Bmw Ag: The Digital Car Project

BMW AG: The Digital Car Project

Introduction

The case describes Bavarian Motor Work's (BMW) product development efforts toward reducing the product development time to half using various means including computer aided design technologies. In this case we have analysed the challenges faced by the company in order to achieve the objective of reducing the product development time.

We have discussed the processes existing at BMW for many years, the changing environment and other competitive challenges and the evolution of product development processes in response to these challenges.

This includes a thorough analysis to understand the competition in the automotive industry in 1990's and the consequent changing dynamics. Then we discuss how the product development process has evolved in response to the environment and what strategies the company wants to employ going forward. We have also tried to capture the new product development process and the risk involved in changing the product development process too slowly or quickly. Finally, we discuss a relevant decision point which the company faces.

COMPETITIVE CHALLENGES AND IMPACT ON BMW

The case was written by Professor Stefen Thomke and research associate Ashoke Nimgade during the late 1990's. Hence we shall concentrate on the changes that occurred in the automotive industry during this period, the kind of competitive challenges it created and the effect it had on BMW.

Firstly this decade saw Globalization, regionalization and market convergence in the automotive industry– Due to the effects of liberalization, national markets became increasingly globalized. Though this gave companies a chance to expand to new markets, but it also increased the threat of new entrants or increased competition in traditional markets. Hence all car manufacturers were experiencing the boons and banes of the biggest buyer market in history.

Next we see the emergence of increasingly diversified consumer aggregate patterns of behaviour – Consumers were no longer accepting standardized products, but wanted products that satisfied their individual requirements and tastes. Target groups thus had to be downsized by companies to attract customers by the products offered. However, because of the increased global competition with a stronger focus on price and not on brand loyalty, consumers generally did not reward companies only for their more individualized products irrespective of price. In other words the customers became price sensitive, were not ready to pay a premium for more innovative products, and used their bargaining power to become more demanding. As a result of these factors, automobile manufacturers had new demanding requirements within their field