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In an increasingly interconnected world, businesses face remarkable opportunities and challenges to expand their operations across borders. International business strategy has emerged as a vital framework for businesses to navigate the complexities of global markets effectively. By developing a welldefined international business strategy, organizations can align their objectives, design a plan for success, and secure longterm growth in the global marketplace. The importance of international business strategy lies in its ability to provide businesses with a comprehensive approach to entering and operating in foreign markets. It goes beyond mere expansion and encompasses a holistic understanding of cultural, political, economic, and legal factors that influence business operations globally. Whether an organization aims to tap into new customer segments, diversify its revenue streams, or gain a competitive edge, a wellcrafted international business strategy is essential. Therefore, we group 10 would like to research a significant business strategy: the truth behind BMW’s success. Today, the BMW Group, with more than 30 production and assembly facilities as well as a global sales network, is the worlds leading manufacturer of premium automobiles and motorcycles, and provider of premium financial and mobility services, then it is undeniable the role of suitable international business strategy for longterm development. This report is structured as below: • Section 1: Background information: Luxury automotive industry, an overview of BMW. • Section 2: Analysis of international business strategies of BMW With limited knowledge and time allowance, our report cannot be free from mistakes. Our team is eager to receive feedback from PhD.Nguyen Hong Hanh to improve the report’s content and structure.
FOREIGN TRADE UNIVERSITY FACULTY OF ECONOMICS AND INTERNATIONAL BUSINESS MIDTERM REPORT INTERNATIONAL BUSINESS STRATEGY: BMW'S SUCCESS IN THE AUTOMOTIVE MARKET GROUP Instructor: Ph.D Nguyen Hong Hanh Class: KDOE307 Ha Noi, June 2023 TABLE OF CONTENT TABLE OF CONTENT TABLE OF FIGURES INTRODUCTION Section : Background Information I Overview of the automotive industry .4 Size and scope Market Trends and Innovations: II Overview of the luxury automotive industry Size and scope Key players: Characteristics: Opportunities .9 Challenges: .10 III Overview of BMW 10 Introduction to BMW .10 BMW's History 14 Vision and Mission: 14 BMW’s Internationalization: 15 Section : Analysis on international business strategies of BMW 16 I The value chain analysis 16 BMW’s Primary Activities: 16 BMW’s Supporting Activities: 28 II Rationale behind chosen IBS of BMW 31 External factors .31 Internal factors: The VRIO analysis 32 III BMW's international business strategies: Transnational strategy .38 CONCLUSION 42 REFERENCES 43 1|Page TABLE OF FIGURES Figure 1: Automobiles production statistics in 2022 .4 Figure 2: Global automotive manufacturing industry revenue from 2019 to 2022 .5 Figure 3: The World's Top Ten Largest New Car Markets In 2022 Figure 4: Luxury car market trends by region in 2022 Figure 5: The regional mix of BMW purchase volume 2022 (BMW Group Report 2022) 17 Figure 6: BMW Group largest motorcycle markets in 2022 (BMW Group Report 2022) 20 Figure 7: BMW Group's largest automobile markets in 2022 (BMW Group Report 2022) 20 Figure 8: BMW Group Outbound Logistics at a glance in 2016 22 Figure 9: BMW's spending on employee training and development 30 Figure 10: Best brand 2022 33 INTRODUCTION In an increasingly interconnected world, businesses face remarkable opportunities and challenges to expand their operations across borders International business strategy has emerged as a vital framework for businesses to navigate the complexities of global markets effectively By developing a well-defined international business strategy, organizations can align their objectives, design a plan for success, and secure long-term growth in the global marketplace The importance of international business strategy lies in its ability to provide businesses with a comprehensive approach to entering and operating in foreign markets It goes beyond mere expansion and encompasses a holistic understanding of cultural, political, economic, and legal factors that influence business operations globally Whether an organization aims to tap into new customer segments, diversify its revenue streams, or gain a competitive edge, a well-crafted international business strategy is essential Therefore, we- group 10 would like to research a significant business strategy: the truth behind BMW’s success Today, the BMW Group, with more than 30 production and assembly facilities as well as a global sales network, is the world's leading manufacturer of premium automobiles and motorcycles, and provider of premium financial and mobility services, then it is undeniable the role of suitable international business strategy for longterm development This report is structured as below: Section 1: Background information: Luxury automotive industry, an overview of BMW Section 2: Analysis of international business strategies of BMW With limited knowledge and time allowance, our report cannot be free from mistakes Our team is eager to receive feedback from PhD.Nguyen Hong Hanh to improve the report’s content and structure Section 1: Background Information I Overview of the automotive industry Size and scope: The automobile industry is a broad and significant sector with numerous operations and players It is one of the most important sectors in the world, having a major economic influence and worldwide reach Production: The automotive industry is a major global producer of vehicles According to the International Organization of Motor Vehicle Manufacturers (OICA), more than 85 million vehicles were produced worldwide in 2022 (OICA, 2023) This production comprises a variety of vehicles, including cars, commercial vehicles, and motorbikes Different regions contribute to this production, with major automobile-producing countries such as China, Japan, India, Germany, and South Korea leading the way Figure 1: Automobiles production statistics in 2022 Employment: The automotive industry is a significant global employer, offering millions of jobs across various sectors These jobs include car production, research and development, design, engineering, marketing, and sales Additionally, the industry has a substantial indirect impact on employment through its supply chain, involving component, material, and service providers According to the International Labour Organization (ILO) in 2021, the automotive industry employs millions of people worldwide, encompassing both skilled and unskilled workers involved in the production, distribution, and maintenance of automobiles The availability of job opportunities in this sector is expected to benefit individuals and communities greatly Revenue and economic impact: The automobile sector generates substantial income and exerts a significant economic influence at both national and global levels This is primarily achieved through vehicle sales, replacement parts, accessories, and related services According to Statista's report in 2022, the global revenue of the automotive industry reached 2.95 trillion U.S dollars Moreover, the automobile sector plays a vital role in national economies, contributing to GDP, tax revenue, and exports in many countries Automakers and their supply chains have a multiplier effect on the economy, creating jobs, driving demand for raw materials, and fostering technological advancements The industry's economic influence extends beyond manufacturing to sectors such as steel, plastics, electronics, and transportation services Figure 2: Global automotive manufacturing industry revenue from 2019 to 2022 Global market reach: The automotive industry has a wide market reach, with vehicles being sold and used in virtually every country Automobile markets in different areas and nations differ due to differences in customer preferences, legal frameworks, and infrastructure China, the United States, India, Japan, and Germany are major automotive markets, accounting for a sizable part of worldwide car sales in 2022 (Munoz, 2022) Furthermore, the automotive industry encompasses more than just the manufacture and sale of new cars The aftermarket industry, which includes vehicle maintenance, repairs, replacement parts, and accessories, is also a substantial component This industry provides services and goods to meet the continuous demands of car owners, contributing to the total economic activity in the automotive ecosystem Figure 3: The World's Top Ten Largest New Car Markets In 2022 Market Trends and Innovations: Electrification: One of the prominent trends in the automotive industry is the increasing adoption of electric vehicles (EVs) As governments across the world tighten emission regulations to combat climate change, automakers are rapidly investing in EV technology According to McKinsey, global sales of EVs are expected to increase significantly in the coming years, driven by falling battery costs and improved charging infrastructure (McKinsey & Company, 2022) For instance, Tesla, a major electric car manufacturer, has had significant success with its Model S, Model 3, and Model Y, contributing to the widespread acceptance of EVs Lightweight Materials: Automakers are increasingly using lightweight materials, such as aluminum and composites, to improve fuel efficiency and reduce emissions (Stewart, 2020) These materials offer strength while reducing the overall weight of vehicles, thereby enhancing performance and reducing fuel consumption For example, BMW's adoption of carbon fiber reinforced plastic (CFRP) in its i3 electric vehicle demonstrates the use of lightweight materials to achieve sustainability goals (BMW Group, 2013) Autonomous driving: Companies are now rapidly investing in advanced driver-assistance systems (ADAS) to enable self-driving capabilities Autonomous vehicles have the potential to enhance safety, reduce traffic congestion, and provide increased mobility options for individuals with limited mobility Leading automakers such as Waymo (owned by Alphabet Inc.) and traditional manufacturers namely General Motors are investing in self-driving technology and performing extensive testing on public roads (Waymo, 2021) II Overview of the luxury automotive industry Size and scope: The luxury automotive industry caters to wealthy consumers seeking high-end vehicles with exceptional quality and performance In 2022, the global luxury car market reached $617.36 billion, expected to grow at a CAGR of 6.9% from 2023 to 2030 Europe dominates the market with a 39.3% share and is projected to grow at a CAGR of over 6.1% The AsiaPacific region is expected to grow at the highest CAGR of 8.2% due to increasing prosperity, changing consumer habits, government incentives for electric vehicles, and rising corporate profits Figure 4: Luxury car market trends by region in 2022 Key players: Some key players operating in the luxury car market include Mercedes-Benz Group AG, BMW Group, Volkswagen, Tesla, TOYOTA MOTOR CORPORATION (Lexus), Volvo Car Corporation, JAGUAR LAND ROVER AUTOMOTIVE PLC (Tata Motors), and Aston Martin These industry giants have a long history of producing high-quality vehicles and have built a strong brand reputation over the years They have a global presence and operate in multiple markets worldwide and invest heavily in improving vehicle performance, safety, unique design and environmental sustainability, catering to the discerning tastes and preferences of luxury car buyers Characteristics: One defining characteristic of the luxury automotive industry is the emphasis on superior design and engineering The emphasis on great design and engineering is a distinguishing feature of the luxury vehicle sector Luxury automobiles stand out by their