Business Environment Appraisal And Financial Analysis

In this record, PESTE, Porter's Five Pushes framework will be used to do an exterior appraisal of BMW GROUP (a car company). We will discuss the key strategic issues facing by the company along with the key success factors. Also, we will perform a financial research of the business in conditions of efficiency, profitability and results to shareholders.

BMW Group

BMW (Bavarian Motor unit Works) Group is a global leading manufacturer of quality luxury vehicles and motorcycles. BMW Group was established in Germany in 1916. Using its three advanced brands: BMW, Rolls-Royce and Minuscule, BMW Group holds significant market share in automobile industry. BMW often considered as among the best in the automotive sector. It has a existence in over 160 countries, with 21 making plant life on four continents. BMW Group utilizes over 100, 000 people worldwide with a working power of 8000 employess in UK. Pursuing Germany and America, UK is BMW's third-largest market on earth.

Why BMW Group?

With a pastime in auto sector, especially in luxury car section impact me to choose BMW group because of this formative assignment. Also, it could give me an possibility to research relevant business environment of BMW Group when i see BMW Group my future company.

Strategic Issues with BMW:

Major strategic issue BMW group presently facing is coping with its funding of functions. Therefore, Fluctuation of company shares is therefore an issue as unpredictability makes it difficult for buyers to judge whether the stock is at a making point or has already reached steady level.

Business Environment Appraisal:

PESTE: A PESTE evaluation is a tool used to discover changes in the exterior environment that may influence business in future (Henry, 2008).

Political:

Political factors have an effect on automobile sector are enforcement of new regulations on emission expectations (e. g. , Euro 5 expectations), politics instability in rising markets. Similarly, directives such as E. L. V (end-of- life vehicles), which determine the way the end-of-life vehicles (ELV) should be recycled poses additional costs on automakers.

Economical:

Economic factors include economic growth, interest rate risk, money risk exposure, etc. Also price of crude petrol and fluctuation in cost of raw materials are other major economical factors.

Social:

Social factors are the changes in cultures and demographics internationally aside from change in the buying pattern and capacity of the buyer. Development in the amounts of middle-class in countries like India and China is an chance of BMW. Also change in customers choices from luxury automobiles to environment friendly hybrid cars have an impact on motor vehicle sector. BMW's reaction to their customers' change in choices, BMW's increased give attention to hybrid cars, dual fuel engines and generally speaking more fuel useful cars. Over time BMW is likely to continue to be at the forefront of sustainability by providing innovative answers to environmental issues.

Technological:

In automobile sector technology is considered at priority to get competitive advantages over rivals. Technology permits environmental friendly alternatives like dual energy engines, cross electric vehicles and hydrogen motivated cars. BMW has a good position, because BMW has researched in this field for years, by researching dual fuel engines, hybrid electric automobiles and hydrogen influenced cars

Environmental or Ecological:

Factors that affect car industry are global warming consciousness, greenhouse effect, C02 emissions norms. For BMW Group complying with new environment requirements, shutting emission and pollution standard distance is crucial. BMW Group is working on Efficient Dynamics programme to achieve environmental efficiencies.

Key motorists of change:

Consumer tastes for green product

Fluctuation in cost of uncooked materials

Emerging new market segments in India and China

Porter's five makes: Michael porter five causes can be an industry analysis that enable mangers to evaluate industry competition (Enz, 2009)

Porter five forces:

Potential entrants

Low

LOW

- High capital investment,

- Wide circulation channel,

- Brand popularity.

High

Competitive rivalry

Buyers

Suppliers

C

Low Low

-Suppliers in lot - Customer commitment,

- High marketing cost - Distinctive brand

- High branding cost

Substitutes

-Toyota, Honda superior cars

Medium

Porter's five pushes model for BMW

Fig 1. 1

Potential Entrants - Low

Threat for new entrants seems to be low since establishing an automobile industry requires huge capital investment. Also, Brand popularity, wide distribution stations, advance use of technology and very skilled management are obstacles to entry for new entrants.

Substitute - Medium

Transportation alternatives such as trains, busses, bicycles or even walking cannot be considered as substitute for BMW. However, well-established company such as Suzuki, Honda, and Toyota entering into premium car segments can be a considered as substitute of BMW.

Power of Suppliers - Low

Bargaining electricity of suppliers is low since suppliers are large in volumes and competition is high. Largely suppliers rely using one or two car manufacturer with strong brand image to buy most their products. If car manufacturer decides to change from one dealer to another then it make a difference the business enterprise of previous distributor. As a result, suppliers are really hypersensitive to the needs and requirements of manufacturer, and hold very little power.

Power of Potential buyers - low

The Transitioning costs of the general car industry are incredibly low. Customers can swap to some other car brand if they are not happy with the current one. This gives customers bargaining power over the car manufacturers. But in case prime car market the bargaining ability of buyer is low as potential buyers have grounds for spending more than necessary for a car. Customer will not frequently have high targets when they buy advanced automobiles. BMW distinctive brand plays a part in customers being more loyal and it therefore lessens the bargaining electric power of the buyer.

Competitive Rivalry - High

In luxury car portion, competitive rivalry is known as high because of high competition cost involved on marketing and branding. The industry rivalry is considered to be very brutal in the top quality automobile segment. Chance for new entrants in future will improve the degree of competition.

FIVE-FORCES MODEL

FORCE

THREAT TO PROFIT

POTENTIAL ENTRANTS

LOW

SUBSTITUTE

MEDIUM

SUPPLIERS

LOW

BUYERS

LOW

COMPETITORS RIVALRY

HIGH

Key Success Factors:

Key success factors in so doing are Branding, innovations and technological functions and sustainability.

BMW Financial Performance:

BMW Group (Worldwide)

Conclusion on the Financial Examination:

Worldwide financial and financial meltdown had a major impact on BMW business in the entire year 2009. Significant fall season in Gross profit, EBIT margin and ROCE ratios indicates decrease in BMW Group's earnings and upsurge in direct cost and bills. However, BMW made it through turmoil without severe trouble with the support its liquidity and efficiency.

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