Executive Summary

4.0 Internal analysis

4.1 Porter's five forces analysis

This analysis’s aim is to increase the competitive advantages of the company. Michael Porter at Harvard University has structured this analyse in 5 stages. And it is often called as Porter’s Five Forces model. [CITATION Ric15 \l 1033 ]. The five stages includes itself power of suppliers, buyers power, threats of substitutes, competitive rivalry and potential new entrants.


Bargaining power of suppliers
BMW group has 12,000 suppliers from different 70 countries. And it is crucial for the company while bargaining with suppliers. [CITATION BMW20 \l 1033 ]. Partnering with the large company like BMW brings reputation to suppliers as well, and so BMW group also sets its rules and code of conducts while bargaining with suppliers. Therefore suppliers need to follow the rules with ethical standards. Thus, the power of the bargain of suppliers is down accordingly.


Bargaining power of buyers or customers
It is the crucial factor of any business that can be affected to the company’s profitability and manufacturing power. The bargaining power of buyers has increased because of the competition. Despite, the premium segment the customers nowadays are more researchable before buy expensive things. Thus, the company is giving more attention to its research and marketing processes in order to find out more about the market trends, customer’s experiences and innovations. Because customer’s value is high quality product and innovation. So the power of buyers is still increasing.


Threat of substitutes
This is affective threat which can be recorded in any organization demand and profitability. If the substitutes is high then it means the higher threats to the company which may occur to lose its customer demand as well as profitability. The main brands which includes in company’s substitutes threat are Land Rover, Volkswagen, Audi, Mercedes Benz, Lexus, Toyota and Ford. So BMW group is trying to make its products as quality as possible as it is for only premium segment. The safety of the products and technological innovations is higher than other rival companies. Thus, the threat is medium for BMW group.