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Strategic Planning-Mass Customization by the BMW Group

Courtney Clarke-Myers

Friends University

BSAD 603, Strategic Planning Final Paper

July 23, 2016

Strategic Planning-Mass Customization by the BMW Group

Abstract

Putting down and ensuring that a firm has a proper strategic plan is one of the fundamental objectives that any firm can make use of in order to ensure that its goals and objectives are fulfilled. The organizations that have strategic plans that are well-established and ones which are developed have been known of having enhanced competitive advantages in the very market structures in which they operate in. one of these companies is the BMW. The firm has been known for the strong competitive advantages that it has developed over time within the local and even at the international markets. BMW has made use of the mass customization and operations strategy. This strategy has been so much useful to the firm hence enabling it to cement its position as one of the leading luxury car production firm. However, just like any other business enterprise in the market, there are some serious shortcomings that have threatened BMW’s very existence. This has also resulted in the firm developing dismal value with relation to the contemporary community. This research project will be focused at the plans related to mass customization, the marketing strategy being utilized by BMW, the problems associated with very poor value and finally, the satisfaction of the customers within the contemporary society.

Introduction

For any firm to have a proper understanding of the market in which they operate from, then the firm should be able to take proper analysis of the consumer needs. When proper measures are taken to ensure that the consumer data is leverage then the firm can be sure of having customers who are happy with the goods and the services being accorded to them by the very company (Nielsen, Brunoe, Joergensen & Taps, 2014). This will be fundamental in ensuring that the firm has a reduction of the consumer churn and hence resulting in very high profits being experienced by the firm. Although there are thousands of internal firms which have set aside thousands of dollars to help with conduction of research and analysis of the trends of the consumers, this process remains one which no organization should ever just start it off without proper plans put down. This is because of the notorious nature in which the activities related to the collection of the customer data have been associated with a mass of privacy drawbacks. However, in the case the collection is done in the right way and that everything stays on path as planned, then, the concerned firms can always be sue of having to experience rampant benefits associated with their bottom line hence outweighing the risks associated with the process.

The research that are always being carried out by these multinational companies are always geared towards having a proper understanding of the significance and the very necessity of the needs of the target market, their patterns of consumptions and that which the concerned firms have the capability of supplying that will quench the thirst of their customers. 0the firms with a desire of making investment within the international market must also carry out related researches to be sure of the available consumer patterns, the cultural practices of the market where the firm has a desire of getting into. This will help the firms to come out with preferences by being able to target a specific market. For instance, BMW has put in place strategic division that is very powerful enough to support all of the operations within the over 100 countries where BMW is situated. This strategic planning has been of significance to the firm to an extent that BMW has become known as one of the strategic leaders within the automobile community (Medini, et al. 2105). Regardless of the fact that BMW has assumed the leadership role, it is still vulnerable to a number of challenges. These are the challenges that are related to the strain that the firm has to overcome in gaining the competitive advantages win the market where it locally operates fro and the international market as well. It is of importance to note that one of the very challenges are related to the famous strategy of mass customization that BMW Company has been known to use for quite a while. This strategy is very fundamental in making sure that there is proper collection of the consumer demands and their very orders, which are very necessary.

BMW’s Mass customization Strategy

There are two approaches that have been main used by BMW to enhance their competitiveness. They include mass customization and customer centric approach. In customer-centric approach the company focuses mainly on the inn the needs that the customers have. On the other hand, in mass customization, BMW has been maneuvering it out by altering the operating model and hence driving up the lower cost of the lower cost (Gamble, Peteraf, and Thompson, 2015). It is of importance to note that BMW has made use of the mass customization strategy to help with the collection of the demands of the consumers and their very needs. The demand has proved very fundamental in the collection of the varying demands of the consumers within the local markets where BMW has remained operational. However, the mass customization has been disregarded at the international level, especially the countries which are of the developing category. This is due to the firm’s inability to satisfy the markets in these countries with the development and with the focus of the products that it produces. For instance, the market in the developing countries requires that any firm which ones to operate from them have the ability to initiate a differentiation strategy to help with the creation of some common demand and even competitive advantage. Contrarily, mass customization has proved to be some significant aspect of creating and ensuring development of some structural advantages in the international, markets for the company.

There are further factors that prove that BMW has utilized the mass customization simply as a differentiation strategy. This has made the firm’s customers to pay huge sum of money. This has made many economists to wonder why BMW cannot just make cars that can best suit the needs of the customers. Furthermore, it can be noted that this strategy has been utilized by other organizations like Levi’s and Dell Inc. The strategy has also exposed the firm to stiff competition from other the competition that the firm faces from other respective substitute goods producing companies like the case of Daimler and even Volkswagen.

BMW’s Achievements by Utilizing Mass Customization

The firm became able of delivering the customers cars within the first 12 days of placing an order any of the company’s cars. The strategy also enabled the firm to incorporate last minute alterations of even up to 5 days beginning of the production process. This gave the car company the big opportunity of manufacturing all of their cars that were on demand at any given time. It ensured that BMW remained as successful as before by promoting improved economies of scale. This was a driving factor as it gave the firm to continue having its pricing as competitive as possible with other automobile giants like Audi and Mercedes-Benz. This has helped the firm to experience the following benefits (Mohamed Khalek, Nirmal Joseph & Loan Nguyen):

· The firm has developed a host of loyal customers over time hence leading to the increase in the reputation of the company’s brand.

· It has led to availability of several innovation possibilities

· It has been very useful in ensuring that the market remains unsaturated through the practice of differentiation

· It has led to the development of reduced inventory costs and,

· The development of huge curve for learning.

Challenges Associated With Mass Customization

Mass customization has remained as one of the fundamental strategies that has been very useful in the development of BMW and its subsequent operations related to production. However, the strategy has come out to be a weakness and hence posing as a challenge in the collection demands of its esteemed customers at the international level. This has led to the company developing a poor and a reduced competitive advantage within the international community (Thompson, et al. 2013). The strategy of mass customization by the BMW firm has turned out to be a challenge as it poorly addresses the needs of the customers, hence, leading to limited or nor development of the customer value in the society. The following are some of the challenges that have been posed by making us of mass incarnation (Mohamed Khalek, Nirmal Joseph & Loan Nguyen):

· It has led to the prices of the raw materials being used by BMW to go up.

· There has been a tendency by the customers to have a preference of purchasing their cars directly from their dealers

· The 12 days provide by the mass customization strategy might seem to be very impressive however, a host of BMW customers still desire the delivery time to be lessened.

· The laws of the United States have not given mass customization to be utilized as one which is standard.

· There are problems related to the choice navigation. This implies that in the case of having too much of the available possibilities, then the customer might be overstrained

· BMW is greatly struggling to align its image with the choices of its customers.

However, regardless of the host of the negative attributions that utilizing mass customization brought to BMW, it proved to be a very successful strategy that had ever been made use of by BMW group. It was also responsible in ensuring that BMW remained differentiated from the other Manufacturers of automobiles. It was also responsible for huge recognition of the brand and the subsequent improvement scope (Perrey, Freundt & Spillecke, 2015).

Conclusion

It is of significance to understand the importance of the various market models and the strategic plans being utilized by the various organizations across the globe. This I fundamental in ensuring that the value associated with the organizational planning is increased. The learning of strategic planning is a vital support into different marketing trends of companies and the serious roles companies play in marketing and competitive advantages in the community (Canals, 2016). Having a proper understanding of the issues and challenges of strategic planning develops and supports the overall understanding of the needs to create, learn and implement strategic plans for organizations. The process of learning about the strategic plans of different companies is essential in planning for competitive advantages for various organizations.

References

Canals, J. (2016). Renewal Inside: Companies as Respected Institutions (No. D/1138). IESE Business School.

Gamble, J., M. Peteraf, and A. Thompson. (2015). Essentials of Strategic Management the Quest for Competitive Advantage 4th Ed. McGraw-Hill, NY. ISBN-10: 0132102927

Mass Customization at BMW presented by: Mohamed Khalek Nirmal Joseph Loan Nguyen - Google Search. (2016). Google.com. Retrieved 25 July 2016, from https://www.google.com/search?q=MASS+CUSTOMIZATION+AT+BMW+presented+by%3A+MOHAMED+KHALEK+NIRMAL+JOSEPH+LOAN+NGUYEN&ie=utf-8&oe=utf-8&client=firefox-b

Medini, K., Le Duigou, J., Da Cunha, C., & Bernard, A. (2015). Investigating Mass Customization and Sustainability Compatibilities. International Journal of Engineering, Science and Technology, 7(1), 11-20.

Nielsen, K., Brunoe, T. D., Joergensen, K. A., & Taps, S. B. (2014). Mass Customization Measurements Metrics. In Proceedings of the 7th World Conference on Mass Customization, Personalization, and Co-Creation (MCPC 2014), Aalborg, Denmark, February 4th-7th, 2014 (pp. 359-375). Springer International Publishing.

Perrey, J., Freundt, T., &Spillecke, D. (2015). Power Brands: Measuring, Making, and Managing Brand Success. John Wiley &Sons.

Thompson, A., Peteraf, M., Gamble, J., Strickland III, A. J., & Jain, A. K. (2013). Crafting & Executing Strategy 19/e: The Quest for Competitive Advantage: Concepts and Cases. McGraw-Hill Education.