DAMODARAM SANJIVAYYA NATIONAL LAW UNIVERSITY VISAKHAPATNAM

TITLE OF THE PROJECT: SWOT ANALYSIS OF CARS

NAME OF THE FACULTY: ABHISHEK SINHA

NAME OF THE STUDENT: N.S.RUPESH

ROLL NO. : 2017057

SEMESTER: II

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TABLE OF CONTENTS:

S.NO. TITLE DATE UPON WHICH PAGE

IT IS DONE NO.

1. ABSTRACT 23-01-2018 3

2. INTRODUCTION 25-01-2018 4

3. METHODOLOGY 26-01-2018 5

4. FINDINGS 29-01-2018 5

5. DISCUSSIONS 30-01-2018 6

6. RESULTS 03-02-2018 11

7. CONCLUSION 05-02-2018 12

8. RECOMMENDATIONS 10-02-2018 12

9. APPENDIX 14-02-2018 12

10. REFERENCE 21-02-2018 14

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ABSTRACT

The Indian auto industry is one of the largest in the world. The industry accounts for 7.1 % of
the country's Gross Domestic Product. The Two Wheelers segment with 80 % market share is the
leader of the Indian Automobile market owing to a growing middle class and a young population.
Moreover, the growing interest of the companies in exploring the rural markets further aided the
growth of the sector. The overall Passenger Vehicle segment has 14 % market share. India is also a
prominent auto exporter and has strong export growth expectations for the near future. In April-March
2017 exports of PV and Commercial Vehicles registered a growth of 16.20 % and 4.99 %
respectively, over April-March 2016. In addition, several initiatives by the Government of India and
the major automobile players in the Indian market are expected to make India a leader in the 2W and
Four -Wheeler market in the world by 2020. The Government of India encourages foreign investment
in the automobile sector and allows 100 % FDI under the automatic route. Some of the major
initiatives taken by the Government of India are, Government is planning to introduce biofuel vehicles
for road and water transportation. India needs to cut fossil fuel imports and look for alternative and
cheaper fuels like methanol. Government of India extended support to the industry by increasing
custom duty on CBUs of commercial vehicles from 10% to 40 % and reducing duty on chassis for
ambulance manufacturing from 24 % to 12.5%. The Government of India plans to introduce a new
Green Urban Transport Scheme with a central assistance of about Rs 25,000 crore, aimed at boosting
the growth of urban transport along low carbon path for substantial reduction in pollution, and
providing a framework for funding urban mobility projects at National, State and City level with
minimum recourse to budgetary support by encouraging innovative financing of projects. Government
of India aims to make automobiles manufacturing the main driver of ‘Make in India’ initiative, as it
expects passenger vehicles market to triple to 9.4 million units by 2026, as highlighted in the Auto
Mission Plan (AMP) 2016-26. The government has formulated a Scheme for Faster Adoption and
Manufacturing of Electric and Hybrid Vehicles in India, under the National Electric Mobility Mission
2020 to encourage the progressive induction of reliable, affordable and efficient electric and hybrid
vehicles in the country. The per capita GDP of India increased from 1200 USD in 2011 to almost 1330
USD in 2012. This is further expected cress the 2000 mark by 2015. The purchasing power will
increase, which will result in increase in demand of automobile industry in India. India has become
one of the international players in the automobile market.

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Introduction:

Bayerische Motoren Werke AG is commonly known as BMW. It translates to English as

Bavarian Motor Works. BMW-AG is a German automobile, motorcycle and engine
manufacturing company based in Munich, Germany. BMW started as a manufacturer of
aircraft engines in 1913, but in 1919following the armistice (Treaty of Versailles)German
military was prohibited to produce aircrafts. Following years saw, the company
manufacturing motorcycles due to the Treaty of Versailles imposed conditions. The first
BMW car was manufactured in the year 1928. Currently, BMW is the parent company of
Rolls Royce Motor Cars and MINI. Besides being one of the ten largest car manufacturers in
the world, it also has a strong market position in the motorcycle sector under BMW Motored.
BMW AG is one of the “German Big 3” luxury automakers with Audi and Mercedes Benz. In
June 2012, BMW was listed as the #1 most reputable company in the world by Forbes.com
and also the same year, Dow Jones Sustainability Indexes named it the world’s most
sustainable automotive company for the 8th consecutive year (first automotive enterprise to
been the Index). Rankings were based on willingness to buy, recommend, work for and invest
in a company. Since its first motorcycle rolled out in 1923, BMW has been engaged in
motorsport activities as well. BMW has been official sponsor for London 2012 Olympics,
United States Olympic Committee, PGA Championships, BMW Italian Open (Golf) and
Bundesliga (football). It is the charter member of US Environmental Protection Agency’s

National Environmental Achievement Track, which recognizes companies for environmental

stewardship and performance. BMW is ranked 3rd place in Carbon Disclosure Leadership
index across all industries.

SWOT Analysis:

Strengths:

1.Strong Brand Reputation: In 2012, BMW was listed as the most reputable business in the
world by the Forbes magazine. The strong brand reputation of BMW is the result of effective
marketing strategies. Consumers‟ perception has been associated with the brand image. With

$29 billion, BMW brand is the third most valuable automotive industry brand in the world.

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2.Environmental Friendly Technology: BMW is known for its innovation and technological
advancements. The company develops environment friendly cars, with its engineers working
on developing new types of fuels, such as hydrogen. BMW AG offers nearly 20 models
emitting CO as low as 140g/km. In 2013, BMW-AG announced launch of its first fully
electric car range, starting with BMW i3 in 2014.

3.Highly Skilled Workforce: Quality cars require premium materials and skilled workforce.
BMW has set up assembly plants mainly in USA and Germany, which have the most skilled
vehicle assemblers.

4.Corporate Social Responsibility (CSR):The company invests large sums in employee health
management, balanced work life

programs, zero waste at its plants and suppliers‟ sustainability. It is committed to

employee-community well-being and environment protection programs.

5.Quality Products: BMW is a world renowned brand for its engineering potentials, skilled
workforce and quality products.

BMW aims at technological advancements, „green‟ vehicles and

new innovative quality products.

6.Competitive Customer Service: BMW works efficiently on long-term post sales customer
service practices catering to the needs, problems and any issues faced by its customers.
Customers spending so many amounts of money on quality products look for superior after-
sale services, which BMW knows very well how to full fill.

Weaknesses:

1.High cost structure: For production of high-end, luxury products; hiring skilled workforce
and new technological components leads to high costs for the business. BMW‟s cost
structure is higher than that of its competitors like Audi, Toyota, GM and Volkswagen.

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2. High prices perception:

Compared to its competitors, like Audi; BMW‟s luxury cars requires higher

Cost structure. Thus, BMW follows a premium pricing strategy leading to high price in
comparison with other cars.

3.Too few acquisitions and strategic partnerships: The lack of strategic partnerships with
other organizations is another weakness of BMW-

AG. BMW‟s 10% growth is credited to acquisitions which makes hard for a

company to grow. In order to grow remarkably, a company has to acquire more brands and
enter into more strategic partnerships.

4.Weak brand portfolio (only three brands):BMW manufactures and sells only 3 brands:
BMW, MINI and Rolls-Royce. The lack of differentiation in brand portfolio may have
negative impact on long-term growth of the company. It may put the company in jeopardy to
external shocks and economic crisis in the future.

Opportunities:

1.Increasing fuel prices: With the current economic instability and growing fuel prices, large
markets can welcome the new range of BMW hybrids and hydrogen cars. BMW has been
working on developing the I-BMW concept which includes fully electric cars leading to
emission reduction and cost efficient cars.

2.Green vehicles and new emission regulations: With customers becoming more conscious
about the environmental protection and the negative aftermaths of petrol and diesel cars,
BMW‟s emphasis on „green‟ vehicles

will definitely create strong position in the automotive industry in the future. The
firm produces most ecological vehicles which comply with the new reduced vehicle emission
regulations.

3.Changing customer needs: Unique selling proposition and continuous brand building with
the help of new innovative technologies can help BMW to cater to different target groups.
BMW takes into account the changing customer needs before launching and developing
new products.

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4.Strategic alliances with other automobile companies: BMW can plan to increase its
presence globally by taking in to account the possibility of strategic alliance with other
companies. Strategic alliances can help large companies to explore the markets of countries
that have limited themselves to particular companies

Threats:

1.Increasing prices of raw materials: Auto manufacturers are facing issues due to rise in costs
or raw materials leading to lesser profits and higher input costs.

2.New competition: In developed countries, markets are saturated for luxury cars,
intensifying competition. With increasing competition from competitors like Audi, Mercedes
Benz, Toyota, etc. BMW tends to compete more on price rather than differentiation.

3.Euro exchange rates: Exchange rate fluctuation can be a major threat for BMW if euro
appreciates against other currencies because a huge part of it profits come from other
currencies.

4.Malfunctions: Another threat for BMW can be the product recalls which compromises its
claims of high-end quality products affecting its brand image. E.g. in July 2014, the company
announced recall of 1.6m 2000-06 3 series models due to passenger-side airbag issues.
Similarly, in April 2014, BMW recalled 156,137 luxury cars and SUVs due possibility of
faulty engine bolts.

5.Shale Gas Extraction: With increasing emphasis on shale gas extraction, future fuel prices
may drop making electric, hybrid and hydrogen cars less attractive. This in turn can be an
area of concern for the company who is spending a major portion of its reserves and profits in
developing the I-technology electric and hydrogen cars.

Results
Individual SWOT outputs

A summary of the individual SWOT outputs from each cluster are included in Annex 1,2.
Each cluster was asked to prioritize the points within each SWOT quadrant and hence the
lists are numbered from one (highest priority) up to ten (lowest priority).

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Conclusion

Automobiles and mainly Cars in world today is constrained by many factors. BMW which is
a German based company which has created history by becoming the large contributor in the
central pool of cars and gained the title of the Best Sedan class car manufacturer of World .
This paper is an effort to analyses the strengths, weaknesses, opportunities and threats of Cars
of BMW. While the strengths lie in having one of the world’s largest work station and with a
record sedan class production car, the weaknesses lie in the Production of Surface Utility
Vehicles {SUV’s} and Ceramic Disk Breaking System. Efforts need to be made to face the
threats and exploit the available opportunities. BMW has seen the brighter days of robust
automobile growth. Though, today BMW is on the crossroads, efforts need to be done to
regain the lost glory and improve its present condition.

Recommendations

1. Various kinds of cars.

2. Much safer journey.
3. Comfortable.
4. Luxurious.

Appendix

BMW   is   an   automobile   and   motorcycle   manufacturer   based   in   Munich,   Germany.   The

company   sells   BMW,   Rolls­Royce and   Mini   cars   and   BMW   Motorrad   and   Husqvarna

motorcycles. In 2012, Forbes announced BMW as the most reputable company in the world.

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References 

1. BMW Group (2013). Insights: the Corporation.

2. Interbrand 2013. Best Global Brands 2012

3. Reuters 2013. BMW says China group sales surge 73 pct in December