Help with BMW Case Analysis for School

[SonnyZ4]

I'm working on a case analysis for my MBA capstone and I need ya'lls help! We had to pick a company from a list and I chose BMW. The goal of the analysis is to find a company that they should acquire, why they should, what issues, etc.

Some information I'm trying to gather is how BMW is sold/advertised/perceived in other countries. One of our exchange kids from Germany mentioned that they're not really sold just as a premium luxury brand. For example, you might see some with 4cyl, cloth seats, etc; where in the US we look at it more as a status symbol so American's wouldnt' want one with cloth seats and "low level" options. I read an article that VW has some trouble in the US with people viewing them as expensive because of other brands they associate that brand with being a "near luxury" car that's expensive-ish. Does BMW have that problem anywhere?

In your country, is BMW considered simply a premium/luxury brand? Or is there more to how they're perceived? Are they part of a "status" symbol like they tend to be for many Americans?

Thanks for all the help

[paulgs1000]

Interesting question Sonny,

In the UK I think that BMW are perceived as a premier brand, though most importantly seen (and marketed) as a driver's car - the driver's choice. For many that's where the status starts alongside reliability and build quality.
The company/brand has a racing/sport history based upon rear drive cars which they have emphasised as part of their marketing.

In order to exploit all markets, BMW have gone on to provide more affordable models alongside technologically leading models such as the i8 and they certainly try to cover most market areas whilst still maintaining this image.

Being a premier brand calls for quality options and extras and these become part of the status and value of the brand.

In the UK they are a desirable expensive status brand and especially prized as a 'driver's car' - perhaps looking at how the company has maintained this image through it's different models (use of the ///M designation for example) and advertising would be an interesting strand for your work?

I'm sure you'll get more feedback from forum members - there are many knowledgeable folk who have a lot of history with the brand.

Good luck with your study.

[Dewi]

In the UK BMW are being more percieved as unreliable rather than luxury brand cars, they live on past glories rather than current values. They're fine whilst still under warranty (depending on the particular dealer, some have after sales that is quite franky piss poor) but once the warranty has expired you're pretty much on your own with all the problems that the short in-built life span offers. They are and always have been a good driver machine though, offering great road manners and superb performance, but too many dodgy electronic / mechanical problems makes them flawed in comparison to say Japanese cars. The Z4 in particular has many mechanical and electronic issues, i.e Roof motors on the Roadster which drown in water, suspension springs that break with great regularity, Brake ABS sensor failure, Sticky steering, Hydraulc valve lifter problems, Gearbox problems......the list goes on.

So why do I have one? It's just simply great to drive and I can forgive all it's foibles, which is why BMW get away with selling us sh*t

[SonnyZ4]

Interesting, thanks for the info guys.

Dewi: Oddly enough, I've always considered BMW to be engineered well and reliable haha

Our case analysis requires us to find a company for them (BMW in my case) to acquire. At the moment, I'm looking at hydrogen fuel cell engine or alternative fuel vehicle companies for them to acquire. I'm hoping that if BMW does have a global view as a more premium/expensive brand, I can use their higher price to offset/hide the higher cost of early alternative fuel vehicles. I work for an oil and gas company and I have a biased towards fuel cells since production can be done with natural gas in electric generation

[RickRob]

I think the reply from paulsg1000 is spot on.

My personal experience is not not as described by Dewi. My first BMW was a 1996 328Ci which bought then it was 18 months old with 19k on clock. When it was out of warranty it started to sound like a bag of nails. I took it to the BMW dealer who replaced the engine block and a lot of hoses/pipes etc and they sent the bill to BMW UK. Whilst this was all being done they lent me a 728 and then a Z3. I had one of the sub-standard blocks that were an issue for a lot of cars made around that time.

As you can imagine I was super-impressed and relieved that this all cost me nothing. BMW didn't have to do that, but presumably did to protect their reputation.

After that I kept the car until 2008 with no problems at all - just getting it serviced and replacing things that are consumables.

I have only owned the Z4M since April of this year. It has almost 90k on the clock and sailed through its MOT and the independent dealer confirmed that all was in good shape.

Hope this helps.

[ekimj10]

Interesting topic and some excellent responses. I've been a BMW owner for 9 years now, a Series 1 for 9 years which I still have, a Z3 followed by a Z4 for the last 2 years which has 124k miles on the clock.
Reliability for the most part has been excellent, depreciation acceptable and there's not too much to dislike. If anything, they are very strong mechanically but often let down by electrical issues.
BMW is still perceived as a 'luxury' brand in UK though I see this being less so judging by the high numbers seen on the road these days. They have lost (imo) their way a bit of late with their designation of marque numbers and badging.
As for your project, there is certainly a lot of scope for BMW to manufacture both parts and vehicles outside of USA and Germany. I don't have any data to hand but suspect there is very little manufactured elsewhere.
Best of luck with your MBA studies.

[Dewi]

Interesting, thanks for the info guys.

Dewi: Oddly enough, I've always considered BMW to be engineered well and reliable haha

Our case analysis requires us to find a company for them (BMW in my case) to acquire. At the moment, I'm looking at hydrogen fuel cell engine or alternative fuel vehicle companies for them to acquire. I'm hoping that if BMW does have a global view as a more premium/expensive brand, I can use their higher price to offset/hide the higher cost of early alternative fuel vehicles. I work for an oil and gas company and I have a biased towards fuel cells since production can be done with natural gas in electric generation

After 3 BMW cars and 4 bikes, I've found the big stuff is usually ok, it's the small annoying things like electrical gremlins etc that let the brand down. In fairness the cars haven't been too bad but the bikes have had more than you'd expect in the way of breakdowns from a premium maker. I've had a catalogue of faults on the BMW bikes, including blown gearbox & final drive oils seals, Warped brake discs, failed wheel bearings and one bike (the R1100S) even went up in smoke due to a badly routed wiring loom. Nothing at all of note has gone wrong on the Jap bikes strangely enough. The present bike, a BMW R1200R, has a knackered fuel gauge at the moment- it's done just short of 8k miles, it went kaput about 1000 miles ago. It's a very common fault which out of warranty BMW want £340 to repair and the failure rate on the replacements is equally as high so no point is shelling out for what is a basic design fault. I now do what I've always done, zero the trip meter at fillup and refill at around 200 miles.

I've just had a letter from BMW telling me here's a recall on the bike to fix a potential leaking fuel pump housing. I know this has been a problem for some time so I've been expectng the recall letter, but at first they only issued a blanket statement saying they'd sort it at the next service. Problem with that is, like a lot of people, I don't use BMW to service the bike, I do it myself - properly. My pump has never leaked so I left it, but something has now happened which has prompted them to recall all the bikes affected for a free of charge fix. Someone somewhere has put pressure on them to issue the recall, as I'm sure they wouldn't do it otherwise. It's good job it's great bike to ride or it would have gone a long time ago

[paulgs1000]

SonnyZ4,

If you have to have your company (BMW) invest in another company then why not go for your modern fuel cell but link it in some way with the thrill of driving - in other words find a company that holds the same goal - a company that would benefit from the image of BMW so that the best experience could be gained when the new power source is used (as with the i8 already). Certainly the i8 is now a bench mark in hybrid technology - why couldn't BMW do the same for one of your new energy companies? If such a link worked then the acceptance of the new power source would be greatly enhanced as would BMW's image being at the forefront of the development.

Just a thought. . . . .


Or what about investment and work with a quality assurance or testing company. From the postings of other forum members it looks like BMW would benefit from such input on their components - does your company have such a section?

[wegras]

A battery technology company ,or have they already done that

[Bumpy]

In Canada, BMW is seen as a premium brand and it's promoted as a driver's car with exceptional engineering.
You have to understand that the North American automakers that were the traditional first choice of most, have pretty much imploded since the early 90's, and that's released many potential customers into the marketplace.

I can only speak for one dealership "Endras BMW" in Ajax, Ontario, Canada.
These people market their products as if every customer is special and important to them. They back this policy up by their actions, be it service or a new vehicle launch - Everything is done first class. The New Mini Introduction is a perfect example. Customers were invited, the dealership was decorated, included a DJ and an open bar plus lots of British Themed appetizers. You could drive any and all models of the new Minis, and there were significant door prizes like a weekend at a spa. My wife and I totally enjoyed the evening, and came away significantly impressed with how hard Endras values us as customers.

The down side.
Well a premium car, requires premium service and premium parts. All of these come at a very premium price. There are very few alternatives than to return to the dealership for even the most basic of parts and service. As I discovered with my M Bumper Project, small little pieces of metal and plastic are marketed at what sometimes appears to be 'dislocated' from the cost to produce such a part. But the customer is pretty much obliged to suck this up because there are so few alternatives.

Also the cost of what often appears to be over engineering, well that opens the door for so many additional things that can go wrong. I have so far avoided all of these, but I do have a concern that all the computer assisted systems, keep on working. I can only imagine the costs of getting headlights to remember how to self align or similar. The prospect of the car becoming a money pit is always looming on the horizon.

Unlike my past experience as a mostly Chevrolet owner, as was my father before me, I enjoyed their ownership until about 1990 when I discovered the products had turned to junk and the dealerships were not interested in hearing about it ...So far Im very happy with my Zed, BMW and Endras. All of it well above my expectations.

Cheers with your Project
Bumpy

[SonnyZ4]

PaulG: Thats actually the direction I've started to go, I've been looking at companies that build hydrogen fuel cell engines. I got the idea for purchasing a fuel cell company from the i8. Plus, just like you mentioned, BMW would benefit greatly from being the first mover (assuming fuel cells were to replace gas)

Since a hydrogen fuel cell car (sports car or not) would have a high initial adaptation cost, I was hoping that I could build off of BMWs already premium/luxury brand status to sort of hide or disguise the higher cost of new fuel type cars. I thought, if the i8 was a normal gas powered car, would it still be able to command the ~$150k price and does the fact that its a BMW and not a more "common" car help with how consumers view the price tag?

Based on talking with a friend from Germany, it looks like they also view it as a more premium brand, its just that they also market some models as a more affordable option.

Thats why I enlisted your guy's help haha Since they're a global company, I wanted to see if other countries view BMW the same as us Americans so I can have some info on how both BMW and the car would be marketed worldwide, or if it would have to be completely different for each country. Plus, if the acquisition would even be worthwhile

[paulgs1000]

SonnyZ4,

I think the i8 shows that BMW are prepared to 'blaze the way' if the product is right. The design of the i8 is also striking and different yet approachable enough to be accessible to the market i.e. it is an effective and efficient machine as well as being at the forefront of design.

In terms of cost I would think that anything which is seen to be effective and well received from a premier company would be sought after and therefore people would be prepared to pay a premium price and remember there is an increasing global market for such goods.

One concern you might like to highlight in your work is that BMW have produced the 'i' range after such technology has had some time to develop - would they take a new power source to the market as a first provider? Would you have to argue that the power source was a realistic and viable way forward to enlist the support of such a premier brand in this case?

Good luck with your work.

[wildbeeste]

Have a look at UKGSER.com
It is a site for owners of the BMW GS adventure bike range (you do not have to subscribe for most of the site)
It is massive - find the WC section - BMWs latest watercooled Boxer engine
Search and find out about - final drives failures - faulty fuel gauge strips- gearboxes failures - corrosion - engine replacements under warranty - poor dealer service etc etc
Surely it would be cheaper to make the thing work first time than fixing all these major things

Once you have exhausted the WC section you will find that some of the problems have been around for many many years and are not isolated issues

Good luck