In business for more than 100 years, BMW began as an aircraft engine manufacturer but turned into a car and motorcycle manufacturer in 1928. Since then, the iconic brand has become recognize

business multi-part question

Read the Management Decision Case on page 110 and answer the following questions:
Assuming BMW wants to learn more about what customers value in a luxury driving experience, and then make decisions based on that research, what kind(s) of market research would you recommend that might improve BMWs understanding?
BMW is facing the classic qualityquantitycost trade-off; when it seeks higher-quality information (represented by more questions), fewer responses are received or research costs are higher. Since BMWs executives all have 25 to 30 years of experience in the automotive market, what would be the advantages and disadvantages of trusting their own experience versus spending more on market research?
When problems develop, like what BMW is experiencing in its research data gathering, a new, often technological solution is developed to address the issue. What might be some innovative ways to approach gaining both statistical significance (through higher response rate) and deeper context (through open-ended qualitative data)?

Book:
Marshall, G., & Johnston, M (2019). Marketing management (3rd ed.). McGraw-Hill Higher Education.
Print ISBN: 978-1259637155
eText ISBN: 978-1260157857
Requirements: 3-4 pages
Hitt 13e Case Teaching Notes
Case 3: Future of the Autonomous Automobile: A Strategy for BMW
Case Synopsis
In business for more than 100 years, BMW began as an aircraft engine manufacturer but turned into a car and motorcycle manufacturer in 1928. Since then, the iconic brand has become recognized the world over for its exceptional, award-winning engineering and forward-thinking design. Like many other automotive and technology firms, BMW is now looking to the future, particularly at developing autonomous vehicles. Norbert Reidheim, head of BMWs Future Car group, is charged with leading this project, which is so important that it is expected to change BMWs business model over the next 20 years. In fact, BMWs top-level executives have told shareholders they intend to lead in the self-driving car industry.
The technology for autonomous driving ranges from self-parking, which is already commercially available, all the way up to complete autonomy, in which the driver? would actually be more like a passenger, free to talk, work, read, and relax while being transported. Among experts, there seems to be some debate whether cars will ever become fully autonomous, and yet several major automotive brands are pursuing that goal. BMW, Audi, Mercedes-Benz, and Chevrolet, for example, all have fully autonomous cars in development, and other firms, including Google, are also investing in R&D in this space.
Given the advanced technology involved, its not surprising that numerous alliances and acquisitions have sprung up between automobile manufacturers and technology companies. Google is currently looking for a prospective automotive partner, GM acquired the creator of a self-driving accessory that can be added to existing cars, and BMW is working with Chinese search engine giant Baidu, just to name a few.
BMW, like its rivals working in the same arena, faces a number of uncertainties in six key areas: social?who will use these vehicles and how; technological?the cost of the finished product will influence how quickly they are adopted; economic?differences in consumer spending and legislation in various countries will mean self-driving vehicles are adopted at different rates; environmental?how these vehicles will affect pollution emissions and gasoline; legal?numerous serious questions surround responsibility and accountability in the use of self-driving cars; and ethical?privacy and protection from hacking are two major concerns.
Despite the uncertainties and other obstacles, BMW is forging ahead with the development of autonomous vehicles with the aim of becoming a leader in this new industry.
Learning Objectives
Describe the competitive landscape and explain how globalization and technological changes shape it. (Chapter 1)
Use the industrial organization (I/O) model to explain how firms can earn above-average returns. (Chapter 1)
Describe vision and mission and discuss their value. (Chapter 1)
Explain the importance of analyzing and understanding the firms external environment. (Chapter 2)
Define and describe the general environment and the industry environment. (Chapter 2)
Discuss the four parts of the external environmental analysis process. (Chapter 2)
Name and describe the general environments seven segments. (Chapter 2)
Explain the differences among five types of business-level strategies. (Chapter 4)
Use the five forces of competition model to explain how firms can earn above-average returns when using each business-level strategy. (Chapter 4)
Discuss the risks associated with using each of the business-level strategies. (Chapter 4)
Describe how strategic actions and tactical actions drive competitive rivalry between firms. (Chapter 5)
Explain factors affecting the likelihood a firm will respond to actions its competitors take. (Chapter 5)
Define strategic entrepreneurship and corporate entrepreneurship. (Chapter 13)
Define entrepreneurship and entrepreneurial opportunities and explain their importance. (Chapter 13)
Define invention, innovation, and imitation, and describe the relationship among them. (Chapter 13)
Strategic Issues and Suggested Discussion Questions & Answers
Use the I/O model to evaluate BMWs entry into the self-driving car business. Based on your analysis, what recommendations do you have for BMW?
Students should work through the I/O model (Figure 1.2) one step at a time.
The external environment: The concept of autonomous vehicles has been around for quite some time, but recent developments in technology, especially advances in CPUs and GPUs as well as digital mapping and wireless connectivity, have made the prospect more viable. Consumers are gradually coming around to the idea as well because they can see the many potential benefits in time savings, safety, and a cleaner environment. With such a promising future, many auto manufacturers and others have quickly ramped up their R&D efforts in developing fully functioning autonomous vehicles. BMWs competitors, such as Volkswagen/Audi, Toyota, Mercedes-Benz, and Chevrolet, are all aiming for fully autonomous vehicles, and GM quickly snapped up Cruise, the maker of a self-driving accessory that can be added to existing cars. Universities and research labs are also investing in developing this technology, and Alphabet/Google has been steadily working on this project for years. Thus, BMW faces competition from quite a few important rivals.
An attractive industry: Populations around the world are expected to grow exponentially in years to come, and in many developing economies, such as in the Middle East, South America, and Southeast Asia, there is a growing middle class who want, need, and can afford vehicles. It is possible that they might want and be able to purchase autonomous vehicles. Research in developed economies has also revealed that many consumers would welcome self-driving cars if they can be made available at a moderate price point. Finally, because of the environmental and safety benefits, a few nations have indicated a willingness to invest in supporting the development of this new class of vehicles. All of this suggests eventual above-average returns.
Strategy formulation: BMW has always pursued a focused differentiation strategy by creating valuable, precision-crafted automobiles for which affluent people are able and willing to pay a premium, and its strategy has yielded above-average returns. If BMW can apply its same award-winning engineering to the creation of a self-driving car and combine that technology with all of the other characteristics that make BMW vehicles stand out, there should be no reason why it cant use the focused differentiation strategy to earn above-average returns with its autonomous vehicles in the future.
Assets and skills: As stated, BMW has been recognized by industry leaders with awards for its engineering, design, and craftsmanship. The firm also has strengths in manufacturing, marketing, sales, and other key functional areas. These skills and assets are being used in the development of autonomous vehicles. Additionally, the firms connections with technology-industry leaders in the United States, China, and beyond are enabling the creation of strategic alliances that will give BMW access to new kinds of technology and other knowledge needed to perfect its self-driving cars.
Strategy implementation: To implement such a bold, new direction for the firm, BMWs senior executives have needed to secure the approval and support of the firms board and its shareholders. As expected, these influencers have raised questions about some of the uncertainties related to the development of self-driving cars, the market for such a product, and the firms ability to deliver a product that will set industry standards. While leaders like Norbert Reidheim are confident and even passionate about the potential of autonomous vehicles, they must be prepared to answer these questions and justify their decisions. Without board and investor support, BMW may not be able to move forward with this project.
Superior returns: Despite the hefty investments in R&D, and the fact that self-driving vehicles may initially be priced too high for many of the worlds car-buying consumers, it would appear that eventually the returns on this investment could be far above average.
Most students will agree that, given BMWs engineering prowess and the potential size of the market, the firm should move forward with developing self-driving cars. However, strategic alliances will be instrumental to the success of the project, as will earning the trust and support of investors. Although BMW does not need to be a first mover in this space, its stated intention to be a leader is a worthy and attainable goal.
The case identifies quite a few issues and questions in the various segments of BMWs general environment. Which of these do you think BMWs top leadership should be most concerned about? Why?
Students will have varying opinions on this question, but they should be able to support their answers with logical reasoning. Many will say that technology and the need to create an artificial intelligence system that is sophisticated enough to operate a car will be the greatest challenge. Others will say that the high costs of development could potentially put self-driving vehicles out of reach for most consumers, which will result in huge losses for the firm and its investors. Still others will claim that the many legal ramifications on the manufacturers of self-driving cars?some of which have an ethical component, such as privacy and the risk of hacking?are significant enough to abandon the project.
In the past, BMW has been able to successfully differentiate its products by engaging in value-adding value chain activities. What are some of these specific activities? How can BMW ensure its ability to continue with value-adding activities as it evolves into a maker of self-driving cars?
BMWs current manufacturing of high-end vehicles includes many instances of value chain activities that add value to the product. Exacting quality in manufacturing craftsmanship is one of the hallmarks of the brand, and this and other distinctive brand characteristics that differentiate BMWs products are clearly and effectively communicated through promotional and advertising programs. BMW also has an efficient distribution process and has experienced success in the Chinese market thanks to a board member leveraging business contacts in that country. Finally, BMW is responsive to its customers. For example, the firm would not have been able to successfully introduce its innovative iDrive? dashboard control unit had it not known how to respond to and work with customers.
For BMW to assume a leadership position in autonomous vehicles, it will most likely need to gain access to new technologies, both the hardware placed within its vehicles as well as the software used to operate them. Rather than develop these technologies internally, it will be faster and more effective for BMW to form strategic alliances and acquisitions with members of its supply chain. BMW has already acquired a stake in HERE, an open platform for cloud-based maps, and it has partnered with Baidu to gain access to the Chinese search companys high-resolution GPS system. More partnerships like these are sure to be involved as BMW moves forward.
Using the two major aspects of competitor analysis?market commonality and resource similarity?conduct a brief analysis of several of BMWs competitors currently developing autonomous vehicles. Conduct the same type of analysis on Alphabets (Googles) self-driving car division.
Without further information beyond what has been provided in the case, it would be challenging for students to predict any move that BMWs competitors may make. However, they can begin to conduct a brief analysis of a few of the competitors.
As a high-end, luxury vehicle manufacturer, BMW shares a high degree of market commonality with several other competitors currently working on developing self-driving cars, including Volkswagens Audi brand, Toyotas Lexus brand, Tesla, and Mercedes-Benz (Figure 1). It has slightly less market commonality with a few other competitors in this new space, such as Volkswagen, Toyota, and GMs Chevrolet brand, all of which are aimed at the broader mass market for mid-priced and lower-priced cars. Given that most of BMWs autonomous vehicle competitors share the same market, it can be assumed that they also have fairly similar tangible and intangible resources in terms of financing, operations, marketing, and manufacturing.
On the other hand, Googles market for its overall set of existing products is radically different, although its market for self-driving cars will probably be very similar to BMWs. And, other than healthy financial backing, Googles tangible and intangible resources are completely distinct from BMWs. In fact, Google lacks any experience in car design and manufacturing, which is why it will need to partner with or acquire an automobile manufacturer in order to continue developing its brand of self-driving vehicles. Googles resources are centered on technology, which is something BMW will need to acquire through strategic alliances.
Additional Resources
Reuterss company profile gives in-depth background on BMWs current financials, leadership, valuation, news, and more:
Yahoo! Finances company profile offers additional background on BMWs current financials, leadership, valuation, news, and more:
BMWs website provides an in-depth explanation of the meaning of autonomous driving?:
In November 2018, BBC Top Gear provided an update on BMWs iNext:
In September 2018, CNN Business offered this report on BMWs electric self-driving car scheduled for release in 2021:
In September 2018, Alpha Squad Official went behind the scenes with the designers of BMWs autonomous vehicles:
BMW created this April 2018 insiders look at its campus where autonomous driving is under development:

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