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What main trends are identifiable in the business environment in general and in the automobile industry in particular in 2000?

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Introduction

Question 1. What main trends are identifiable in the business environment in general and in the automobile industry in particular in 2000?

1.  Consolidation

The trends in the automobile industry present through the 1990s intensified as the industry moved into the twenty-first century. Global convergence stood out as a major issue. And the consolidation was continuing from 1990 to 2000.

  1. Mergers and acquisition

There was a great deal of consensus amongst commentators that in a few years the industry would consist of no more than six giants, with a peppering of niche players. Mergers and acquisition activity moving from automobile manufacturers, already highly concentrated to parts suppliers.

  1. Technology

The Internet and e-commerce---- shortening the lead-time

The Internet and e-commerce play a vital role by shortening the lead-time for the production of an automobile. If given the importance of the purchase, customers could be brought into a Web-driven relationship with automobile suppliers and manufacturers, a shortening of the lead-time was a distinct possibility.

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Middle

I will apply Porter’s five forces framework to the segmentation of luxury cars in automobile industry in this question. The five forces framework helps identify the sources of competition in an industry or sector. The five forces are the threat of entry, the threat of substitutes, the power of buyers, the power of suppliers and competitive advantage.

The threat of entry:

The threat of entry is high in luxury cars segmentation. They need high technology to produce the luxury cars. And the capital requirement of entry is quite high as well.

The threat of substitutes:

The threat of substitute is high.

The power of buyers:

The power of buyers in luxury cars segmentation is tending to be low. There are few alternative resources of supply. Because comparing with other kinds of cars there are only few manufacturers produce luxury cars. And we know that not everybody can afford

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Conclusion

I will choose the luxury cars markets as my segmentation in which BMW compete in this question.

      The critical success factors in the luxury cars segmentation:

  1. Highly qualified labour force. In the twenty-first century, the scarce resources that most influence national competitiveness are likely to be the skills displayed by the workforce. One of Germany’s distinctive national resources was a highly qualified labour force that could be used by German manufacturers as a source of competitive advantage. Most of such advantage went to companies such as BMW, managed to build a perception of valuable differences in the minds of their buyers.
  2. The BMW brand. BMW had traditionally taken great pride in the quality of its engineering. And BMW employed a highly skilled German labour force, so they get the benefits of a reputation for high-quality products.

Question 4. What are the bases of BMW’s strategy? What core competence did it posses?

Question 5. Briefly compare and contrast Porter’s view on competitive positioning with Barney’s resource based view.

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