Global Strategy and Management

Running Head: GLOBAL STRATEGY AND MANAGEMENT 1

GLOBAL STRATEGY AND MANAGEMENT 2

Bruna Spera Martins

Southern States University

BU536 – Global Strategy and Management

Instructor: Dr. Javier Wedekind-Flores

The daily operational activities of a company are characterized by the strategies that the companies adopt. The company strategies can either be long-term or short term depending on the decision of the decisions of company management. Companies that have good performing records across the continent are subject to very profound strategies. Company strategies enable an organization to survive and sustain a competitive environment and also effectively manage risks. New York Times reported in 2015 that many companies collapsed in the previous due to inadequate strategies. This paper intends to investigate BMW's differentiated business-level strategy, corporate-level diversification competitive strategy, and functional strategy.

Some of the approaches of product differentiation that BMW has been able to use, as evident on its website, are engineering design, perceived prestige and status, rapid product innovation, unusual features, different taste, and responsive customer service. The recent study shows that BMW is one of the product innovator automobile companies besides Mercedes Benz and Audi (Kumar, 2016). BMW manufactures environmentally friendly hydrogen cars, which has enabled the company to be highly reputable amongst other automobile companies. It also gives ecologically conscious customers a variety of products to choose from. Another differentiation strategy that BMW has adopted is the establishment of links between the company and the customers. Establishment of connections between customers and the industry enables the company to maintain its relationship with its customers even after making purchases.

BMW has used a competitive diversification strategy to reduce variability in its profitability since it's able to obtain earnings from its separate line of business. The competitive diversification strategies used in BMW are low-level and high-level diversifications.

A low level of diversification has enabled the BMW Company to obtain more than 80% of its stockholder's equity from its main business area in Germany and beyond (Kumar, 2016). The company has 14 branches located across the world in different countries. It operates in only three products, e.g., motorcycles and cars and engines. The fact that the company is working in a few businesses and markets has enabled it to obtain remarkable returns because it can develop the capabilities for these diversified markets and provide high-quality services to its customers. Besides, the company has been experiencing very few challenges in managing the few businesses that have enabled it to obtain the economies of scale and effectively use its resources. BMW also maintains the narrow focus of diversification as a means of keeping the quality standards of the company for its esteemed customers (Kumar, 2016). The company has focused on the manufacturing of light vehicles, motorcycles, and engines, thus enabling it to balance its resources.

BMW Company obtains only 15% of its profit from other related businesses across the globe. The company produces car engines that are supplied to all parts of the world. The similarity on the company line of products around the world shows that the company shares its resources across its businesses with a related-constrained strategy. Production of motorcycles alongside automobiles enables the company to attract different customers since the customers can choose from a variety of products. BMW Company uses a related-linked corporate-level strategy, which allows it to share fewer assets and resources between its businesses. The company concentrates on transferring core competence and knowledge between its activities (Kumar, 2016). The use of a related-linked diversification strategy enables BMW Company to continually adjust the mix in its portfolio of businesses and make decisions towards managing its operations.

Conclusion

This paper has addressed specific strategies that BMW adopts to ensure that it creates a competitive advantage against other competing firms such as Mercedes and Audi. The company uses a differentiated business-level approach to become more competitive within Germany and corporate-level diversification competitive strategy to operate beyond its borders. The company uses both low-level and high-level strategies to colonize its market at corporate levels fully.

References

Kumar, K. (2016). Strategic Management On BMW. GRIN Verlag.