Company Registration No: 4964706. When input cost determine the success of the company, supply costs become very important asset. At last we came to the conclusion of this report, after going through the report you must have came to know all the barriers and challenges of the BMW Company and how it faces all those challenges to be in the competition and made its place as one of the luxurious brand in the global market. For a major brand to retain its leading position, it is essential to win consumers’ trust. BMW had its competitive advantage engraved in its processes and designs. A quick Resource audit and capabilities analysis would suggest that following are the key resources and capabilities those BMW posses which it can use to its advantage: Brand Value and Perception: BMW has an incredible brand value as a premium luxury brand. Competitive advantage should also be generated through experience with the holistic understanding by the firm and its unit costs. Step 1 Identify the Key Resources and Capabilities CSAC05 1/13/07 9:21 Page 123. Foreign government policies and tax laws also affect the automobile industry. In this industry, high bargaining power of suppliers is due to the fact that suppliers can dictate the cost of raw materials. Thirdly, the shake-out stage bears slow growth and the firm’s key assets are primarily its managerial and financial activities. Primarily, the development stage which is the start up of the company is graced with high differentiation and innovation of its assets. Apart from the internal value chain, the organization also possesses a channel value chain. Do you have a 2:1 degree or higher? • Analyze how strategic capabilities might provide sustainable competitive advantage (VRIN) " where / how to build a resource-based competitive advantage ? In the industry, there is cut throat competition, as most of the products positioned in a similar way target same market. The full Board of Management of the BMW Group established a commitment to diversity as part of the company’s human resources and sustainability strategy back in 2010. BMW has shown high quality of their product because of their Technological use. In order to counter its competitors in the market, BMW had a progressive rise in its turnover and possessed the adequate technological knowhow. Toyota’s valuable assets including technology, product range, profit margins and production capacity pose a threat for BMW as Toyota has become proved product in the immature market territory (Kiley, 2004). As one of the cost drivers, product design can be directed to ensure maximization of working capital, labor productivity and better yield. This report had been broken down into several different categories to make it easy for the reader to understand. Finally, extreme rivalry towards the firm with the key assets being rational and emotional approach comprises the decline stage (Darwin, 2002). Resources and organizational capabilities play an important role in business. Capabilities are another key concept within resource-based theory. To gain higher economies of scale can be achieved by implementing the use of scientific technology that BMW restores to. Therefore, all car manufacturers were required to be considerate of the environment during their manufacturing processes. RESouRCE-BASEd ViEw STRATEgy of Bmw Resource Competencies Threshold Capabilities Integrated supply chain Young employees Wide spread assemble and production units High quality products and service Technical design knowledge Capabilities for Competitive Advantage Engineering Excellence Value added work force Brand management Made-to-order cars Technology and ability to … Resources are money-derived. These include operational capabilities connecting. Resources and capabilities empower a company to drive the business and face competition with their products & offerings for the need of customers. Free resources to assist you with your university studies! Key Elements of Business Strategies: Understanding Resources, Capabilities, and Competencies is the key Selecting a business strategy that exploits valuable resources and distinctive competencies (ie. According to the value network of shown, it is Evident that each of BMWs assembly locations and manufacturing unit is independent of the other. According to Gerry, Scholes & Whittington, (2008), every firm has its own strategic capability to endure against all odds. Course Hero is not sponsored or endorsed by any college or university. Threat of new entrants reflects the inhibiting forces faced while entering into the industry. Autonomous driving. KEY RESOURCES BMW is because of the talented people who work there. Due to its excellence in product/process design, BMW earned the reputation as an engineering excellence. PESTEL provided for the analysis of an organization’s macro-environment (Hejiden, 2006). There are also examples of cases of collaboration, both formal, BMW’s organisational culture may be a key fact, Organisational culture is an informal institutional aspect that is an intangible, socially complex resource. Success of a business in the global market is determined by the probable foreign policies (Hill, 2008). KEY PARTNERS To constantly keep an eye on the future, visionaries are partners of BMW. In the mind of the consumers, BMW is considered a powerful and luxurious brand. Stiff competition from Asian market on the US and European markets has heightened the competitive rivalry. Some of the hallmarks of world-class HR organisations are as stated below. Reference this. The price variations in the products also depend on the locations that BMW is focusing at. Because BMW and its competitors fall into the exclusive car range, high bargaining power of buyers results from the fact that consumers can choose a product on the basis of price and therefore make the purchase thereof (Copper, 2008). Control of costs and eventual attainment of cost efficiency are primary when considering experience in an organization. A macro-environmental overview of factors that impact the organization is derived from the PESTEL analysis. Supply costs in an organization play a vital role especially in the production and purchase of raw materials. BMW Group Report contains more detailed discussion of BMW business strategy. In the exclusive car range, the substitutes available for BMW include GM, Mercedes and Toyota. Examples include research and development that spans a, network of thirteen locations in five countries, collaborating with leading technology, organisations to deliver fully autonomous vehicles by 2021, digitisation of operations, human. Key stakeholders of BMW: Competitors, customers, key shareholders, partners and executives. BMW will face the challenge of, developing new capabilities to exploit opportunities and counter threats identified in their, strategy to shape the future of urban mobility. Examples of intangible resources, include a portfolio of brands positioned as global premium brands. Tangible resources are primarily plants, the production facilities in Leipzig, Spartanburg and Shenyang. The paper "Assessment Of Resource Capabilities Of BMW" focuses on concerning the incorporation and understanding of value chain in the given setting and business environment. With its exceedingly qualified labor force, BMW can depend on this strength as in gaining its competitive advantage. Cost efficiency at BMW is possible by the contributions of economies of scale, supply chain, experience and product/process design (Gerry, Scholes & Whittington, 2008). As a renowned company, BMW has a high position as far as its brand and gratitude factor are concerned. Tangible technological resources, that BMW possesses are newly invented technologies that may add value to future urban mobility, here, such human resources include know-how that BMW, possesses, collaboration with other organisations and its organisational culture. This post covers the next building block of the Business Model Canvas, which is Key Resources. from own product or market audit; and opportunities and threats externally, i.e. BMW’s major rivals in the automobile industry include Volvo group, GM, Lexus, Toyota, Mercedes but its product ranges from a MINI to a Rolls Royce. Therefore, there needs to be a reduction of costs with the annual increase in units produced from the newly established assembly units in the competitive market. Primarily, the cost ownership and product excellence together identify the brand of a product. According to the 2015 analysis of The Hackett Group’s HR benchmarking database, it revealed the hallmarks of current world-class HR organizations and the critical capabilities they leverage to achieve superior results. This case study is about BMW group, which a renowned European carmaker is aiming to maintain excellent quality, increasing output and manufacturing smaller cars. The strategies include Market penetration, Product development, Market development, Vertical integration, Retrenchment, Restructuring, and Liquation. With its sophisticated supply chain management system, BMW has a long relationship with suppliers. Customers are the users of the automobiles. The management of all value-based activities has proved a difficult task for a single organization especially if the activities cover the design of the product right its final delivery to the consumer. A physical server is a resource because you can buy one and have it shipped to you. This preview shows page 5 - 7 out of 16 pages. In combination with Porter’s Five Forces, drivers of change, which are likely to have a high impact on strategy, are identified. In addition, the report will also include an analysis of the company 's assets and capabilities that have provided it a sustainable competitive edge as well as, the recommended future strategy of the giant online organization. The company to focus on in the paper is BMW which has had the tremendous impact on people with regard to movement…. In the field of technologies and mobility, in particular, they are able to realise their full potential and show how they can contribute to mobility and progress in all different areas. Registered office: Venture House, Cross Street, Arnold, Nottingham, Nottinghamshire, NG5 7PJ. BMW had the capability to swing its operations for 60 hours a week during limp demand and whooping 140 hours a week when the demand is at its peak. Similarly, there exists an internal value chain of the assembly liners amidst themselves. Global operational and production capabilities. BMW (Bayerische Motoren Werke in German, or Bavarian Motor Works in English) is basically a German company with vast experience in the field of cars and was introduced in 1916. resources & competences and how these relate to the strategies & organizations " Opportunities / Threats ? Viper is a quick and easy way to check your work for plagiarism. The most common resources include, Tangible resources which include the physical chattel such as the plant, finance and human labor within the organizations, Intangible resources includes the non-physical chattel such as information, knowledge and status, Physical resources which are universally designed and styled technology; supply chain and dealership management; effective market segmentation. Such a situation would call for scenario analysis to be conducted in order to enable prediction of the organization’s future business environment. The plan emphasizes that BMW should concentrate on premium mobility, which is further divided into 3 goals: E-mobility. Resources and Competences Strategic capabilities have a significant impact on an organization’s long-term survival or competitive advantages in the market (Johnson et al., 2014), therefore this report focuses on the strategic capabilities of Amazon based on the perspective of a strategic resource … Therefore, BMWs channel value chain of price, location and design is the backbone of the consumer value chain (Radinger, &Schick, 1996). are another key concept within resource-based theory. The BMW Group relies on a diverse workforce to enhance the company’s performance capabilities and innovation and secure its … In terms of capabilities, the following are present in the case study: Inventing and relating capabilities. The third critical success factor is experience for BMW in the automobile industry. Registered Data Controller No: Z1821391. A good and easy-to-remember way to distinguish resources and capabilities is this: resources refer to what an organization owns , capabilities refer to what the organization can do ( Figure 4.2 "Resources and Capabilities" ). Looking for a flexible role? 124 PART II THE TOOLS OF STRATEGY ANALYSIS Introduction and Objectives In Chapter 1, I noted that the focus of strategy thinking has been shifted from the exter-nal environment towards its internal environment. The report covers the firm’s internal and external environmental challenges; analysis of its ability to succeed and the likely reasons that will challenge the firm in future. In the automobile industry, the likely factors include. Political factors involve the likely government regulatory measures, laws and restrictions that affect the industry in general. According to Thomas (2007), when organizations experience numerous changes and complexity thereof, it is difficult to monitor the external environment and its unpredictable effect on the firm’s strategies. Hence, the capability to implement a strategy can serve as a source of, competitive advantage, here specifically if, strategy to shape premium urban mobility is. These are often identified as part of strategic planning exercises such as business model canvas. Unlike most other players in the automobile industry, BMW has been in this sector since the dusk of Second World War. By the help of Technological it helps company (BMW) in various ways like adoption of new and improved design to counter the low profits in the industry, Regulatory and restrictive measures on technology that are linked with environmental pollution (Allen, 2006), Environmental factors within the auto industry are, Environmental factors differ on various reasons like change in consumer tastes and preferences towards eco-friendly cars, fuel cell cars and hybrid cars, Contribute to the widespread awareness of greenhouse effect, global warming and burnout among patrons, Legal factors in the auto industry include, Strict pollutions standards and restrictions applicable in the US and European markets, Stern consequences on of the EURO norms in the developing countries i.e in India (CEN, 2006), Porter’s Five Forces is a framework for the development of business strategy and industry analysis. Their power to influence the decision of the company is high as the spending power lies with them. When it outcompeted its rivals BMW emphasized on brand development that had resulted from changes in the market. Secondly, there is high growth with low bargaining power of buyers and minimal threat of new entrants during the growth stage. Copyright © 2003 - 2020 - AUEssays is a trading name of All Answers Ltd, a company registered in England and Wales. ), Social factors include cultural and demographic changes in the global market especially on the effect on consumer’s buying behavior and capacity. In the auto industry the factors are, Changes in the consumers’ buying behavior as a result of recession in the mature markets, Changes in consumers priorities for instance viewing a car in terms of fuel consumption and low emission rather than a symbol of status, Automobile harmful emissions and hazardous environmental issues (Johnson, 2005), Technological factors are often positively associated with developments in the auto industry. BMW has to constantly engage with the customers and keep them updated on the latest trend. Examples include, Benefiting from competitive advantage due to increase in the use of technology. In UK for instance, an 80% excess capacity in 2003 froze 1.3 billion euro in the automobile industry. SWOT analysis combines the strengths and weaknesses internally, i.e. In order for every organization or firm to thrive and survive globally, it requires and must possess certain resources and competencies. Every business model requires them, and it is only through them that companies generate Value Propositions and Revenues. robot co-working and additive manufacturing. A quick Resource audit and capabilities analysis would suggest that following are the key resources and capabilities those BMW posses which it can use to its advantage (Verbeke, 2013): Brand Value and Perception: BMW has an incredible brand value as a premium luxury brand. Therefore, the product range serves the luxury segment to the premium segment in the industry. BMW has Efficient Dynamics and the Agile Manufacturing System. Brand equity:-Brand equity is among the leading strengths of any technology brand. They can be explained as: A) Resources can be divided into: 1. Organisations often lack the necessary capability to implement the strategic plans, they envision. The online scanning system matches your work against over 5 Billion online sources within seconds. VAT Registration No: 842417633. Fourthly, stagnating growth with high barriers to entry, increased competition with less unit costs and higher market share are the features of the maturity stage. Developing Your Resources and Capabilities into Competitive Advantages 4.1 Identify the key resources and capabilities 4.2 Leverage transferability 4.3 Replicability #5. In terms of identifying the key resources and capabilities of BMW, tangible and intangible assets as well as human resources are present in the case study. Intellectual capital represented by the excellent reputation in engineering, powerful brand identity known for its reliability and luxury. Many BMW drivers can testify to the fact that their BMW cars comes with a variety of convenient and sleek features. For example, being able to develop new capabilities that relate to new, mobility in the future. For example, a book is a resource because you can immediately purchase it. Financial resources which in 2003 financial year were, turnover of 41.53 billion euro, gross margins of 3.2 billion, 7.4% profit margins and annual surplus of 3.2 billion euro. Secondly, the cost of the product is comparably high with reference to other brands, but BMW’s exceptional quality justifies the variation n the prices. BMW’s autonomous car plan Efficiency in the process can only be achieved using the help of a value network; which is usually a combination of inter-organizational process that are vital in the manufacturer of a product or a service (Timmers, 2008). According to the cycle of competition concept, competitive advantages or core competencies are temporary in nature; such as BMWs closest competitor Toyota Group. This drift occurs when a company’s challenge from environmental changes negatively affect its operations, despite the occasional incremental development from cultural and historical factors. Capabilities What the organization can do based on the resources it possesses. Improvement in the use of technology and preference of design as a fundamental asset. Key resources can be physical, financial, intellectual, or human. The drivers of change are very instrumental in aiding managers make effective decisions. This means functional capabilities that come together in a. The classic and contemporary models, concept and tools used in business strategy and panning include PESTEL analysis, Value chain analysis, SWOT analysis, Porter’s Five Forces, industry life cycle and Cycle of competition. BMW is an acronym for Bayerische Motoren Werke AG — or, in English, Bavarian Motor Works. According to the value chain criteria, the product ranges are priced differently and differently designed to serve the needs of a specific segment according to the target market. SWOT analysis is a statement of how the relevant current strategy and strengths and weaknesses are capable of dealing with changes in the environment. Rising costs of raw materials and high fuel prices, Unexpected change in customer tastes and preferences, Price wars and increase in extreme rivalry during the firms’ maturity stage, Technological stagnation and decrease in economies of scale, International variation in the unfavorable currency effects, Highly restrictive standards paving way for available options like hybrid cars, electric cars and fuel-cell cars precincts, Changes in precincts in emergent urban areas, However, BMW possesses the strategies that will likely aid it readdress profits, eventually retaining endurance for the organization’s future. BMW possesses a, great deal of knowledge gained through experiential learning (, of manufacturing vehicles since 1928. First, consider identifying core, functional activities that BMW perform. that is difficult for competitors to duplicate or imitate (Peng & Meyer, 2019; Barney, 1991). This channel value chain is structured on the basis of design, location and price; such the products available for its customers vary from a “Mini” to a “Rolls Royce”. Disclaimer: This work has been submitted by a university student. Academia.edu is a platform for academics to share research papers. environmental analysis. From the above diagram, BMW’s critical success factors (y-axis) are: Product cost that determines the quality of the product. In this case study, BMW is seen in the maturity stage of the industry life cycle. BMW a German company which started in the year 1910 in the city of Munich which then manufactures the air engines, which after the world war 1 was forced to stop the manufacture of aircraft engines then moved into motorbikes and slowly grown into the automobile sector and had become one of the world renowned brands. Although BMW’s growth was stagnant, its huge market share and brand identity allowed for standardization of products like the 1,3,5,7 series in mature and developing markets. 1st Jun 2017 An increase in amount of revenue in marketing and new product design that was due to surplus production of cars prompted withholding of revenue although supply was higher than demand. Economic factors for the automobile industry are. However for BMW, the acquisition of cumulative experience is expected to lower its unit costs. The VRIN test- Evaluate the competitive advantage of resources #4. You can spend money and immediately acquire a resource. A good and easy-to-remember way to distinguish resources and capabilities is this: resources refer to what an organization owns, capabilities refer to what the organization can do (Table 4.2 “Resources and Capabilities”). The laws and regulations that had affected the automobile industry touched on the environmental practices that were expected of any car industry. Examples in the case-study include operating in, over 150 countries, employing 129 932 people and network sales via BMW, MINI and Rolls-, Dynamic capabilities. In order to maximize the use of available working capital, BMW embarked on new and modern technology for its production (Pavelec, 2007). Tangible resources are primarily plants – here, the production facilities in Leipzig, Spartanburg and Shenyang. In order to maintain a brawny supply chain management, BMWs strong relationship with suppliers was strengthened, In comparison with other competitors, BMW had a serious and conventional overall image, The overreliance on the European and US market, In spite of the economic downturn, there was an increase in the number of products sold, Increase in popularity of upcoming developing countries such as India and China, Adoption of advanced technology for products and flexibility in development and manufacturing, Affordability due to decrease in interest rates, Cut throat competition especially in the luxury niche of automobiles, Repercussions from the economic down turn and consequential increase in fuel costs, Increase in the number of entrants into the automobile industry, Increasing supply costs such as for the steel, Price variation depending on the product quality, Product design and price according to product quality. Therefore, the available option for BMW is to compete through its competitive advantages and core competencies. Cycle of competition refers to the various drifts among competitors over time. Firstly, product quality is an unavoidable and a unique factor that is vital as far as consumer satisfaction is concerned. In order to identify BMW Group’s internal strengths and weakness, here applied strategic capability which combined three keys of resource: tangible resources, intangible resources, and competences. Key Resources is the building block describing the most important assets needed to make a business model work. Consideration on the environmental issues. cars, capabilities to meet regulatory requirements in terms of manufacturing new energy cars, capabilities in developing autonomous driving vehicle systems, and capabilities to envision new, In terms of the strategy process, being able to implement a planned strategy is a very important, capability. BMW should focus on hybrid and electric vehicles as the future technology powering its vehicles. The first key to the meaning of the BMW logo are its colors: white and blue are the colors of the State of Bavaria in Germany, home of BMW. Employees of BMW and visionaries are thinking about how BMW can innovate to stay ahead of the trends and the client wishes. • Diagnose strategic capabilities by means of benchmarking, value Additionally, it can be adopted to gain competitive advantage coupled with marketing intelligence to outcompete its rival. There are many factors that drive performance leadership in an organisation. BMW also had produced an impressive 1.1 million cars in fiscal year 2003 (Gerry Johnson, Kevin Scholes, Richard Whittington, 2008), thus demoing economies to scale to gel with its manufacturing units worldwide. Key resources are the talent and capital that are required to execute a strategy or plan. Customers who buy BMW products don’t just buy the product. Economic factors entail global economic growth, international exchange rates and business status in a given industry. In summary, BMW’s key success factors are BMW’s business model, Sustainability, technology, brand image, and CEO of BMW, Helmut Panke. Poor performance of the Euro decreasing exchange rate has greatly affected car makers in Europe, Global increase in GDP from 2.0% to 3.1% in 2008 and consequential economic downturn in the US market in 2008, Emergence of developing economic states like China and India’s excess capital and buying power regionally and globally (Autofacts, 2004). In order to manage its supply costs, BMW set up different locations in the global market such as China, Germany, UK, USA and South Africa with a human workforce of 104000. Although the necessary competitive advantage may not be achieved, the reduction in unit costs guarantees capability of survival. Human resources composing of young and wealthy professionals supported by a highly qualified labor force, Threshold competencies represented by good relationships with the suppliers, inevitable quality, reliability and dealings, Core competencies known for its speedy production and technology that are the ultimate driving machines for BMW, Threshold resources of integrated supply chain, worldwide production and assembly units supported by young and astute employees, Unique resources of high quality labor force and excellence in engineering. Page 5 - 7 out of 16 pages deal of knowledge gained through experiential learning (, of manufacturing since... Is due to the company has a long relationship with suppliers future, visionaries are thinking about how can! Day scenario automobiles play an important role in organization because it helps various fields like controlling cost, speed! Modern day scenario automobiles play an important role in business more time to be in! 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