Bmw Five Forces

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Table of contents BMW: case study analysis Q1: Business environment and main trends in 2004 The global car market started decline in 2003, led by market falls in North America and Western Europe. Other regions of the world led by East Asia are seeing further car market expansion in 2003. In 2004, projections for livelier economic growth underpin the resumption of car market growth in Western Europe and North America. (Langley 2004, p691-711) Although the more stringent laws can eat away at companies' earnings, they also provide the stimulus to develop new technologies and markets. Another major external factor affecting the current situation of BMW is that industry structure is becoming more and more concentrated. In this era of…show more content…
The buyer concentration ratio and information availability is high as well as ratio of firms producing cars, on the other hand the power of buyers is weak due to low demand for non-consumer goods- automobile, high switching costs and low ability to backward integrate. The threats of substitutes are moderately strong because there are many different and less expensive transportation facilities. (Ahlstrom and Sjostrom 2005, p230-40) On the other hand, intense rivalry is strong because the major players are dominant in the market by nearly same technology and manufacturing processes, supplier's relationship and distribution systems. The ease of differentiating cars and price based competition. BMW is looking at entering into alliances, joint ventures, partnerships as it is the safest way of securing a market share, product attractiveness and competitive prices. In a decision to purchase a BMW product or that of the competitor, an individual will be influenced by a group of people that he or she wants to join. People in a certain social class or in a certain income level, and they are referred to as inspirational group for that individual. (Gereffi 2004, p78-104) Owning a BMW
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