Practical Management Science
Practical Management Science
6th Edition
ISBN: 9781337406659
Author: WINSTON, Wayne L.
Publisher: Cengage,
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Which elements of the General Environment are significant to the future of the German luxury car industry?

STRATEGIC FOC GERMAN PERFORMANCE/LUXURY CARS: IF YOU'VE SEEN ONE, HAVE YOU SEEN THEM ALL? GLOBALISATION Audi, BMW and Mercedes-Benz (Mercedes have long competed against each other in the performance/luxury segment of the car industry. Given that they implement similar strategies in many of the same markets throughout the world and emphasise similar dimensions to do so, these firms förm a strategic group. This means that the rivalry within this group is more intense than is the rivalry between members of this group and companies offering products that are intended to functionally serve and satisfy a mass-market appeal among large customer groups. One could even argue that three substrategic groups exist for these firms in that each offers products in the large, mid-size and small parts of the performance/luxury segment. (Think of the Audi S8 versus the BMW 7 series versus the S Mercedes series as products through which these firms compete against each other in terms of large performance/luxury cars.) The similarities among these firms as they compete are extensive. For example, the Chinese and US markets are critical to their success. With respect to China, an analyst noted that "BMW, Audi and Daimler's Mercedes-Benz units have benefited as China's fast-growing wealthy population has flocked to high- end cars in recent years.' In response to this growth in demand for their products, all three firms are investing billions of dollars to expand production and their sales operations in China. models that are intended to significantly expand their sales. One way these competitors are doing this is to offer 'lower-priced models that would draw younger, less affluent US customers away from mass-market brands such as Ford Motor Co., Honda Motor Co. and Toyota Motor Corp'. A lower-cost version of the www.clearlybetterdiesel.org} that touted diesel's benefits of superior fuel economy and a reduced environmental impact. For the Western markets, the firms are introducing new To better serve the needs of younger consumers, all three çòmpanies are 're-thinking everything from dashboard entertainment systems to the relative importance of mileage over horsepðwer to fundamental marketing strategies'. An initial outcome from these evaluation processes was a decision to include smartly presented, smartphone-driven multimedia A3 sedan was Audi's initial offering to reach this objective. BMW developed a new version of its top-selling 3 series sedan (the 320) that had a base price way below the least expensive car in this series. Similarly, Mercedes offered the CLA, a four-cylinder car with a very competitive price. BMW got into this game a decade ago with its Mini, a car targeted at young drivers who they hoped would get a Beemer (BMW) next time. Essentially, introducing systems in models. As is often the case with strategic groups, the rivalry and strategic moves among Audi, BMW and Mercedes has remained stable over the years. As such, we can anticipate that the rivalry among them will remain intense as they rely on similar strategic dimensions to implement similar strategies. Sources: B. Laban, 2003, The Mini: Making of a Modern Icon, Singapore: Collins; C. Carroll, 2013, Audi plans to attract more U.S. buyers with diesels, Wall Street Journal, http://www.wsj.com, 8 February; V. Fuhrmans, 2013, Europe bets U.S. auto demand to stay high, Wall Street Journal, http://www.wsj.com, 16 January; V. Fuhrmans, 2013, German auto makers to shake up luxury market, Wall Street Journal, http://www.wsj.com, 14 January; V. Fuhrmans & F. Geiger, 2013, W to bolster its output in China, Wall Street Journal, http://www.wsj. com, 14 March; F. Geiger, 2013, Daimler boosts investment in China, Wall Street Journal, http://www.wsj.com, 1 February; J. W. Whits, 2013, Beyond boomer buyers: Car makers seek younger crop of customers, Wall Street Journal, http/www.wsj.com, 16 January. these products was a strong attempt by the three firms to lower price as an entry barrier to their products among consumers in their 20s, 30s and early 40s. These firms are emphasising similar dimensions or product features to produce new models as well as some existing ones. For example, diesel engines are important to the companies and their efforts to sell more cars in China, the USA and other countries as well. Because of this, the three of them joined a few other companies to develop a website (http://
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Transcribed Image Text:STRATEGIC FOC GERMAN PERFORMANCE/LUXURY CARS: IF YOU'VE SEEN ONE, HAVE YOU SEEN THEM ALL? GLOBALISATION Audi, BMW and Mercedes-Benz (Mercedes have long competed against each other in the performance/luxury segment of the car industry. Given that they implement similar strategies in many of the same markets throughout the world and emphasise similar dimensions to do so, these firms förm a strategic group. This means that the rivalry within this group is more intense than is the rivalry between members of this group and companies offering products that are intended to functionally serve and satisfy a mass-market appeal among large customer groups. One could even argue that three substrategic groups exist for these firms in that each offers products in the large, mid-size and small parts of the performance/luxury segment. (Think of the Audi S8 versus the BMW 7 series versus the S Mercedes series as products through which these firms compete against each other in terms of large performance/luxury cars.) The similarities among these firms as they compete are extensive. For example, the Chinese and US markets are critical to their success. With respect to China, an analyst noted that "BMW, Audi and Daimler's Mercedes-Benz units have benefited as China's fast-growing wealthy population has flocked to high- end cars in recent years.' In response to this growth in demand for their products, all three firms are investing billions of dollars to expand production and their sales operations in China. models that are intended to significantly expand their sales. One way these competitors are doing this is to offer 'lower-priced models that would draw younger, less affluent US customers away from mass-market brands such as Ford Motor Co., Honda Motor Co. and Toyota Motor Corp'. A lower-cost version of the www.clearlybetterdiesel.org} that touted diesel's benefits of superior fuel economy and a reduced environmental impact. For the Western markets, the firms are introducing new To better serve the needs of younger consumers, all three çòmpanies are 're-thinking everything from dashboard entertainment systems to the relative importance of mileage over horsepðwer to fundamental marketing strategies'. An initial outcome from these evaluation processes was a decision to include smartly presented, smartphone-driven multimedia A3 sedan was Audi's initial offering to reach this objective. BMW developed a new version of its top-selling 3 series sedan (the 320) that had a base price way below the least expensive car in this series. Similarly, Mercedes offered the CLA, a four-cylinder car with a very competitive price. BMW got into this game a decade ago with its Mini, a car targeted at young drivers who they hoped would get a Beemer (BMW) next time. Essentially, introducing systems in models. As is often the case with strategic groups, the rivalry and strategic moves among Audi, BMW and Mercedes has remained stable over the years. As such, we can anticipate that the rivalry among them will remain intense as they rely on similar strategic dimensions to implement similar strategies. Sources: B. Laban, 2003, The Mini: Making of a Modern Icon, Singapore: Collins; C. Carroll, 2013, Audi plans to attract more U.S. buyers with diesels, Wall Street Journal, http://www.wsj.com, 8 February; V. Fuhrmans, 2013, Europe bets U.S. auto demand to stay high, Wall Street Journal, http://www.wsj.com, 16 January; V. Fuhrmans, 2013, German auto makers to shake up luxury market, Wall Street Journal, http://www.wsj.com, 14 January; V. Fuhrmans & F. Geiger, 2013, W to bolster its output in China, Wall Street Journal, http://www.wsj. com, 14 March; F. Geiger, 2013, Daimler boosts investment in China, Wall Street Journal, http://www.wsj.com, 1 February; J. W. Whits, 2013, Beyond boomer buyers: Car makers seek younger crop of customers, Wall Street Journal, http/www.wsj.com, 16 January. these products was a strong attempt by the three firms to lower price as an entry barrier to their products among consumers in their 20s, 30s and early 40s. These firms are emphasising similar dimensions or product features to produce new models as well as some existing ones. For example, diesel engines are important to the companies and their efforts to sell more cars in China, the USA and other countries as well. Because of this, the three of them joined a few other companies to develop a website (http://
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