BMW stands for Bavarian Motor. It was created in the year 1917. It is acting as a premium brand while considering the automobile industry and market and it has secure a pronoun place over there. It is famous because of the consistent excellence, competence and novelty that they are constantly provided to their customers. It is acting as a competitors for Mini and Rolls-Royce that are also considered one of the top class brands in automobiles and are known for their wide variety of products.
Porter analysis of BMW
It is founded by Michael Porter to understand the strategy and to provide means for the company or industry to look for the rivals and competitors and answers the questions that how to increase their productivity by taking due consideration on the forces and powers that are mentioned in Porter analysis. The analysis for BMW is given below.
Threat of Substitutes
The It is a difficult task for the clients and the market to consider the substitutes for brands such as BMW. As BMW acquire a very strong position in the market and in the eyes of its valuable customers and is known for the reputation it possesses internationally. However, there may be occurrence of risks from other automobile companies including producers of cars and sports bikes. The government can also pave a threat for BMW while considering the emissions from fuels and the environmental hazards the cars are causing (ukessays, 2012). The customers are encouraged to move towards public transport and hence in return can reduce the issues of transportation. But still this is low impact on BMW due to the strategy employed by the company and the preference of the people over luxury cars.
Power of Competitors
There exists a large amount of competitors when we talk about the automobile industry and its market. Likewise BMW also has a huge list of competitors internationally. Those competitors also have an enormous target audience in market. These includes Audi, Mercedes Benz etc. and when we talk about the bike brands, Ducati, Yamaha etc. comes in it. These all are creating an immense and powerful competition for the BMW (Dudovskiy, 2016). With the technology advancement, the demands and market for the hybrid cars is increasing day by day. So it is a positive point for BMW as they are manufacturing cars in this category which are friendlier to the environment and reducing the transportation issues. Whereas the competitors in case of hybrid cars are left behind including Toyota etc.
Power of Buyers
In order to capture a large target audience and more customers, techniques of marketing and advertising are used and a huge amount of budget is spare for the cause of influencing the customers. Nowadays the clients buy anything on the basis of the reviews and the comments which are provided by the users in magazines and websites. They are looking forward to the rating of the product before purchasing it. These reviews comprise of the information about the automobiles and the segments from which they are made of. These also explain the factors such as pricing, features and models that are the key factors which influence the choice of the customers while purchasing a car. All the resources which are providing such knowledge to the customers are playing important role in increase negotiating power of the customers (admin, 2015). Hence in order to overcome such factors, the company creates striking catalogues and broachers to capture more audience.
Power of Suppliers
Suppliers also play a significant role in the production of the goods in automobile industry. The organization requires crude materials, labor, spare parts and other facilities to produce cars. The delivery of the products to the customers can be effected by the delay in these materials as the production of the vehicles depends upon it to a countless extent. The cost of the suppliers also has an impact on the profit that is produced by the organization. They may have a positive as well as adverse impact on the costs and distribution of the vehicles. When the suppliers are asking for more money, the cost of the products will also be increase to many folds side by side. But we cannot generalize this concept to all the suppliers (Dudovskiy, 2016). Some of the manufactures also have interest in the supply of the materials to earn good reputation in the market when associated with a particular brand. BMW is quite concerned about the excellence of the products they are manufacturing while considering the cost and quality of the parts provided by the suppliers.
Threats to New Entrants
In order to start up an automobile industry and to compete the well-known brands in this market is a difficult task to accomplish. There is the existence of intense competition in the market for automobile industry and specially the pronoun companies including BMW. So the upcoming industry will require an enormous amount of funds, investment, capital, highly qualified and skilled employees and engineers to become a successful organization. Many few companies invest in such sort of environment which is full of risks and the rate of return is very slow as compared to the rate of investment. BMW consists of one of the best technicians, engineers and designers that are the backbone for the success of the brand by aiding the firm to introduce new designs and models of cars and a whole new era of innovation in the automobile industry (DO, 2014).
Hence, Porter’s analysis on BMW show that the organization is maintaining the strong position and brand image in the industry while keeping in mind all the important forces mentioned in Porter analysis. The hybrid technology that is developed by BMW is helping to focus on more profits and customers as the reviews about this technology is prodigious. This helps them to retain their name in the top most brand in such a competing environment. It attracts more and more customers. So, therefore other automobile companies should also take in to account the strategy that is adopted by BMW to standout in the automobile industry.
References
admin. (2015, August). Retrieved from www.premiumessays.ne: http://www.premiumessays.net/articles/sample-essay-on-porters-5-forces-analysis-of-bmw/#sthash.nxu739MA.dpbs
DO, T. (2014, Octobar). Retrieved from bmvsmb.wordpress.com: https://bmvsmb.wordpress.com/2014/10/22/porters-5-forces-competitive-analysis-of-the-luxury-car-industry/
Dudovskiy, J. (2016, April 25). Retrieved from research-methodology.net: http://research-methodology.net/bmw-porters-five-forces-analysis/
ukessays. (2012). Retrieved from www.ukessays.com: https://www.ukessays.com/essays/marketing/a-porters-five-forces-analysis-of-bmw-marketing-essay.php