A REPORT ON THE STUDY DONE

ON
AUTOMOBILE INDUSTRY
(ROLLS ROYCE, BMW, MERCEDES BENZ)
Submitted to UNIVERSITY OF KERALA
In partial fulfillment of the requirement for the award of degree of
MASTERS OF BUSINESS ADMINISTRATION
Submitted by
JIBIN ANAND
Register number: 59519941025
Under the guidance of
Dr. V. JAYAMOHANAN NAIR
UIM POOJAPPURA

UNIVERSITY INSTITUTE OF MANAGEMENT

ICM CAMPUS, POOJAPPURA
OCTOBER, 2020
UNIVERSITY OF KERALA
 DECLARATION
I, JIBIN ANAND, student of University Institute of Management, Poojappura; declare that the
Internship done on “Automobile sector (Rolls Royce, BMW, Mercedes Benz)”, submitted to
University of Kerala in partial fulfillment of the requirements for the award of the Degree of
Master of Business Administration (MBA) is a record of the original and independent work done
by me during the period of one month, and has not formed the part or basis for the award of any
other Degree/Diploma, Fellowship or any other similar titles to any candidate of this university
or any other university.

Place: Poojappura JIBIN ANAND

Date: Register No.: 59519941025
 ACKNOWLEDGEMENT
I would like to express my deepest appreciation to all those who provided me the
possibility to complete this report.
First of all I thank almighty God for all the blessings showered upon me to undergo my
study.
I would like to express my deepest gratitude to Mr. RADHAKRISHNA MENON, Director of
University Institute of Management, Poojappura for granting me permission to undergo the study
programme and the valuable guidance and support provided to complete the study successfully.
I would like to express my deepest gratitude to Dr. V. JAYAMOHANAN NAIR,
academic coordinator of University Institute of Management, Poojappura for the valuable
guidance and support provided to complete the study successfully.
I express my foremost sincere thanks to our faculty guide, Dr. RAM KRISHNAN S.,
University Institute of Management, Poojappura for granting me permission to undergo the study
programme and the valuable guidance and support provided to complete the study successfully.
I am grateful to my family and friends whose encouragement and assistance have helped
me a great deal for the smooth completion of the Internship Programme.

JIBIN ANAND
 CONTENTS
1. INTRODUCTION 1
1.1 Introduction
1.2 Scope of the study
1.3 Data Sources
1.4 Limitations of the study
1.5 Chapterisation
1.6 Period of the study

2. INDUSTRY PROFILE 5
2.1 History of Automobile Industry
2.2 Invention of Automobiles
2.3 Development of Automobile Industry
2.4 Contribution of Automobile industry in the Economy
2.5 Indian Automobile Scenario
2.6 Future of Automobile Industry
2.7 SWOT analysis of Automobile Industry
2.8 Impact of recession on the Automobile Industry
2.9 Causes of slowdown in India
2.10 Trends shaping the future of automobile industry in India
2.11 Challenges confronting the Automobile Industry
2.12 Current Scenario of Automobile Industry
2.13 How the industry can cope up with the challenges
2.14 Government initiatives in Automobile Industry in India

3. COMPANY PROFILE 26
3.1 ROLLS ROYCE 27
3.2 BMW 39
3.3 MERCEDES BENZ 55
4. DATA ANALYSIS 67
4.1 SWOT ANALYSIS 68
4.1.1 ROLLS ROYCE
4.1.2 BMW
4.1.3 MERCEDES BENZ
4.2 PORTERS FIVE FORCE 76
4.2.1 ROLLS ROYCE
4.2.2 BMW
4.2.3 MERCEDES BENZ
4.3 BCG MATRIX 91
5. FUTURE PROSPECTS 93
5.1 FUTURE PROSPECTS
5.2 FINDINGS
5.3 CONCLUSION

BIBILIOGRAPHY 98
APPENDIX
 LIST OF TABLES AND CHARTS
TABLE PAGE NO.
1. FINANCIAL INFORMATION OF ROLLS ROYCE 30
2. SALES OF ROLLS ROYCE 33
3. SALES OF BMW 44
4. BMW INFORMATION 46
5. FINANCIAL INFORMATION OF BMW 49
6. SALES OF MERCEDES BENZ 63
7. PORTERS FIVE FORCES 77
8. BCG 91
9. BCG ANALYSIS 92
 CHAPTER 1
INTRODUCTION

UNIVERSITY INSTITUTE OF MANAGEMENT POOJAPPURA 1

1.1 INTRODUCTION
As a part of Master of Business Administration, it is intended, that the student should undergo
one month practical training in a reputed organization, so as to acquire the managerial skills and
to grasp some of the aspects of management that is beyond the theoretical study. Due to the
widespread of COVID-19 pandemic the internship program was not possible to acquire, in order
to overcome this difficulty, University of Kerala suggested identifying any three organizations in
a single industry / sector and submitting a report under the guidance of an assigned faculty. Here,
the internship consists of the details regarding the particular sector and the capabilities a student
should possess in order to acquire a particular career. This summer internship provides the
students and opportunity to know, learn, collect and analyze the nature, vision and objective and
learn about the industrial sector’s culture.
Automobile Industry, the business of producing and selling self-powered vehicles, including
passenger cars, trucks, farm equipment, and other commercial vehicles. By allowing consumers
to commute long distances for work, shopping, and entertainment, the auto industry has
encouraged the development of an extensive road system, made possible the growth of suburbs
and shopping centers around major cities, and played a key role in the growth of ancillary
industries, such as the oil and travel businesses. The auto industry has become one of the largest
purchasers of many key industrial products, such as steel. The large number of people the
industry employs has made it a key determinant of economic growth. Worldwide auto industry
employs 9 million people directly and about 41 million indirectly. It is observed that the GDP
per capita increases with motor vehicle sales (excluding two wheelers). The production
contribution of China in global production is 23%, which is about 9% more than that of the both
USA and Japan. The majority (78%) of vehicles are cars. General Motors, Volks-wagon, Toyota,
Hyundai and Ford are five major auto producer companies in the world. India’s Tata Motors
(18th), Mahindra (33rd) and Ashok Leyland (49th) are among 50 key auto –makers.

UNIVERSITY INSTITUTE OF MANAGEMENT POOJAPPURA 2

1.2 SCOPE OF THE STUDY
This study is made as an attempt to evaluate the growth and development of three companies
coming under the same industrial sector. The Automobile Sector) is a private sector which
continues its upward growth journey. It is one of the most important industry undergoing
phenomenal growth. The scope of the study covers the sectors growth and development over all
the period of time alongside its current trend and services provided to the customers. Well
organized companies form the base stone of every successful and growing industrial sector. The
study provides an excellent opportunity for understanding the sector by the data collected and
analyzed on the respective companies. The study covers the sector growth rate, statistics and
significance along with future prospects.

1.3 DATA SOURCES

The data used for the study is secondary data as it was impossible to fetch primary data due to
the widespread of the COVID-19 pandemic worldwide. The data were collected from different
official sites and research reports of eminent organization and people.

1.4 LIMITATIONS OF THE STUDY

• Due to the spread of COVID-19 pandemic, we could not undergo primary data collection.
• Since the data was collected from public domain, confidential information were not revealed.
• The study could not cover the sector’s working performance and different functions connected
with it.

1.5 CHAPTERIZATION
CHAPTER 1: The first chapter defines the introduction about the research study with its
limitations and scope. The data collection method as well as the significance of the research
study done on the three companies from an industrial sector is included in the first chapter.
CHAPTER 2: The particular chapter includes the industrial profile, its evolution and
development. The growth of the particular sector until the date of research study is also
explained.
CHAPTER 3: The third chapter includes the company profile. It consists of the evolution,
growth and current position of the companies that are taken for study.

UNIVERSITY INSTITUTE OF MANAGEMENT POOJAPPURA 3

CHAPTER 4: The fourth chapter includes the data analysis of each company chosen for research
study in each sector. The data collected in the previous chapter is analyzed and interpreted in this
chapter; it includes SWOT Analysis, Porter’s Five Force Analysis and BCG Matrix Analysis.
CHAPTER 5: The fifth chapter includes the findings of the research study and the future
prospects of the sector and the organization. It also includes the conclusion of the research study.
CHAPTER 6: The chapter being the last one includes bibliography which includes the list of
data collection sources like articles, publications, project reports, etc.

1.6 PERIOD OF THE STUDY

The period of study is one month (01/10/2020-30/10/2020).

UNIVERSITY INSTITUTE OF MANAGEMENT POOJAPPURA 4

 CHAPTER 2
INDUSTRY PROFILE
 AUTOMOBILE INDUSTRY
The automobile industry comprises a wide range of companies and organizations involved in
the design, development, manufacturing, marketing, and selling of motor vehicles. It is one of
the world's largest industries by revenue. All those companies and activities involved in the
manufacture of motor vehicles, including most components, such as engines and bodies, but
excluding tires, batteries, and fuel. The industry’s principal products are passenger automobiles
and light trucks, including pickups, vans, and sport utility vehicles. Commercial vehicles (i.e.,
delivery trucks and large transport trucks, often called semis), though important to the industry,

are secondary.

The automobile industry does not include industries dedicated to

the maintenance of automobiles following delivery to the end-user such as automobile repair
shops and motor fuel filling stations.

2.1 HISTORY OF AUTOMOBILE INDUSTRY

 Leonardo da Vinci considered the idea of a self-propelled vehicle in the 15th century.
 In 1760 a Swiss clergyman, J.H. Genevois, suggested mounting small windmills on a

cartlike vehicle, their power to be used to wind springs that would move the road wheel.
 Steam propulsion was proposed as early as the 16th century, and in 1678 Ferdinand
Verbiest, a Belgian Jesuit missionary to China, made a model steam carriage based on a
principle suggestive of the modern turbine.
 In 1748 a carriage propelled by a large clockwork engine was demonstrated in Paris by
the versatile inventor Jacques de Vaucanson
 In the 18th century a French scientist, Philippe LeBron, patented a coal-gas engine and
made the first suggestion of electrical ignition.
 In Paris, Isaac de Rivas made a gas-powered vehicle in 1807; his engine
used hydrogen gas as fuel, the valves and ignition were operated by hand, and the timing
problem appears to have been difficult.
 Most historians agree that Nicolas-Joseph Cugnot of France was the constructor of the
first true automobile.
 A replica of Cugnot’s second vehicle, partially original, is preserved in the Conservatoire
National des Arts ET Métiers in Paris.

 English inventors were active, and by the 1830s the manufacture and use of steam road
carriages was flourishing.
 Some of the steamers could carry as few as two people and were capable of speeds of 20
miles (32 km) per hour.
 At that time public was not friendly with the introduction of automobiles into the streets.
 Light steam cars were being built in the United States, France, Germany, and Denmark
during the same period
 The grip of the steam automobile on the American imagination has been strong ever since
the era of the Stanley brothers—one of whose “steamers” took the world speed record at
127.66 miles (205.45 km) per hour in 1906.
 The car designed by them and sold as the Loco mobile became the first commercially
successful American-made automobile 
 It is estimated that in the year 2000 there were still some 600 steam cars in the United
States, most of them in running order.
 At the beginning of the 20th century, 40 percent of American automobiles were powered
by steam, 38 percent by electricity, and 22 percent by gasoline.
 In the face of the gasoline car’s unreliability, noise, and vibration and the steamer’s
complications and thirst, the electric offered attractive selling points: notably, instant self-
start, silent operation, and minimal maintenance.
  The first automobile to exceed 100 km (60 miles) per hour was an electric (Camille
Jenatzy’s La Jamais Contente, 1899).
 Invention of the storage battery by Gaston Planté of France in 1859–60 and its
improvement by Camille Faure in 1881 made the electric vehicle possible, and what was
probably the first, a tricycle, ran in Paris in 1881.
 The heyday of the electric car in America had ended by 1920, although a few
manufacturers offered them on special order until World War II.
 The war, however, gave rise to experiments with small electric cars in fuel-starved
France and resulted in extensive use of electric vehicles for milk delivery in Britain,
which continued in urban areas there for the rest of the century.
 Karl Benz and Gottlieb Daimler of Germany are the most important pioneer contributors
to the gasoline-engine automobile.
 Benz ran his first car in 1885, Daimler in 1886.
 The four-stroke principle upon which most modern automobile engines work was
discovered by a French engineer, Alphonse Beau de Rocha’s, in 1862.
 Karl Benz was completely dedicated to the proposition that the internal-combustion
engine would supersede the horse and revolutionize the world’s transportation.
 Benz made his first sale to a Parisian named Émile Roger in 1888.
 In 1893 Karl Benz began to make a four-wheeler.
 In France the giants were De Dion-Bouton, Peugeot SA, and Renault.
 At the beginning of the 20th century, 40 percent of American automobiles were powered
by steam, 38 percent by electricity, and 22 percent by gasoline.


 This 1888 Hammel automobile is located in the Danish Museum of Science and
Technology. It is the oldest known automobile still in running condition.
 The Daimler and Benz claims to the invention of the automobile were attacked in 1895
when U.S. patent 549,160 was granted to George B. Selden as inventor of the
automobile.

2.2INVENTION OF AUTOMOBILES (POST WORLD WAR)

 Post World War II, the automotive industry showed rapid modernization in the 1950s and
1960s. Many new car models were introduced like Edsel, Chevrolet, etc. In the U.S., road
network was built after the World War II. This road network was quite modern with long
highways stretching across the length and breadth of the country. It is noteworthy that
U.S. has a large landmass and vast geography, which allows open and wide roads to be
built.
 The Big Three of the car industry, namely General Motors, Ford and Chrysler set about
to design big fast-moving cars for the American roads. Edsel, Buick, Pontiac Firebird,
Chevrolet Impala, etc., were some of the big cars that came on American highways in the
1950s and 1960s.
 Meanwhile, quietly but with determination, Japan was developing cars for marketing
worldwide, mainly in the U.S. Actually, after the devastation of their country during
World War II, several Japanese companies came into existence like Toyota, Mazda,
Mitsubishi, Suzuki, etc.
 The modern era has been one of increasing standardization, platform sharing and
computer-aided design.
 Toyota Corolla (1966–present) — a simple small Japanese saloon/sedan that has come to
be the best-selling car of all time.
 Range Rover (1970–present) — the first take on the combination of luxury and four-
wheeled drive utility, the original ‘SUV’. Such was the popularity of the original Range
Rover Classic that a new model was not brought out until 1994.
 Mercedes-Benz S-Class (1973–present) — features like electronic anti-lock braking
system, supplemental restraint airbags, seat belt pretensions and electronic traction
control systems made their debut in the S-Class. These features later became standard
throughout the car industry.
 BMW 3 Series (1975–present) — the 3 Series has been on the Car and Driver magazine’s
annual Ten Best list 17 times, making it the longest running entry in the list
 Honda Accord (1977–present) — this Japanese sedan became the most popular car in the
U.S. in the 1990s, pushing the Ford Taurus aside, and setting the stage for today’s
upscale Asian sedans.
 Dodge Aries and Plymouth Reliant (1981–89) — the ‘K-cars’ that saved Chrysler as a
major manufacturer. These models were some of the first successful American front-
wheel drive, fuel-efficient compact cars.
 Chrysler minivans (1983–present) — the two box minivan design nearly pushed the
station wagon out of the market, and presaged today’s crossover SUVs.
 Renault Espace (1984–present) — first mass one-volume car of non-commercial MPV
class.
 Ford Taurus (1986–present) — this mid-sized front-wheel drive sedan with modern
computer assisted design dominated the American market in the late 1980s, and created a
design revolution in North America.
 Pontiac Trans Sport (1989–99) — it was one of the first one-box cars.
 Toyota Prius (1997–present) — launched in the Japanese market, it reached a worldwide
cumulative sales of 2 million units in September 2010, becoming the most iconic hybrid
electric vehicle in the world.
 Ford Focus (1998–present) — one of the most popular hatchbacks across the globe,
which is also one of Ford’s best-selling world cars.
 Tata Nano (2008-present) — it is an inexpensive (`1, 00,000), rear-engine, four-
passenger city car built by an Indian company, Tata Motors, and is aimed primarily at the
Indian domestic market.
 Nissan Leaf and Chevrolet Volt (2010–present) —all these electric cars were launched in
the American and Japanese markets in December 2010, thereby becoming the first mass
production vehicles of their kind.
 When 1973 oil crisis occurred, these companies were very well positioned to roll out
smaller, compact, economical models in the U.S.
2.3 DEVELOPMENT OF AUTOMOBILE INDUSRTY
Popularity of the automobile has consistently moved with the state of the economy,
growing during the boom period after World War I and dropping abruptly during the
Great Depression, when unemployment was high. World War II saw a large increase in
mass transit because employment was high and automobiles were scarce. The rapid
growth of car owners after World War II, particularly in the United States and Western
Europe demonstrated the population's favor towards automobiles. During the war,
automobile motors, fuel, and tires were in short supply. There was an unsatisfied
demand when the war ended and plenty of production capacity as factories turned off the
war machine. Many people had saved money because there was little to buy, beyond
necessities, in the war years. Workers relied heavily on mass transportation during the
war and longed for the freedom and flexibility of the automobile. Some historians cite
examples as early as the year 1600 of sail-mounted carriages as the first vehicles to be
propelled by something other than animals or humans. 5 However, it is believed by most
historians that the key starting point for the automobile was the development of the
engine. The engine was developed as a result of discovering new energy carrying
mediums, such as steam in the 1700s, and new fuels, such as gas and gasoline in the
1800s. Shortly after the invention of the 4-stroke internal combustion gasoline-fuelled
engine in 1876, the development of the first motor vehicles and establishment of first
automotive firms in Europe and America occurred. The first automobile to be produced
in quantity was in the US three-horsepower, curved-dash Oldsmobile; 425 of them were
sold in 1901 and 5,000 in 1904-this model is still prized by collectors. The firm
prospered, and it was noted by others, and, from 1904 to 1908, 241 automobile-
manufacturing firms went into business in the United States. One of these was the Ford
Motor Company which was organized in June 1903, and sold its first car on the
following July 23. The company produced 1,700 cars during its first full year of
business. Henry Ford produced the Model T to be an economical car for the average
American. By 1920 Ford sold over a million cars.

2.4 CONTRIBUTION OF AUTOMOBILE INDUSTRY IN ECONOMY

Automobile industry gives important contribution in country’s fast development. It

provides to the requirement of equipment for basic industries like steel, nonferrous
metals, fertilizers, refineries, petrochemicals, shipping, textiles, plastics, glass, rubber,
capital equipment’s, logistics, paper, cement, sugar etc. it facilitates the improvement in
various infrastructure facilities like power, rail and road transport. Due to its deep
forward and backward linkages with almost every segment of economy, the industry has
a strong and positive multiplier effect and thus propels progress of a nation. The
automotive industry comprises of the automobile and auto component sectors. It
includes passenger cars; light, medium and heavy commercial vehicles; multi-utility
vehicles such as jeeps, scooters, motor cycles, three wheelers, tractors, etc; and auto
components like engine parts, drive transmission parts, suspension and breaking parts,
electrical, body and 6 chassis parts; etc. In India, automotive is one of the largest
industries showing impressive growth over the years and has been significantly making
increasing contribution to overall industrial development in the country. The sector has
shown great advances in terms of development, spread, absorption of newer
technologies and flexibility in the wake of changing business scenario. It is also finding
increasing recognition worldwide and a beginning has been made in exports in vehicles
as well as components.
2.5 INDIAN AUTOMOBILE SCENARIO
 The automotive industry in India started with the import of cars for royal families, which
perhaps started in 1920s. For many years, India did not have any manufacturing
capability of its own.
 Hindustan Motors is one of the initial car manufacturers in India, founded in 1942 by
B.M. Birla
 It was a leader in car sales until the 1980s, when the industry was opened up from
protection
 Hindustan Motors was the producer of the Ambassador car widely used as a taxicab and
as a government limousine.
 This car was based on the Morris Oxford, a British car that dates back to 1954. The
production of Ambassador stopped in 2014.
 In 1983, the Government of India started Maruti Udyog in collaboration with Suzuki of
Japan.
 By the end of 1990s, several other global multinational car makers also started
manufacturing their models in India. Among them were General Motors, Ford, Hyundai,
etc.
 In just a few years the Indian market for cars became a hotspot of global automotive
activity.
 The automotive industry in India is one of the largest in the world and one of the fastest
growing globally.
 According to the Society of Indian Automobile Manufacturers, annual vehicle sales
were projected to increase to 5 million by 2015 and more than 9 million by 2020. By
2050, the country is expected to top the world in car volumes with approximately 611
million vehicles on the nation’s roads.
 The majority of India’s car manufacturing industry (Fig. 1.18) is based around three
clusters in the south, west and north.
 The southern cluster near Chennai is the biggest with 40 per cent of the revenue share.
The western hub near Pune is 33 per cent of the market. The northern cluster is primarily
Haryana with 32 per cent.
  Chennai is also referred to as the ‘Detroit of India’ with the Indian operations of Ford,
Hyundai, Renault and Nissan headquartered in the city and BMW having an assembly
plant on the outskirts.
 Chennai accounts for 60 per cent of the country’s automotive exports. Gurugram and
Manesar in Haryana form the northern cluster where the country’s largest car
manufacturer Maruti Suzuki is based.
 The Chakan corridor near Pune, Maharashtra is the western cluster with companies like
General Motors, Volkswagen, ŠKODA, Mahindra and Mahindra, Tata Motors,
Mercedes Benz, Land Rover, Fiat and Force Motors having assembly plants in the area.
 Aurangabad with Audi, ŠKODA and Volkswagen also forms part of the western cluster.
 . Another emerging cluster is in the state of Gujarat with manufacturing facility of
General Motors in Halol and further planned for Tata Nano at Sanand.

2.6 THE FUTURE OF INDIAN AUTOMOBILE INDUSTRY

The Automotive Industry of India with the tremendous growth occupying a key place on the
canvas of Indian economy, Due to growth of transportation system. Factors determining the
growth of the industry are,
 Fuel economy and demand for greater fuel efficiency is a major factor that affects
consumer purchase decision that will bring leading companies across two-wheeler and
four-wheeler segment to focus on delivering performance-oriented products.
 Sturdy legal and banking infrastructure
 Increased affordability, heightened demand in the small car segment and the surging
income of the Indian population
 India is the third largest investor base in the world
 The Government technology modernization fund is concentrating on establishing India
as an auto-manufacturing hub.
 Availability of inexpensive skilled workers
 Industry is perusing to elevate sales by knocking on doors of women, youth, rural and
luxury segments
 Market segmentation and product innovation
 The Indian automobile industry has a prominent future in India. Apart from meeting the
advancing domestic demands, it is penetrating the international market too. Favoured
with various benefits such as globally competitive auto-ancillary industry; production
of steel at lowest cost; inexpensive and high skill manpower; entrenched testing and R
& D centers etc., the industry provide immense investment and employment
opportunities.

For the impressive future of the Indian automobile industry the Government of India
and the automotive industry had jointly set a road map Automotive Mission Plan (AMP)
2006-16.The Automobile Mission Plan (AMP) for the period 2006– 2016, designed by the
government is aimed at accelerating and sustaining growth in this sector. Also, the well-
established Regulatory Framework under the Ministry of Shipping, Road Transport and
Highways, plays a part in providing a boost to this sector. According to the SIAM website,
the AMP was first launched in 2006 for a 10-year period ending in 2016. The plan had a
vision that India would emerge as a favorable production location for global automakers, for
vehicles and automotive components, with output targeted to reach US45 billion by 2016,
accounting for more than 10% of GDP and providing additional employment for 25 million
people by the target year. The plan primarily focused on boosting competitiveness in the
domestic vehicle manufacturing industry and the flow of technology, 16 demand, brand
building, and infrastructure, export and international business, environmental and safety
standards, and human resource development. The AMP 2016 plan envisioned India as the
seventh largest automotive market globally by the target year, as compared to the eleventh
during 2006, and to be the fourth largest truck producer in the world. However, SIAM
earlier predicted that the industry will miss the ambitious targets, owing to the weak market
conditions in recent years. The second phase of the AMP, which was first launched in 2006
that lasted until 2016 India's government revealed the latest roadmap for the country's
automotive industry, known as the Automotive Mission Plan for 2016–26, with ambitious
growth development plans. India has seen a lot of automotive sector interest in recent years.
It is a market with a huge potential for growth, but a China-like market surge is not
expected. Indeed, the economic crisis of 2013 and subsequent slowdown has hurt the
automotive industry, which has also been dragged down by slower economic growth,
 inflation, high interest rates and expensive fuel. However, stronger sales recovered over the
past little duration have caused renewed optimism. India is also a substantial auto exporter,
with solid export growth expectations for the near future. Looking at the facts, there are
ample reasons to be optimistic about the automotive industry’s future in India. Ultimately to
conclude the Indian automobile industry seems to be the strongest growing markets among
all of automobile industry present crossways the globe at current.

2.7 SWOT ANALYSIS OF AUTOMOBILE INDUSTRY AS A WHOLE

STRENGTHS OF AUTOMOBILE INDUSTRY

1. Evolving industry: Automobiles represent freedom and economic growth. Automobiles

allow people to live, work and travel in ways that were unimaginable a century ago.
Automobiles provides access to markets, to doctors, to jobs. Nearly every automobile trip
ends with either an economic transaction or some other benefit to the quality of life.
2. Continuous product innovation & technological advancement : With the advent of E-
vehicles & alternative fuel such as Shell gas, CNG and others, Automobile Companies are
increasing R & D expenditure to drive the next phase of growth through use of renewable
sources of energy which may be solar, wind etc.
3. Growth shifting to Asian markets : Although American & European market is the
pulse of this Industry, but the focus is shifting to developing markets like China, India &
other Asian nations because of the rise in disposable income, changing lifestyle & stable
economic conditions.
4. Increasing demand of VFM vehicles: Intense competition in the matured/developed
markets has forced automobile manufacturers to target developing economies. But these
developing economies have high demand for VFM products (value for money). In the
automobile industry, VFM products would be fuel efficient, high mileage vehicles because
majority of customers in these nations prefer vehicles for commuting. On the other hand,
developed nations need is of vehicles for interstate travelling, and high speed vehicles
suitable for long route with high engine power.
5. Increase in demand of luxury commercial vehicles: Companies like VOLVO,
Daimler/Chrysler, Bharat Benz are betting high & are targeting the developing nations due
to increase in demand of Luxury public transportation system.
6. Manufacturing facilities in Asian nations to control cost : In order to control cost & to
manage shrinking margins automobile companies like Harley, Volvo, Bharat Benz etc. are
building their manufacturing facilities in developing nations like India, China because
these nations have cheap workforce, are high in resources & are nearer to developed
economies. These are classic conditions of an emerging market.

WEAKNESS OF AUTOMOBILE INDUSTRY

1. Cars recalled: Controversies relating to recalling vehicles on account of some technical

dis-functionality or non-abidance to govt. led rules is becoming very common.
2. Bargaining power of consumers: Over the last 3-4 decades the automobile market has
shifted from demand to supply market. Availability of large number of variants, Stiff
competition between them, and long list of alternatives to choose from has given power to
customers to choose whatever they like.
3. Growth rate of Automobile industry is the in the hands of the government due to
regulations like excise duty, no entry of outside vehicles in the state, decreasing number of
validity of registration period & volatility in the fuel prices. These factors always affect the
growth of the industry.

OPPORTUNITIES OF AUTOMOBILE INDUSTRY

1. Introducing fuel-efficient vehicles: Optimization of fuel-driven combustion engines and

cost efficiency programs are good opportunities for the automobile market. Emerging
markets will be the main growth drivers for a long time to come, and hence fuel efficient
cars are the need of the hour.
2. Strategic Alliances: Making strategic alliances can be a smart strategy for Automobile
companies. By using specialized capabilities & partnering with other companies, they
can differentiate their offerings.
3. Changing lifestyle & customer groups: Three powerful forces are rolling the auto
industry. Shift in consumer demand, expanded regulatory requirements for safety and fuel
economy, and the increased availability of data and information. Also with the increase in
nuclear families there has been increase in demand of two-wheelers & compact cars and
this will grow further.
4. Market expansion : Entering new markets like Asian & BRIC nations will result in
upsurge in demand of vehicles. After these markets, other markets are likely to emerge
soon.
5. OEM priorities: Given the increase in electronic content, OEMs need to collaborate
with suppliers and experts outside the traditional auto industry. Accomplishing this will
require changes in the way OEMs function. OEMs will be looking to their top suppliers to
co-invest in new global platforms & this will be the driving force in the future.

THREATS OF AUTOMOBILE INDUSTRY

1. Intense Competition: Presence of such a large number of players in the Automobile

industry results into extensive competition, every company eating into others share
leaving little scope for new players.
2. Volatility in the fuel Prices: At least for the passenger segment fluctuations in the fuel
prices remains the determining factor for its growth. Also government regulations relating
the use of alternative fuels like CNG. Shell gas is also affecting the inventories.
3. Sluggish Economy: Macroeconomic uncertainty, Recession, un-employment etc. are the
economic factors which will daunt the automobile industry for a long period of time.
4. High fixed cost and investment in R & D: Due to the fact that mature markets are
already overcrowded, industry is shifting towards emerging markets by building facilities
R & D centers in these markets. But the ROI out of these decisions is yet to be capitalized.
2.8 IMPACT OF RECESSION ON AUTOMOBILE INDUSTRY IN INDIA

The automobile industry in India is huge. The country has a population of over 1.2 billion
people. A lot of these people have now become affluent since India adopted globalization in
1991. The rising middle class has been a steady consumer of India’s automobile companies. This
is the reason why the personal vehicle segment of these automobile companies has been showing
consistent growth since the past decade.

In the second half of 2018, the situation started to change. Dealers who were stocking up
inventory in anticipation of high sales suddenly realized that they couldn’t sell their products fast
enough. They thought that the slowdown might be temporary because of the elections and the
effect that they have on the overall economy. For the three quarters, sales kept declining. The
situation has gone from bad to worse. As a result, now, the sales of the Indian automobile
industry have fallen to an 18 year low. This is because the sales of passenger vehicles are down
by as much as 21%.On the other hand, the sales of commercial vehicles are also down by 6%.
These lower numbers have been achieved after taking into account that India is now becoming
an export hub for vehicles. Even though the local sales have slowed down, the export numbers
have risen by 8% during the same period.

2.9 Causes of the Slowdown in India

There is no big bang event that can be directly correlated to the slowdown, which is now being
observed in the Indian industry. Instead, a slew of small and seemingly insignificant changes are
the real reason that the automobile industry is reeling today. Some of these changes have been
listed below.
 Macro-economic Changes: The Indian government has been trying to downplay the
issues facing the economy. However, it seems like the challenges are real. The growth
rate has started rapidly decelerating. As a result, fewer jobs are being created. The
unemployment in India is at a record high. The inflation numbers are also rising rapidly.
All these numbers are scaring the consumers. Since people are no longer sure of the
income that they will generate in the future, they want to save as much as possible. As a
result, car purchases, which are a discretionary expense, have taken a backseat. This has
wreaked havoc on the Indian auto industry which expected the consumer to continue
making larger purchases.
 Regulatory Changes: A slew of regulatory changes have also made operations difficult
for automobile companies. For instance, the regulatory bodies in India have become strict
about insurance. Most two-wheelers being sold in India now must have three to five years
of insurance. As a result, the cost of vehicles and two-wheelers have increased. Also, the
insurance companies themselves have increased premiums compared to the past.
 This has led to an increase in the price of vehicles. The increased cost is the biggest
reason that customers are shying away from new purchases.
 Also, other regulatory measures, such as stricter emission norms has made the production
of vehicles more expensive. Indian customers are extremely cost conscious. These
increased costs have not gone down well with the customers who have significantly cut
down on auto purchases.

2.10 Trends shaping the future of automobile industry

 Internet connectivity and multi-platform connectivity

 Autonomous driving
 3D-LiDAR (millimeter precision driving assistance)
 Electric automobiles
 AI integrated driving and smart proximity devices
 Shared - In a survey conducted by Assurant, 66 percent of respondents said that the best
thing about the future that will have autonomous vehicles, which will provide service on-
 demand, would be the savings as they wouldn’t have to invest substantial money into
owning a car. Many shared car services have already sprung up and are on the rise. Many
more will emerge in the near future. These service providers will own the fleets which
would be hired by the people as per their needs.

2.11 Challenges Confronting the Automobile Industry

 Regulations: The automotive market must overcome crippling tariffs and punishing
pollution regulations.
 Alternative fuel vehicles: No one contests the advantages of alternative fuels on
greenhouse emissions. The universal challenge is the absence of broad availability of the
fuel. Other common complications are extreme climates make these fuels difficult to use.
 Building brand loyalty: Automakers must focus their efforts on programs that build
brand loyalty. However, customer retention or loyalty in the automotive industry is a
solitary expression. According to IHS, only half of all US new car buyers remain
steadfast to the brand they already own.
 Choosing the correct power train technology: Making the right powertrain technology
choices which will define the future of the automotive trade. Society preferences change
rapidly. Manufacturers must recognize what combinations of technology work best for
the business. If manufacturers do not carry out these constructive advances, governments
will.
 The automotive supply chain: The automotive supply chain is decades old. An
immediate objective is to bring the supply chain to the 21st century and eliminate
failures. A delay of one hour in the chain can mean a production line being shut down.
Another significant facet supply chains are the routing of individual parts. Again, an

improvement in just one operation can mean an extra few dollars when the vehicle sells.

2.12 Current scenario of automobile industry and way forward

The Auto industry is going through one of the worst crisis and the sales is slowest in the last
20 years. It is worth mentioning that Auto industry contributes to close to 7% of overall GDP
and nearly half of manufacturing GDP of the Country , contributes 11% to the GST
collection and provides direct and indirect employment to 35 million jobs. The impact of
demand slowdown is so huge that most of the companies are operating at 70% of their level
of potential and there is huge accumulation of Inventory.

 In India it is the finance which was selling. Roughly 60% of the total vehicle sales was
financed and crisis in the Shadow Banking Industry (after ILFS) has restricted Credit inflow
to the Dealers and Consumers. Norms of NBFCs for lending was slightly on easier side for
Vehicle loans. In this hard time of Buyers, even banking industry is struggling with close to
$150 billion in bad loans. Another uncertainty is shifting of emission standard from current
Bharat Stage IV norms to Bharat Stage VI norms from April 2020. For the implementation of
the revised norms, the price of Diesel cars are likely to go up which will have impact on
Diesel cars share in the overall Market segment. It is worth mentioning that, Diesel Cars
share has been under decline since last 10 years from 60% to 40%.Implementation of GST
has played both Negative and Positive role in demand. Industry is expecting that GST should
be reduced from current level of 28% to 18% to kick start the demand. But one thing needs to
be understood that due to implementation of GST, there is seamless flow of Commercial
vehicles across the States as hurdles at the border checks have been removed. This has
definitely increased the life of Commercial vehicles.

Consumers’ behavior have changed dramatically. They are more informed and have started
exercising their rights. In the current scenario, they could be waiting for

a.     Improved BS VI cars variant so that they get enhanced engine

b.    Electronic Vehicles—So that they are saved form extremely high Fuel cost

c.     Commercial vehicles may be waiting for Vehicle Scrap Policy for obtaining hefty
discounts on the age old model.

All the above impacts have taken a toll in the employment situation of Auto industry. As per
some estimate, some 3.5 lac jobs have been lost mainly in contractual and casual labor
category. But a close watch on the growth in Jobs in Automobile Industry will reveal the fact
that there is tapering in the jobs from last 10 years due to automation already started in this
sector. Over a long time horizon, Robotics, AI and ML will definitely impact the scenario of
manual jobs in this industry and hence the current loss of job is more of an accelerated
process of future scenario.

2.13 How the Industry can cope up with the challenges

There are several ways for the industry to come out of the situation but nothing can be quick
fix. It will require a long learning lesson for the Industry for self-survival so that every time a
crisis happens, they don’t have to run to Govt for Tax cut and concessions.

1.    Indian Auto Industry is probably the most protected ones in the world. GoI has
already done their bit by providing Custom Duty on Imported cars to the tune from 60% to
125%. (Even the 2nd hand cars attract huge Custom Duty).

2.    With such level of protection, the indigenous industry should work towards
creating world class infrastructure facilities. The market of World Auto industry is close to
$800 billion Dollar and our contribution is even less than 1 percent.

3.    The last recession in Auto industry occured in 2000. No lesson was learnt from the
same and Auto industry was dependent on Tax cut and Consumer demand for their survival.

4.    No new innovation / New Model are getting developed and the quantum of
Research is pathetic in Indian Industry. It is worth mentioning that the new generation
doesn’t give much value in holding assets. They are more interested in gaining experience
and hence Car sales will remain a tough challenge going forward, unless innovation drives
the passion for new generation to hold Assets

5.    Worldwide Auto Industry goes through slump. But they come out of the same
through Innovation, new features, cost cutting and brining new model in the market.

2.14 Government Initiatives in the automobile industry in India

 The Government of India encourages foreign investment in the automobile sector and
allows 100 per cent FDI under the automatic route.

In the Automotive Mission Plan 2026, the government and industry set a target to triple
industry revenues, to $300 billion, and expand exports sevenfold, to $80 billion. To meet
these aims, it is estimated that the sector could contribute more than 60 million additional
direct and indirect jobs, and the result could be improved manufacturing competitiveness

and reduced emissions.

To tackle emissions, the government seeks to bring local standards up to par with global
standards, enabling India to leapfrog from BS-4 to BS-6 emissions (the Euro 6 equivalent)
by 2020 (Exhibit 1). Additionally, India has implemented Corporate Average Fuel
Efficiency norms in which the manufacturers have to improve their fuel efficiency by 10
percent between 2017 and 2021 and by 30 percent or more from 2022.

Some of the major initiatives taken by the Government of India are:

 Mr Nitin Gadkari, Minister of Road Transport, Highways & Shipping has

announced plans to set up a separate independent Department for Transport,
comprising of experts from the automobile sector to resolve issues such as those
related to fuel technology, motor body specifications and fuel emissions, apart from
exports.
 Government of India aims to make automobiles manufacturing the main driver of
‘Make in India’ initiative, as it expects passenger vehicles market to triple to 9.4
million units by 2026, as highlighted in the Auto Mission Plan (AMP) 2016-26.
 In the Union budget of 2015-16, the Government has announced to provide credit of
Rs 850,000 crore (US$ 124.71 billion) to farmers, which is expected to boost the
tractors segment sales.
 The Government plans to promote eco-friendly cars in the country i.e. CNG based
vehicle, hybrid vehicle, and electric vehicle and also made mandatory of 5 per cent
ethanol blending in petrol.
 The government has formulated a Scheme for Faster Adoption and Manufacturing
of Electric and Hybrid Vehicles in India, under the National Electric Mobility Mission
2020 to encourage the progressive induction of reliable, affordable and efficient
electric and hybrid vehicles in the country.
 The Automobile Mission Plan (AMP) for the period 2006–2016, designed by the
government is aimed at accelerating and sustaining growth in this sector. Also, the
well-established Regulatory Framework under the Ministry of Shipping, Road
Transport and Highways, plays a part in providing a boost to this sector.
 The World Economic Forum ranks India 30th on the global manufacturing index,
which assesses the manufacturing capabilities of more than 100 countries. The
government’s “Make in India” initiative has played an important role in elevating
country’s position. In the past three to four years, India improved on nine out of ten
parameters for ease of doing business.
COMPANY PROFILE
COMPANY 1

ROLLS ROYCE
 COMPANY PROFILE: ROLLS ROYCE

ROLLS ROYCE HISTORY

 ROLLS ROYCE grew from the electrical and mechanical business established by
Henry Royce in 1884. Royce built his first motorcar in 1904 and in May of that year
met Charles Rolls, whose company sold quality cars in London.
 An agreement was reached that Royce limited would manufacture a range of cars to
be exclusively sold by CS Rolls & Co – they were to bear the name Rolls Royce.
 Success with the cars led to the formation of Rolls Royce Company in March 1906
and to the launch of the six cylinder Silver Ghost which, within a year, was hailed as
‘the best car in the world’.
 At the start of First World War, in response to the nations need, Royce designed his
first aero engine – The Eagle, providing some half of the total horse power used in the
air war by the allies.
 The late 1920s saw Rolls Royce develop the ‘R’ engine to power Britain’s entry in
the International Schneider Trophy seaplane contest. It established a new world air
speed record of over 400 mph in 1931.
 1940- The merlin powered the hawker Hurricane and Super marine Spitfire in the
Battle of Britain. Demand for the Merlin during the Second World War transformed
us from a relatively small company into a major contender in aero propulsion.
 1944- Rolls Royce began development of the aero gas turbine by Sir Frank Whittle.
 1953- Rolls Royce entered the civil aviation market.
 1971- Early problems RB211 (engine) led to the company being taken into state
ownership, and the flotation of the motorcar business in 1973 as a separate entity.
 1987- Rolls Royce returned to the private sector, undergoing a number of mergers
and acquisitions to create the only company in Britain capable of delivering power for
use in the air, at sea and on land.
 In 1990 Rolls Royce formed an aero engines joint venture with BMW of Germany.
 Allison Engine Company in Indianapolis was acquired in 1995.
  Rolls Royce motorcars was sold by Vickers to Volkswagen, although BMW hold the
rights to the name and marque for use on Rolls Royce cars, having acquired the rights
from Rolls Royce plc. for £40m in 1998.
 RR took full control of the oil and gas joint venture, Cooper Rolls, with the
acquisition of the rotating equipment interests of Cooper Energy Services.
 In 2006 RR opened their 6000 square meter Marine facility in Shanghai.
 The Rolls-Royce Phantom four-door sedan was the first product offered for sale in
2003. Since then, the company has expanded its product line to include extended
wheelbase, two-door coupé, and convertible versions of the Phantom Sedan, as well
as the smaller Ghost four-door sedan, Wraith two-door coupé, Dawn Convertible, and
the Cullinan SUV.

CLIENT PROFILE OF ROLLS ROYCE

Rolls-Royce clientele are almost all self-employed, entrepreneurs, heirs of large fortunes or

royalty. A typical client of Rolls-Royce is a person with between three and five homes, a large
collection of luxury cars and a net worth of around $30 million.

ROLLS ROYCE VISION STATEMENT

“Our vision, in its purest form, is to create the automotive equivalent of haute couture. This is the
future of luxury mobility.”

ROLLS ROYCE VALUES

“Our strive for perfection guides us.

Rolls-Royce is an everlasting expression of the exceptional, where everything we do
reflects our persistence and commitment towards the remarkable.”
 ORGANISATIONAL STRUCTURE

As a giant company, they choose hierarchical structure to manage the company. It is a traditional
and effective structure for Rolls Royce to supervise and develop the business. The Group is
managed by detailed systems and procedures due to the large turnover.

STRATEGIES OF ROLLS ROYCE

1. Cutting edge technologies

2. Dynamic technology management
3. Compelling customer propositions
4. Long term value creation
5. Resilient business.

FINANCIAL INFORMATION
TABLE 1

Jun 30, Dec 31, Jun 30, Dec 31, Jun 30,
Name
2020 2019 2019 2018 2018

 Total Current Assets 16,952 16,054 15,960 16,820 15,699

Cash and Short Term

4,239 4,461 4,208 4,980 4,386
Investments

Cash - - - - -

Cash & Equivalents 4,239 4,443 4,208 4,974 4,379

Short Term
0 18 0 6 7
Investments
 Jun 30, Dec 31, Jun 30, Dec 31, Jun 30,
Name
2020 2019 2019 2018 2018

Total Receivables, Net 7,714 7,199 7,008 6,781 6,372

Accounts
Receivables – 7,676 7,160 6,981 6,747 6,363
Trade, Net

Total Inventory 4,818 4,320 4,711 4,287 4,065

Prepaid Expenses - - - - -

Other Current Assets,

181 74 33 772 876
Total

 Total Assets 33,140 32,266 32,419 31,857 30,071

Property/Plant/Equip
6,152 6,812 6,872 4,929 4,494
ment, Total – Net

Property/Plant/Equi
pment, Total – 11,493 10,803 10,781 8,901 8,233
Gross

Accumulated
-5,341 -3,991 -3,909 -3,972 -3,739
Depreciation, Total

Goodwill, Net 1,066 994 1,050 1,045 1,029

Intangibles, Net 4,263 4,448 4,387 4,250 4,237

Long Term
446 432 421 434 744
Investments

Note Receivable –
- - - - -
Long Term
 Jun 30, Dec 31, Jun 30, Dec 31, Jun 30,
Name
2020 2019 2019 2018 2018

Other Long Term

4,261 3,526 3,729 4,379 3,868
Assets, Total

Other Assets, Total - - - - -

 Total Current Liabilities 16,642 14,976 14,943 14,851 12,732

Accounts Payable - - - - -

Payable/Accrued 8,299 8,450 8,216 8,292 10,183

Accrued Expenses - - - - -

Notes Payable/Short
8 0 0 0 0
Term Debt

Current Port. Of LT
1,768 775 464 858 797
Debt/Capital Leases

Other Current
6,567 5,751 6,263 5,701 1,752
liabilities, Total

 Total Liabilities 41,288 35,642 35,042 32,931 29,320

Total Long Term Debt 6,988 4,910 6,065 3,804 3,644

Long Term Debt 4,985 4,910 6,065 3,804 3,644

Capital Lease
2,003 - - - -
Obligations

Deferred Income Tax 785 618 661 962 485

Minority Interest 24 22 24 22 19
 Jun 30, Dec 31, Jun 30, Dec 31, Jun 30,
Name
2020 2019 2019 2018 2018

Other Liabilities,
16,849 15,116 13,349 13,292 12,440
Total

Sales of Rolls Royce motor cars

The all-time high record of sales (beginning in 2005) was achieved in 2014, at 4,063 cars,
topping 2016 sales by 52 cars. In 2011, Rolls-Royce Motor Cars Limited sold 3,538 cars, an
increase of 31 percent compared to 2010, beating the previous sales record from 1978. The
strong sales growth occurred in the Asia Pacific region, Britain and the Middle East with sales
increases of 47 percent, 30 percent and 23 percent respectively

TABLE 2

Calendar year Total sales

2013 3,630

2014 4,063

2015 3,785

2016 4,011

2017 3,362

Sustainable business of Rolls Royce

Being sustainable means understanding the impact our business has on the world around us, and
the impact the world around us has on the business.

Rolls Royce ensures sustainable development through the following:

3 Understanding and minimizing the impact on the environment, particularly in the context

of climate change.
4 Seeking opportunities to adopt circular business practices to reduce demand for virgin
materials, safeguarding supply and further reducing the impacts.
5 Making a positive contribution to the communities within which they operate
6 Acting with Integrity and considering the potential and actual ethical implications of all
business decisions.
7 Ensuring Zero Harm to the people who work for or with us and give them the best
opportunity to be at their best
8 Reporting and communicating with the key stakeholders transparently and honestly.

MARKETING MIX OF ROLLS ROYCE

Rolls Royce Product Strategy:

The product strategy and mix in Rolls Royce marketing strategy can be explained as follows:

Rolls Royce is a globally recognized luxury car brand based in England. Rolls Royce is an
extremely high end luxury car maker specializing in providing cars to elite clients. Rolls Royce
has several prominent brands like Phantom, Dawn, Ghost, Wraith etc in its product line up in its
marketing mix. The brand is a subsidiary of German auto giant BMW. Rolls Royce Motors
offers customized cars to customers, and the company has nothing to do with Rolls Royce brand
which is another conglomerate with the same name. Rolls Royce cars have a unique identity of a
long front bonnet, metallic finish exteriors and customized interiors. Rolls Royce also offers
Coupe or convertible variations for some its models. The products and cars basically define the
ultimate criteria for luxury in the automobile segment. Since Rolls Royce focuses only on a niche
premium segment, the annual sales of the brand worldwide are only in the range of 3500-4500
cars.
Rolls Royce Price/Pricing Strategy:

Below is the pricing strategy in Rolls Royce marketing strategy:

Rolls Royce motor cars are premium priced cars and they serve only extremely affluent and rich
clients. The pricing in its marketing mix is kept high as they offer products, services and
finishing of the highest quality and also offer customization as per the requirement of the
customer. Rolls Royce offers cars starting at a base price of $200,000- $250,000. These prices
for Rolls Royce are the entry level prices. Customizations, additional add-ons, interiors etc can
increase the price of the cars as per the customers’ needs and wants. The costliest Rolls Royce
car was Hyperion Pininfarina priced at $6 million per car. In India, the starting price of Rolls
Royce cars in at INR 4 crore. This clearly shows that the brand is not disrupted by a competitor
pricing and simply focuses on offering highest quality and a premium price.

Rolls Royce Place & Distribution Strategy:

Rolls Royce has a tremendous worldwide presence. The brand has offices spread in 50 countries
worldwide. People from over 150 countries like US, UK, India, Middle East, Australia, and
China etc use Rolls Royce cars. Rolls Royce is headquartered in England, where they have the
administrative and production facilities for the customers. Since Rolls Royce has a limited client
base, they have been extremely diligent in having a strong distribution network of its cars. Since
Rolls Royce are customized, spare parts and servicing are provided by the company and they are
delivered to the customer's doorstep.

Rolls Royce Promotion & Advertising Strategy:

The promotional and advertising strategy in the Rolls Royce marketing strategy is as follows:

Rolls Royce has a tremendous legacy and is an inspirational brand. It is not a product which the
masses will buy and hence Rolls Royce does not follow the conventional advertising strategy in
its marketing mix. Since this caters to a niche segment, using mass media like TV, print, online
ads etc doesn’t make sense for the company. Rolls Royce being a sought after luxury brand and a
social status symbol, attracts elite people. Word of mouth, usage by rich and successful
celebrities, businessmen etc make Rolls Royce a powerful brand. This is the biggest marketing or
brand awareness which the company can do. For its customers, Rolls Royce ensures they are
engaged through various activities like exclusive merchandise, expensive gifts etc. Also, regular
PR coverage through newspaper articles, TV shows etc reiterate the prominence and dominance
of the luxury car brand. Hence, this gives an insight in the marketing mix of Rolls Royce motors
car brand.

AWARDS AND ACCOLADES OF ROLLS ROYCE

1. The golden steering award for cullinan suv(2019)

2. Best ultra-luxury SUV of the decade {RR Cullinan}

3. The red dot awards for the best innovations

4. The drum design award of 2019

5. Best car of the year since 2008.{uk}

COVID 19 IMPACT ON ROLLS ROYCE.

The Rolls-Royce gave a stark warning about the impact of the Covid-19 pandemic on
the business as it reported a record £5.4bn loss for the first half of the year.

The company does not expect orders to recover to pre-Covid levels until 2025. The pandemic led
to a slump in demand for its engines as airlines reduced flights and aircraft manufacturers slowed
production. It continues to burn through cash, and expects to have burned through £4bn by the
end of the year, and said it may not be able to find enough funding to cover its needs.
Announcing its results for the first half of the year, it said: “The inherent uncertainty over the
severity, extent and duration of the disruption caused by the Covid-19 pandemic and therefore
the timing of recovery of commercial aviation to pre-crisis levels and the availability of
sufficient funding, represent material uncertainties that may cast significant doubt on the group’s
ability to continue as a going concern.”

Rolls-Royce is undertaking the largest restructuring in its history and, as a result, will close
several production sites, including Barnoldswick, in Lancashire, and Annesley, in
Nottinghamshire, as it consolidates its operations.
Rolls-Royce previously announced plans to cut 9,000 jobs globally, more than 15% of its
workforce, because of the pandemic, with UK staff making up two-thirds of the total. The
company said 2,500 of its UK workers had applied for voluntary redundancy or agreed to take
early retirement, substantially reducing the need for compulsory redundancies.  4,000 people in
its civil aerospace business have left the company, reducing its global workforce to 48,000; a
further 5,000 are due to leave before the end of the year.

Rolls-Royce predicts pre-tax savings of at least £1.3bn by the end of 2022 from its restructuring
programme. As part of the attempts to shore up its balance sheet for the longer term, it is looking
to sell at least £2bn worth of assets, including the Spanish engine maker ITP Aero.

The company said it had taken decisive action when the pandemic began to affect its business,
such as its restructuring programme, but it only expected deliveries of large engines to increase
from 2022.

The company said its defense business had remained resilient during 2020 and demand from its
key government customers was unchanged.

Ethics and compliance of Rolls Royce

Rolls Royce have a Global Code of Conduct (Our Code) that applies to all employees of Rolls-
Royce, its subsidiaries and controlled joint ventures, wherever they are located.

It sets out the principles that underpin the values and the way Rolls Royce do business. It also
provides guidance on how to apply these principles in everything Rolls Royce do. Breaches are
not acceptable and will result in the company taking action. This may include disciplinary action
up to and including dismissal.

Rolls Royce have recruited a team of industry leading experts in ethics and compliance and
enlisted the help of Lord Gold. These changes include the appointment of a Head of Ethics and
Compliance, as well as dedicated specialist legal, monitoring and employee training support.
Rolls Royce have over 100 Local Ethics Adviser positions globally and Ethics and Compliance
Officers within the businesses to promote the tackling of ethical issues locally and within the
businesses.
Rolls Royce encourages all employees and stakeholders not to hesitate in raising ethical
questions or concerns.

Rolls Royce have four main channels for employees to raise questions; speaking to their
line manager; speaking to a subject matter expert; speaking to their Local Ethics Advisor;
or raising a question via our Ethics Line.

Facts about Rolls Royce

1. The model for The Spirit of Ecstasy was shrouded in scandal
2. Rolls-Royce once made a .50 caliber machine gun
3. A Rolls-Royce engine helped begin the 300-mph club
4. You could only get a Phantom IV if you were a royal
5. You can send your chauffeur to a Rolls-Royce driving school
6. Only bulls are used for Rolls-Royce’s leather interiors
7. One man paints all of Rolls-Royce’s pinstripes by hand.
COMPANY 2
BMW
BMW HISTORY

The official founding date of the German motor vehicle manufacturer BMW is 7 March 1916,
when an aircraft engine manufacturer called Bayerische Flugzeugwerke AG was formed. This
company was renamed to Bayerische Motoren Werke (BMW) in 1922. However the name
BMW dates back to 1913, when the original company used the name BMW (which in German
appears as Rapp Motorenwerke).

The company was established in 1913 and based in Munich, Germany. It started out as an aero
engine manufacturer, hence the company logo. The logo comprised of four quadrants of
alternating white and blue color. It is a stylized representation of an airplane propeller spinning
against the clear blue sky. The logo represents a white propeller blade against a blue sky. It
reflects the origins of BMW as a maker of military aircraft engines during WWI. Also, white and
blue are the traditional colors of Bavaria.

BMW's first product was a straight-six aircraft engine called the BMW IIIa. Following the end
of World War I, BMW remained in business by producing motorcycle engines, farm equipment,
household items and railway brakes. The company produced its first motorcycle, the BMW R
32 in 1923.

BMW became an automobile manufacturer in 1928 when it purchased Fahrzeugfabrik Eisenach,

which, at the time, built Austin Sevens under license under the Dixi marque. The first car sold as
a BMW was a rebadged Dixi called the BMW 3/15. Throughout the 1930s, BMW expanded its
range into sports cars and larger luxury cars.

Aircraft engines, motorcycles, and automobiles would be BMW's main products until World
War II. During the war, against the wishes of its director Franz Josef Popp, BMW concentrated
on aircraft engine production, with motorcycles as a side line and automobile manufacture
stopped altogether. BMW's factories were heavily bombed during the war and its remaining
West German facilities were banned from producing motor vehicles or aircraft after the war.
Again, the company survived by making pots, pans, and bicycles.

In 1948, BMW restarted motorcycle production. BMW resumed car production in Bavaria in
1952 with the BMW 501 luxury saloon. The range of cars was expanded in 1955, through the
production of the cheaper Isetta microcar under license. Slow sales of luxury cars and small
profit margins from micro cars meant BMW was in serious financial trouble and in 1959 the
company was nearly taken over by rival Daimler-Benz.

A large investment in BMW by Herbert Quandt and Harald Quandt resulted in the company

surviving as a separate entity. The 1962 introduction of the BMW New Class compact sedans
was the beginning of BMW's reputation as a leading manufacturer of sport-oriented cars.
Throughout the 1960s, BMW expanded its range by adding coupe and luxury sedan models.
The BMW 5 Series mid-size sedan range was introduced in 1972, followed by the BMW 3
Series compact sedans in 1975, the BMW 6 Series luxury coupes in 1976 and the BMW 7
Series large luxury sedans in 1978.

The BMW M division released its first road car, a mid-engine supercar, in 1978. This was
followed by the BMW M5 in 1984 and the BMW M3 in 1986. Also in 1986, BMW introduced
its first V12 engine in the 750i luxury sedan.

The company purchased the Rover Group in 1994, however the takeover was not successful and
was causing BMW large financial losses. In 2000, BMW sold off most of the Rover brands,
retaining only Mini and Rolls Royce.

The 1995 BMW Z3 expanded the line-up to include a mass-production two-seat roadster and the
1999 BMW X5 was the company's entry into the SUV market.

The first mass-produced turbocharged petrol engine was introduced in 2006, with most engines
switching over to turbocharging over the following decade. The first hybrid BMW was the
2010 BMW Active Hybrid 7, and BMW's first electric car was the BMW i3 city car, which was
released in 2013. After many years of establishing a reputation for sporting rear-wheel drive cars,
BMW's first front-wheel drive car was the 2014 BMW 2 Series Active Tourer multi-purpose
vehicle (MPV).

BMW's production of automobiles began in 1928, when the company purchased

the Automobilwerk Eisenach car company from Gothaer Waggonfabrik. Eisenach's current
model was the Dixi 3/15, a licensed copy of the Austin 7 which had begun production in 1927.
Following the takeover, the Dixi 3/15 became the BMW 3/15, BMW's first production car.
Towards the end of 1930, BMW attempted to introduce a new front axle with independent wheel
suspension for both their models, the BMW 'Dixi' 3/15 DA4 and BMW 'Wartburg' DA3, but this
resulted in accidents with the prototypes because of construction faults.

In 1932, the BMW 3/20 became the first BMW automobile designed entirely by BMW. It was
powered by a four-cylinder engine, which BMW designed based on the Austin 7 engine.

BMW's first automotive straight-six engine was released in 1933, in the BMW 303, which was
larger and more conventional than its 3/20 predecessor.

The 303 was also the first BMW to use the "kidney grille" that would become a characteristic of
BMW styling. The 303 formed the basis for the four-cylinder 309 and the larger-engined 315 and
319, while the 315/1 and 319/1 roadsters were built using the chassis of the 303.and the restyled
329.

The 303 platform was supplemented in 1936 by the BMW 326, a larger luxury car with a more
rigid frame. The 326 was BMW's first four-door sedan. 

A shortened version of the 326 chassis was used in the BMW 320 (which replaced the 329),
the BMW 321 (which replaced the 320) and in the BMW 327 coupé.

Also in 1936, the BMW 328 sports car replaced the 315/1 and 319/1. Unlike its predecessors, the
328 had a purpose-built chassis and a unique engine (the BMW M328) which produced 59 kW
(79 bhp; 80 PS). From its introduction at the Eifelrennen race at the Nürburgring in 1936,
where Ernst Henne drove it to win the 2.0 litre class, to the overall victory of Fritz Huschke von
Hanstein at the 1940 Brescia Grand Prix during World War II.The 328 was highly successful in
motor racing, with more than 100 class wins in 1937 alone.

The BMW 335 luxury car was produced from 1939 to 1941.It was built using an extended
version of the 326 chassis with the larger BMW M335 straight-six engine.

In West Germany, many of the BMW factories had been heavily bombed during the war. By the
end of the war, the Munich plant was completely destroyed. BMW was banned by the Allies
from producing motorcycles or automobiles. During this ban, BMW used basic secondhand and
salvaged equipment to make pots and pans, later expanding to other kitchen supplies and
bicycles.
In 1948, BMW was still barred from producing automobiles, however, the Bristol G
Company (BAC) inspected the factory, and returned to Britain with plans for the 327 model and
the six-cylinder engine as official war reparations. Bristol then employed BMW engineer Fritz
Fiedler to lead their engine development team. In 1947, the newly formed Bristol Cars released
their 400 coupé, a lengthened version of the BMW 327. That featured BMW's double-kidney
grille. Influenced by the public response to the introduction of the Mercedes-Benz
300SL and Mercedes-Benz 190SL in 1954, BMW began development of a sports car based on
the platform of the BMW 502 luxury sedan. The styling was contracted out to industrial
designer Albrecht von Goertz, who designed a two-seat roadster and a four-seat grand
tourer versions.The BMW 507 roadster was introduced at the Waldorf-Astoria Hotel in New
York in early 1955, while the BMW 503 four-seater was introduced a few months
later. However, high prices would be the downfall of both models. Max Hoffman, the BMW
importer for the United States, told BMW that he would order 2000 507s if he could sell them
for US$5,000 each. When the selling price was given as about twice that, and higher than the
300SL, he withdrew his offer 412 units of the 503 and 253 of the 507 were built during their
production runs from 1956 (May for the 503, November for the 507) to March 1959.

BMW released their first electric car, the BMW i3 city car, in 2013. The i3 is also the first mass-
production car to have a structure mostly made from carbon-fiber. BMW's first hybrid sportscar
(and their first mid-engined car since the M1) is called the BMW i8 and was introduced in 2014.
The i8 is also the first car to use BMW's first inline-three engine, the BMW B38.

In 2013, the BMW 4 Series replaced the coupe and convertible models of the 3 Series. Many
elements of the 4 Series remained shared with the equivalent 3 Series model. Similarly,
the BMW 2 Series replaced the coupe and convertible models of the 1 Series in 2013. The 2
Series was produced in coupe (F22), five-seat MPV (F45) and seven-seat MPV (F46) body
styles. The latter two body styles are the first front-wheel drive vehicles produced by BMW.
The F48 X1 also includes some front-wheel-drive models.

The BMW X4 compact SUV was introduced in 2014.

The 2016 G11 7 Series 740e and F30 3 Series 330e models are the first plug-in hybrid versions
of the 7 Series and 3 Series respectively.

OLDEST EXISTING MODEL OF BMW LATEST MODEL OF BMW i8

BMW SALES 2019 TABLE 3

  Sale 2019 % Change

BMW Group Automotive 2,520,307 +1.2

BMW 2,168,516 +2.0

BMW M GmbH 135,826 +32,2

MINI 346,639 -4.1

BMW Group electrified* 145,815 +2.2

BMW Motorrad 175,162 +5.8

Type Public (Aktiengesellschaft)

Traded as FWB: BMW

Industry Automotive

Predecessors Rapp Motorenwerke

Bayerische Flugzeugwerke
Fahrzeugfabrik Eisenach

Founded 7 March 1916; 104 years ago

Founders Camillo Castiglioni

Franz Josef Popp
Karl Rapp

Headquarters Munich

, 

Germany

Area served Worldwide

Key people Oliver Zipse, Chairman of the Board of

Management
Norbert Reithofer, Chairman of the
Supervisory Board

Cars
Products
motorcycles
Production  2,564,025 vehicles (2019)
output

Brands Automobiles
BMW
Mini
Rolls-Royce
BMW M
BMW i
Motorcycles
TABLE4
Motorenwerke company logo, which featured a black ring bearing the company name
surrounding the company logo, on a plinth a horse's head couped.BMW retained Rapp's black
ring inscribed with the company name, but adopted as the central element a circular escutcheon
bearing a quasi-heraldic reference to the coat of arms (and flag) of the Free State of Bavaria (as
the state of their origin was named after 1918), being the arms of the House of
Wittelsbach, Dukes and Kings of Bavaria. However as the local law regarding trademarks
forbade the use of state coats of arms or other symbols of sovereignty on commercial logos, the
design was sufficiently differentiated to comply, but retained the tinctures azure (blue) and
argent (white).

The current iteration of the logo was introduced in 2020, removing 3D effects that had been used
in renderings of the logo, and also removing the black outline encircling the rondel. The logo
will be used on BMW's branding but will not be used on vehicles.

The origin of the logo as a portrayal of the movement of an aircraft propeller, the BMW logo
with the white blades seeming to cut through a blue sky, is a myth which sprang from a 1929
BMW advertisement depicting the BMW emblem overlaid on a rotating propeller, with the
quarters defined by strobe-light effect, a promotion of an aircraft engine then being built by
BMW under license from Pratt & Whitney. “For a long time, BMW made little effort to correct
the myth that the BMW badge is a propeller" (quote by Fred Jakobs, Archive Director, BMW
Group Classic).It is well established that this propellor portrayal was first used in a BMW
advertisement in 1929 – twelve years after the logo was created – so this is not the true origin of
the logo.

The global BMW Headquarters in Munich represents the cylinder head of a 4-cylinder engine. It
was designed by Karl Schwanzer and was completed in 1972. The building has become a
European icon and was declared a protected historic building in 1999. The main tower consists of
four vertical cylinders standing next to and across from each other. Each cylinder is divided
horizontally in its center by a mold in the facade. Notably, these cylinders do not stand on the
ground; they are suspended on a central support tower.

BMW Museum is a futuristic cauldron-shaped building, which was also designed by Karl
Schwanzer and opened in 1972. The interior has a spiral theme and the roof is a 40-metre
diameter BMW logo.
BMW Welt, the company's exhibition space in Munich, was designed by Coop
Himmelb(l)au and opened in 2007. It includes a showroom and lifting platforms where a
customer's new car is theatrically unveiled to the customer.

Mission

BMW’s mission statement is “to become the world’s leading provider of premium products
and premium services for individual mobility.”

Vision

BMW’s vision statement is “to be the most successful premium manufacturer in the
industry.”

Values

BMW’s core values comprises of “responsibility, appreciation, transparency, trust, and

openness.”

Slogan
The slogan 'The Ultimate Driving Machine' was first used in North America in 1974.

In 2010, this long-lived campaign was mostly supplanted by a campaign intended to make the
brand more approachable and to better appeal to women, 'Joy'. By 2012 BMW had returned to
'The Ultimate Driving Machine'.
FINANCIAL INFORMATION (TABLE 5)

Total
Revenue Net income
Year Assets Employees
in bn. EUR€ in bn. EUR€
in bn. EUR€

201
76.058 5.314 138.368 110,351
5

201
80.401 5.798 154.803 116,324
6

201
92.175 6.369 172.174 122,244
7

201
94.163 6.863 188.535 124,729
8

201
98.678 8.620 193.483 129,932
9

BMW produces complete automobiles in the following countries:

 Germany: Munich, Dingolfing, Regensburg and Leipzig

 Austria: Graz
 United States: Spartanburg
 Mexico: San Luis Potosí
 South Africa: Rosslyn
 India: Chennai
 China: Shenyang
BMW also has local assembly operation using complete knock-down (CKD) components in
Thailand, Russia, Egypt, Indonesia, Malaysia and India.

In the UK, BMW has a Mini factory near Oxford, plants in Swinton and Hams Hall, and Rolls
Royce vehicle assembly at Good wood. In 2020, these facilities were shut down for the period
from March 23 to April 17 due to the coronavirus outbreak.

The BMW group (including Mini and Rolls-Royce) produced 1,366,838 automobiles in 2006
and then 1,481,253 automobiles in 2010. BMW Motorcycles are being produced at the
company's Berlin factory, which earlier had produced aircraft engines for Siemens.

By 2011, about 56% of BMW-brand vehicles produced are powered by petrol engines and the
remaining 44% are powered by diesel engines. Of those petrol vehicles, about 27% are four-
cylinder models and about nine percent are eight-cylinder models. On average, 9,000 vehicles
per day exit BMW plants, and 63% are transported by rail.

Environmental record

BMW is a charter member of the U.S. Environmental Protection Agency's (EPA) National

Environmental Achievement Track, which recognizes companies for their environmental
stewardship and performance. It is also a member of the South Carolina Environmental
Excellence Program.

Since 1999, BMW has been named the world's most sustainable automotive company every year
by the Dow Jones Sustainability Index. The BMW Group is one of three automotive companies
to be featured every year in the index. In 2001, the BMW Group committed itself to the United
Nations Environment Programme, the UN Global Compact and the Cleaner Production
Declaration. It was also the first company in the automotive industry to appoint an environmental
officer, in 1973. BMW is a member of the World Business Council for Sustainable
Development.

In 2012, BMW was the highest automotive company in the Carbon Disclosure Project's Global
500 list, with a score of 99 out of 100.The BMW Group was rated the most sustainable DAX 30
Company by Sustainalytics in 2012.

To reduce vehicle emissions, BMW is improving the efficiency of existing fossil-fuel powered
models, while researching electric power, hybrid power and hydrogen for future models.
COVID 19 SCENARIO OF BMW

The BMW Group is well prepared to react swiftly and decisively at all times to new
developments during the corona pandemic by systematically identifying potential scenarios. This
approach is all the more important given that the BMW Group expects the consequences of the
corona pandemic to constrain the operations of the entire automotive industry for quite some
time to come. It is also becoming apparent that delivery volumes in key markets are not going to
return to normal in the space of just a few weeks. The BMW Group is developing strategies for
various scenarios and is prepared to take additional measures to safeguard its financial position
and use its underlying strength to steer itself through this challenging phase.
 At the same time, the BMW Group is keenly aware of its responsibility as an employer and as
an integral part of society. It promotes the protection and health of its employees and endeavours
to strike the best possible balance to ensure the enduring success of the enterprise. The BMW
Group is also helping public authorities to procure personal protective equipment, providing
vehicles for aid organizations, and has even started producing respiratory masks.

Even in the current situation, the BMW Group’s strategic decisions are paying off. It set about
meeting currently applicable CO2 targets at an early stage, an important aspect of which was the
decision to systematically electrify its model range. With its Performance > NEXT programme
launched in 2017, the BMW Group laid the foundations for achieving greater efficiency and
stronger operating performance. It has also strategically secured access to the raw
materials needed to deliver electric mobility. Since the beginning of the current year, the BMW
Group has been procuring the required cobalt and lithium directly and passing those resources on
to the suppliers who manufacture battery cells.

At the same time, the BMW Group remains convinced of the importance of focusing consistently
on customer needs and therefore on the innovations required to meet those needs as crucial to its
enduring success: “We remain focused on investing to enhance our future success. We will
continue to electrify our fleet as planned and make no compromises when it comes to highly
automated driving.
I NEXT is designed to provide Level 3 performance on highways. BMW will also continue to
invest in hydrogen fuel cell technology.

Furthermore, as a dependable partner within our society, we continue to train young people,”
said Zipse with emphasis. “In no way does the pandemic call our business model into question.
Driven by technology and innovation, our business model will remain future-proof after the
current crisis has ended.”

With these aims in mind, the BMW Group continues to invest in broadening its expertise in key
future-oriented fields of technology. By 2025, the Group intends to invest over 30 billion
euros in research and development to further establish its role as an innovation leader.

Over the past three years, the BMW Group has already achieved an excellent starting position
with its Performance > NEXT programme.

One of the many positive outcomes of this initiative is that development times for new vehicle
models have been reduced by as much as one third. On the product side, up to 50% of
today’s drivetrain variants will be eliminated from 2021 onwards in the transition to creating
enhanced flexible vehicle architectures.

Moreover, the BMW Group’s model portfolio is regularly assessed with a view to finding
additional potential ways of reducing complexity. Potential for greater synergy and efficiency in
indirect purchasing as well as in terms of material and production costs is also being leveraged
throughout the Group.

By the end of 2022, the Group intends to save more than 12 billion euros through efficiency-
boosting measures.

Marketing strategy of bmw

BMW implemented a different marketing mix to sell cars to different socioeconomic segments,
aggressively emphasizing premium segments. BMW initiated the goal of segmenting the
premium market by optimizing the fit between the purchasing behavior of consumers and the
marketing mix to maximize sales to that segment. Responding sensitively to unique values and
purchasing behavior enabled BMW to transcend intended performance. To begin with, BMW
vehicles sell well to consumers who have high standards for quality, luxury, and performance
because BMW builds those attributes into its automobiles.

The fact that BMW concentrates on premium segments on a global scale and consistently defines
high-end brand identification renders success. Attractive and trendsetting products ranging from
the 3 to 7 series that deliberately focus on affluent customers demonstrate the success of the
automaker’s global marketing strategy. The firm’s global marketing strategy represents
leadership through innovation. Originally an aircraft engine manufacturer, BMW incessantly
sought an innovative spirit to satisfy the premium market’s demands. Recently, requirements for
clean energy and green environmental factors have rendered many companies to concur with
their business strategies with the shifting paradigms of environmental demands. BMW’s
innovation initiates from the realization of such requirements for clean energy, such as hydrogen.
The innovative spirit of BMW’s testing of hydrogen-fueled automobiles since 1978 and applying
the technology to production demonstrates its futuristic mindset and innovative leadership.
BMW creates value, competitive advantage and ramifications of innovation through various
marketing efforts heavily committed in the premium segments of significance.

Though disciplines of marketing are universal, the method of global marketing strategy that
BMW addresses reflect the significance of premium relevance. BMW does not feature minivans
segmented as MPV (multi-purpose vehicles) in its product lineup. The logic is simple. BMW is a
premium brand that does not compromise and cater to any segment of the market. Its global
marketing strategy underscores the selected premium target market. In addition to premium
marketing, BMW has shifted its position as “the ultimate driving machine” to “sheer driving
pleasure” that refers to a gradual movement from the emphasis on automobile performance to the
involvement of customers and taking emotional factors into serious consideration.

The company attempts to underpin the new theme of communication that integrates superior
performance of automobiles into emotionally sensual marketing communication worldwide. The
global marketing strategy underscoring activities that form an emotional foundation spotlights
consumers actually enjoying driving premium and superior automobiles that BMW create. Not to
be conventional, the emotional marketing perspective that intertwines with the premium
marketing in BMW’s global marketing strategy interplays synergistically to maintain its strong
leadership in the automobile industry.
Advertising appeal is the communicative approach relevant to the motives of the targeted
customers. Emotional appeals may evoke feelings of response that directly affect customers
purchasing behaviors. BMW perspicaciously combined premium marketing and molded into
emotional marketing to represent the company’s global marketing strategy.

Overall, BMW’s global marketing strategy bridging premium and emotional marketing have
compensated the company with superior economic performance and a strong leadership position
in the automobile industry. BMW strides further alongside its profitability to commit in an
outstanding manner to long-run corporate social responsibility (CSR) activities to create shared
value. BMW vividly pays attention to CSR activities, specifically in obligations to science and
engineering education and an eco-friendly environment.

FACTS ABOUT BMW

1. Bmw didn't start out making cars.

2. The bmw logo isn't based on airplane propellers.

3. Bmw made very good airplane engines.

4. Bmw only got into cars because the war ended.

5. Bmw built motorcycles before it built cars.

6. Even bmw's early automobiles were world class.

7. Bmw didn't design its first car.

8. Bmw headquarters is designed to resemble a four cylinder engine.

9. Electric bmws date back to 1972.

10. Even the oldest bmw engines can work effectively.

 COMPANY 3

MERCEDES BENZ

MERCEDES BENZ
Mercedes-Benz is both a German automotive marque and, from late 2019 onwards, a subsidiary
(Mercedes-Benz AG) of Daimler AG. Mercedes-Benz is known for producing luxury
vehicles and commercial vehicles. The headquarters is in Stuttgart, Baden-Württemberg. The
name first appeared in 1926 under Daimler-Benz. In 2018, Mercedes-Benz was the largest seller
of premium vehicles in the world, having sold 2.31 million passenger cars.

The company's origins come from Daimler-Motoren-Gesellschaft's 1901 Mercedes and Karl

Benz's 1886 Benz Patent-Motorwagen, which is widely regarded as the first internal combustion
engine in a self-propelled automobile. The fuel was not gasoline, it was a much more volatile
petroleum spirit with several names including ligrane/ligrain/ligroin. This was used as a
degreaser, spot remover, paint thinner, etc. and was so quick to burn or explode, it was not stored
inside. The slogan for the brand is "the best or nothing".

3.2 The HISTORY of Mercedes Benz

Mercedes-Benz traces its origins to Karl Benz's creation of the first internal combustion engine
in a car, the Benz Patent Motorwagen, financed by Bertha Benz's dowry and patented in January
1886, and Gottlieb Daimler and engineer Wilhelm Maybach's conversion of a stagecoach by the
addition of a petrol engine later that year. The Mercedes automobile was first marketed in 1901
by Daimler-Motoren-Gesellschaft (DMG).

Emil Jellinek, a European automobile entrepreneur who worked with DMG, created the
trademark in 1902, naming the 1901 Mercedes 35 hp after his daughter Mercedes Jellinek.
Jellinek was a businessman and marketing strategist who promoted "horseless" Daimler
automobiles among the highest circles of society in his adopted home, which, at that time, was a
meeting place for the "Haute Volée" of France and Europe, especially in winter.

His customers included the Rothschild family and other well-known personalities. But Jellinek's
plans went further: as early as 1901, he was selling Mercedes cars in the New World as well,
including US billionaires Rockefeller, Astor, Morgan, and Taylor. At a race in Nice in 1899,
Jellinek drove under the pseudonym "Monsieur Mercédès", a way of concealing the competitor's
real name as was normal and very regularly done in those days.

The race ranks as the hour of birth of the Mercedes-Benz brand. In 1901, the name "Mercedes"
was registered by Daimler-Motoren-Gesellschaft (DMG) worldwide as a protected trademark.
The first Mercedes-Benz brand name vehicles were produced in 1926, following the merger of
Karl Benz's and Gottlieb Daimler's companies into the Daimler-Benz company on 28 June of the
same year.

Gottlieb Daimler was born on 17 March 1834 in Schorndorf. After training as a gunsmith and
working in France, he attended the Polytechnic School in Stuttgart from 1857 to 1859. After
completing various technical activities in France and England, he started working as a draftsman
in Geislingen in 1862. At the end of 1863, he was appointed workshop inspector in a machine
tool factory in Reutlingen, where he met Wilhelm Maybach in 1865.

Throughout the 1930s, Mercedes-Benz produced the 770 model, a car that was popular during
Germany's Nazi period. Adolf Hitler was known to have driven these cars during his time in
power, with bulletproof windshields. Most of the surviving models have been sold at auctions to
private buyers. One of them is currently on display at the War Museum in Ottawa, Ontario. The
pontiff's Popemobile has often been sourced from Mercedes-Benz.

From 1937 onwards, Daimler Benz focused increasingly on military products, such as
the LG3000 lorry and the DB600 and DB601 aero engines. To build the latter, in 1936 it built a
factory hidden in the forest at Genshagen 10 km south of Berlin. By 1942 it had virtually stopped
making cars, and was entirely devoted to the war effort. According to its own statement, in 1944
almost half of its 63,610 employees were forced labourers, prisoners of war or concentration
camp detainees. Another source places this figure at 46,000 forced labourers working in Daimler-
Benz's factories to bolster Nazi war efforts. The company later paid $12 million in reparations to
the labourers' families.

Mercedes-Benz has introduced many technological and safety innovations that later became

common in other vehicles. Mercedes-Benz is one of the best-known and established automotive
brands in the world.

In November 2019, Daimler AG announced that Mercedes-Benz, up until that point a company
marque, would be spun off into a separate wholly owned subsidiary called Mercedes-Benz AG.
The new subsidiary would manage the Mercedes-Benz's car and van business. Mercedes-Benz-
badged trucks and buses would be part of the Daimler Truck AG subsidiary.

Quality rankings
 Mercedes-Benz has maintained a reputation for its quality and durability. Objective measures
looking at passenger vehicles, such as J. D. Power surveys, demonstrated a downturn in
reputation in these criteria in the late 1990s and early 2000s. By mid-2005, Mercedes temporarily
returned to the industry average for initial quality, a measure of problems after the first 90 days
of ownership, according to J. D. Power. In J. D. Power's Initial Quality Study for the first quarter
of 2007, Mercedes showed dramatic improvement by climbing from 25th to 5th place and
earning several awards for its models.

For 2008, Mercedes-Benz's initial quality rating improved by yet another mark, to fourth
place. On top of this accolade, it also received the Platinum Plant Quality Award for its
Mercedes’ Sindelfingen, Germany assembly plant. D. Power's 2011 US Initial Quality and
Vehicle Dependability Studies both ranked Mercedes-Benz vehicles above average in build
quality and reliability. In the 2011 UK J. D. Power Survey, Mercedes cars were rated above
average. A 2014 iSeeCars.com study for Reuters found Mercedes to have the lowest vehicle
recall rate.

Environmental record

Mercedes-Benz has developed multi-concept cars with alternative propulsion, such as hybrid-

electric, fully electric, and fuel-cell powertrains. At the 2007 Frankfurt motor show, Mercedes-
Benz showed seven hybrid models, including the F700 concept car, powered by a hybrid-electric
drivetrain featuring the DiesOtto engine. In 2009, Mercedes-Benz displayed
three BlueZERO concepts at the North American International Auto Show. Each car features a
different powertrain - battery-electric, fuel-cell electric, and gasoline-electric hybrid. In the same
year, Mercedes also showed the Vision S500 PHEV concept with a 19 miles (31 km) all-electric
range and CO
2 emissions of 74 grams/km in the New European Driving Cycle.

Since 2002, Mercedes-Benz has developed the F-Cell fuel cell vehicle. The current version,
based on the B-Class, has a 250-mile range and is available for lease, with volume production
scheduled to begin in 2014. Mercedes has also announced the SLS AMG E-Cell, a fully electric
version of the SLS sports car, with deliveries expected in 2013. The Mercedes-Benz S400 Blue
HYBRID was launched in 2009, and is the first production automotive hybrid in the world to use
a lithium-ion battery. In mid-2010, production commenced on the Vito E-Cell all-electric van.
In 2008, Mercedes-Benz announced that it would have a demonstration fleet of small electric
cars in two to three years. Mercedes-Benz and Smart are preparing for the widespread uptake of
electric vehicles (EVs) in the UK by beginning the installation of recharging points across
their dealer networks. So far 20 Electro bay recharging units, produced in the UK by Brighton-
based Electromotive, have been installed at seven locations as part of a pilot project, and further
expansion of the initiative is planned later in 2010.

In the United States, Mercedes-Benz was assessed a record US$30.66 million fine for their
decision to not meet the federal corporate average fuel economy standard in 2009. Certain
Mercedes-Benz cars, including the S550 and all AMG models sold in the United States, also face
an additional gas guzzler tax. However, newer AMG models fitted with the M157 engine will
not be subject to the gas-guzzler tax, due to improved fuel economy, and newer models powered
by the M276 and M278 engines will have better fuel economy. In 2008, Mercedes also had the
worst CO
2 average of all major European manufacturers, ranking 14th out of 14 manufacturers. Mercedes
was also the worst manufacturer in 2007 and 2006 in terms of average CO2 levels, with 181 g
and 188 g of CO2 emitted per km, respectively.

Mercedes-Benz paid an additional US$38 million for failing to meet its CAFE standards for
model years 2008–2011.

In May 2017, Mercedes partnered with Vivint Solar to develop a solar-energy home storage
battery. In February 2018, it was announced that Mercedes cabin air filters earned the Asthma
and Allergy Friendly Certification.

Innovations of Mercedes Benz

Numerous technological innovations have been introduced on Mercedes-Benz automobiles

throughout the many years of their production, including:

 The internal combustion engine automobile was developed independently by Benz and

Daimler & Maybach in 1886
 Daimler invented the honeycomb radiator of the type still used on all water-cooled vehicles
today
 Daimler invented the float carburetor which was used until replaced by fuel injection
 The "drop chassis" – the car originally designated the "Mercedes" by Daimler was also the
first car with a modern configuration, having the carriage lowered and set between the front
and rear wheels, with a front engine and powered rear wheels. All earlier cars were
"horseless carriages", which had high centers of gravity and various engine/drive-train
configurations.
 The first passenger road car to have brakes on all four wheels (1924)
 In 1936, the Mercedes-Benz 260 D was the first diesel-powered passenger car.
 Mercedes-Benz were the first to offer direct fuel injection on the Mercedes-Benz
300SL Gullwing
 The "safety cage" or "safety cell" construction with front and rear crumple zones was first
developed by Mercedes-Benz in 1951. This is considered by many as the most important
innovation in automobile construction from a safety standpoint
 In 1959, Mercedes-Benz patented a device that prevents drive wheels from spinning by
intervening at the engine, transmission, or brakes. In 1987, Mercedes-Benz applied for its
patent by introducing a traction control system that worked under both braking and
acceleration
 An Anti-Lock Brake system (ABS) was first offered on the W116 450SEL 6.9. They became
standard on the W126 S-Class starting production in 1979 and first sold in most markets in
1980.
 Airbags were first introduced in the European market, beginning with the model year 1981 S-
Class.
 Mercedes-Benz was the first to introduce pre-tensioners to seat belts on the 1981 S-Class. In
the event of a crash, a pre-tensioner will tighten the belt instantaneously, removing any 'slack'
in the belt, which prevents the occupant from jerking forward in a crash
 In September 2003, Mercedes-Benz introduced the world's first seven-speed automatic
transmission called '7G-Tronic'
 Electronic Stability Programme (ESP), brake assist, and many other types of safety
equipment were all developed, tested, and implemented into passenger cars – first – by
Mercedes-Benz. Mercedes-Benz has not made a large fuss about its innovations and has even
licensed them for use by competitors – in the name of improving automobile and passenger
safety. As a result, crumple zones and anti-lock brakes (ABS) are now standard on all
modern vehicles.
 The (W211) E320 CDI which has a variable geometry turbocharger (VGT) 3.0-
litre V6 common rail diesel engine (producing 224 hp or 167 kW), set three
world endurance records. It covered 100,000 miles (160,000 km) in a record time, with an
average speed of 224.823 km/h (139.70 mph). Three identical cars did the endurance run
(one set above record) and the other two cars set world records for time taken to cover
100,000 kilometers (62,137 mi) and 50,000 miles (80,000 km) respectively. After all three
cars had completed the run, their combined distance was 300,000 miles (480,000 km) (all
records were FIA approved).
 Mercedes-Benz pioneered a system called Pre-Safe to detect an imminent crash – and
prepares the car's safety systems to respond optimally. It also calculates the optimal braking
force required to avoid an accident in emergency situations and makes it immediately
available for when the driver depresses the brake pedal. Occupants are also prepared by
 tightening the seat belt, closing the sunroof and windows, and moving the seats into the
optimal position.
 At 181 horsepower per litre, the M133 engine installed in Mercedes-Benz A45 AMG is the
most powerful series-production four-cylinder turbocharged motor (as of June 2013) and has
one of the highest power density for a passenger vehicle.

The oldest model of Mercedes Benz in existence.

The latest model of Mercedes Benz.(electric)

Ever since, Mercedes-Benz is a name synonymous with Quality, Class, cutting-edge

engineering and sheer brilliance and is considered one of the best automakers in the world.
Today the brand produces luxury automobiles, buses, trucks and coaches. Carl Benz is
regarded to be the founder of this company, his 1986 patent 'Benz Patent Motorwagen' is
widely considered to be the first automobile.

From September 1902 DMG holds the patent for successful “Mercedes” brand name. All that
is missing is a characteristic trademark. That’s when the sons of Gottlieb Daimler, Paul and
Adolf, remember, that their father previously used a star for a symbol. The DMG Board of
Management follows this inspiration and in June 1909 registers both a three-pointed and
four-pointed star as trademarks.

Both logos are legally protected but it is the three-pointed star that is ultimately used and a
three-dimensional star adorns the front radiator of vehicles from 1910 onwards. With the
merging of both companies in June 1926, a new brand name is created, which combines the
essential elements of the previous emblems.
 Industry Automotive

Benz & Cie.

Predecessors
(1883–1926)
Daimler-Motoren-
Gesellschaft
(1890–1926)
Mercedes (marque)
(1901–1926)
Founded 28 June 1926; 94 years ago

Founders Karl Benz

Gottlieb Daimler
Area served Worldwide

Key people Ola Källenius, Chairman of the

Board of Management

Products Automobiles
Light commercial vehicles
Production  2.3 million Cars worldwide
output (+0.9%) (2018)

Brands Mercedes-Benz EQ
Mercedes-Maybach
Services Financial services
Automobile repair
Parent Daimler AG

Divisions Mercedes-Benz Cars

Mercedes-Benz Vans
Subsidiaries Mercedes-AMG

Mercedes Benz Sales (TABLE 6)

   2020 2019 Change 2020/19

September 201,849 209,964 -3.9%

August 168,710 182,268 -7.4%

July 185,836 189,651 -2.0%

June 172,808 179,885 -3.9%

May 134,819 188,882 -28.6%

April 97,048 174,854 -44.5%

March 170,102 202,192 -15.9%

February 132,701 158,331 -16.2%

January 161,701 164,446 -1.7%

Mercedes Benz Road to sustainable Mobility

Under the heading “Ambition 2039”, Mercedes-Benz Cars has set itself ambitious yet
realistic goals. As part of this, the automotive manufacturer is examining the issue of
sustainability along the entire value chain. The goal is the transformation of the full range of
passenger cars into a carbon-neutral product range as of 2039. This includes topics such as
raw materials and the supply chain, the production of the vehicles, their use phase and
recycling concepts. Similar transformation plans are being developed for the commercial
vehicles. Already during the development of a new model, Mercedes-Benz Cars looks at its
 environmental performance over the entire life cycle. Vehicles from Mercedes-Benz Cars are
scrutinized in a comprehensive life-cycle assessment, the so-called 360-degree
environmental check: from manufacture of the raw materials to production and from vehicle
operation to recycling at the end of the vehicle’s service life – a long way off in the case of a
new Mercedes-Benz.

Mission Statement of Mercedes Benz

“We will inspire and create an exceptional place to work and to do business. One employee, one
customer, one vehicle at a time. Through our transparent atmosphere, premium auto inventory,
and individualized customer care, we create the luxury shopping experience that our customers
truly deserve.”

Vision Statement of Mercedes Benz

Mercedes Benz holds a responsibility to foster an environment which empowers employees,

promotes innovation, relationships, and growth. Mercedes Benz will continuously strive to
inspire consumer confidence by supplying a transparent atmosphere and offering a premium
automobile product with individualized customer care.

Marketing Strategy of Mercedes Benz

Mercedes segments its luxury & state of art cars on a mix of demographics, Psychographics &
Behavioral factors. It targets customers from the upper-class social group, Professionals &
Executives who have an inclination towards the modern technology equipped vehicles, more
safety, more styling & more efficiency. Differentiation targeting strategy is used by Mercedes to
attract the customers and satisfy their wants. It targets young buyers who are passionate to drive
and cars resonate of what they are, what their fashion statement & style is. Positioning itself
through emotional appeal and creating top of mind awareness has helped the company in
becoming the best luxury car makers in the world.
Mercedes has started aligning its sales & marketing plans with customer requirements i.e. they
are evolving themselves from product centric to customer centric organisation meant for
delivering tailored products to individuals representing their lifestyle.

Covid 19 scenario of Mercedes Benz

Mercedes-Benz operates a global business and often employees travel across geographies.
Daimler’s health and safety guidelines were adapted to the guidelines of the authorities in the
wake of the COVID-19 outbreak. For example, employees who had travelled or transited
through crisis zones were instructed to Work From Home in self-isolation for the stipulated 14
days.

As the outbreak worsened and the spread of the disease accelerated, it became evident that, soon
some stringent and exceptional measures would need to be implemented. On March 17, days
before the Prime Minister announced a nationwide lockdown; Mercedes-Benz India started its
business continuity. Work From Home measures, isolation and social distancing, were
implemented as per the government and medical directives. The same teams are now busy on
work packages to ramp up the operations, once the lockdown is lifted, until normalcy is
achieved.

Mercedes Benz India Pvt ltd- country’s largest premium passenger vehicle manufacturer –
announced sales of only 2,948 vehicles in the January to June period due to disruptions
related to the Covid-19 pandemic. The sales numbers are not comparable with the
corresponding period in the last fiscal since production and retail operations were hampered
by lockdown measures taken by the union and the state governments to contain the spread of
the virus.
According to Martin Schwenk, managing director and chief executive, Mercedes Benz India,
the company is glad to witness a slow movement from previous months and expects this
trend to gather momentum. However, the luxury carmaker said recovery will be slow and it
currently expects customer sentiments to revive going forward even though the market
conditions would continue to remain challenging. Vehicle manufacturers had to close their
factories and showrooms from March 22, following the lockdown announced by the union
 and state governments to contain the spread of the Covid-19 pandemic. The company,
however, in the meantime has been working with its suppliers and dealers to create standard
operating procedures (SOPs) that need to be followed once manufacturing and retail
operations started.
“In view of the current situation, Mercedes-Benz India has strengthened its online offering.
As part of its online sales focus, Mercedes-Benz India has been offering a completely online
customer journey experience. The company has been collaborating closely with its retail
partners to offer the best customer experience to Mercedes-Benz customers," the company
said in a statement.

Facts about Mercedes Benz

 Karl Benz had the first ever driver’s license!
 The first car in the country of Nepal was a Mercedes-Benz, given to its king in 1940
 The logo of the company represents air, land, and water. The company thought about
adding a fourth point to the star to represent space, but decided not to.
 Mercedes-Benz vehicles are manufactured in 30 countries around the world.
 Mercedes-Benz vehicles were the first to have brakes on all four wheels, beginning in
1924. Safe!
 The iconic silver color of Mercedes Benz came from saving weight for a race.
 Anti-lock brakes were created specifically for the S-Class in 1978
 Mercedes-Benz first unveiled a self-driving car over two decades ago
 Each car goes through thousands of independent inspections during the manufacturing
process.
 The Seats Provide Support For Internal Organs. The engineers take suggestions from
prominent orthopedic physicians to ensure that the seats are highly ergonomic. They
provide support for vital body parts such as back, knee-joint, kidneys, etc.
 CHAPTER 4
DATA ANALYSIS
4.1 SWOT ANALYSIS

SWOT (strengths, weaknesses, opportunities, and threats) analysis is a framework used to

evaluate a company's competitive position and to develop strategic planning. SWOT analysis
assesses internal and external factors, as well as current and future potential.

A SWOT analysis is designed to facilitate a realistic, fact-based, data-driven look at the

strengths and weaknesses of an organization, its initiatives, or an industry. The organization
needs to keep the analysis accurate by avoiding pre-conceived beliefs or gray areas and instead
focusing on real-life contexts. Companies should use it as a guide and not necessarily as a
prescription.

Understanding SWOT Analysis

SWOT analysis is a technique for assessing the performance, competition, risk, and
potential of a business, as well as part of a business such as a product line or division, an
industry, or other entity. Using internal and external data, a SWOT analysis can tell a company
where it needs to improve internally, as well as help develop strategic plans.

Using internal and external data, the technique can guide businesses toward strategies
more likely to be successful, and away from those in which they have been, or are likely to be,
less successful. An independent SWOT analysis analysts, investors or competitors can also guide
them on whether a company, product line or industry might be strong or weak and why.

A SWOT analysis is a great way to guide business-strategy meetings. It's powerful to

have everyone in the room to discuss the company's core strengths and weaknesses and then
move from there to define the opportunities and threats, and finally to brainstorming ideas.
Oftentimes, the SWOT analysis you envision before the session changes throughout to reflect
factors you were unaware of and would never have captured if not for the group’s input.

A company can use a SWOT for overall business strategy sessions or for a specific segment such
as marketing, production or sales. This way, you can see how the overall strategy developed
from the SWOT analysis will filter down to the segments below before committing to it.

4.1.1 Rolls Royce

Rolls Royce has been an epitome of quality behind wheels. Rolls-Royce Motor Cars Limited
designs manufacture and sell luxury automobiles and automobile spares across the globe. Rolls-
Royce Motor Cars Limited manufactures and customizes their vehicles from their manufacturing
facilities in London from the year 2003. Rolls-Royce Motors Cars Limited has secured exclusive
rights to manufacture Rolls-Royce branded motor cars from the year 2003. The company has
registered gross sales to the tune of 1941 million Euros in the year 2016.

Strengths in the SWOT analysis of Rolls-Royce:

Strengths are defined as what each business best in its gamut of operations which can give
it an upper hand over its competitors. The following are the strengths of Rolls Royce:

 Brand Image – Rolls Royce cars have always been strongly associated with quality
and performance and are the last word in luxury. This brand image has helped the brand
charge a premium for their cars.
 Backing from the parent company – Rolls Royce cars have the technical support from
the parent company which has been continuously researching into the technology and has
perfected it over the years. This association with the parent company acts as their biggest
strength.
 Superior design – Rolls Royce Cars have perfected the art of top class design in luxury
cars and they are also experts in interiors. The build quality is high and the engine and
chassis are also superior.
 Luxury Variants – The variants of the Rolls Royce brands like Phantom, Phantom Drop
head Coupé (convertible), Phantom Coupé (coupe) and Ghost are all popular in the
premium automobile segments.
 Skilled workforce – The Company recruits people with a lot of attention and most of the
employees who work with Rolls Royce are highly skilled and qualified in their respective
domains.
 Pan-global presence – Rolls Royce has a presence in more than 50 countries across the
world and their customers are spread across 180 countries of the world.

Weaknesses in the SWOT analysis of Rolls-Royce:

Weaknesses are used to refer to areas where the business or the brand needs improvement. Some
of the key weaknesses of Rolls Royce are:
  Status Symbol: Rolls Royce is perceived as a luxury brand and people associate it with
high status and dignity. It is perceived as a rich man’s vehicle and thus seen as
unaffordable for lower classes.
 Evolutionary Design: The design of Rolls Royce cars have evolved over time and thus
the various cars look like clones of a single model. Customers who choose Rolls Royce
cars are people who prefer the brand for its standards styling and design.
 Exorbitant Pricing: Rolls Royce Cars are priced at the highest end of the spectrum and
may be unaffordable for most customers. This makes the company target just niche
segments and thus cater to a small clientele.
 Over-reliance on repeat purchase: Rolls Royce cars are luxury cars that target a small
group of customers and they depend on client loyalty and repeat business for their
revenues.

Opportunities for the SWOT analysis of Rolls-Royce :

Opportunities refer to those avenues in the environment that surrounds the business on which it
can capitalize to increase its returns. Some of the opportunities include:

 Technology savvy cars: The technology in the automobile industry is growing and one of
the biggest trends today are self-driven cars. This creates a new opportunity for luxury cars
like Rolls Royce. Companies are also trying to integrate new age technologies like IOT,
machine learning, and data connectivity and there will be a new fleet of brands
incorporating these technologies. This is a huge opportunity for luxury cars.
 Increased focus on automation: There are lots of research in automobile companies on
building self-driven cars. The growing focus on automation is an opportunity which
luxury car companies can reap easier than regular car companies.
 Growing customer spending: The customer has no dearth of money today and there is an
increase in the number of dual-income families. This creates more money to spend in on
the ideal transportation option of their choice.
 Customization: Customers are willing to pay a price for the car that they want. This will
create growing need for personalized cars an opportunity that Rolls Royce can easily tap.
  Focus on low cost, green and hybrid vehicles: The increased focus on green and hybrid
vehicles may be a great opportunity for higher end vehicle manufacturers and established
car brands such as Rolls Royce.

Threats in the SWOT analysis of Rolls-Royce:

Threats are those factors in the environment which can be detrimental to the growth of the
business. Some of the threats include:

 Focus on sustainability: The world is having serious concerns about sustainable

transportation options since the current vehicle system is not environment savvy.
However sustainable vehicles are costly.
 Increased competition: Rolls Royce faces competition from brands like
BMW, Mercedes Benz, Audi, and Lamborghini.
 Growing costs: Raw material costs are on the rise and so are fuel costs. Research on
future vehicle options is expensive as well.

4.1.2 BMW

One of the classiest cars across the world, known for its quality and design is BMW.
The brand is known to be adaptable and has cars which are in the ultra-premium segment as well
as cars which are pretty much affordable as far as luxury cars go. Here is the SWOT analysis of
BMW.

Strengths in the SWOT analysis of BMW

 BMW group: Group consist of 3 brands namely BMW, MINI &Rolls Royce all
positioned in the premium segment. Also BMW is not only a car maker, they are one of
the world leaders in motorcycle production, aircraft engines and marine engines.
 Innovation & technological advancement: Continuous process improvement &
technological advancement in its R&D has made it a market leader in the premium
segment for car sales. The Brand is known for its quality, reliability & superior customer
service support. And more importantly for the lovely design of its range of cars.
  Renowned brand in automobile industry: With its innovative advertising campaigns
company has succeeded in positioning it as a premium brand resulting into High TOMA
(Top of mind awareness).
 Workforce: It has created a pool of 100000+ highly skilled employees who continuously
work in 100+ countries to differentiate BMW’s offering from their rivals.
 Product portfolio: BMW have diversified product portfolio from SUV’s to Luxury
Sedans to sports cars. The product line and product depth are fantastic in terms of quality
and design.
 Asian markets: There is very little to work upon in matured and developed economies.
BMW has made the smart move by starting early in developing economies. And it is now
the top selling luxury car in developing economies like India and China (in terms of total
number of vehicles sold in a year).
 Plans for hybrid models: BMW has plans to launch models which run on alternative
fuels like Electricity and natural gas. These plans show that the company is making
inroads to be prepared in the future where fuel might become a problem.

Weaknesses in the SWOT analysis of BMW

 Cars recalled: Controversies relating to recall of cars on account of some technical

functionality or non-abidance to govt. led rules is becoming very common, most recent
one is BMW recalling 1.6 million cars due to airbag concerns. For a brand like BMW it is
affecting its brand image.
 Strategic alliances: BMW group has very few strategic alliances. This gives the
competitors an edge over BMW. BMW is capable of good R&D but the implementation
of the researched vehicles takes strategic alliance with different companies which BMW
lacks.
 Younger generation less brand conscious – The younger generation is more likely to
spend the money on electronic appliances then saving it for a premium car.

Opportunities in the SWOT analysis of BMW

  Increasing product portfolio: By increasing their product portfolio and introducing new
series in different segments they can increase their sales as there will be more choices for
customers under the same brand. Off course, this is the best opportunity for any brand in
the market.
 Strategic Alliances: This can prove a smart strategy for BMW. BMW can use other
company’s specialized capabilities to differentiate their offerings.
 Changing lifestyle & customer groups: With changing customer lifestyle and more &
more inclination towards premium brands it is certain that this segment is growing fast. In
developing nations the growth rate is even as high as 33% YoY.
 Market expansion: Entering new markets will help the company to increase their
targeted revenue. This is the only way to ensure that they remain on top of the revenue
chain for developing economies.

Threats in the SWOT analysis of BMW

 Competition: Low cost car companies with their stylish & inexpensive offerings will be
major threat to the company. Also Stiff competition from other companies in premium
segment like Audi, Mercedes is a determining factor.
 Price factor: More and more people are becoming price conscious and with the younger
generation on an electronic purchasing spree, there is threat that in the near future luxury
cars will stop receiving as much attention.
 Rising fuel problems – BMW needs to strongly adapt to the need of green fuel and green
machines so that it can absorb the potential customers who are looking for green car
solutions, especially in the mature markets.

4.1.3 MERCEDES BENZ

Strengths in the SWOT analysis of Mercedes

  High TOMA: Mercedes is a well established brand & is part of the “German Big 3” luxury
automakers, along with Audi and BMW, which are the best-selling luxury automakers in

the world. Mercedes focuses its sponsorship spending on events that attract a well-heeled
crowd. Its three pillars are golf, tennis and New York’s Fashion Week. Mercedes won its
first Constructors’ Championship as the top team in F1 in 2014.

 Manufacturing facilities worldwide: It has manufacturing facilities across 6 continents

and in 26 countries including both for passenger cars & buses which is helping them to keep
their operational cost low & thereby increase their profit.
 Continuous product innovation: Daimler parent company of Mercedes has always been
known for its technological advancement right from introduction of internal combustion
engine in 1886 to “Pre-safe” technology in 2013, Company has travelled far to establish
itself in the premium passenger car/trucks segment. Mercedes is concerned about safety
features of the vehicle.
 Financial stability: Strong financial position of the parent company Daimler which has
several other world renowned brands is helping the group companies in minimizing their
operational cost by using shared resources.
 Strong hold in the developing nations: Premium automobile players like AUDI, BMW
etc. who are excelling in the developed economies are being trailed by Mercedes in
developing nations like India. Mercedes is focused on becoming No.1 player in
developing markets & that’s what driving their growth.
 Product portfolio: Mercedes have strong product portfolio ranging from sedan to SUV
which is helping them to compete with other players in the market.

Weaknesses in the SWOT analysis of Mercedes

 Expensive After sales service & maintenance: Servicing cost is one of the important
deciding factors which ever vehicle you are planning to buy. Mercedes servicing cost is
high as compared to other players in the same segment.
 Conflicting goals of the group companies: It may happen that Daimler itself being such
a big group can fall prey of conflicting objectives of the group companies which may
affect its individual brand.
  Distribution is stunted – Although Mercedes could expand strongly, however, it is found
to have a stunted growth because it keeps distribution of its vehicle very much exclusive,
which affects its supply and therefore its brand equity.

Opportunities in the SWOT analysis of Mercedes

 Growth shifting to Asian markets: Although American & European market is the pulse
of this Industry, but the focus is shifting to developing markets like China, India & other
Asian nations because of rise in disposable income, changing lifestyle &
stable economic conditions.
 Increase in demand of premium vehicles: Companies like VOLVO, Audi, BMW etc.
are betting high & are targeting the developing nations due to increase in demand of
Luxury public transportation system.
 Strategic Alliances: This can prove smart strategy for Automobile companies. By using
specialized capabilities & partnering with other company they can differentiate their
offerings.
 Growing Automobile industry: Automobiles represent freedom and economic
growth. Automobiles allow people to live, work and play in ways that were unimaginable
a century ago. Automobiles provide access to markets, to doctors, to jobs. Nearly every
trip ends with either an economic transaction or some other benefit to the quality of life.
 Technological advancement: Developing fuel efficient futuristic technology & hybrid
cars can help Mercedes in emerging as a market leader globally.

Threats in the SWOT analysis of Mercedes

 Intense Competition from other players in the segment: Presence of        players such

as AUDI, BMW, Volvo etc. who are not leaving any stone unturned to emerge as a global
player  &  leader in most of the markets.
 Volatility in the fuel Prices: At least for the passenger segment fluctuations in the fuel
prices remains the determining factor for its growth. Also government regulations relating
the use of alternative fuels like CNG. Shell gas is also affecting the inventories.
 Sluggish Economy: Macroeconomic uncertainty, Recession, un-employment etc. are the
economic indicators which will daunt the automobile industry for a long period of time.
 High fixed cost and investment in R & D: Due to the fact that mature markets are
already overcrowded, Industry is shifting towards emerging markets by building facilities,
R & D centers but benefit of these decisions is yet to be capitalized.
 Government Regulations: Government policies like reduction in global warming by
discouraging the use of personal transportation, reducing the road permit validity,
volatility in fuel prices, restricting the entry of outside state vehicles are some of the
policies/regulation which are already been implemented in respective regions in the world
and is affecting the sector by & large.

4.2 PORTER’S FIVE FORCES MODEL

Porter’s five forces model, refers to a framework based on the competitive analysis,
introduced by Harvard Business School Prof. Michael E. Porter. The model determines the
intensity of competition in any industry is a mix of five competitive factors operating in
different areas of the whole market. The framework is an outside-in strategy tool for the
business unit that evaluates the attractiveness (profitability) of an industry. Thus, helps the
business-persons to identify existing and potential lines of business.

It is a useful tool for accurately diagnosing important competitive elements in the market, as
well as determining the strength and significance of each five forces.
4.2.1 Rolls Royce

Threat of New Entrants

 The economies of scale is fairly difficult to achieve in the industry in which Rolls-Royce
operates. This makes it easier for those producing large capacitates to have a cost
advantage. It also makes production costlier for new entrants. This makes the threats of
new entrants a weaker force.
 The product differentiation is strong within the industry, where firms in the industry sell
differentiated products rather a standardized product. Customers also look for
differentiated products. There is a strong emphasis on advertising and customer services
as well. All of these factors make the threat of new entrants a weak force within this
industry.
 The capital requirements within the industry are high, therefore, making it difficult for
new entrants to set up businesses as high expenditures need to be incurred. Capital
expenditure is also high because of high Research and Development costs. All of these
factors make the threat of new entrants a weaker force within this industry.
 The access to distribution networks is easy for new entrants, which can easily set up their
distribution channels and come into the business. With only a few retail outlets selling the
product type, it is easy for any new entrant to get its product on the shelves. All of these
factors make the threat of new entrants a strong force within this industry.
  The government policies within the industry require strict licensing and legal
requirements to be fulfilled before a company can start selling. This makes it difficult for
new entrants to join the industry, therefore, making the threat of new entrants a weak
force.

How Rolls-Royce can tackle the Threat of New Entrants

 Rolls-Royce can take advantage of the economies of scale it has within the industry,
fighting off new entrants through its cost advantage.
 Rolls-Royce can focus on innovation to differentiate its products from that of new
entrants. It can spend on marketing to build strong brand identification. This will help it
retain its customers rather than losing them to new entrants

Bargaining Power of Suppliers

 The number of suppliers in the industry in which Rolls-Royce operates is a lot compared to
the buyers. This means that the suppliers have less control over prices and this makes the
bargaining power of suppliers a weak force.
 The product that these suppliers provide are fairly standardized, less differentiated and have
low switching costs. This makes it easier for buyers like Rolls-Royce to switch suppliers.
This makes the bargaining power of suppliers a weaker force.
 The suppliers do not contend with other products within this industry. This means that there
are no other substitutes for the product other than the ones that the suppliers provide. This
makes the bargaining power of suppliers a stronger force within the industry.
 The suppliers do not provide a credible threat for forward integration into the industry in
which Rolls-Royce operates. This makes the bargaining power of suppliers a weaker force
within the industry.
 The industry in which Rolls-Royce operates is an important customer for its suppliers. This
means that the industry’s profits are closely tied to that of the suppliers. These suppliers,
therefore, have to provide reasonable pricing. This makes the bargaining power of suppliers
a weaker force within the industry.
How Rolls-Royce can tackle the Bargaining Power of Suppliers?

 Rolls-Royce can purchase raw materials from its suppliers at a low cost. If the costs or
products are not suitable for Rolls-Royce it can then switch its suppliers because switching
costs are low.
 It can have multiple suppliers within its supply chain. For example, Rolls-Royce can have
different suppliers for its different geographic locations. This way it can ensure efficiency
within its supply chain.
 As the industry is an important customer for its suppliers, Rolls-Royce can benefit from
developing close relationships with its suppliers where both of them benefit.

Bargaining Power of Buyers

 The number of suppliers in the industry in which Rolls-Royce Holdings Plc operates is a
lot more than the number of firms producing the products. This means that the buyers have a
few firms to choose from, and therefore, do not have much control over prices. This makes
the bargaining power of buyers a weaker force within the industry.
 The product differentiation within the industry is high, which means that the buyers are
not able to find alternative firms producing a particular product. This difficulty in switching
makes the bargaining power of buyers a weaker force within the industry.
 The income of the buyers within the industry is low. This means that there is pressure to
purchase at low prices, making the buyers more price sensitive. This makes the buying power
of buyers a weaker force within the industry.
 The quality of the products is important to the buyers, and these buyers make frequent
purchases. This means that the buyers in the industry are less price sensitive. This makes the
bargaining power of buyers a weaker force within the industry.
 There is no significant threat to the buyers to integrate backwards. This makes the
bargaining threat of buyers a weaker force within the industry.
How Rolls-Royce can tackle the Bargaining Power of Buyers

 Rolls-Royce can focus on innovation and differentiation to attract more buyers. Product
differentiation and quality of products are important to buyers within the industry, and Rolls-
Royce can attract a large number of customers by focusing on these.
 Rolls-Royce needs to build a large customer base, as the bargaining power of buyers is
weak. It can do this through marketing efforts aimed at building brand loyalty.
 Rolls-Royce can take advantage of its economies of scale to develop a cost advantage and
sell at low prices to the low-income buyers of the industry. This way it will be able to attract a
large number of buyers.

Threat of Substitute Products or Services

 There are very few substitutes available for the products that are produced in the industry in
which Rolls-Royce Holdings Plc operates. The very few substitutes that are available are also
produced by low profit earning industries. This means that there is no ceiling on the
maximum profit that firms can earn in the industry in which Rolls-Royce operates. All of
these factors make the threat of substitute products a weaker force within the industry.
 The very few substitutes available are of high quality but are way more expensive.
Comparatively, firms producing within the industry in which Rolls-Royce operates sell at a
lower price than substitutes, with adequate quality. This means that buyers are less likely to
switch to substitute products. This means that the threat of substitute products is weak within
the industry.

How Rolls-Royce can tackle the Threat of Substitute Products

 Rolls-Royce can focus on providing greater quality in its products. As a result, buyers
would choose its products, which provide greater quality at a lower price as compared to
substitute products that provide greater quality but at a higher price.
 Rolls-Royce can focus on differentiating its products. This will ensure that buyers see its
products as unique and do not shift easily to substitute products that do not provide these
unique benefits. It can provide such unique benefits to its customers by better understanding
their needs through market research, and providing what the customer wants.
Rivalry among Existing Firms

 The number of competitors in the industry in which Rolls-Royce operates are very few. Most
of these are also large in size. This means that firms in the industry will not make moves
without being unnoticed. This makes the rivalry among existing firms a weaker force within
the industry.
 The very few competitors have a large market share. This means that these will engage in
competitive actions to gain position and become market leaders. This makes the rivalry
among existing firms a stronger force within the industry.
 The industry in which Rolls-Royce is growing every year and is expected to continue to do
this for a few years ahead. A positive Industry growth means that competitors are less likely
to engage in completive actions because they do not need to capture market share from each
other. This makes the rivalry among existing firms a weaker force within the industry.
 The fixed costs are high within the industry in which Rolls-Royce operates. This makes the
companies within the industry to push to full capacity. This also means these companies to
reduce their prices when demand slackens. This makes the rivalry among existing firms a
stronger force within the industry.

How Rolls-Royce can tackle the Rivalry among Existing Firms

 Rolls-Royce needs to focus on differentiating its products so that the actions of

competitors will have less effect on its customers that seek its unique products.
 As the industry is growing, Rolls-Royce can focus on new customers rather than winning
the ones from existing companies.
 Rolls-Royce can conduct market research to understand the supply-demand situation
within the industry and prevent overproduction.

4.2.2 BMW

The Porter’s Five Forces model can be used to analyse the industry in which BMW operates, in
terms of attractiveness through inherent profit potential. The information analyzed using the
model can be used by strategic planners for BMW to make strategic decisions.
Threat of New Entrants

 The economies of scale is fairly difficult to achieve in the industry in which BMW
operates. This makes it easier for those producing large capacitates to have a cost advantage.
It also makes production costlier for new entrants. This makes the threats of new entrants a
weaker force.
 The product differentiation is strong within the industry, where firms in the industry sell
differentiated products rather a standardized product. Customers also look for differentiated
products. There is a strong emphasis on advertising and customer services as well. All of
these factors make the threat of new entrants a weak force within this industry.
 The capital requirements within the industry are high, therefore, making it difficult for
new entrants to set up businesses as high expenditures need to be incurred. Capital
expenditure is also high because of high Research and Development costs. All of these factors
make the threat of new entrants a weaker force within this industry.
 The access to distribution networks is easy for new entrants, which can easily set up their
distribution channels and come into the business. With only a few retail outlets selling the
product type, it is easy for any new entrant to get its product on the shelves. All of these
factors make the threat of new entrants a strong force within this industry.
 The government policies within the industry require strict licensing and legal
requirements to be fulfilled before a company can start selling. This makes it difficult for new
entrants to join the industry, therefore, making the threat of new entrants a weak force.

How BMW can tackle the Threat of New Entrants

 BMW can take advantage of the economies of scale it has within the industry, fighting
off new entrants through its cost advantage.
 BMW can focus on innovation to differentiate its products from that of new entrants. It
can spend on marketing to build strong brand identification. This will help it retain its
customers rather than losing them to new entrants.

Bargaining Power of Suppliers

 The number of suppliers in the industry in which BMW operates is a lot compared to the
buyers. This means that the suppliers have less control over prices and this makes the
bargaining power of suppliers a weak force.
 The product that these suppliers provide are fairly standardized, less differentiated and
have low switching costs. This makes it easier for buyers like BMW to switch suppliers. This
makes the bargaining power of suppliers a weaker force.
 The suppliers do not contend with other products within this industry. This means that
there are no other substitutes for the product other than the ones that the suppliers provide.
This makes the bargaining power of suppliers a stronger force within the industry.
 The suppliers do not provide a credible threat for forward integration into the industry in
which BMW operates. This makes the bargaining power of suppliers a weaker force within
the industry.
 The industry in which BMW operates is an important customer for its suppliers. This
means that the industry’s profits are closely tied to that of the suppliers. These suppliers,
therefore, have to provide reasonable pricing. This makes the bargaining power of suppliers a
weaker force within the industry.

How BMW can tackle the Bargaining Power of Suppliers?

 BMW can purchase raw materials from its suppliers at a low cost. If the costs or products
are not suitable for BMW, it can then switch its suppliers because switching costs are low.
 It can have multiple suppliers within its supply chain. For example, BMW can have
different suppliers for its different geographic locations. This way it can ensure efficiency
within its supply chain.
 As the industry is an important customer for its suppliers, BMW can benefit from
developing close relationships with its suppliers where both of them benefit.

Bargaining Power of Buyers

 The number of suppliers in the industry in which BMW operates is a lot more than the
number of firms producing the products. This means that the buyers have a few firms to
 choose from, and therefore, do not have much control over prices. This makes the bargaining
power of buyers a weaker force within the industry.
 The product differentiation within the industry is high, which means that the buyers are
not able to find alternative firms producing a particular product. This difficulty in switching
makes the bargaining power of buyers a weaker force within the industry.
 The income of the buyers within the industry is low. This means that there is pressure to
purchase at low prices, making the buyers more price sensitive. This makes the buying power
of buyers a weaker force within the industry.
 The quality of the products is important to the buyers, and these buyers make frequent
purchases. This means that the buyers in the industry are less price sensitive. This makes the
bargaining power of buyers a weaker force within the industry.
 There is no significant threat to the buyers to integrate backwards. This makes the
bargaining threat of buyers a weaker force within the industry.

How BMW can tackle the Bargaining Power of Buyers

 BMW can focus on innovation and differentiation to attract more buyers. Product
differentiation and quality of products are important to buyers within the industry, and BMW
can attract a large number of customers by focusing on these.
 BMW needs to build a large customer base, as the bargaining power of buyers is weak. It
can do this through marketing efforts aimed at building brand loyalty.
 BMW can take advantage of its economies of scale to develop a cost advantage and sell
at low prices to the low-income buyers of the industry. This way it will be able to attract a
large number of buyers.

Threat of Substitute Products or Services

 There are very few substitutes available for the products that are produced in the industry
in which BMW operates. The very few substitutes that are available are also produced by low
profit earning industries. This means that there is no ceiling on the maximum profit that firms
can earn in the industry in which BMW operates. All of these factors make the threat of
substitute products a weaker force within the industry.
 The very few substitutes available are of high quality but are way more expensive.
Comparatively, firms producing within the industry in which BMW operates sell at a lower
price than substitutes, with adequate quality. This means that buyers are less likely to switch
to substitute products. This means that the threat of substitute products is weak within the
industry.

How BMW can tackle the Threat of Substitute Products

 BMW can focus on providing greater quality in its products. As a result, buyers would
choose its products, which provide greater quality at a lower price as compared to substitute
products that provide greater quality but at a higher price.
 BMW can focus on differentiating its products. This will ensure that buyers see its
products as unique and do not shift easily to substitute products that do not provide these
unique benefits. It can provide such unique benefits to its customers by better understanding
their needs through market research, and providing what the customer wants.

Rivalry among Existing Firms (BMW)

 The number of competitors in the industry in which BMW operates are very few. Most of
these are also large in size. This means that firms in the industry will not make moves without
being unnoticed. This makes the rivalry among existing firms a weaker force within the
industry.
 The very few competitors have a large market share. This means that these will engage in
competitive actions to gain position and become market leaders. This makes the rivalry
among existing firms a stronger force within the industry.
 The industry in which BMW is growing every year and is expected to continue to do this
for a few years ahead. A positive Industry growth means that competitors are less likely to
engage in completive actions because they do not need to capture market share from each
other. This makes the rivalry among existing firms a weaker force within the industry.
 The fixed costs are high within the industry in which BMW operates. This makes the
companies within the industry to push to full capacity. This also means these companies to
 reduce their prices when demand slackens. This makes the rivalry among existing firms a
stronger force within the industry.
 The products produced within the industry in which BMW operates are highly
differentiated. As a result, it is difficult for competing firms to win the customers of each
other because of each of their products in unique. This makes the rivalry among existing firms
a weaker force within the industry.

How BMW can tackle the Rivalry among Existing Firms?

 BMW needs to focus on differentiating its products so that the actions of competitors will
have less effect on its customers that seek its unique products.
 As the industry is growing, BMW can focus on new customers rather than winning the
ones from existing companies.
 BMW can conduct market research to understand the supply-demand situation within the
industry and prevent overproduction.

4.2.3 Mercedes Benz

The Porter’s Five Forces model can be used to analyse the industry in which Mercedes-Benz
operates, in terms of attractiveness through inherent profit potential. The information analyzed
using the model can be used by strategic planners for Mercedes-Benz to make strategic decisions.

Threat of New Entrants

 The economies of scale is fairly difficult to achieve in the industry in which Mercedes-
Benz operates. This makes it easier for those producing large capacitates to have a cost
advantage. It also makes production costlier for new entrants. This makes the threats of new
entrants a weaker force.
 The product differentiation is strong within the industry, where firms in the industry sell
differentiated products rather a standardized product. Customers also look for differentiated
products. There is a strong emphasis on advertising and customer services as well. All of
these factors make the threat of new entrants a weak force within this industry.
 The capital requirements within the industry are high, therefore, making it difficult for
new entrants to set up businesses as high expenditures need to be incurred. Capital
expenditure is also high because of high Research and Development costs. All of these factors
make the threat of new entrants a weaker force within this industry.
 The access to distribution networks is easy for new entrants, which can easily set up their
distribution channels and come into the business. With only a few retail outlets selling the
product type, it is easy for any new entrant to get its product on the shelves. All of these
factors make the threat of new entrants a strong force within this industry.
 The government policies within the industry require strict licensing and legal
requirements to be fulfilled before a company can start selling. This makes it difficult for new
entrants to join the industry, therefore, making the threat of new entrants a weak force.

How Mercedes-Benz can tackle the Threat of New Entrants

 Mercedes-Benz can take advantage of the economies of scale it has within the industry,
fighting off new entrants through its cost advantage.
 Mercedes-Benz can focus on innovation to differentiate its products from that of new
entrants. It can spend on marketing to build strong brand identification. This will help it retain
its customers rather than losing them to new entrants.

Bargaining Power of Suppliers

 The number of suppliers in the industry in which Mercedes-Benz operates is a lot

compared to the buyers. This means that the suppliers have less control over prices and this
makes the bargaining power of suppliers a weak force.
 The product that these suppliers provide are fairly standardised, less differentiated and
have low switching costs. This makes it easier for buyers like Mercedes-Benz to switch
suppliers. This makes the bargaining power of suppliers a weaker force.
 The suppliers do not contend with other products within this industry. This means that
there are no other substitutes for the product other than the ones that the suppliers provide.
This makes the bargaining power of suppliers a stronger force within the industry.
 The suppliers do not provide a credible threat for forward integration into the industry in
which Mercedes-Benz operates. This makes the bargaining power of suppliers a weaker force
within the industry.
 The industry in which Mercedes-Benz operates is an important customer for its suppliers.
This means that the industry’s profits are closely tied to that of the suppliers. These suppliers,
therefore, have to provide reasonable pricing. This makes the bargaining power of suppliers a
weaker force within the industry.

How Mercedes-Benz can tackle the Bargaining Power of Suppliers

 Mercedes-Benz can purchase raw materials from its suppliers at a low cost. If the costs or
products are not suitable for Mercedes-Benz, it can then switch its suppliers because
switching costs are low.
 It can have multiple suppliers within its supply chain. For example, Mercedes-Benz can
have different suppliers for its different geographic locations. This way it can ensure
efficiency within its supply chain.
 As the industry is an important customer for its suppliers, Mercedes-Benz can benefit
from developing close relationships with its suppliers where both of them benefit.

Bargaining Power of Buyers

 The number of suppliers in the industry in which Mercedes-Benz operates is a lot more
than the number of firms producing the products. This means that the buyers have a few firms
to choose from, and therefore, do not have much control over prices. This makes the
bargaining power of buyers a weaker force within the industry.
 The product differentiation within the industry is high, which means that the buyers are
not able to find alternative firms producing a particular product. This difficulty in switching
makes the bargaining power of buyers a weaker force within the industry.
 The income of the buyers within the industry is low. This means that there is pressure to
purchase at low prices, making the buyers more price sensitive. This makes the buying power
of buyers a weaker force within the industry.
 The quality of the products is important to the buyers, and these buyers make frequent
purchases. This means that the buyers in the industry are less price sensitive. This makes the
bargaining power of buyers a weaker force within the industry.
 There is no significant threat to the buyers to integrate backwards. This makes the
bargaining threat of buyers a weaker force within the industry.

How Mercedes-Benz can tackle the Bargaining Power of Buyers

 Mercedes-Benz can focus on innovation and differentiation to attract more buyers.

Product differentiation and quality of products are important to buyers within the industry,
and Mercedes-Benz can attract a large number of customers by focusing on these.
 Mercedes-Benz needs to build a large customer base, as the bargaining power of buyers
is weak. It can do this through marketing efforts aimed at building brand loyalty.
 Mercedes-Benz can take advantage of its economies of scale to develop a cost advantage
and sell at low prices to the low-income buyers of the industry. This way it will be able to
attract a large number of buyers.

Threat of Substitute Products or Services

 There are very few substitutes available for the products that are produced in the industry
in which Mercedes-Benz operates. The very few substitutes that are available are also
produced by low profit earning industries. This means that there is no ceiling on the
maximum profit that firms can earn in the industry in which Mercedes-Benz operates. All of
these factors make the threat of substitute products a weaker force within the industry.
 The very few substitutes available are of high quality but are way more expensive.
Comparatively, firms producing within the industry in which Mercedes-Benz operates sell at
a lower price than substitutes, with adequate quality. This means that buyers are less likely to
switch to substitute products. This means that the threat of substitute products is weak within
the industry.

How Mercedes-Benz can tackle the Threat of Substitute Products

 Mercedes-Benz can focus on providing greater quality in its products. As a result, buyers
would choose its products, which provide greater quality at a lower price as compared to
substitute products that provide greater quality but at a higher price.
 Mercedes-Benz can focus on differentiating its products. This will ensure that buyers see
its products as unique and do not shift easily to substitute products that do not provide these
unique benefits. It can provide such unique benefits to its customers by better understanding
their needs through market research, and providing what the customer wants.

Rivalry among Existing Firms (Mercedes Benz)

 The number of competitors in the industry in which Mercedes-Benz operates are very
few. Most of these are also large in size. This means that firms in the industry will not make
moves without being unnoticed. This makes the rivalry among existing firms a weaker force
within the industry.
 The very few competitors have a large market share. This means that these will engage in
competitive actions to gain position and become market leaders. This makes the rivalry
among existing firms a stronger force within the industry.
 The industry in which Mercedes-Benz is growing every year and is expected to continue
to do this for a few years ahead. A positive Industry growth means that competitors are less
likely to engage in completive actions because they do not need to capture market share from
each other. This makes the rivalry among existing firms a weaker force within the industry.

 The fixed costs are high within the industry in which Mercedes-Benz operates. This
makes the companies within the industry to push to full capacity. This also means these
companies to reduce their prices when demand slackens. This makes the rivalry among
existing firms a stronger force within the industry.
 The products produced within the industry in which Mercedes-Benz operates are highly
differentiated. As a result, it is difficult for competing firms to win the customers of each
other because of each of their products in unique. This makes the rivalry among existing firms
a weaker force within the industry.

How Mercedes-Benz can tackle the Rivalry among Existing Firms

 Mercedes-Benz needs to focus on differentiating its products so that the actions of
competitors will have less effect on its customers that seek its unique products.
 As the industry is growing, Mercedes-Benz can focus on new customers rather than
winning the ones from existing companies.
 Mercedes-Benz can conduct market research to understand the supply-demand situation
within the industry and prevent overproduction.

4.3 BCG MATRICES

The BCG Matrix is a business method that was created by the Boston Consulting Group in the
1970’s. This business method bases its theory on the life cycle of products. Also known as the
Boston Box or Grid, BCG Charts are divided into four types of scenarios, Stars, Cash Cows,
Dogs and Question Marks.

TABLE 8

The Stars is the scenario where there is the optimum situation of high growth and high share, this
method requires an increased investment due to the continuous growth. The Cash Cow cycle
deals with low growth and high share. This scenario requires a low investment, but the growth is
very slow. The Dogs method is the situation where the growth is low and the market share is
low, this is one of the worst situations. In this situation if the products are not delivering the cash
then it is best to liquidate. The last part of the cycle is the Question mark which is high market
growth but low shares. In this situation there is a high demand but low returns. It is best to try
and increase market share or get it to deliver cash. The limitation of this business theory is that it
only works with high market share and this is not the only meter for success. Also there are
many situations in business where the Dogs can out earn the Cash Cows.

The Boston Consulting Group Matrix (BCG MATRIX) analysis of Rolls Royce, BMW and
Mercedes Benz ( Automobile Industry) is given in the following figure,

MARKET GROWTH

MARKET

SHARE

TABLE 9
 BMW is placed in the star quadrant in the BCG matrix due to the enormous growth in the
market as well as the market
HIGH `LOW
share has STAR QUESTION MARK increased from
19% to 24% and is still
HIGH
MERCEDES
expected
will BMW that the shares
increase 1 to 1.5%
further, led BENZ by its portfolio
CASH COW DOG
range and expanding reach.
 Mercedes LOW Benz is placed in
ROLLS
the question mark
quadrant in ROYCE the BCG matrix
because it retains the highest
market share in the economy for straight 5 years, however it posted a decline of market
growth by a factor of 11% than the previous year.
 Rolls Royce is placed in the Cash Cow quadrant in the BCG matrix because it is the
clear market growth leader with almost 3.25% increase in growth than the previous year
but the market share quantity is much lower than that of BMW and Mercedes Benz.
 CHAPTER 5

FUTURE PROSPECTS

Future prospects

The automobile market is growing at about 25% for the last three years. The number of persons
per car is 200, which is very large compared to other emerging markets like Korea and Brazil
which have about 12 persons per car. There is therefore a very huge untapped market.
Uncertainty exists about the extent of growth, but a minimum growth rate of 20% is expected
until the year 2000. Sales are expected to rise to anywhere between 850,000 to 1.5 million
vehicles by the year 2000. Markets are highly price sensitive since a car is about 18 to 24 months’
salary for the average middle class buyer.
However, incomes are rising and the economy has been growing steadily at nearly 6%. Import
duties on CKDs and components is 50%. Reduction of prices because of lower duties and taxes
and progressive indigenization, and rising middle class incomes are likely to further increase
industry growth rates. Penetration in rural and semi urban areas is extremely low and could
provide fresh markets. New entrants will have to deal with uncertainty of demand, different and
evolving customer needs, a relatively poor supplier base, a market crowded with competition and
industry wide capacity shortages. However, if there is a shake out as many analysts expect,
further opportunities for survivors will open up.

Another implication is that India could emerge as a significant manufacturing base for exports.
The supplier industry is also going through massive growth, although from a small initial base.
India is expected to emerge as the world’s third-largest passenger-vehicle market by 2021. It took
India around seven years to increase annual production to four million vehicles from three
million. However, the next milestone—five million—is expected in less than five years. Hitting
that mark will depend on today’s rapid economic development continuing, with a projected
annual GDP growth rate of 7 percent through 2020, ongoing urbanization, a burgeoning
consuming class, and supportive regulations and policies.

With the advancement of technologies like artificial intelligence (AI), robotics, and
Internet of Things (IoT), the automobile industry has made some significant leaps towards growth
and development. The utopian image of the future – with cars that run on eco-friendly fuel and
can drive themselves – isn’t too far away now. Four major trends that are shaping the future of
the automobile industry are clubbed together under the acronym C.A.S.E. The acronym stands for
Connected, Autonomous, Shared and Electric.
One of the major trends shaping the future of automobile sector is internet connectivity in cars.
These cars can communicate with other devices — inside and outside the car — that are also
connected to the internet.

A connected car can accomplish a myriad of tasks. Its sat-nav system can warn you about
traffic holdups and suggest alternate routes; you can remotely start your car engine to melt the
frost on the windows before you enter the car; you can remotely lock and unlock the car as well.
Some car apps even provide car parking services, which can help you park in a tight spot or a
narrow garage. People inside and around the car can connect to its WiFi hotspot and enjoy
internet access. One such example of connectivity is the emergence of smart tablets that can
connect to your smartphone via a WiFi hotspot and double as a head unit.

They allow you to use your smartphone remotely with ultimate ease without having to
shift your focus from the road. With the recent voice command upgrades like the Alexa upgrade,
these technologies are going to make the driving experience more seamless than it ever has been.
As good drivers as we believe us to be, let’s face it – we’re humans – and by definition, we’re
prone to making mistakes. This is why a lot of R&D is being dedicated to manufacturing
autonomous cars. As this technology keeps on evolving, we’ll see more and more autonomous
cars on the streets.
Currently, we are at Level 2 of automation, where the cars use millimetre wave radar and cameras
to detect obstacles for driving assistance. But the accuracy of these systems largely depends upon
the inclement weather and the attributes of the objects that are to be avoided.
To overcome these lacunae and move to Level 3 of automation, 3D-LiDAR technology is being
developed by the leading automobile companies.

The LiDAR system emits its own laser light and maps the surroundings according to the
input car-mounted sensors receive from the reflected light. This makes it a superior choice as
LiDAR systems work well in situations where cameras fail – such as at night.
Earlier, with 2D-LiDAR, we were able to only detect the depth of a single beam but by
implementing its digital signal processing technologies in digital tuners, we can enable unique
processing to achieve high precision and stability. This makes the LiDAR technology weather
independent and enables the detection of glossy black objects, which isn’t possible with
conventional LiDARs.

Fossil fuels aren’t good for the environment — not to mention the ever-increasing prices that put
a lot of pressure on the pocket. With e-vehicles, we’ll finally see an end to this problem. During
the early phase of development, range anxiety (the anxiety about the car running out of battery
before reaching the destination) was a major issue. But with the invention of more powerful
batteries and a growing number of charging stations, this issue has been resolved as well. The e-
 vehicle market is expected to grow at a robust CAGR of 43.13 percent from 2019 to 2030, which,
in itself, says enough.

5.2 Findings

 Rolls-Royce's future is pricey bespoking, not electric cars. The virtually unlimited
optional extras, upgrades, and customizations, the true cost of a bespoke Rolls-Royce has no
limits. Rolls-Royce is undertaking the largest restructuring in its history. They are taking extreme
efforts to increase the market share by bringing out many confidential tools and techniques.
 The BMW Group has set course for a successful future with its strategic realignment.
“We will consistently align the BMW Group to achieve profitability and increase value over the
long term,” said Norbert Reithofer, chairman of the board of management of BMW AG, on
September 27 when he presented the new corporate strategy in Munich, Germany. The Group’s
strategic direction up to 2022 is clearly defined: The BMW Group is the world’s leading
provider of premium products and premium services for individual mobility. The future strategy
focuses on ensuring the company’s long-term success and safeguarding its independence. The
BMW Group has set ambitious interim targets for the first five years. The BMW Group expects
to be able to achieve the growth planned for the period until 2022 with roughly the same level of
personnel as today.
 All-electric vehicles are the wave of the future and Mercedes-Benz will undoubtedly
lead the charge. Mercedes-Benz officials have pledged more than $12 billion toward the
development and production of electric Mercedes-Benz models. The German automaker expects
to launch 10 all-new electric models by 2022 that will include electric variations of brand
favorites, an electric model in each segment and electric commercial models. Mercedes-Benz has
already set the bar high with an all-electric truck and an electric van set to debut in 2022.
Mercedes-Benz has created a future development plan that centers on the acronym CASE –
Connected, Autonomous, Shared and Services and Electric. Brand officials will strive to be an
industry leader in each facet of CASE and will work to seamlessly integrate these elements into
all Mercedes-Benz vehicles.
 J

 5.3 CONCLUSION
The internship done regarding Automobile industry (Rolls Royce, BMW, Mercedes Benz) was
with an objective to understand the activities and services provided.

The study provided the opportunity to understand the successful journey of one of the largest
industry. It helped to acquire data regarding the organizations and its competitors.

The valuable time spend in procuring the data enables access to the world of automobile industry
as well as the growth of the organizations in automobile sector.

Indian automotive industry needs to develop a proactive culture with regard to investments in
R&D rather than responsive culture. This would help the industry to understand the complexities
of vehicle users and bring in product innovation through changes in design and vehicle
engineering. This all may be done by making collaboration of automobile MNCs and to make
them ready for knowledge sharing along with the FDI on mutual interest basis.

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