Case One BMW: Automaker Competes on the Digital Front

One of the biggest trends driving competition in the auto industry in recent years is the race to offer new and better connected-car technologiesincluding those that enhance safety, monitor maintenance requirements, provide Internet connectivity, and offer seamless integration with smartphones and wearable devices. A 2015 study of the worldwide auto industry projected that customer spending on connected-car technologies will exceed 40 billion ($42 billion) in 2016; that number is expected to more than triple to 122 billion ($129 billion) by 2021. Tech-savvy consumers increasingly expect their cars to serve as extensions of their personal technology, and one company working hard to exceed those expectations is German automaker Bayerische Motoren Werke AGor BMW, as it is more commonly known.

BMW was founded in 1916 as a manufacturer of aircraft engines, but the company soon branched out into other areas. Today, the BMW Group manufactures motorcycles in addition to its three premium car brands (BMW, MINI, and Rolls-Royce), and it is now represented in over 140 countriesincluding 30 production locations in 14 countries. With close to 2 million cars sold in 2014, BMW is one of the worlds most-recognized luxury car brands, with a reputation for consistently delivering high-quality cars built on a foundation of advanced mechanical engineering. To maintain its edge, BMW is now expanding its focus to find ways to improve its cars through cutting-edge technological innovations.

According to Dieter May, BMWs digital business models senior vice president, Our competitor is not Audi, Jaguar Land Rover or Mercedes, but the space of consumer electronics players. As May sees it, one of the biggest questions facing BMWand other auto makersin the coming years is How do we take the connected home, personal digital assistants, and advanced sensor technology, and connect all these trends?

BMW has responded to this question by building an extensive array of new technologies into its latest models. Through BMWs iDrive information and entertainment system, drivers can access ConnectedDrive, a portal offering a wide range of location-based services, including concierge services, real-time traffic information, and access to more than 12.6 million searchable points of interest, ranging from gas stations to restaurants to tourist attractions. Another ConnectedDrive feature, the Head-Up Display, projects important driving informationsuch as current speed and warnings from the cars night vision systemon the windshield, allowing the driver to keep his or her eyes on the road. The Speed Limit Info feature uses a car-mounted camera along with data from the navigation system to keep drivers informed of current speed limits, including those in effect due to road construction and weather conditions. ConnectedDrive, which can be controlled from the drivers smartphone, also offers mobile office features, such the ability to dictate and send messages, and a ConnectedDrive Store, where users can purchase apps and services directly through the iDrive interface. And at the high end of BMWs model line, the 7 Series full-size sedan, BMWs flagship vehicle, is the first model to accept gesture-control commands for the iDrive display as well as a completely automated self-park feature that can be operated when the driver is outside the vehicle.

BMW is also working to ensure that the car-buying experience is keeping up with customers expectation by encouraging its dealerships to create more digital showrooms, with flat screen displays and virtual demonstrations to appeal to the many customers who are accustomed to the online shopping experience. In addition, BMW is adding product geniuseslike those found in Apples retail storesto its showrooms. The specialists have no responsibility to sell; their job is simply to spend whatever time is necessary to explain and demonstrate each cars various technological features to potential BMW customers.

To continue to develop the complex technological innovations it needs to maintain its edge over competitors, BMW has explored possible partnerships with technology companies such as Apple. Currently, however, the auto maker is focused on building up its in-house expertise and speeding up its internal software development cycles. In 2014, BMW spent over 4.5 billion ($4.75 billion) on research and development, and it spent, on average, more than 6,000 ($6,370) per car on connected-car technology. BMW is making it clear to potential customers and competitors alike that is committed to competing and winning on the digital front. Critical Thinking Questions

1. Other than selling more cars, what potential benefits do connected-car technologies offer auto makers such as BMW in terms of enhancing long-term customer relationships?

2. What responsibilities does BMW have to its customers regarding the data it captures via the various connected car technologies that it builds into its cars?

3. Visit a BMW showroom and spend time with one of the product geniuses to learn more about the latest BMW technological innovations. Write a brief paragraph or two providing your critique of these innovations.

SOURCES: Muller, Joann, 5 Big Trends Driving The Auto Industry in 2015, Forbes, January 19, 2015, www.forbes.com/sites/joannmuller/2015/01/05/5-big-trends-driving-the-auto-industry-in-2015; Vierecki, Richard, Ahlemann, Dietmar, Koster, Alex, and Jursch, Sebastian, Connected Car Study 2015: Racing Ahead with Autonomous Cars and Digital Innovation, Strategy&, September 15, 2015, www.strategyand.pwc.com/global/home/what-we-think/reports-white-papers/article-display/connected-car-2015-study; Annual Report 2014, BMW Group, www.bmwgroup.com/e/0_0_www_bmwgroup_com/investor_relations/finanzberichte/geschaeftsberichte/2014/_pdf/12507_GB_2014_en_Finanzbericht_Online.pdf, accessed November 23, 2015; Murphy, Margi, BMW Internalizes IT to Claw Back Customer Data, ComputerworldUK, June 24, 2015, www.computerworlduk.com/news/data/bmw-our-competitor-is-not-audi-jaguar-land-rover-or-mercedes-but-consumer-electronics-players-3616944; Green, Chloe, Rise of the Intelligent Car, InformationAge, July 7, 2015, www.information-age.com/industry/software/123459790/rise-intelligent-car-how-digital-technologies-are-creating-third-wave-car-makers; BMW ConnectedDrive, BMW USA, www.bmwusa.com/standard/content/innovations/bmwconnecteddrive/connecteddrive.aspx#home, accessed November 28, 2015; 7 Series, BMW USA, www.bmwusa.com/bmw/7series, accessed November 28, 2015; Taylor, Edward, Love, Julia, Tim Cook Visited BMW in Germany to Learn How to Build an Electric Car, Business Insider, July 31, 2015, www.businessinsider.com/r-apple-bmw-in-courtship-with-an-eye-on-car-collaboration-2015-7; BMW Tosses Salesmen for Geniuses, Wall Street Journal, February 19, 2014, www.wsj.com/articles/SB10001424052702304450904579364833799765354.

Rubric

Some Rubric

CriteriaRatingsPts

This criterion is linked to a Learning OutcomeDescription of criterion

Content & Analysis/Citation/Grammar & mechanics/Completeness

10 to >8.0 pts

Excellent

Demonstrate close reading of case and include excellent use of course materials for context during team presentation in class. Strong team work and presentation with every member in the team. Provide all quotes that support presentation and paraphrased content. No or few errors; slides are well edited. Meets 6 pp slides minimum with graphics and design requirements.

8 to >6.0 pts

Good

Analysis is focused on readings of case and includes good use of course materials for context during team presentation in class. Good team presentation with few team members. Missing few quotes/paraphrased content. Quite a few errors; needs further editing. Meets below 6 pp slides minimum with graphics and design requirements.

6 to >3.0 pts

Adequate

Analysis of case and context from course materials during team presentation in class. Adequate presentation with one team member. Missing some quotes/paraphrased content. Quite a lot of errors; needs a complete editing. Far below 6 pp slides minimum with graphics and design requirements.

3 to >0 pts

Inadequate

PowerPoint presentation is mostly summary of case study with little or no analysis/no use of outside sources. No team work and presentation. No quotes supporting case study/paraphrased content. Egregious errors. Does not meet 6 pp slides minimum with graphics and design requirements.

10 pts Total Points: 10