Vertu
Exploring Corporate Strategy
CLASSIC CASE STUDIES
BMW automobiles
Valeriano Lencioni
The BMW Group is a prominent European maker of prestige automobiles. Its operations also include motorcycles, software products and financial services: this case deals only with the group’s automobiles. By 2004 it produced and sold over one million vehicles under three brands: BMW, by far the largest; MINI, a relaunch of the British icon small automobile from the 1960s; and the Rolls Royce, of which they relaunched the ‘Phantom’ model in 2003. Following the failure to grow market share and the range of models by acquiring the British group Rover, the Group in the early 2000s adopted an aggressive strategy of organic growth. The result was the launch of a large number of models across the price and class ranges, and a robust policy of market development.
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THE AUTOMOBILE INDUSTRY IN THE MID 2000S
The first automobiles were produced in the late 19th century but the automobile industry became a significant employer and an economic force only after the Second World War, when national economies began to be rebuilt. With the end of the war, the industrial production and manpower that had fuelled the war effort were deployed to rebuild infrastructures and provide people with the consumer goods that were not available during the war. Automobile production was initially prominent in the US, but soon Europe, later Asia, especially Japan, became equally important forces. By the latter part of the 20th century, the automobile industry was global, mature and heavily consolidated: most of the world automobile production was concentrated in five companies – General Motors, Ford, Daimler-Chrysler, Toyota and Volkswagen (see Exhibit 1). A number of environmental circumstances affected the industry in the first few years of the 21st century. The global economy experienced a sharp downturn in 2001, which lasted well into 2003 when some signs of acceleration were experienced, especially
CLASSIC CASE STUDIES
BMW automobiles
Valeriano Lencioni
The BMW Group is a prominent European maker of prestige automobiles. Its operations also include motorcycles, software products and financial services: this case deals only with the group’s automobiles. By 2004 it produced and sold over one million vehicles under three brands: BMW, by far the largest; MINI, a relaunch of the British icon small automobile from the 1960s; and the Rolls Royce, of which they relaunched the ‘Phantom’ model in 2003. Following the failure to grow market share and the range of models by acquiring the British group Rover, the Group in the early 2000s adopted an aggressive strategy of organic growth. The result was the launch of a large number of models across the price and class ranges, and a robust policy of market development.
● ● ●
THE AUTOMOBILE INDUSTRY IN THE MID 2000S
The first automobiles were produced in the late 19th century but the automobile industry became a significant employer and an economic force only after the Second World War, when national economies began to be rebuilt. With the end of the war, the industrial production and manpower that had fuelled the war effort were deployed to rebuild infrastructures and provide people with the consumer goods that were not available during the war. Automobile production was initially prominent in the US, but soon Europe, later Asia, especially Japan, became equally important forces. By the latter part of the 20th century, the automobile industry was global, mature and heavily consolidated: most of the world automobile production was concentrated in five companies – General Motors, Ford, Daimler-Chrysler, Toyota and Volkswagen (see Exhibit 1). A number of environmental circumstances affected the industry in the first few years of the 21st century. The global economy experienced a sharp downturn in 2001, which lasted well into 2003 when some signs of acceleration were experienced, especially