Bmw Case Submission

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Attributes which might improve: Cost savings, Quality, faster attainment of full time production.

Attributes which might deteriorate: Flexibility would be greatly reduced, designs will have to be frozen in an earlier stage and last minute changes will not be possible.

- What recommendations would you make to Chairman von Kuenheim regarding BMW's strategy to compete against new Japanese entrants into the luxury car market?

ANSWER:

BMW underestimated Japanese completion in the beginning but Japs picked up soon. The underlying principal for Toyota and Honda’s success story was that they were quick to roll out new models with ‘incremental changes’. This allowed for quick turnaround and reduced lead times significantly. BMW should seriously consider putting this strategy into practice as rather than waiting for fresh set of pre-production tools for each new model, if incremental changes are to be put in pre-production tools from even penultimate model could be utilized.

Secondly, BMW 7 series competes at a level where the customer is image and brand savvy rather than being price sensitive. If despite paying best of the price customer receives a luxury car with faults, it hurts the BMW’s brand image tremendously. Hence, considering high pre-production costs involved in this segment, rather than being price competitive BMW should focus on brand image. Simultaneously, BMW can also consider the concept of incremental changes in lower segment of 20-40 k. This way it will be possible for BMW to address both the cost issue as well as the quality issue.

At one instance, it has been mentioned in the case that it takes only one week to make production tools during the prototype stage. BMW should seriously consider scaling up further on this aspect as production tool manufacturing could add to the core competence of BMW and may significantly bring down costs and lead time ( currently 6 months) in the long run.

One more recommendation from my end would be to compete in environment friendly vehicles segment. While Toyota Prius has been a huge success, nothing has hugely successful has yet come out from BMW’s stable. Environment friendly cars are the future. Success of Prius has created a flagship product on its own for Toyota. BMW too should focusing on this aspect of car production.