BMW vs. Volkswagen

BMW vs. Volkswagen

BMW vs. Volkswagen

Introduction

Bayerische Motoren Werke (BMW), owner of the prestigious BMW brand, was one of the Europe's top automakers. BMW automobiles employed 82,000 workers in plants in Munich and Regensburg in Germany. Spartanburg in the US, Rosslyn and South Africa (Lencioni, 2001, cited in Johnson & Scholes, 2002).

BMW was established during the First World War to manufacture engines in 1945, the company was still Germany's leading manufacture of ero-engines. Subsequently it diversified into automobiles and motorbike in 2000. By then BMW was one if Germany's largest and most successful companies (Lencioni, 2001, cited in Johnson & Scholes, 2002, p.891).Many companies place themselves at the intersection of art and commerce, but few as successfully as the famous German carmaker BMW. It's no accident. The executives manage closely the relationship between designers, engineers and corporate managers (Bangle, 2001).

Volkswagen AG (VW) is the largest motor vehicle manufacturer in Europe, and the fourth largest in the world. Volkswagen manufacturers economy and luxury automobiles, sports cars, light trucks and commercial vehicles through nine independent brands that include Audi, Bentley, Bugatti, Lamborghini, Seat, Skoda and Rolls-Royce (until 2003's finalization of sale to BMW). These brands originate in six different European countries, and span customer base, cost and function. Each brand has a 'distinct personality', yet is unified under the parent Volkswagen Group that consists of all of Volkswagen's individual brands and subsidiary divisions. The Volkswagen Group's activities primarily focus on the automotive market in which they offer products and services along the entire automotive value chain such as sales, service, financing, leasing, car rental and insurance through a separate financial services division and Europcar. However the Volkswagen Group also includes subsidiaries that are involved in real estate, transportation planning and logistics, knowledge implementation and information technology consultancy.

As a global player, Volkswagen is represented in all the major world markets with product offerings in more than 150 countries, and employs over 300,000 people throughout its global manufacturing base of 43 production facilities. In addition to their global manufacturing presence, Volkswagen's strong international sales and marketing component provides them with an added foothold in the global marketplace. In Western Europe almost every fifth car originates from the Volkswagen Group where at year-end 2001, they held a 18.9% share of the passenger car market even though there were inconsistent developments in various markets. Worldwide, Volkswagen held a 12.4% market share in the same market (see Figure 1). These figures represent a -0.6% decrease in Western Europe, but a +0.7% increase in the United States. Following 2000, during which there were a record high number of new vehicle registrations, 2001 saw a 1.1% decrease. This was initially due to uncertainty following the terrorist attacks of September 11th, but subsequently due to lingering effects such as shorter working hours, factory shutdowns, and profit-cutting promotions. Overall 2001 produced revenue of $78,429 million, and net income of $2,582 million; this represented growth of 2.6% and 33% respectively. In 2001 Volkswagen production peaked at more than 5 million cars deriving significant ...