BMW's Innovation Strategies
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Case Code : BSTR060
Case Length : 11 Pages
Period : 2002 - 2003
Organization : BMW
Pub Date : 2003
Teaching Note :Not Available
Countries : Germany
Industry : Automobiles and Automotive
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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Background Note Contd...
During the 1920s, BMW strengthened its competitive position in the German automobile market, by producing small and efficient vehicles. The company launched its first car model 'Dixi' in 1929, followed by BMW 315/1 and BMW 319/1 in 1934.
In 1936, BMW introduced its first sports car model, the 238. Its lightweight construction, outstanding aerodynamics, high performance and elegance helped the 238 become a major success in international motor racing events. Soon, BMW's reputation as a company manufacturing elegant, prestigious and superior performance automobiles began to spread outside Germany as well. Until the 1950s, BMW concentrated only on a limited number of models. The focus then was more on expanding operations to other parts of Europe, outside Germany. In 1956, the company introduced a new model, the BMW 507 roadster, equipped with a powerful 3.2 litre, 8-cylinder and lightweight metal engine with an output of 150 bhp. This unique model not only became extremely popular in Germany, but also became one of the most popular vehicles in the automobile world.
In the late 1950s, despite BMW's sustained efforts to emerge as a manufacturer of prestigious vehicles, the company came to the brink of bankruptcy on account of the decline in the motorcycle market.
The company soon faced a takeover bid from Mercedes, another leading German automobile company. With the help of an industrial financier, Herbert Quandt (Quandt), BMW was able to thwart this takeover bid. Quandt acquired a majority of BMW's shares and initiated a restructuring exercise to bring the company back on track. The success of BMW 700, a small car, launched in 1959, came as the much-needed boost to the company. BMW soon regained its position in the market. As a part of the restructuring initiative, BMW focused on developing sports sedans2 - leading to the launch of the first of 'New Range' BMWs in 1961. The company began to consolidate its position in the market, with a focused marketing strategy. Greater emphasis was placed on advertisement and sales support...