbon emissions for the fleet” corresponds
to average emissions of CO2 for new car sales in the EU-28 countries. The use of additional key
value drivers makes it easier to identify the reasons for changes in the RoCE and to define
measures capable of influencing its development.”
2010 2011 2012 2013 2014
RoCE 40.2% 77.3% 73.7% 63.0% 61.7%
The RoCE of BMW has had a positive trend and even if it had been decreasing of 1.3% from 2013
to 2014 it can be considered an extraordinary result, as a RoCE of 26% is considered a good
achievement in the automotive industry and BMW’ one largely overcome this value.
4,355
7,477
7,599
6,649
7,224
4,3
4,8
5,3
5,8
6,3
6,8
7,3
2010 2011 2012 2013 2014
ineuromillion
year
EBIT between 2010 and 2014
EBIT

44
6.2 Motorrad
In the following analysis, we will first examine the Revenues, which is a sector of smaller relevance
inside the BMW group, but still a the positive trend could also be noted in motorcycle’s revenues,
as it has been increasing of 28.75%.
Figure 47:Revenues
The profits trend ’, this time, does not go in the same direction of revenues. The growth which
took place last year is important: BMW has increased its profits of 41.8%, and this value is
incredible. Before 2014 the growth of BMW’s profit had not been constant and positive as can be
seen in the graph below. In particular in 2012 this sector has registered a huge loss of profits.
Despite the worldwide recession in the motorcycle sector, in 2012 BMW has increased its sales
volume of 3.1%. We couldn’t find the causes of this loss of profits. Our hypothesis is linked to
important investments in R&D that year (increased of 17,2% in total R&D investment during 2012),
but we have no evidence to support this opinion.
Figure 48: EBIT motorcycle segment BMW
1,304
1,436
1,49 1,504
1,679
1,3
1,4
1,5
1,6
1,7
2010 2011 2012 2013 2014
ineuromillion
year
Revenue motorcycle
Revenue motorcycle
71
49
9
79
112
5
25
45
65
85
105
2010 2011 2012 2013 2014
ineuromillion
year
EBIT
EBIT

45
As with the Automotive segment, operating performance for the Motorcycles segment is managed
on the basis of RoCE. Capital employed is measured using the same procedures as in the
Automotive segment. The strategic target for the Motorcycles segment’s RoCE is 26%.
2010 2011 2012 2013 2014
RoCE 18.0 10.2 1.8 16.4 21.8
The results are completely different when switching to the automotive sector. Even though BMW
is a leader in the Motorcycle segment, the RoCE of this area is smaller than the desirable value of
26%. It is difficult for us, on the basis of available information, to identify the cause of this
phenomenon.
Those data show that BMW is increasing its profits and its revenues, therefore it can be argued
this is a consequence of the “Number One” strategy and its efforts in innovation and quality
control.

46
7. FUTURE SCENARIOS
7.1 S.W.O.T. analysis43 44
Now, enough elements have been provided about BMW, so it is time to stocktaking. SWOT
analysis is an analytical tool used for the identification and categorization of internal and external
factors. Strengths and weaknesses in SWOT analysis are termed as internal factors while
opportunities and threats are termed as external factors. SWOT analysis definition can help
organizations in their strategic planning process, and in matching their capabilities and resources
to the competitive environment in which its operations are carried out.
Our SWOT analysis is focused on the main business of BMW Group: BMW automotive. We recall
elements already analyzed in the previous chapters and within each category –strengths,
weakness, opportunities, threats- elements are listed in order of importance.
STRENGTHS
1) Quality products
2) Brand reputation
3) Diversified product portfolio
4) Highly skilled workforce
5) Environment friendly vehicles
6) Corporate Social Responsibility (CSR)
7) Strong brand presence in China
WEAKNESSES
1) High cost structure
2) Weak brand portfolio
3) Perception of high prices
4) Too few acquisitions and strategic
partnerships
OPPORTUNITIES
1) Positive attitude towards “green”
vehicles
2) Increasing fuel prices
3) Expand brand portfolio
4) New emission standards
5) Increasing interest in ecology
THREATS
1) Intense competition
2) Innovation by competitors
3) Rising raw material prices
4) Decreasing fuel prices
5) Growing euro exchange rate
Figure 49: SWOT ANALYSIS
Strengths
1) Quality products. BMW is valued on its engineering capabilities, skilled workforce and
quality products. BMW recalls their cars less often and at lower numbers than most of its
competitors do.
2) Brand reputation. BMW brand is the third most valuable automotive industry brand in the
world , worth $29 billion. In 2012, Forbes has also listed BMW as the most reputable
business in the world.
43
http://www.strategicmanagementinsight.com/swot-analyses/bmw-swot-analysis.html
44
http://www.freeswotanalysis.com/automobile/636-bmw-swot-analysis.html

47
3) Diversified portfolio: that included sport cars, luxury cars, electric cars, hybrid cars and so
on.
4) Highly skilled workforce. Quality cars require premium materials and skilled workforce and
BMW only employs the most skilled workers to produce its vehicles. BMW sets up its
assembly plants in countries -such as USA and Germany- where only the most skilled
vehicle assemblers are employed.
5) Environment friendly vehicles. The company develops environment friendly cars but also
make them more efficient. It offers nearly 20 models that emit CO2 as low as 140g/km. To
make BMW cars more environment friendly, the firm’s engineers develop new types of
fuels, such as hydrogen.
6) Corporate Social Responsibility (CSR). BMW is strongly committed to the environment
protection, employee and community well-being and sustainability programs. The
company invests large sums in employees’ health management, programs promoting
balanced work life, sustainability requirements for its suppliers and produces zero waste at
its plants.
7) Strong brand presence in China. Over the last few years, BMW has seen strong sales
growth in China, the largest automotive market in the world. In 2012, BMW sold 326,444
vehicles there. In China alone, more than 40 BMW dealerships and 30 MINI dealerships
were opened in 2014.45
Weaknesses
1) High cost structure. Producing quality cars and hiring skilled workforce results in
high costs for the business. BMW cost structure is higher than the one of its biggest
competitors such as Toyota, GM and Volkswagen.
2) Weak brand portfolio. The company only caters luxury market segment for elite
classes. This could create a negative impact on the future growth of the company.
3) High prices. BMW manufactures luxury cars that require best quality materials,
skilled workforce and a great brand image. This results in higher car prices, often
considered too pricey compared to those of other cars.
4) Lack of acquisitions and strategic partnerships. 90% of BMW growth is organic and
only 10% derives from acquisitions. Without acquisitions, the company finds it hard
to grow even with exclusive engineering capabilities. Thus, if the company wants to
grow significantly, acquiring different brands and enter into strategic partnerships
could be convenient.
Opportunities
1) Positive attitude towards “green” vehicles. Nowadays, consumers are more aware
of negative effects (air pollution) caused by petrol and diesel fueled cars. Large
quantities of CO2 emissions intensify greenhouse effect and negatively impact life
on earth. Thus, consumers are more likely to buy new hybrid and hydrogen fueled
cars that emit less or no CO2 at all.
2) Increasing fuel prices, together with the interest regarding pollution (5), leads to a
growing LEV’s demand (Low emission Vehicles). Consequently, a large markets is
45
BMW Group Annual Report 2014

48
now emerging for BMW with hybrid and hydrogen cars as consumers shift towards
cheaper fuel types.
3) Expand brand portfolio. In order to grow at a higher rate, BMW should expand its
brand portfolio to meet different needs and to fulfil a larger consumer market, e.g.
through the introduction of brand new models in its range.
4) New emission standards. A new wave for stricter regulations on vehicle emission
standards would positively affect BMW position in automotive industry. The firm
produces some of the most eco-friendly vehicles and has introduced hydrogen fuels
with zero CO2 emissions. New vehicle emission regulations would mean 0 additional
investment for BMW while its competitors would mandatory have to invest large
sums to comply with regulations.
Threats
1) Intense competition. BMW faces increasing competition from its direct competitors
and the markets for luxury cars are saturated even in emerging economies.
2) Product innovation by other competitors in the automotive sector.
3) Rising raw material prices. Rising prices for raw metals lift the costs for car
manufacturers and result in squeezed profits.
4) Decreasing fuel prices. Due to increasing extraction of shale gas, future fuel prices
should drop and make electric, hybrid and hydrogen cars could become less
attractive, resulting in huge losses for BMW most ambitious projects, hydrogen
fueled and electric cars.
5) Growing euro exchange rate. BMW earns part of its profits outside the euro zone,
so exchange rate fluctuations threaten BMW profits.
7.2 Future perspectives
To meet the environment challenges BMW formulated the Number ONE Strategy (2007), which
aligns the BMW Group with two targets: to be profitable and to enhance long-term value in times
of change. This applies to technological, structural as well as cultural aspects of our company. The
corporate objectives derived from strategy Number One Since 2007 are: Growth, Shaping the
Future, Profitability and Access to Technologies and Customers.
According to strategy Number One, BMW will remain firmly focused on the premium segments of
the international automobile markets. The mission statement up to the year 2020 is clearly
defined: the BMW Group is the world’s leading provider of premium products and premium
services for individual mobility.46
On the basis of the following elements (presented in the figure), BMW decided to focus its
attention on the sustainable mobility by developing the i brand.
46 http://www.bmwgroup.com/e/0_0_www_bmwgroup_com/unternehmen/unternehmensprofil/strategie/strategie.html

49
Figure 50
The following shows why the i-brand is a result of the Number One strategy application.
In conclusion, the future perspectives of BMW are strictly linked to strategy Number One and its
goal that is – as CEO Norbert Reithofer revealed- to reach annual sales of 2 million by 202047
while
always paying attention to sustainability.
47 http://www.autoblog.com/2007/09/27/bmw-plans-for-future-2-million-by-2020-new-models-and-fourth-b/

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