A PESTEL analysis of BMW examines the external factors that impact the company and the automotive industry as a whole. This analysis evaluates the political, economic, sociocultural, technological, environmental, and legal factors that can influence BMW’s operations and performance.
By conducting a PESTEL analysis, BMW can identify opportunities and challenges in the external environment and adapt its strategies and operations accordingly. The analysis can help BMW understand the impact of factors such as government policies, economic trends, consumer preferences, technological advancements, environmental concerns, and legal regulations on its business.
Background and Introduction
BMW is a German luxury vehicle and motorcycle manufacturer that was founded in 1916. The company’s headquarters is located in Munich, Germany, and it is one of the world’s leading producers of premium automobiles and motorcycles.
BMW’s original focus was on the production of aircraft engines, but after World War I, the company was forced to pivot and began producing motorcycles. In the 1920s, BMW expanded into automobile manufacturing and began producing luxury cars.
Throughout the 20th century, BMW continued to innovate and expand its product line, introducing iconic models such as the BMW 3 Series, the BMW 5 Series, and the BMW 7 Series. In the 1990s, the company also launched the Z3 and Z8 sports cars, and in the early 2000s, it introduced the X5, X3, and X1 SUVs.
Today, BMW is a global brand with a presence in over 140 countries. The company’s products are known for their exceptional performance, luxurious design, and advanced technology. BMW also has a strong commitment to sustainability and has implemented initiatives to reduce its environmental impact, such as investing in electric and hybrid vehicle technology.
Company Information Summary
| Founded | 1916 |
| Headquarters | Munich, Germany |
| Industry | Automotive |
| Products | Cars, motorcycles, engines |
| Revenue (2021) | € 98.6 billion |
| Net income (2021) | € 8.8 billion |
| Employees (2021) | 120,726 |
| CEO | Oliver Zipse |
| Brands | BMW, MINI, Rolls-Royce |
| Global Sales (2021) | 2.3 million vehicles |
| Sustainability Initiatives | Investing in electric and hybrid vehicles, reducing CO2 emissions, using renewable energy sources in manufacturing |
Political Factors
BMW is considered one of the largest luxury car manufacturers across the globe. BMW is mainly affected by two main political factors. Firstly, an escalation of a trade war between China and the USA. Secondly, rise in the political instability in Europe due to the decision of Britain to exit the European Union. As higher taxes are imposed on goods traded from China and the USA, this weakens the stock market which causes a decline in the prices of stocks of the automobile industry. European Union has also imposed high duties on the import of aluminum and steel into the USA. Also, the exit of Britain from the EU has hurt BMW as it increases the trade restrictions which causes an increase in costs and a decline in volume (Shankar, 2019).
Economic Factors
Economic factors mainly refer to the macroeconomic aspects such as consumer demand and also exchange rates which influence the international and local markets. Automotive manufacturers such as BMW need to introduce new vehicle models by considering consumers’ preferences and income power. However, the life cycle of a vehicle abbreviates continuously. Moreover, demand for SUVs and smaller cars have been increased recently. Hence, BMW developed a series of 1 model which meets the consumers’ expectations for the small premium cars and X series models satisfy the SUV buyers. Furthermore, BMW is also planning to launch mini-SUVs, also known as BMW Urban Cross to gain a larger market share (Grin, 2015).
Social Factors
All countries across the globe have cultural differences which vary from economy to economy. This clearly indicates towards BMW group as it adjusts its’ marketing and products to fit people and consumers. This completely requires the adaptation of every market, as using one size does not fit all approaches. BMW is a manufacturing company that works in major countries globally, such as China, Austria, and South Africa. These locations are selected on basis of research and development. BMW has to understand its consumers according to the economic and political landscape. BMW uses Instagram for marketing purposes. BMW boasts about 20 million followers and posts dazzling pictures of cars in luxury locations (Frue, 2019).
Technological Factors
Technological factors play an important role in the success of a business. Technology is at the core of the consumer experience. BMW mainly invests in digital technology for making the driving of its’ cars better and offer a safe experience. Autonomous driving technology also helped companies grow their customer base and tap into the new customer segment. In this, digital technology is helping a lot to market the brands and products with high efficiency. Social media, websites, blogs, etc, companies are using multiple channels to advertise their products. BMW also uses global and regional websites to access consumers (Pratap, 2019).
Environmental Factors
The BMW group of automobiles has always been a leading organization in the automobile industry, contributing to sustainability. The BMW Group is involved in contributing to UN Environmental Programs since 2001. It was the first company in the industry that came up with an Environment officer post. The company has also decreased its carbon footprint by decreasing CO2 emissions in European vehicles by almost 42 per cent. It also introduced electric vehicles to reduce CO2 emissions even more. It is completely electric with 0 carbon emissions. However, its hybrid models have carbon emissions of less than 45g/km (MBA Skool, 2020).
Legal Factors
BMW groups are subjected to multiple legal problems all across the globe. in 2017, over 100 BMW customers filed compliant about its engine failures during driving. Almost 30 of them had filed complaints in court. In 2018, over 300,000 cars manufactured in 2007 and 2011 were called back to complete the engine failures. There were many complaints regarding mysterious fires in parked cars. It is also known that South Korea‘s government had also fined a big amount of $9.9 million to the BMW group for hiding problems regarding fires in engines (MBA Skool, 2020).
Conclusion
As there are several companies in the automobile industry that have faced troubles and challenges of different nature, BMW has managed to grow efficiently and successfully. It has taken steps in positive directions and focused on multiple consumer segments.
References
- BMW. 2021. Overview. [Online], Available at: https://www.bmwgroup.com/en/company.html, [Accessed on: 18th May, 2021].
Frue, K. 2019. PESTEL analysis of BMW; shaping the automotive industry. [Online], Available at: https://pestleanalysis.com/pestle-analysis-of-bmw/, [Accessed on: 21st May, 2021]. - Grin, 2015. PESTEL analysis of BMW. [Online], Available at: https://www.grin.com/document/295081, [Accessed on: 18th May, 2021].
- MBA Skool, 2020. BMW Pestel analysis. [Online], Available at: https://www.mbaskool.com/pestle-analysis/companies/18042-bmw.html, [Accessed on: 18th May, 2021].
- Pratap, A. 2019. PESTLE analysis of BMW. [Online], Available at: https://notesmatic.com/bmw-pestel-analysis/, [Accessed on: 18th May, 2021].
- Shankar, S. 2019. PESTEL analysis of BMW. [Online], Available at: https://www.slideshare.net/ShashwatShankar2/pestel-analysis-of-bmw, [Accessed on: 18th May, 2021].