Category: BMW

Case Background

Tom Dunn was appointed the new service manager for Sharpe BMW, a BMW dealership based in Michigan. He faced numerous challenges in his new post because the dealerships customers were losing confidence in the firms ability to satisfy their expectations.

These problems were impacting negatively on the firms operations. The firms Customer Satisfaction Index scores were below the national average. The firm needed to carry out several changes in its internal operations to regain the competitive edge it used to have in the market.

Dunn together with the service director, Bob Deshane formulated a proposal, which would enable the firm carry out several improvements in its internal technical functions. This approach was needed to make the firms Customer Satisfaction Index improve (Subramanian 497). The bonus payment plan proposed, intended to make the firms technicians more motivated in their duties to enable them achieve quality outcomes in their performance.

Some technicians felt that the plan was noble but the bonus payments offered were very little to make any impact. Other technicians thought the new plan was good because it encouraged them to improve their own performance at the workplace. Dunn had a difficult task of coming up with strategies that would help Sharpe BMW increase its revenues in the market.

He also needed to improve the firms customer service ratings by changing customers perceptions regarding the quality of service offered by the firm (Subramanian 498). Therefore, this compelled Dunn to come up with customer service strategies to change the way technicians performed their duties at the workplace. The firms service department was very important to its long term operations because it determined the level of competitiveness the firm was going to have in the market.

Case Analysis

Dunn looked at different factors in the firm before deciding the most appropriate course of action the firm needed to follow to improve its services. He reviewed different customer charges clients pay whenever they bring their vehicles for servicing. He noted that the Customer Satisfaction Index was not being given the necessary attention it deserved by different stakeholders in the firm. He felt that the firms focus should be on the quality of service it offers its clients, to help it become more competitive in the market.

Dunns was not satisfied with the CSI scores because he felt that ratings made by customers regarding the quality of service offered by the firm were not good enough. He had noted that the dealerships CSI score was below the national average, of 91%. This was an indication that Sharpe BMW needed to do more to improve its image in the market (Subramanian 500). He wanted Sharpe BMW to offer customers the best service compared to other BMW dealers operating in the area.

Deshane had noted that disparities in the way technicians were paid for performing two different jobs. The labor market for technicians had experienced a lot of changes, which made it difficult for several dealerships to hire and retain highly skilled technicians. Technicians had to go through rigorous certification programs, which made them demand high hourly wages. Dunn noted that the firm needed to train its dealers constantly to make them achieve high standards in their performance, which would make them more competitive.

BMW technology was constantly changing and the firms technicians needed to be kept abreast with the latest technological changes, which would benefit them at work. However, there was another matter of concern, which needed to be addressed (Anderson 78). There were disparities between customer pay and warranty pay, which influenced the amount of hourly wages technicians earned in the firm.

Deshane proposed that technicians whose CSI rating surpassed 91%, needed to be given a 2%-3% monthly bonus payment on top of their hourly wages. He argued that this showed the quality of their performance was high. This approach would help the firm assess the contribution of each individual technician in the firm. Deshane had noted that this approach was different from the labor practices of other dealerships in the area. He believed that this would make technicians more committed to the firm.

Dunns terms of employment stated that he needed to help the service department surpass the average national CSI score of 91%, to earn a bonus on his earnings. Dunn had managed to create positive relationships with technicians and other stakeholders in the firm. This made it easy for them to collaborate with him on different aspects of service delivery that needed improvements. Dunns employment background made him suitable for this role because he was effective in managing customer relationships (Anderson 87).

Dunn was in support of the new system which Deshane had proposed in the firm. He understood that the firm had to increase its service revenues and this was only possible if it improved its internal systems. However, some employees felt that the bonus plan proposed by Deshane was not adequate and they needed an improvement in the payment terms which had been outlined by the plan.

Most technical employees supported the plan because they felt the management was working harder to improve their welfare (Cummings and Worley 24). They felt that the management had begun to recognize their contribution to work and they needed to build on this to achieve positive outcomes. Dunn was keen to build on this trust to improve relationships between management and staff.

Implementation Plan

Dunn needs to consult technicians to understand their issues before implementing the bonus payment plan. He needs to call a meeting with them to explain to them what the company feels needs to be achieved to make it possible for the firm to move in a positive direction. The disparities in customer payment and warranty payment jobs need to be ironed out to motivate technicians to work harder in their assignments.

The firm needs to review the amount of money paid for warranty jobs because this can discourage technicians from working hard. Technicians who do more warranty jobs earn less compared to those who do jobs paid by customers directly. This disparity makes more technicians to prefer customer jobs over warranty jobs and this is the reason that has made the firm to register poor CSI scores (Cummings and Worley 28).

In conclusion, the firm needs to increase the average repair time for each BMW to 2.6 hours to motivate technicians to improve their performance. This will help iron out pay disparities that exist to ensure that the bonus payments they get are enough. The firm should maintain Deshanes plan of giving technicians who exceed the average CSI score in their performance by 2% to 3%. This will improve the firms performance in the market.

Works Cited

Anderson, Donald. Cases and Exercises in Organization Development & Change. London: Sage, 2012. Print.

Cummings, Thomas, and Christopher G. Worley. Organization Development & Change. Mason: Cengage Learning, 2009. Print.

Subramanian, Ram. Sharpe BMW Case Study. Case Research Journal (2002): 497- 503. Print.

Introduction

The Sharpe BMW is an automobile dealership company that survives chiefly like what most companies survive on: automobile sales and services such as maintenance. The company has experienced a new fall over the years which Sharpe BMW have predicted to have been caused by the changing of the headship in which the company has experienced victory.

The adjustment in the management allegedly reduced client rankings and the revenues and profit margins of the automobile dealership company.

However, latest improvements made an immediate change when the top management decided that it required an adjustment in the company in order that it would be capable of meeting the sector margin and preferably, the victorious margins that the firm has attained previously under the headship of the former service boss.

Tom Dunn, the service manager and Bob Deshane, presented a proposal to the firm administration that would absolutely return the years when the Customer Satisfaction Index (CSI), which has been infecting Sharpe BMW, was strong. The CSI was identified as a cause of low service quality in the automobile dealership industry in the region.

Among the issues that should be solved in the plan, the technicians feel that the plan was an excellent concept the sole problem of which is the bonus would be so inadequate on their side. Adding a supplementary reality were the observations of Sharpe BMW technician that he would be comfortable performing more warranty tasks as this would provide him with more salary.

The other employee, however, was positive concerning the new plan. The technician remarked that the Customer Satisfaction Index offers extra details and concentrates on an aspect that is not actually useful as that aspect is beyond the reach of the technicians.

He as well commented that the new plan in addition granted the employees a more than congratulate recognition that further encourages the employees (Kenneth & Whitten 2007).

To add more trouble to Bob Deshanes problem is that the task ahead of him specified that his works requirements comprise the focus on growing the service sections income and on increasing the Customer Satisfaction Index ranking of the service unit.

Deshane understood then that the assignment ahead of him is in line with the new plan, but would include the amending of a number of items that are associated with the service section.

Deshanes predicament includes that the integration of the plan would not be assured to work and bring an excellent result and that everybody would be pleased. To make things harder, Deshane think of the likelihood of that the plan or the integration would have a number of flaws and would have a likelihood that it would not work.

Background

As the issue comprises the plan and the judgment that must be made by the director, Bob Deshane, the initial step that the report has to focus on would be the company situation and the new plans merits and demerits.

In an attempt of stemming deteriorating service unit incomes and low CSI scores, Bob Deshane, the Service Director of Sharpe BMW had created an action plan that alters the way technicians are paid (Herrnstadt 2007).

The task of executing the bonus plan falls to Tom Dunn, the freshly recruited Service administrator. Dunn must develop an extensive plan for implementing such organizational change. The setting of the case  a small car dealership  offers both familiarity and sympathy, with the role faced by the service manager.

There are two key objectives here. First, has the compensation plan been structured in a suitable way and does the organizational procedure seem right? Second, what is the complexity of the assignment ahead of employees who have to bring a change in the service department?

Objective of the report

The report is an attempt of developing an outline of implementation which discuses the exact steps that Dunn ought to follow with a view of ensuring that Deshanes strategy is effectively executed. The report will focus on:

• Providing a chance to use performance administration solutions, particularly a compensation system change.
• Diagnosing and applying design process to a pay system intervention
• Designing a change management plan

Discussion queries

The case involves two queries. These include:

• What do you see as the merits and demerits of the suggested bonus strategy?
• Based on the details in the Sharpe BMW case, prepare an execution strategy for Dunn to follow?

Analysis of the current plan

Prior to embarking into such significant queries, it is worth organizing the case scenario into an organized change process format. Particularly, how did the service manager find himself in this scenario and does that create issues? The case involves the following issues:

• Service departments revenues
• Dealerships customer satisfaction index
• Service technicians labour market

The case offers an assortment of details concerning the current compensation plan in addition to some pieces of information regarding how the evaluation (although non-formal) was carried out.

The current pay plan exists in a more enormous performance coordination model context. Specifically the present plan of warranty reward and client payment is closely associated with the client satisfaction index plan (Hassin 2010; Long 2006).

We can borrow and adapt the procedure for a successful employee appraisal plan in addition to the procedure for a successful compensation plan in assessing the association of these two criteria.

Pros and cons of the current CSI

The customer satisfaction index model can be evaluated as follows:

• Relevance  the client satisfaction index method ranks well on relevance as marks are transferred to the company every four weeks (Mclean 2009).
• Exactness  the precision of the client satisfaction index score can be disputed. It includes survey feedbacks. Only one of eight queries associates with technician attitudes and only four of five bring about a rating of 85%. A client bringing his or her vehicle in for a warranty fix, in the best scenario, cannot be a pleased client and thus the probability to rate the general service experience as excellent (100%) cannot be high regardless of how good the technicians perform (Chew & Cheng 2006).
• Recognition  there is little recognition of the client satisfaction index plan as an applicable dimension. Under the present plan, an employee is not paid at all for good client satisfaction index score, so there is slight opportunity he or she would agree being controlled by it (Magal & Word 2012).

Generally, the client satisfaction index plan does not have lots of inspiring potential as a performance response model, particularly for the technician.

Pros/ cons of the current pay plan

The present compensation plan can be evaluated as follows:

• Relevance  even though no particular details are available, it is possibly reasonable in assuming that under the present model, a technician is remunerated on a monthly basis. Relevance of the pay is consequently judicious.
• Availability  here the query is whether remunerations are available. Based on the old model, the response is that there is no an extra incentive or appreciation awarded beyond the present hourly remuneration rate. Not to be assumed, however, is the actual uncertainty that a qualified technician is hard to get and there is an opportunity for the technician in other service enterprises.
• Performance possibility  is there a link between remuneration and good service. The response here is no. A technician in the new plan is simply rewarded based on the job he or she performs (warranty payment versus client payment)
• Equity  the plan seems to be fair as far as intrinsic and extrinsic equity is concerned.
• Visibility  the current plan lacks visibility. However, it is perhaps realistic in assuming that a non-formal plan in the service unit exists (Stinson & Smith 2007).

A technician perhaps knows who gets what job and if or not some people are receiving higher proportions of warranty versus customer pay job. In general, the current reward plan is possibly average in its inspiring potential. The most fragile factors are performance possibility and availability.

The configuration between the current plan and new plan is not good. Basically, the communication model determines the worker attitude that is not being paid but for which top management is being recognized. It is no doubt the top managers at Sharpe BMW have selected the pay plan as the primary switch for change.

It is not likely that the managers would be capable of changing Sharpes business model. As far as the analytic process is concerned, the Sharpe BMW case leaves the tough feeling that the analysis was performed approximately totally by Bob Deshane (Burke 2011).

As an outcome, we can forecast that the technical employees will probably be doubtful and show as a minimum some resistance to the execution of the current pay plan. The senior technicians comment in the case is suggestive of this resistance (Bloodgood & Morrow 2003).

Executing the new pay plan

Given the merits and demerits of the existing performance coordination approach and the way the analytic phases were carried out, we can resort to the query of execution.

Dunns responsibility in execution

As a service administrator in a car dealership, Tom Dunn is a central administrator. For Dunn, top managers want improved CSI scores, while his workers want to be fairly rewarded for their contribution.

Dunns work is that of finding a common ground, of getting a technician to understand the need for a reward alteration system (or the significance of precisely executing Deshanes system) and, at the same time, assure that the new system attains top managers objective of advanced CSI scores.

Basically, Dunn is the change executor and therefore must balance the requirements of the management as well as anticipations of the workers (the technicians).

Execution plan

There are 2 methods to think regarding the establishment of an execution design. In the first scenario, the service manager can conduct a force-field investigation and generate a change approach derived from that investigation. On the other hand, Dunn can follow a change implementation design (Zhu & Meredith 2003).

Table 1: Force-field investigation

The new plan brings in another measure  CSI scores  that influences technicians bonuses, and that ranking is not in their favour. As an outcome, it is possible that a technician would oppose.

Managing change

Once the service manager has understood the scope of the change via a force-field assessment, Dunn must craft an execution strategy.

Dunn may have to choose whether he would conduct a pilot execution (comprising, say a single technician) or an entirely fledged execution comprising all technicians. Dunn then must develop a successful method of communicating this strategy to the technicians (Barlett & Ghosai 2007).

Reflections

Any strategy of execution that Dunn utilizes ought to stress the following core aspects:

1. Communication  he must explain the new system completely in a way that any technician can know its impact on him or her. Dunn must start by explaining what encouraged the company towards adopting the bonus plan and the outcomes that the managers expect once the system is executed.

Dunn must emphasis the gains (although small) that would go to the technicians based on the plan. Dunn as well should be specific to explain what is anticipated of the technicians, for example higher interest to warranty works. He should understand that good communication is critical to the victory of the plan.

2. Monitoring and response  after the reward system is implemented, Dunn should track it to see its result and offer response to the workers. It may encourage the workers if the manager can make public success episodes (increased CSI ratings) in addition to the bonus that a certain technician has got due to more focus on warranty job.

Conclusion

The case analysis aimed at assessing the current situation of Sharpe BMW and the new plans pros and cons. In an effort of stemming deteriorating service unit incomes and low CSI scores, Bob Deshane, the Service Director of Sharpe BMW had created an action plan that alters the way technicians are paid.

A technician has to vividly know the underlying principle for the alteration, what he or she has to do to obtain the reward, and what type of modified attitudes are anticipated of him. It may seem right for the service manager to develop real figures and indicate how technicians can increase their present salaries by enhancing their CSI ratings.

Recommendation/ solution

Regardless of the reward plans slightly better structure, executing such change may not actually assist the Sharpe BMW in the long term. The solution is to sustain customer satisfaction index ratings at an echelon satisfactory to Sharpe BMW and to senior managers.

References

Barlett, C & Ghosai, S 2007, Managing across borders: The transnational solution, Harvard Business School Press, Boston.

Bloodgood, J & Morrow, J 2003, Strategic organizational change: exploring the roles of environmental structure, internal conscious awareness and knowledge, Journal of management studies, vol. 40 no. 7, pp. 1761-1782.

Burke, W 2011, Organization Change Theory and Practice, 3rd edn, SAGE Publication, United States of America.

Chew, M & Cheng, J 2006, Managers role in implementing organizational change: case of the restaurant industry in Melbourne, Journal of global business and technology, vol. 2 no.1, pp. 58-67.

Hassin, A 2010, Effective diagnosis in organization change management, Journal of business systems, vol. 5 no. 2, pp. 23-29.

Herrnstadt, O 2007, Are international framework agreements a path to corporate social responsibility, Journal of business and employment law, vol. 10 no. 1, pp. 187-223.

Kenneth, G & Whitten, D 2007, Organisational culture of customer care: market orientation and service quality, International journal of services and standards, vol. 3 no. 2, pp. 137-153.

Long, R 2006, Strategic compensation in Canada, 3rd edn, Thomson Publication, Toronto.

Magal, S & Word, J 2012, Integrated business processes with ERP systems, Wiley, Cambridge, MA.

Mclean, G 2009, Organization development principles processes performance, Berrett-Koehler Publishers, California.

Stinson, V & Smith, S 2007, The CSI effect: reflections from police and forensic investigators, The Canadian journal of police & security services, vol. 5 no. 3, pp, 125-133.

Zhu, Z & Meredith, P 2003, Defining critical elements in JIT implementation: a survey, Industrial Management & Data Systems, vol. 95 no. 8, pp. 21-29.

BMW has adopted many strategies for the multi-product. Among the strategies BMW has used in their Multi-product in price differentiation for different market segments. This is attributed to the fact that people with high disposable income tend to spend more on a prestigious good. Secondly, some markets like Africa, part of South America, Asia and Europe people have low disposable income, which the company cannot sell the product at higher prices like in areas where there is high disposable income.

There are many risks and advantages associated with the marketing strategies adopted by BMW while market their products. BMW have tried to use technological economies scale and scope to produce multiproduct that is actually meets the customer needs in various market segment. The company has chosen product approach where capital and labor are employed to reduce economies of scale. Under this method, fixed cost associated with the production are sold in a market where people have high disposable income, while people with less disposable income goods are sold to them at variable cost only.

BMW in their strategic policy has chosen differentiation as strategy for positioning in the market. In some markets have produced a sleek car that is expensive while other markets have produced different car that meets the market standards. They managed to sell the car which economic, reliability, functionality performance, elegant, sleek design sporty, aggressive fun emotional competitive appeals hard charging for the German and Europe market while a similar vehicle that fits Africa market where the disposable income is low. BMW is not using volume in their production but they use differentiated Although BMW clearly competes on a generic strategy based on differentiation focus, through these, they are able to be market leaders. Through this, they are able to build; quality of BMW cars was for different market and different cost and charges different prices. This has made them more competitive.

Using the strategy cube above BMW have followed porters argument of differentiation in which he argues that in order to achieve good benefit, you have to incur some costs which are more than average to attain higher profit. For example, the BMW Company produces a costly vehicle, which is sold to the market with higher disposable income. The same vehicle can be sold to people with low disposable income excluding the cost of non-production activities.

Another position that BMW can adopt is the position with high benefits at the same time high cost but low price. This is when the company is incurring long-term economies of scale. Variable cost is considered leaving fixed cost. As well as BMW can also adopt the strategy where high benefit, which is, associated wit low cost but high price. This is where the product is well known to be doing well and the market client has high disposable income.

Again, the other position that can be adopted is the cost of incremental where they reduce the cost/benefit ratio so that they can remain competitive. From the cube if the company launches a product that is a motor vehicle for sports at a lower price, then the market will move towards the product giving them a competitive advantage. That is from F to D meaning previously price was at a low price since people have come in the price will go up increasing the benefits and production will be higher reducing the cost of production.

References

Jenkins W (2004): towards a strategic framework for competition in multi-product consumer markets: international J management and Decision making Volt 5, Nose 2/3.

Jenkins W competing times of evolution and revolution An Essay on long-term firm survival. Web.

Introduction

An accounting framework enables a business to monitor a wide range of money-related trade, including sales and liabilities and is equipped for producing factual reports that give administrators or individuals an unmistakable arrangement of information to help in the basic leadership process. Accounting systems track the salary and costs of an association or organization (Abela & Mora, 2012). As a result, accounting strategies are changed to fit the particular bookkeeping needs of an organization.

Representing a development firm is unique about the accounting framework for a retailer. A director needs to characterize the particular accounting needs of the organization or industry and select a framework that meets these necessities. A few organizations require strong inventory requirements while different organizations require definite reports of records receivables. Therefore, accounting concepts and reporting are used by the location and companys objective.

This paper will discuss accounting concepts, principles, IFRS standards, and audit requirements. The companies use different accounting standards by the financial reporting regulations in their various countries. The paper will study BMW and Cadillac automobile industries. BMW uses the IFRS accounting standards, while Cadillac, a subsidiary of General Motors, uses the GAAP accounting standards. The paper will summarize the accounting standards and compare the similarities and differences. Consequently, the paper will analyze the issues with the non  comparability with financial statements.

International Accounting Standards

Accounting systems control different aspects of a firms operations. By implication, an accounting system controls a firms expenses, invoice, and cash flows. A firms expenses describe the measure cash that leaves the organization in return for merchandise or benefits another firm. In more seasoned bookkeeping programming or a manual framework, for example, Excel, it is important to record, balance, and classify each cost.

Thus, accounting frameworks permit fast passage, categorization, and balance costs. All business liabilities, including creditor liabilities, bank loans to help the business, or personal are called cash flows (Camfferman & Zeff, 2018). An accounting system monitors these liabilities as payable value and reports all repayments when installment is made and debts are paid.

GAAP Accounting Standards

Some standard rules and ideas oversee the field of accounting. These rules are called essential bookkeeping standards and guidelines from the preparation on which more itemized, complicated, and legalistic bookkeeping rules are based. For instance, the Financial Accounting Standards Board (FASB) utilizes the fundamental bookkeeping standards and rules as a reason for accounting reports and a set of bookkeeping guidelines and models (Popatia, 2017).

The expression generally accepted accounting guidelines (GAAP) comprises of three vital rules:

1. The fundamental bookkeeping standards and rules.
2. Guidelines and measures issued by FASB.
3. GAAP industry practices and standards.

If an organization disseminates its money-related reports to people, it is required to use GAAP standards in preparing the announcements. Consequently, if an organizations stock is traded on an open market, government law requires autonomous or independent auditors to examine the organizations money-related reports.

Both the organizations administrators and the auditors must ensure that the monetary reports and budgetary proclamations have been produced under the GAAP standards (Popatia, 2017). GAAP is helpful because it tries to institutionalize and direct accounting definitions, theories, and strategies. Although accounting standards have variations such as IFRS and GAAP, accountants can make conclusions when contrasting one organization to another, or contrasting one organizations report on the industry.

Fundamental Accounting Principles and Concepts

Since GAAP is established on the fundamental bookkeeping standards and rules, accounts can comprehend GAAP if they understand accounting concepts and principles.

Monetary Entity Statement

The auditor records the firms operations, which differ from the entrepreneurs deals. For legal reasons, a stakeholder and its proprietor are the same; however, they are different based on accounting principles.

Financial Statement

Financial operations are reported in U.S. dollars, and exchanges that can be communicated in U.S. dollars are recorded. Due to this fundamental bookkeeping guideline, it is accepted that the dollars buying power has not changed. Therefore, auditors disregard the impact of inflation on record sums.

Time Statement

This bookkeeping rule suggests that it is conceivable to report the complex and continuous exercises of a business is moderately short, interim such as the five months ended May 31, 2018, or 5 weeks ended May 1, 2017. It is a rule that the time interim must appear in the heading of every wage report on the investors value, and proclamation of cash flows (Roe, 2014). Naming one of these financial reports with June 31 is not enough. The investor has to know whether the announcement covers the whole year.

Cost Principle

From a bookkeepers perspective, the expression cost alludes to the sum spent when an asset is acquired, regardless of time. Thus, sums that appeared on accounting statements are called authentic cost sums. Based on this rule, cost sums are not altered in the financial report.

Full Disclosure Principle

The financial statement displays information concerning areas of interest to an investor, stakeholder, or customer. Based on this assumption, various pages of references are joined to monetary statements. For instance, suppose an organization is named in a claim that requests a measure of cash. At the point, when the budgetary statements are prepared, it may not be clear whether the organization will have the capacity to protect itself or whether it may lose the claim (Roe, 2014). Because of these conditions of the full disclosure, the claim will be portrayed in the notes to the financial report. An organization records its bookkeeping strategies as the principal note of its many related statements.

Going Concern Concept

This bookkeeping rule accepts that an organization will operate as an entity to complete its targets and duties and will not declare insolvency or bankruptcy.

The going concern guideline enables the organization to concede expenditures ahead of time.

Matching Concept

This accounting rule expects organizations to utilize the accrual basis of bookkeeping. Most organizations, including BMW and Cadillac automobile, use the matching concept. Based on this concept, organizations match expenditures with cash inflow. For instance, deals cost should be recorded when the sales were made. Workers salaries are accounted as a cost in the week when the representatives worked and not in the week when the representatives are paid. If an organization consents to give its representatives 1% of its 2016 incomes as a reward on January 15, 2017, the organization should report the reward as a cost in 2016 and the sum unpaid on December 31, 2016, as a liability.

Income Recognition Concept

Under the collections premise of accounting, incomes are recorded when an item has been sold or services have been performed. Under this fundamental accounting guideline, an organization could acquire and report $40,000 of income in its first month of activity but records $0 in real trade for that month.

Materiality Concept

Based on this principle, an auditor may be permitted to disrupt another bookkeeping rule if a sum is inconsequential. Proficient judgment is expected to choose whether a sum is irrelevant or inconsequential. A case of insignificant activity is the purchase of a $100 wall clock by a very productive multi-million dollar organization. Since the wall clock will be utilized for a long time, the matching concept guides the bookkeeper to record the cost over the five years. The materiality rule enables this organization to disregard the matching concept.

Conservatism Concept

When there are two choices for recording a purchase, the conservative principle guides the bookkeeper to pick the elective that will cause less net pay and expenditure. The Conservative principle helps the auditor to break a tie. It does not mandate the auditor to be moderate.

IFRS Accounting Standards

Financial proclamations of BMW AG and its auxiliaries in Germany have been produced using accounting standards by IAS 27 (Consolidated and Isolate Financial Statements). BMW AG is a multi-organization that produces automobiles, power bikes, and aircraft parts (Zicke, 2017). The organization uses the IFRS reporting standards for reporting its income and expenditures. Incomes from sales are reported when its benefits are transferred to the merchant or client if the measure of income can be properly estimated. The financial advantages related to the trade would likely flow to the expenditure if sales can be properly measured. By IFRS standards, incomes are expressed net of settlement rebates, rewards, and discounts.

Revenues additionally incorporate rentals and premium salaries earned by monetary services. Incomes from rents and customer leases are recorded in the financial statement on a straight-line premise over the pertinent term of the rent. Income from leases and merchant financing is recorded utilizing the compelling interest technique and revealed as incomes inside the detail Interest wage on credit financing. However, if product sales incorporate a definite sum for other services, related incomes are conceded and transferred to the applicable period.

Profits are recognized as wages by the expenses. Income emerging on automobiles with a repurchase duty is not recorded until payment is delivered to the organization. The vehicles are incorporated in the inventories and expressed as a cost. The cost of offers contains the expenditures of items sold and the procurement cost of purchase products (Zicke, 2017).

Based on the IAS 20 standards, grants are recorded in the financial statement when conditions and requirements are fulfilled. They are recorded as salary over the periods important to coordinate them with the related expenses, which they are proposed to reimburse. Consequently, the firms earnings per share are registered based on the IAS33 (Earnings per Share). Undiluted profit per share is computed from the firms, preferred and common stock.

Accounting Standards used by Cadillac Corporation: US GAAP

General Motors, the worlds biggest vehicle maker, plans, fabricates and has advertised vehicles and trucks around the world since 1931. General Motors Corporations established in 1908 have their vehicles sold in more than 190 nations. Cadillac a subsidiary of GM produces exotic and comfort cars in the US. The corporation is listed on the NYSE and is obliged to use the GAAP accounting standards.

The GAAP is an accounting framework that organizations must use when they prepare their financial statements and reports. GAAP is a blend of definitive measures and the usually acknowledged methods for recording and revealing account information. GAAP enhances the lucidity of the correspondence of budgetary data. GAAP guarantees a base level of consistency in Cadillacs financial disclosure and reports, which makes it less demanding for financial specialists to examine and retrieve valuable data. GAAP likewise encourages the cross-examination of money-related data among similar organizations.

Corporations in the US use GAAP standards as against the IFRS principles. As a result, the GAAP standards are enforced when an organization releases its monetary articulation. Since Cadillacs stock is traded publicly, the budgetary articulation should likewise stick to rules by the U.S. Securities and Exchange Commission (SEC). The GAAP covers income acknowledgment, monetary record arrangement, and share valuation. Likewise, a few organizations may utilize both GAAP and non-GAAP accounting standards when announcing money-related outcomes. GAAP directions require that non-GAAP measures are distinguished in money-related explanations and other open announcements such as public statements (Yurisandi & Puspitasari, 2015).

Differences between the two Accounting Standards

U.S. GAAP and IFRS standards vary and are based on the accounting concept. The U.S. GAAP is a guideline-based framework, while IFRS is a standard-based framework. This qualification may be disturbing because accountants, auditors, and financial experts in the U.S. have been educated in the tenets of U.S. GAAP.

The differences between both accounting standards include inventory, PP&E and impairment, financial instruments, revenue recognition, research and development, pension, and other post-retirement benefits

Inventory

The LIFO is a major concern for accountants using the IFRS standards. Under U.S. GAAP, Cadillac and other companies can enforce LIFO principles to their inventory. During inflation, this principle prompts higher recorded expenses of revenue, and in this manner diminishes tax income. Nevertheless, LIFO bookkeeping is not permitted under IFRS. As a result, organizations must transfer inventory estimates to weighted accounts for FIFO standards.

Assets Breakdown

Under IFRS, significant segments of an asset must be isolated and deteriorated over their evaluated valuable life span. As a result, distinguishing the significant assets of multinationals like BMW is challenging. For assets that normally require substitution amid the production phase, devaluation might be computed on the units of production.

Organizations that change over to IFRS can expect a complex and possibly extensive procedure to componentize their property, plant, and gear. It will be difficult to distinguish the relevant assets and to change the devaluation estimation of fixed assets (Yurisandi & Puspitasari, 2015).

Asset deficit

Two noteworthy contrasts exist between U.S. GAAP and IFRS standards on asset disability. The differences will be summarized below.

1. While evaluating for disability under U.S. GAAP, a two-advance approach is connected. To start with, the asset value is contrasted and the undiscounted estimation of money flows to be generated from the property. Second, where the asset value is higher, the benefit is lowered to a reasonable cost. Under IFRS, the asset value is contrasted with the recoverable sum. By implication, a definitive impact is that debilitation might be recorded prior under IFRS.
2. Under U.S. GAAP, accountants cannot reverse recorded impairments. Nonetheless, under IFRS, where the marker that prompted the hindrance misfortune never again exists, the perceived impairment is reversed. Under IFRS, you should track your property hindrances after preparing them to decide if there should be a reversal. Variations exist in cash determinants for impairment.

Budgetary Instruments

Under U.S. GAAP, Cadillac automobiles have full control of hedging instruments. This approach is restricted under IFRS; rather, viability must be constantly surveyed and estimated, requiring evaluation and documentation of subsidiary instruments. A few contrasts exist amongst IFRS and U.S. GAAP on the financing cost technique, especially the definition of segments of direct expenses between the two model systems. Eventually, the effect of the distinction implies that internal expenses identified with credit starts amortized under U.S. GAAP (Yurisandi & Puspitasari, 2015). The effect of these distinctions could be significant for automobile organizations, especially those OEMs with financial bodies.

Income Recognition

IFRS requirements for income acknowledgment are substantially less challenging than U.S. GAAP. One zone with conceivably significant impact is the direction representing various component plans. While U.S. GAAP reports these plans using simple and effective standards, IFRS does not provide answers to such activity. The ramifications of this contrast go beyond bookkeeping operations but could affect contract requirements and approval.

R&D

U.S. GAAP requires expenses identified with R&D be prepared as incurred. However, IFRS separates amongst Research and Development expenses, with improvement costs promoted when the specialized and financial process of a task can be illustrated.

Pension and Retirement Package

With the significant number of present and future retirees in the automobile business, annuities, and retirement packages cover a large part of the firms financial report. Under U.S. GAAP, such expenditures are recorded in the equity section. However, IFRS does not recognize this expenditure. Consequently, IFRS sets a benchmark for pension packages that must be reported. Companies using GAAP do not have restrictions or pension caps for financial reports (Zicke, 2017).

Similarities between IFRS and GAAP

Auditors using different accounting standards do not accept everything, except there is a colossal shared conviction among specialists and scholastics on what the objectives of the financial reporting framework ought to be. An accounting principle should give information on how well the organization is doing (financial execution) and help speculators and investors in their asset distribution choices (choice importance). Tax auditors collect valuable information from a different framework.

Non-Comparability of Financial Statements in Different Countries

Financial accounting comparability has been perceived as a critical component of accounting and enhancing the value of bookkeeping data. Comprehensively, financial leadership contrasts options while accounting books suggest that financial reports cannot be evaluated as a single entity. The significance of non-comparability of financial statements in different countries is underscored in valuation strategies, for example, pricing issues, audit requirements, and reporting standards.

Thus, standard auditors set comparability as a component of accounting systems. The procedure of synchronization amongst IFRS and US GAAP can be moderate, risky, and a process that is developing. A current study discovered almost half of U.S.  based multinational organizations are either utilizing IFRS in their subsidiaries or have finished an underlying effective evaluation, or are intending to complete an evaluation (Zicke, 2017).

The IFRS impression is expansive and grows as financial globalization expands. Thus, financial regulatory agencies should advocate collaboration with national standard regulators, for example, FASB, and guarantee that IFRS addresses the issues of every single capital market, including the United States (Taplin, 2017). It is imperative to survey the attributes of the two bookkeeping frameworks based on the challenges of supplanting the US GAAP with IFRS standards.

The examination of the contrasts between American principles and the European standards-based, frameworks has been the question of similar research on various accounting frameworks and in various ways to deal with corporate financial control (Taplin, 2017).

The implementations of research results on IFRS are envisioning its global acceptance regardless of the challenges with US GAAP. A scope of various prospects has risen concerning the utilization of US GAAP where the two extraordinary circumstances are spoken to by the upkeep of US GAAP with the acknowledgment of IFRS for international organizations and the formation of I-GAAP as a substitute for international GAAP (Taplin, 2017). The verbal confrontation on IFRS selection in the US is pertinent and the discoveries of a study directed on the financial specialist observations featured the significance of comparability to financial investors (Yurisandi & Puspitasari, 2015).

Conclusion

The paper discussed the importance, concept, definition, and principles of financial accounting standards. Several accounting systems and concepts were analyzed. The concepts include the revenue recognition principle, matching principle, go-concern principle, cost principle, and the full disclosure principle. Consequently, the paper also discussed two accounting standards used by the two automobile industries under review. The automotive industries are BMW and Cadillac Corporation. The difference in the selected accounting standards lies with its inventory, financial instruments, revenue recognition, R&D, and impairment.

Based on the analysis, the research question is relevant because of the challenges in adopting a unified accounting standard. As a result, the target audiences are accountants and decision-makers. The comparability of financial statements is a growing concern for multinational companies. Issues such as mergers create compliance issues for various organizations. As a result, accountants must harmonize their reporting standards to a single entity. It was observed that accounting standards differ in various countries. However, accounting standards provide a platform for a fair and valid reporting framework.

References

Abela, M., & Mora, A. (2012). Understanding the consequences of accounting standards in Europe: The role of EFRAG. Accounting in Europe, 9(2), 147170.

Camfferman, K & Zeff, S. (2018). The challenge of setting standards for a worldwide constituency: Research implications from the IASBS early history. Journal of European Accounting Review, 27(2), 289-312.

Popatia, K. (2017). IFRS & GAAP: Reconciling differences between accounting systems and assessing the proposed changes to the IFRS constitution. Northwestern Journal of International Law & Business, 38(1), 1-24.

Roe, J. (2014). Transition from US GAAP to IFRS: Analysis of impact on income tax administration in USA. European Financial and Accounting Journal, 9(4), 86-109.

Taplin, R. (2017). Measuring the comparability of company accounts conditionally: A research note. A Journal of Accounting, Finance and Business studies, 53(4), 527-542.

Yurisandi, T., & Puspitasari, E. (2015). Financial reporting quality: Before and after IFRS adoption using Nice qualitative characteristics measurement. Social and Behavioral Sciences, 211(1), 644-652.

Zicke, J. (2017). The effects of accounting standards on the financial reporting properties of private firms: Evidence from the German accounting law modernization act. Business Research, 10(2), 215-248.

Luxurious, sleek, and sporty are some words that come to mind when I think of a BMW. I picture a speedy automobile with an aggressive look and the performance that backs it up. I do not think of is a person that has lost their leg due to a drunk driving crash. Every two minutes someone is injured in a drunk driving accident (MADD). BMW wants to do their part to try to decrease the number of drunk drivers on the road. BMW takes a serious tone with this ad; a change from their usual ads that strictly showcase their cars. This advertisement from BMW uses rhetorical appeals such as, emotional appeal, logical appeal, and ethical appeal, to persuade against drinking and driving.

The ad catches the viewer’s attention instantaneously with a vivid picture of a person with a prosthetic leg and the words, “Don’t Drink and Drive.” (Fig 1) BMW plays off the idea that the amputee will catch and keep the viewer’s attention. The ad uses emotional appeals by making the viewer see the consequences of driving under the influence. A car accident where someone is seriously injured, like the person in the ad, invokes many emotions. Most of the viewers cannot say that this scenario could never happen to them because it could. Think about all the people that travel on the roads each day; whether they are the passenger or the driver they can still be involved in a drunk driving crash. The point is, drunk drivers affect much more than just themselves. The enormous target audience is a strength of this ad. Also, BMW does a great job of picking colors that appeal to the viewer’s emotions. The background colors are soft and plain to really draw the attention to the black prostatic leg. It is also interesting that they chose a person with only one prosthetic leg rather than two. Again, they did this to make the prosthetic leg stand out. I also believe they want to show how fast a person’s life can change when being involved in a drunk driving crash.

After the viewer sees the ad, they are hooked. Next, they read the text to find out what the message is. The ad says, “Spare parts for humans are not as original as those for cars. Don’t Drink and Drive.” (Fig 1) This statement uses a logical appeal by saying that human limbs are not as easy to replace as a part on a car. Most people in this world know, and agree, that drinking and driving is dangerous and should be avoided. BMW puts this statement out knowing that everyone will agree with it. This creates a sense of teamwork with the audience to fight against a common problem. The design of this ad is also simple and logical with the picture on the left and words on the right. Wisely, BMW did not try to do anything glamorous or fancy in this ad. By putting out this ad BMW is conveying that they are a company that cares about the people, and they are doing their part to prevent drunk driving. This ad indirectly tries to sell cars by showing the consumer that BMW is a trustworthy and caring company that wants to keep the population safe. Another thing the viewer recognizes right away is the logo. This induces a sense of trust from the viewer.

The famous BMW logo puts credibility in this ad. BMW is a German company that was founded in 1916 (BMW Group). The fact that BMW has been around for more than one hundred years is all the credit this ad needs. BMW is using their credibility in a good way by trying to prevent drunk driving. In 2011, BMW also started an ad campaign to combat the problem of texting and driving (Boeriu). With these types of ad campaigns, BMW shows that they do not only focus on creating better cars and increasing sales; they also focus on creating a better society where people are safer on the roads. In turn, these ads have pushed BMW to have record sales for the past five years (BMW Group).

With the perfect storm of the latest innovations in the automobile industry, and masterfully crafted advertisements, it is no shock to see BMW’s sales sky rocketing. This shows what using rhetorical appeals in advertisements can do for a company’s success, and in this case help prevent drunk driving. Rhetorical appeals are everywhere – just look around.

Works Cited

1. BMW. Don’t Drink and Drive. N.d. Mad Over Marketing. Web. .
2. ‘BMW Group – Company – History.’ BMW Group. BMW, n.d. Web. 04 Feb. 2017. .
3. ‘BMW Group Achieves Fifth Consecutive Record Sales Year.’ BMW Group. BMW, 1 Nov. 2016. Web. 04 Feb. 2017. .
4. Boeriu, Horatiu. ‘BMW Launches ‘Don’t Text and Drive’ Campaign.’ BMW BLOG. BMW BLOG, 02 June 2011. Web. 04 Feb. 2017. .
5. ‘Drunk Driving Statistics.’ MADD. MADD, 2015. Web. 03 Feb. 2017. .

BMW is a huge manufacturing organization known for its automobiles, motorcycles and financial services. As the case study shows, BMW’s market is doing well with its market share all around the world. It has a percentage of its market in America, North America, Germany and in the rest of Europe. With the help of the advertising agencies, BMW became more popular and the unit sales have been increasing for their products yearly.

The main issue that BMW faced was that there has been continuous increases in the total advertising expenditures across the country. The economic environment GDP plays a huge role in the sales of BMW. In the USA , there has been high changes in the percentage of the advertising expenses in comparison to the percentage in the GDP of the country.

SWOT Analysis

Strengths

BMW is has a strong brand name and a strong image with MINI Cooper and Rolls Royce. BMW’s continuous innovation and technology is a key strength to the company or organization as it launched the MINI with its different features. The uniqueness design of the MINI Cooper attracted the customers to purchase the car with its variety of colours and being able to customize it as they wish.

Weaknesses

Advertising is a key factor for success in any organization. The lack of knowledge and lack of financials with dealing with the budget is a weakness in any organization.

Opportunities

As BMW’s market share being around the world , it has the chance to expand more by increasing their innovation and technology in their cars. BMW can look to make new partnerships with other car manufacturers to promote the sale of new brand products. Low price cars with better innovation and technology can be an advantage for both BMW and Mini Cooper.

Threats

Since there are many other car industries around the world such as Mercedes, Audi and Lexus, BMW should look to future needs in the world of development and make sure their sales do not drop drastically. The percentage changes in the advertising expenses in the USA have been high, therefore this might affect BMW’s market sale.

BMW plans on hiring a new advertising agency for the promotion on its new model car MINI through selecting the best advertising agencies considering its cost and benefit analysis.

AS for BMW’s segmentation it classifies a group of customers having certain characteristics. This will be suitable for people who would prefer a small but comfortable car . The people targeted to purchase Mini are willing to spend a lot of money that will reflect their attitude and their status.

By selecting the marketing communication budget using the percentage-of-sales method , BMW can use this method to evaluate the performance of the company and identify key indicators of improvement that the BMW need over time.

Competitive parity method is another method BMW can use as the advertising expenditures of competitors are taken as the guidelines for adjusting their advertising budgets.

Objective and task method is where the specific objectives are defined, tasks required to achieve objectives are determined. Costs of performing task are estimated, then summed to create the promotional budget. Advertising objectives are fixed after intensive research.

Conclusion

Mini Cooper became one of the world’s preferred cars. It drew the attention of people around the world with it being present in so many different countries. Mini Cooper attracted the people around the globe, whether young or old people. By developing their innovative marketing strategies it will boost their sales of Mini.

The following report features an in depth analysis and comparison of two major automotive giants being Chevrolet and BMW. This report aims to explore in depth the history, practices, management between the two companies, so that we can better understand how two vastly different companies dominate their field.

BMW

BMW is a German motor vehicle manufacturer that was officially found on the 7th of March 1916 and is now one of the leading car manufacturers in the world. Although during establishment of the company they were previously an aircraft engine manufacturer known Bayerische Flugzeugwerke AG and in 1922 they officially changed their name to Bayerische Motoren Werke.

The first product manufactured by BMW was a straight-six aircraft engine called the BMW IIIa, that was used in aero planes during World War 1. After the conclusion of WW1, BMW diversified their product line, now producing motorcycle engines, farm equipment, house hold items and railway breaks. It wasn’t until 1928 where BMW officially became an automobile manufacturer when they purchased Fahrzeugfabrik Eisenach which was a company at the time already producing cars. During the 1930s BMW extended their automobile range to now include bigger luxury cars as well as sports cars

An major factor that affected the rise of BMW was the beginning and outbreak of World War II in 1939. This is so as BMW were now required to manufacture war supplies now to the German army, which was done under the instruction of the German government. Due to BMW manufacturing plants now being under control of the German government and all efforts forced to go to the German army, a massive toll began to take effect on the company. This is so as to keep up with the constant military demand, enormous amounts of materials were used to produce their products as well as to ship them to the front lines. Additionally at the beginning of 1940 BMW how now begun to hire foreign workers within the company, due to minimal amounts of staff present, as most employees had been drafted into the German army. Furthermore in the mid 1940’s BMW resorted to hire prisoners of war as employee numbers continued to diminish, during these times the factories working conditions were the worse they have ever been in the companies history. These working conditions became so bad as efficiency was prioritized above all else and everything ranging from humane working conditions to safety was neglected.

After Nazi Germany was defeated, the Allied forces destroyed and dismantled all of BMW’s factories due to their contribution to Germanys war effort. This act by the allied forces almost put the company out of business for good. During this time BMW reverted to selling kitchen utensils and other form of cooking ware to keep the company afloat. After a few years of selling kitchen ware BMW was able to rebound and produce its first automobile again in 1951, with the car being a considered a luxury vehicle that seated 6 people. This car was titled the 501 and was able to restore BMW’s reputation within the automotive industry.

During the 1960’s and 70’s BMW began to rapidly grow, with expansion of the company now being the primary focus of the company. This expansion came in the form of BMW establishing its own financial subsidiary organization known as BMW Kredit, which allowed them to expand and develop the automotive leasing market which was only just beginning at the time of this implementation.

In 1972 BMW expanded overseas with the construction of their first manufacturing plant in Rosslyn, South Africa, which employed 1700 employees and exclusively produced 53,000 unit of the BMW series 3 model.

By the 1990s the BMW name and brand has become associated with that of wealth and luxury, with their production line now expanding sports cars and sedans. In 1994 BMW finally expanded into the United States, which saw them construcut a manufacturing plant in Spartanburg, South Carolina. During this expansion period BMW also began aquiring other companies, firstly the Rover group in 1994 and in 1998 the Rolls Royce group.

Currently the BMW automotive group has its sights set on further expansion, with the aspects of growth, new technology and profit being their main goal.

Chevrolet

Chevrolet is an American motor vehicle company that was started on November 3 1911 in Detroit by automotive engineer by Louis Chevrolet and William Durant. At the time Durant was head of the Buick automotive company and during this period Louis Chevrolet was hired to drive the cars he produdced in races in order to promote the brand. Chevrolet had their first car produced In 1913, this being the Series C classic Six. Additionally in 1913 Louis Chevrolet’s well known bowtie was adopted into the company logo, which was then implemented as badges on all of their products.

In 1915 Chevrolet owner William Durant acquired the rights to McLaughlin Motor Car Company, which currenly produced Buick cars in Canada. With Durant knowing this he was able to create the Chevrolet Motor Car company of Canada, under a specific franchise agreement of General Motors. Only three year later both Chevrolet and McLaughlin automotive were aquired by General Motors.

In 1916 Chevrolet had a become a major player within the American automotive industry, which then allowed Durant to purchase the majority share within General Motor. After the deal was completed in 1917, Durant became the President of General Motors America and ordered for Chevrolet to be merged into GM as a separate division.

After many years of GM on top of the automotive industry they finally made a break through in 1955, this being a small V8 engine. The design of this engine had a global effect on the automotive industry, with todays engines still using the basis of this design in their current automobiles. Additionally on top of the V8 engine Chevrolet were the first to introduce a fuel injected motor into their cars, which further propelled the success of the business with one in every ten cars being sold in 1963 being a Chevrolet.

Since 2010 Chevrolet has been operating in over 140 countries and set a record in global sales for over 4.76 million vehicles sold world wide. Although the US is the primary distributor of vehicles, Brazil and China follow close for second and third.

In 2010 GM began to research and develop the production of a Hybrid Plug in Chevrolet, which came to be known as the Opel/Vauxhall. This car design received multiple awards being car of the year in 2012 and was the best selling electric car in 2012 with 31,400 units sold.

The Major Environmental Factors Affecting Both Chevrolet and BMW

In the past decade society have become more knowledgeable and aware of factors that impact our environment, we find ourselves being more conscious of the choices we make in our everyday lives and how we can preserve our eco system in the most efficient way possible. Global companies have now marketed towards this move, increasing their involvement and providing solutions to contribute to creating a more sustainable environment. BMW and Chevrolet are two internationally renowned companies that have recognised the importance of sustainability. Companies like BMW and Chevrolet share partnerships with various campaigns that help minimise wast production and carbon emissions.

Managing Change and Innovation

For companies such as BMW and Chevrolet we need to look at what influences have and will make the most change in terms of design and revolution of their products. In the scope of this report we will specifically outline and discuss the influences of the consumer market upon the shaping of future electric vehicles, while also comparing strategies of the companies. In turn this should demonstrate how BMW and Chevrolet differ in managing change and innovation.

As one of the most predominant car manufacturing companies in European and overseas markets BMW has been attempting to widen their range of electric vehicles. From this they are attempting to hopefully lower production of all petrol vehicles and make way for more ecologically friendly substitutes. According to an article by ‘The Driven’ BMW announced it would be increasing production for ’25 new plug-in electric cars” to reach their new deadline of 2023 rather than the previously mentioned 2025.

Unfortunately, according to BMW executive Klaus Frölich European market customers are showing minimal interest in purely electric cars and believes that sales will not increase as a result of elevated production. To counteract this issue Frölich states that big offers and incentives will be required to sell these cars, although he is not optimistic on the capability of these enticements. In terms of marketing all electric cars it’s believed concentrating on regions such as China and California are the best option for retailing these vehicles as they display much popularity in these parts of the world.

Another issue that has befallen not just BMW but other car makers within Europe is the unwillingness to increase the production and sales of “cleaner cars” as to retain earnings from there much less eco-friendly alternatives. These highly profitable SUVs have given negative incentive to manufacturers of these cars to post pone generation of all electric vehicles just to keep shareholders content. However due to the greater demand for stricter legislation and taxation in Europe by the year 2021 car makers will pay substantial fines if certain fuel emission standards are not met. This enticement will ultimately force companies such as BMW to rethink their manufacturing and marketing strategies for new pure electric cars.

Chevrolet under the parent company General Motors (GM) has observed the market and realised that there are significant underlying issues with many all electric vehicles. Up until recently electric vehicles have been considered luxury items especially when you look at companies such as Tesla and how expensive their cars are, but this isn’t the only issue plaguing car manufacturers. It was stated by GM that they “currently lose money selling electric cars” alluding to the unprofitability of all electric vehicles. To counterbalance this GM have discussed making cheaper and more affordable cars but also putting resources into new and more efficient battery technology while attempting to reduce cost overalls. Batteries will however need to be produced at less than 100 US dollars per kilowatt hour just to remain profitable but GM expresses that they are on their way to meet this goal.

Chevrolet has also recently discussed production of an all-electric utility vehicle marketed towards larger families who need cars bigger than the usual small sedan. Although it has not been explicitly stated Chevrolet has in fact foreseen the eventual demand in larger electric cars for the general public and through this they will be able to fill that space within the market. Ideas such as this have put Chevrolet higher on the ladder in terms of innovating electric vehicles for the average person.

Recommendations for Improving Their Practices

• Large car manufacturers are trying better to be more sustainable.
• They have the resources to do so while influencing legislation.
• Put more research into better batteries
• Help improve infrastructure for charging points.
• Make electric cars more affordable.

References

1. Schmidt, B. (2019). BMW unveils new electric vehicles, says Europeans don’t want them | The Driven. [online] The Driven. Available at: https://thedriven.io/2019/07/01/bmw-unveils-new-electric-vehicles-says-europeans-dont-want-them/ [Accessed 19 Oct. 2019].
2. Welch, D. and Bloomberg (2019). GM Is Planning Electric Cars That Won’t Give Buyers Sticker Shock, General Motors President Says. [online] Fortune. Available at: https://fortune.com/2019/06/05/gm-electric-cars/ [Accessed 21 Aug. 2019].
3. Lambert, F. (2019). GM unveils Chevrolet Menlo EV electric car – a Bolt EV utility vehicle – Electrek. [online] Electrek. Available at: https://electrek.co/2019/08/14/gm-chevrolet-menlo-ev-electric-bolt-euv/ [Accessed 19 Aug. 2019].
4. Wikipedia. 2019. History of BMW – Wikipedia. [ONLINE] Available at: https://en.wikipedia.org/wiki/History_of_BMW. [Accessed 26 August 2019].
5. History of the BMW. 2019. History of the BMW. [ONLINE] Available at: https://www.carcovers.com/resources/history-of-bmw/. [Accessed 25 September 2019].
6. media.gm.com. 2019
7. CHEVROLET – A BRIEF HISTORY. [ONLINE] Available at: http://www.gmplantnews.com/media/za/en/gm/news.detail.html/content/Pages/news/za/en/2010/Chevrolet/07_22_chevrolet_brief_history.htm. [Accessed 25 September 2019].
8. Wikipedia. 2019. Chevrolet – Wikipedia. [ONLINE] Available at: https://en.wikipedia.org/wiki/Chevrolet. [Accessed 25 September 2019].

Controlling is a management function that control the performance of a company and process of carry out the plan that have been set. It recognizes the leeway between the plan that have been set and the real outcome. After that, it will make the correction to the deviations and also make sure the company is going on the achievement of its goals (Satyendra, 2015).

BMW’s brand philosophy, only through continuous innovation, can enable the company to maintain a strong life and continuous freshness. As the first brand, BMW definitely needs the first brand in terms of styling, material selection and quality, and needs to be constantly updated (Martina, 2017).

VPS is a value-added production system and is BMW’s main production system designed to create value (PSP Specialist, 2019). BMW VPS expert team completed a number of VPS production practices. In order to repair all quality defects, the BMW Quality Inspector will confirm the status of 100%. Every morning and afternoon, hourly quality meeting, according to BMW quality standards, 30 cars per day in the BMW test environment for road test and rain test.

In fact, in order to improve product quality, BMW VPS systematically cultivated the quality awareness of its employees. Next, the checking process include the vehicle conducts road test and rainwater test in the BMW test environment every day, and conducts a round of regional review every week according to the BMW quality standard to fully guarantee the product quality.

BMW always views corporate social responsibility as an integral part of its sustainability strategy. As an advocate and practitioner of strategic corporate social responsibility, BMW is committed to combining its own resources and core competitive advantages to effectively promote the long-term development of all stakeholders through innovative and sustainable ways operating. Actively participate and create shared value.

Industry 4.0’s highly digital production method, the use of facility 3D printed thumb protection and sunroof adjustment to shorten the development cycle for small batches and custom chemical installations. Frontline employees can get accurate production information and instant messages through smart terminals. The mechanical exoskeleton (without seats) in the assembly shop provides physical support to employees who require extensive physical operations to help employees reduce labor force and increase productivity (Oliver, 2019).

The employee experience day is more about internal employees, because many employees work long hours in the company, but they don’t have the opportunity to drive, or even have no chance to get close to the car, so we did the employee experience day. For example, everyone can made an appointment on the reservation platform (when we were doing BMW 7 series activities), there will be BMW 7 series of handlebars staff to send home, so that employees can better understand the brand power.

Brand Audit – BMW

• Historical overview and background
• Parent company background
• Existing brands
• History of chosen brand
• Any changes in positioning/target market
• Competitors
• Existing brand extensions (if any)

The birth of BMW can be traced back to Karl Rapp and Gustav Otto. Their respective companies; engine maker Rapp Motorenwerke and aircraft manufacturer Flugmaschinenfabrik Gustav Otto, gave rise to Bayerische Motoren Werke. In 1923, BMW began its first metamorphosis when it expanded from manufacturing airplane engines to motorcycles. This was an influential development for the company, as prior to the transition, BMW had only produced engines as a standalone part. Now, they were manufacturing an entire vehicle. They announced that their first motorcycle would be called the R32. The design was considered to be so efficient that the original 1923 concept is still used to this day in modern day BMW motorcycles.

Innovative, high-quality products made a name for BMW as swiftly as its top-class performances in the motor sport arena. In 1972, the company launched their newest BMW Motorsport subsidiary. BMW Motorsport was known for its top of the line standards and began to gain recognition for the power and quality of its vehicles. With its new found popularity, BMW changed the direction of the company and began manufacturing sports cars for the common man. Following the wild success of the BMW Motorsport subsidiary, new lineups such as the BMW Mountains, Yachtsport, and Golfsport began to introduce high-quality performance based vehicles to the market. Over the decades, the name BMW became synonymous with luxury. With its lines of sedans and sports cars, BMW became one of the great cornerstones of the automobile industry. By producing a differing range of products in the same product class, BMW is able to appeal specifically to different segments of the market depending on the customer’s needs and wants. BMW has a general target market of affluent men and women between 25-50.

Along with Mercedes-Benz and Audi, BMW is considered one of the German big three manufacturers of luxury automobiles in the world. It’s market share expanded following the acquisition of the British-based Rover Group in 1994. The Rover Group is best known for their sports vehicles like the Mini, Mg, and Land Rover. Initially, BMW had big plans involving the Rover Group, but they eventually sold the group in 2000, keeping the Mini model for their own purposes. BMW’s hunger for acquiring other automobile manufacturers didn’t end there. In 1998, BMW purchased the Rolls-Royce group. Despite facing uncertainty for the near future, BMW sales have gone up this year. Sales have increased by 0.8 percent overall, worldwide, adding up to over 1.25 million cars delivered. In full year 2018, the BMW Group achieved its eighth consecutive annual sales record with a total of 2,490,664 BMW, MINI and Rolls-Royce delivered around the world. China was by far the largest country market for BMW in 2018 followed by the USA and Germany.

• Brand inventory (positioning)
• Brand elements
• Brand associations
• Positioning strategy (POP/POD)
• Target market
• Existing campaigns

BMW has developed a brand platform of high-level awareness and familiarity with strong and favourable brand associations. They’ve maintained this position following the introduction of their ‘Ultimate Driving Machine’ Slogan. In order to keep its advertising fresh, BMW integrated new taglines, such as; ‘Sheer Driving Pleasure’ and ‘Designed for Driving Pleasure’ in their advertisements. Although the new slogans still retained the spirit of emphasising the emotional aspects associated with the job of driving a BMW, consumers preferred the original slogan. To visually illustrate this philosophy, BMW’s logo is consistently presented on all their products, making it easier for consumers to recognise. Its iconic blue and white quarters are a representation of the State of Bavaria’s official colours.

Traditionally, car manufacturers have tried to measure their brands across a large number of image attributes, hoping to develop additional insights about brand differentiation. Such associations are a set of remembered qualities that help communicate information to the consumer. However, consumer perceptions of a brand’s reputation are generally consistent across different measures of value. For example, consumers believe that manufacturers whose car lines have a reputation for luxury and prestige tend to produce cars that excel in many other areas, such as ride, handling, safety, and reliability.

Deciding on a positioning requires determining the target market and the nature of competition and the optimal points-of-parity and points-of-difference brand associations. In other words, marketers need to know who the target consumer is, who the main competitors are, how the brand is similar to these competitors, and how the brand is different from them. In order to legitimately compete in the high-end cars market, BMW must have associations in common with their competitors. These Points of Parity are elements that are considered mandatory for a brand to be considered a legitimate competitor in its specific category. Indeed, to compete against other premium brands such as Audi, BMW have to maintain a reputation for the quality of their cars: high quality build, finishing, and design. However, brands needs to develop distinctive attributes or benefits (Points of Difference), so as to attract customers and have a competitive advantage over competitors. When BMW first made a strong competitive push into the U.S. market in the early 1980’s, it positioned the brand as being the only automobile that offered both luxury and performance. At that time, U.S. luxury cars like Cadillac were seen by many as lacking performance, and U.S. performance cars like the Chevy Corvette were seen as lacking luxury.

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. They implemented a different marketing mix to sell cars to different socioeconomic segments, aggressively emphasizing premium segments.

· Consumer perceptions

The survey was given to 12 people. Out of these 12 people, 8 were male and 4 were female. The survey was given to people of similar age groups but different professions. The process used to capture the results left us unable to directly determine which responses came from the 12 respondents in the 16 to 25 year old age range. With that capability we could have better identified which segment of the market was responding positively or negatively to a question. The subheadings below will highlight and reflect on the results found within each area from the survey; which is provided in the Appendix.

· Brand awareness/usage

This section was focused on asking questions that determined how many customers actually recognised BMW as a brand. Close ended questions that required a direct response about if the individual was aware of any recent BMW advertisements was asked. They were also asked an aided awareness question to note which competitors were familiar. These questions provide key data points in the development of an overall brand or strategy. For example, a question was asked to gain an insight into which features customers relate BMW with. 95% strongly agreed that it was a luxury brand, however 75% disagreed that it was good value for money. This could be attributed to the low age group of the respondents, especially because the level of disposable income amongst this age group would be significantly low.

· Brand performance

When questioning consumers about brand performance, tangible aspects of the brand need to be acknowledged in order to determine if the customer’s functional needs are met by the product. While exceling in areas concerning the visual appeal of the model of the car, respondents were not convinced BMWs are suitable for a family. This links back to the question asked in regards to brand awareness, and respondents were unable to identify different makes and models of BMW.

· Brand imagery

The questions in this section were focused on gaining an understanding of the tangible or intangible elements that consumers associate with BMW. It can come from any of the five senses, and can be unique to each individual. The below graph dictates the responses to each question asked about words associated with BMW.

The positioning concept indicates how the management wants buyers to perceive the company’s brand (Cravens and Piercy, 2009). In this regard BMW has positioned the brand as the lone automobile that offers both luxury and performance. Its German legacy and reliance on designs, along with a clever marketing strategy, BMW has been able to achieve a point of difference on performance and a point of parity on luxury.

· Brand judgements/attitudes

This section emphasises customer’s personal evaluations and opinions of BMW. Judgements develop from performance and imagery associations and are focused on personal opinions and evaluations like perceived quality of the brand, credibility, consideration and superiority. Feelings, on the other hand, are the emotional responses and reactions to the brand like social approval, self-respect, excitement, fun. It is vital to get a legitimate positive reaction in the buyer mind as far as judgment and emotions.

· Brand resonance

Brand resonance is characterised by the strong connections customers have with BMW. Brands with strong resonance will benefit from increased customer loyalty, and decreased vulnerability to competitive marketing actions. The questions were tailored to determine the extent of brand loyalty possessed by the respondents. However, the automobile market in general has very low customer loyalty, even when satisfaction with a particular brand is high! This explains why that although 75% of respondents answered Yes to letting others know they own a BMW, only 15% answered ‘yes’ to feeling a connection with BMW as a company.

· Main findings

• reasons for gap (desired vs existing positioning),
• what are the main drivers of equity

BMW’s premium price is meant to guarantee the consumer a high level of quality engineering, which can display status or success in a visible manner for social approval. The car’s driving ability combined with its looks and advertised image distinguishes BMW from its competition, as reaffirmed by the results from the survey. It is positioned to attract consumers interested in more than an ordinary car for their money. The survey results indicate BMW to be strongly positioned. BMW produces models targeting the singles market as well as models for families. The survey data indicates the attributes relating to associations with the singles market to be far stronger than those focused on the family market.

Bibliography

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1.1 Industry of BMW

BMW is a one of the leading luxury carmakers in the European automobile industry. In this automobile industry. BMW faces huge competition from its competitors who are Audi, Honda, Volkswagen, Porsche and etc. BMW Group also provides premium financial and mobility services with the help of its three brands, BMW, MINI and Rolls-Royce. As a global company, the BMW Group operates 30 production and assembly facilities in 14 countries and has a global sales network in more than 140 countries. In the era of modern, BMW is now focusing on the digitalisation of production. Digitalisation in production, also referred to as Industry 4.0, opens up new opportunities for the entire BMW Group production system – enabling fulfilment of individual customer wishes and enhancing the flexibility and quality of production processes. Modernisation also benefits our associates over the long term.

1.2 History, Achievement & Future of BMW

Bavarian Motor Works or known as BMW is a German automobile manufacturer founded in March 1916 by Camillo Castiglioni, Franz Josef Popp and Karl Rapp . BMW is headquartered in Munich, Germany.BMW is one of the top industries in the world for multi kind finest motor manufacturers . BMW is a German motor, motorbike and appliance manufacturers that have been widely trade since 1969. In 1928, the first car of BMW was built under license. The company’s slogan in English is “The Ultimate Driving Machine” and Sheer Driving Pleasure”. The original German slogan is “fraud am Fahren,” which translates to “joy in Driving” in English. According to the Chairman of Board of Management of BMW AG, Harald Krüger , their vision is that “ To be the most successful and sustainable premium provider of individual mobility.” and the mission is “ To become the world’s most successful premium manufacturer in the industry.” BMW is known for its performance and luxury vehicles while it is also own and make the tiny product.

In 2018, BMW Group’s global revenue stood at roughly 97.5 billion euros. The German vehicle manufacturer sells vehicles under the BMW, Rolls-Royce, and MINI brands and was among the leading luxury car brands worldwide in 2018. Following the financial disaster of 2008-2009, BMW recovered rather quickly, surpassing pre-crash revenue and the earning before interest and tax (EBIT) by 2010.

As in achievement, in 2018, the BMW Group has achieved its eighth consecutive annual sales record with a total of 2,490,664 (+1.1%) BMW, MINI and Rolls-Royce delivered around the world in 2018. Best-ever figures were achieved by both BMW and Rolls-Royce, while the company’s portfolio of electrified BMW and MINI vehicles grew sales by 38.4% compared with the previous year. This sales result reconfirms the BMW Group’s position as the world’s number one premium automotive manufacturer. BMW can look back on a highly successful 2018 yielding an impressive haul of awards and accolades. Over the course of the past year, vehicles from BMW have managed to win over not just automotive journalists and experts from around the world, but also the readers of motoring magazines, market researchers and IT insiders. What’s more interesting is the the award winners distinguished themselves in areas ranging from product quality and design to technical innovation, intelligent connectivity and sustainability.

With a century of production to their name, the future of automotive design holds interesting prospects for BMW. Customers have shown interests and demanding in electric mobility and other sustainable technologies is creating a complex new chapter in the company’s history. Focus these days is on increased efficiency and decreased carbon footprint in the product lifecycle, including recycled materials, lightweight construction, and the continued development of bivalent hydrogen/gasoline engines. From the innovative IV aircraft engine to the hydrogen-based car of the future, things have certainly come a long way.

2.0 External Environment of BMW

A business organization contains of a group of people or individuals who are targeted towards some common commercial goals. The business organizations operate in an external environment, therefore, the external environmental factors impact on the operations of the business organizations. However, these external factors cannot be controlled by the business organizations. They need to adapt themselves according to the external environment. In addition to it, when beginning a new business venture in a different location, the organization needs to identify the external factors and its impact on the business operations. If the external factors do not align with the goals or the vision of the organization, the business venture can remain unfruitful (Thompson & Martin, 2010). External environment analysis is a strategic tool which assists the organization in forming strategies to curb the market competition. In this regard, the current report will examine the external environment of BMW.

2.1 Mega Environment

The term ‘mega environment’ refers to the external environment that reflects conditions and trends in the society that an organisation operates within. There are five major elements to the mega environment which is technological, economic, legal-political, sociocultural, environmental and international. These elements are often external to the span of control of the organisation and as such are often unable to be influenced directly (Bartol et al, 2003). In this report, 2 out of the 5 major elements will be discussed, that is the environmental and sociocultural factor.

2.2 Environmental Factor

With increasing awareness of global phenomenon, consumers worry about the health of the planet and two major impactful problems are the CO2 emissions and fuel-usage by cars. This affects the change in demand for a different product line and new direction of products. In BMW’s existing markets, environmental concern plays an important role of living up to emission standards. BMW observed the changing trend of consumer’s choice and support for “green” products, and therefore responded by increasing its focus on manufacturing more fuel-efficient automobiles. According to Walsh (2012), BMW achieved its lead on the Dow Jones sustainability index and is working hard to stay ahead of sustainability in creating innovative solutions.

How environmental factor influences the decision making and operations of BMW? BMW decides to lower the emissions from vehicle use with efficiency technologies and solutions for pollutant reduction. In their conventional drive vehicles, they currently achieve the most effective impact on lowering CO2 and pollutant emissions through their efficiency technologies and through specific solutions for pollutant reduction. A reduction in local emissions of nitrogen oxide (NOx) in particular is needed to improve urban air quality. All diesel models of the BMW Group have been fitted with a highly effective combination of a NOx storage catalytic converter (NSC) and a SCR system (SCR, Selective Catalytic Reduction) with urea injection (AdBlue) since mid-2018 (except for MINI 3-door cars, 5-door cars and convertible models). The larger MINI diesel models also use these technologies. In terms of climate protection, reducing global CO2 emissions is imperative. Since 2007, their Efficient Dynamics projects have helped them integrate efficiency technologies in their vehicles, in accordance with the specific requirements of individual models, engines and the respective markets.

Moreover, BMW has attached into the development and distribution of hybrid car models. These cars use less fuel than the non-hybrid models. On top of this, the BMW Group is also introducing more hybrid and electric model options to the audiences. From the very beginning of the BMW I series project, they have pursued the goal of reducing the emissions of CO2 and other pollutants throughout the entire life cycle of our electrified vehicles. To this end, they rely on light construction, renewable resources and particularly resource-efficient and environmentally friendly production processes.

2.3 Sociocultural Factor

The sociocultural element focuses on the attitudes, norms, values, beliefs and behaviours of the demographic region in which an organisation operates (Bartol et al, 2003). The culture in which the countries they operate can impact on the business operations of the company. The culture of the geographical location affects the preference and the choice of the consumers. The culture of the country also impacts on the attitude towards working, education, training and ethics of the people (Thompson & Martin, 2010). All countries have culture that are unique to the country.

This means BMW Group must adjust products and marketing to fit the people it sells to. This requires adaptation to each market, using a one-size fit all approach won’t yield any results. BMW has manufacturing companies all over the world including United States of America, China, India, and Austria. The company chooses the location based on the heavy research and development. This requires not only understanding who the consumers are and why they buy, but also the point of view from political and economic landscape.

How BMW manages the changes lead by this sociocultural factor? BMW Group decided they need a platform to understand the cultural difference of the world and that platform is through social media.BMW has social media pages on most of the major platforms. On Facebook it has over 13 million followers and posts daily updates and entertaining images to provoke interest from followers. Twitter is where the company often responds to customer inquiries, suggestion, and complaints. Although it doesn’t seem to have a dedicated customer service section to help people on a consistent time, but someone do respond to followers when necessary. BMW needed to attract their customers by showing more of their dazzling pictures of their products and this is where Instagram comes in.Instagram is an easy choice for BMW since Instagram is none other than a photo and video sharing social networking. BMW boasts nearly 20 million followers and a feed of bright photos of their cars in various luxury locations. It’s a simple way to showcase BMW’s grand lifestyle to the younger audiences that frequent Instagram. However, due to the cultural difference, BMW will now be able to understand the preference and choice of the customers through social media.

3.0 Task Environment Factors

Task environment of an organization is the environment which directly affects the organization from reaching business goals. For example of task environment are suppliers, distributors, customers, stock markets and competitors which are directly affecting the organization from achieving its goals.

3.1 Competitors

There are many competitors in the automobile industry that are competing with BMW. For example, Audi, Mercedes Benz, Volkswagen and more. Competitions between BMW and the other companies are very fierce which will cause a lot of problems in terms of customers raiding. This factor could dictate their organizations strategies as it is very hard to maintain their customers from other companies, and this has caused them cutting the prices for their products. BMW once has cut prices for approximately 4,500 spare parts used in BMW by 10 to 30 percent. BMW has also been making efforts to increase efficiency and slash turnover costs like purchasing more locally made spare parts and expanding its logistics network to cut prices of the vehicles. This is also to ensure that the car owners do not need to pay a very costly maintenance fees and feels that they are benefiting from it.

These changes can bring some advantages for BMW group. One of the major advantages is relevance to market. They have maintained to be a brand that is hard to match through effective designing and modeling of the vehicles. They have also ensured that their vehicles have a diversified portfolio including luxury Sedans, Sport cars and SUVs. The manner in which the likes of BMW 3 series, BMW 5 series, BMW 7 series, BMW X3, BMW X5 and BMW X6 have been availed in the market, has always ensured that the consumers are challenged to advance with each model. This way, BMW has maintained its relevance in the market.

The other advantage is their ability to satisfy elite. In the perception of people in the market, BMW are very expensive and only belongs to rich and affluent owners. Most of the people believed or viewed that owning a BMW car is an achievement or a social status. This way though, those who can afford the cars will have a demand for every BMW model was released to the market because they will be thinking that buying a new released BMW model is like having a higher status over people who cannot afford it. And those who cannot afford it will have to work hard until they can.

3.2 Suppliers

Suppliers is one of the most important factors in a company’s success. There were many suppliers that had made partner with BMW like Brembo which supplies brake calipers, Peiker Acustic GmbH & Co who supply high speed mobile internet for cars which also made BMW to became the first ever automaker vehicles and other more industry that supply important parts that made BMW. BMW industry is very stable in their stock supplying as they always strengthen their relationship with their suppliers. The main part of having suppliers is because suppliers provide services and maintenance agreement on the item or parts they provide. Suppliers also providing something that the industry does not or cannot process in house like printed marketing material.

By having a strong relationship with suppliers can bring some advantages to the industry. The first advantage is cost reduced, usually when setting up deals with new suppliers will be very costly for the item the industry request. But with a long term of stable mutual beneficial relationship with the suppliers BMW industry can get better offers from the suppliers which able to reduce the cost on vehicles making. That’s not all, having a strong relationship with suppliers also reduced the availability problems and quality issues for the item suppliers were providing which will also give a better product for the customers.

As the relationship with the suppliers develops, the communication between BMW industry with the suppliers will be improved as well. The second advantage is the increase in efficiency. When the suppliers get more understanding on which industry that they are doing business with, they can make a better schedule on item delivery. This will make BMW industry to get their needs more effectively and reduce in supply delaying. This will allow the flow of operations in BMW industry to improve greatly and able to deliver the product to customers efficiently.

4.0 Conclusion

The external environmental analysis can let company understanding the sources of competitive pressure and the impact of these pressures. BMW industry becomes one of the best industries in the world by solving difficulties and decision making. BMW Group always focuses on the future and develops innovative ideas and solution, so they create a project which is ‘THE NEXT 100 YEARS’. BMW aims to make this fascinating driving experience even more intense in the future. The driver is in constant communication with the vehicle in an intuitive and natural way. BMW Group is developing more intelligent cars such as intelligent personal assistant, it can be controlled by voice command and supports you wherever you go.

5.0 References

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