Bmw Strategic Recommendtion

Strategic Recommendations

The first step before reaching what we considered the best strategy that BMW has to implement to address the four most important issues we mentioned in the SWOT Analysis (dealer relationship, image life cycle, Japanese power, and specialized competitors) is brainstorming and recollecting a few ideas. For this specific case, we came upon the following “brainstorming ideas” for each main issue:

To begin explaining what each strategy is about and how we reached one final strategy to be used by BMW, let’s focus on the different “brainstorming ideas” we listed above for each specific issue to be addressed:

Dealer Relationship: The current relationship with dealers does not favor BMW; therefore we recognize that it has to improve in order to achieve the company’s sales goal per year.

Image Life Cycle: Compared to its competitor’s, BMW’s image life cycle takes much longer to change than Japanese cars (8 for BMW compared to 4 from Japanese competitors). This needs to be revised in order to satisfy such a demanding market as the US.

Japanese Power: Japanese competitors had much more money to spend and had created better economies of scale. They also had an advantage over BMW since they were mass producers.

Specialized Competitors: Competition had launched strategies to reduce the number of dealers and it worked just fine. Besides, they had most of their dealers look like the headquarters, which impressed many costumers and made them feel more comfortable when buying a car from them.

For the next step we decided to divide each strategy into a matrix in which we provided three different options for each point addressed in the SWOT Analysis, and from that we reached a final option which we recommend be used by BMW. For each main issue we established different options (as seen below), although our intention is not to recommend all options at the same time.

Even though we set up different options for each main issue, we came up with one final option as BMW’s main issue to resolve in order to overcome their sales goal, and continue with the current sales unit increase they just obtained in 1992. In order to get to that main strategy, let’s focus on explaining each main issue’s options as seen below.

For instance, we recommended that one way to overcome the issue about the vehicle’s Image Life Cycle was by “Asking for new designed models” (Option 1) as seen on the table above. That would have been done directly by BMW AG Headquarters in Germany, and therefore we decided it was not doable since it would have taken too much time and money in order for it to be accomplished. Another recommendation we had also regarding the image life cycle had to do with what we called “Face Lifting” (Option 2). According to our plans this would’ve been done regionally thanks to the new plant in Spartanburg, SC. This strategy was also considered not doable for almost the same reasons as the first. For example, in order for this to be done BMW would have to spend $2 billion in a new model design every four years, something that cannot be done since BMW is not a mass producer.