Category: BMW

Introduction

BMW Company is one of the companies that have wide market for their products in the world. This has been caused by the high quality of their products that surpasses that of other competitors. The company employs unique methods in the production and designing of the vehicles. This has made the products of this company different from other products made by various companies. Some of the techniques that are used to make their products appear unique and attracting include branding of products, production of vehicles with low consumption capacity, high level of technology in the production among others. This essay discusses how BMW Company manufactures products that are differentiated from other competitors.

Branding

BMW Company brands its products in a unique way that is different from their competitors like Toyota Company and Nissan Company. That is, all the names of the products begin with the name BMW, which attracts the customers. For instance, some of the brands used on the products of BMW include BMW 3Series touring, BMW 3Series Gran Turismo, BMW 4Series among others. These brands are only found in BMW Company hence differentiating its products. The customers do not hesitate when buying BMW company products.

Advanced Technology in the Production

BMW Company employs modern technology in the production of its products. The modern technology ensures high quality of products that differentiates the products from other competitors. For instance, the use of Dynamic Traction Control (DTC) is a modern technology, which enables the wheels of the vehicles to slip and controls the traction of the vehicle hence creating room for driving styles with high stability of the vehicles. A little spin of a car cannot cause the falling of the car because of this modern technology. Moreover, Dynamic Stability Control (DSC) is another modern technology that works together with DTC. Its main role is to check on the engine output and prevent the engine from spinning. Equally, the wheels are made in such a way that when the vehicle moves in a steep slope or on the surface containing ice, the spinning of the wheels is necessary to improve the traction. DTC has the ability to be activated when required and deactivated when not in use. For this reason, BMW vehicles are the most preferred for traveling in the countries with snow or steep slopes. BMW Company manufactures most of the vehicles used for sporting activities because their vehicles are able to negotiate sharp corners. Therefore, BMW Company uses modern technology that differentiates its products from the products of their competitors.

Safety

Customers that use BMW vehicles have reported high level of safety. Most of the vehicles have been made in such a way that little shocks are absorbed to prevent injuries. BMW Company has developed a safety mode in various models like BMW i8 and others. These vehicles have high-strength carbon passenger cell that not only protects the passengers from injuries but also protects the vehicle batteries from high voltage that may be caused by the external influences. Another mode of safety employed in BMW vehicle is Innovative BMW Connected Driver Assistance systems that assist the drivers to be alert on the changes that may take place around them. In case there is any problem in the vehicle, many interconnected systems in the vehicle enable the drivers to change accordingly. This mode of safety is only found in the BMW models. This safety in the vehicles has made the products from BMW Company unique and attractive.

Conclusion

In conclusion, BMW Company is the leading company in the production of quality products with unique features. They employ modern technology that designs the vehicles in a unique way different from the products of other companies. The branding and level of safeness of the products also differentiates their products.

BMW car design process

BMW designers regard their job as a very creative process. They believe in the significance that beauty and style have for modern people, and they attempt to create automobiles that can provide unforgettable moments and inspiration for their customers. They think that their works “are not just the end of the creative process, but the beginning. The beginning of adventures and memories… The beginning of passion, dedication, love. The beginning of an emotional experience”.

Concept generation

The car design process in BMW begins with a pencil, a piece of paper, and a designer’s inspiration. Even though modern technologies are used in the process of BMW design, the designers insist on first expressing the idea in real life, because they believe that the spontaneity of sketching is more suitable for a creative process like this one. In their opinion, it is easier to express feelings and to give a concept its life with the help of a real pencil. One of the most important parameters for designers is high-quality aesthetics.

Screening

Every concept of a BMW car is first expressed in a two-dimensional view. Computer programs are used in the process to make sure that all the dimensions are perfect. This allows the designers to verify and control all the lines the sketch consists of along with the three dimensions created by them. The result of the screening is the descriptions of these lines, the information that will be further used in the process of modeling.

Preliminary design

The preliminary design is carried out in two dimensions with the help of sketches and computer programs. Interior design research processes are performed simultaneously with the creation of the sketch. According to BMW designers, the most important detail of an interior design is the materials chosen. They are supposed to suit the part of the car they are used for and match each other. Apart from that, they must be agreeable to the touch since people are going to interact with these materials. Finally, much consideration is given to the aesthetic value of the materials.

Evaluation and improvement

The material that is used to create a model in three dimensions is clay. BMW designers believe that it is perfect for modeling since the amount of material can be easily changed, the lines can be replaced, revised, perfected. The craftsmanship is crucial for this stage of development, which often includes modifying and improving the original design of the car. Although the designers use computer programs for the process in order to verify that every line is in the right place, they believe that the main way of bringing perfection into the design is through their own hands and the clay.

Prototyping and final design

According to the designers, clay “is exactly the material that can bring perfection to our design”. When every surface is modeled with the help of clay, the perfection the designers strive for is achieved and they are certain that the resulting car design is final, silver foil is applied on top of it in order to check how the car looks when painted. It also allows the designers to see how the surface changes from light to shadow.

BMW designers regard their creations as works of art, and they keep improving their models until they believe that there is nothing left to add or take away.

Reference

Roberta S. Russell and Bernard W. Taylor (2008). Operations Management 4th Ed.

Summary of Sharpe’s BMW

Tom Dunn worked as a service manager at a BMW dealership in Michigan known as Sharpe’s BMW. He had been recently appointed after the resignation of the former service manager. He noted that the revenues and customer service index (CSI) ratings of the service department had decreased over time.

Bob Deshane who was the acting service director of the dealership proposed a new bonus plan to George Sharpe. He believed that the new bonus plan would correct the department’s problems. He proposed that the service technicians should be compensated differently. Sharpe approved the plan and Deshane handed it to Dunn for implementation.

The service departments are essential to the revenue flow in all auto dealerships. The service department in Sharpe’s BMW had grown amply in a span of three years. The growth was brought about mainly by the higher sales of vehicles to the locals. The company had also been competing aggressively with other suppliers.

There were two kinds of jobs offered in the service department in Sharpe’s BMW. These were the customer pay and warranty pay. The customer pay service took place when a customer paid for car repairs after the warranty period had expired. The warranty pay service on the other hand took place when BMW paid for repairs of cars still covered by the warranty.

The payments given to the service technicians depended on which pay they were working on at a particular time. After the CSI score and revenue had dropped Deshane carried out an investigation and found out that the problem lay in the service department. He realized that there was a difference in the payments given to the service technicians. The customer pay job paid the service technicians more than the warranty job. However the CSI score for the dealership was based on the value of the warranty job.

The gap between the warranty pay and customer pay made the technicians prefer the aftermarket repair stores. Technicians were being paid hourly wage fees at the aftermarket repair stores. NADA and individual dealerships have failed to offer a solution to this crisis.

Deshane’s new plan proposed a monthly bonus to the technicians who would score a CSI rating of 91% and above. This plan enabled the technician’s efficiency to be assessed regularly. By implementing the plan the dealership would also communicate to its staff that it was commitment to the improvement of the CSI ratings.

Dunn personally felt that the bonus would have insignificant economic value to the technicians. He wondered how the bonus plan would be implemented. He also felt that the technicians at Sharpe’s BMW received extensive training which was very expensive. Dunn knew that a successful implementation of the bonus plan would make a difference in his career and the automobile industry.

Analysis of Sharpe’s BMW

Sharpe’s BMW had amply increased in size over three years due to their dedication to customers. They provided pick-up and drop-off services to the people who purchased vehicles from them. They also extended these services to customers who lived far away. Sharpe’s BMW offered the virtual service section experience to several of its customers. This service enabled several customers to transact without going inside the service department. This feature acted as an important device in luring in customers from competitors.

On average the service department returns covered 82% of the dealership’s operating costs. The service technicians played a vital role in the dealerships. I agree that the difference between the customer pay and warranty pay should be addressed by NADA and the separate dealerships.

Dealerships can gain 100% return from the service department. If the questions on the CSI survey were revised to focus more on the performance of service technicians the CSI ratings would rise. The BMW’s customers would be able to rate the service technicians they meet at the dealership. BMW will be able to monitor the performance of the technicians which this will automatically increase the CSI score.

BMW can introduce a system that will make the service technicians more committed to the dealership. It is important to do so since the firm invest heavily in their training. The system should also maximize on the technician’s productivity. Deshane’s new plan should be reviewed so that the monthly bonus amount can be raised. Higher monthly bonuses will definitely motivate the service technicians to produce quality work. This will guarantee an increase in the CSI scores and a decrease in the operational costs at the dealership.

Dunn should advocate for the monthly bonuses to be increased for the successful implementation of the new plan. Higher monthly bonuses will also make it easier for Dunn to introduce changes to the dealership. He should come up with an effective program to implement the proposed plan. Dunn will leave an impact in both the dealership and automobile industry if the new plan is successful.

Case study questions

Pros and cons of the suggested monthly bonus plan

The proposed monthly bonus plan is good for both the service technicians and dealership. The bonus plan is an indication that the dealership recognizes the efforts of the technicians. The company should compensate the technicians by offering them the monthly bonus in addition to appreciating them verbally.

This bonus will motivate the technicians to produce quality work. This will guarantee an increase in the CSI scores. Higher CSI scores will lift the rank of the dealership. A dealership is recognized for quality work and exceptional service. The operational costs at the dealership will then be fully covered by the higher CSI scores.

There are several disadvantages of the proposed monthly bonus. It is of insignificant economic value to the service technicians. A technician can earn an equal amount by working quickly in the warranty pay job. It will therefore be deemed as non-beneficial by some of them. It could lead to a decrease in their productivity.

The monthly bonus plan is new in Sharpe’s BMW and foreign in the automobile industry. Dunn will face a big challenge when he introduces the proposed monthly bonus. Some of the service technicians may have a hard time adjusting to the new plan. Others may feel that their efforts are not being compensated fairly.

It is likely that there may be service technicians who will resent the plan and even engage in a strike. The productivity of the staff may decrease leading to a drop in the CSI score. This will reflect negatively on Dunn as the service manager.

Implementation plan

Dunn realized that good service technicians were hard to recruit and even retain. Good service technicians can quit today and get another good job the same day. Technicians lack discipline and have no loyalty to their employers. Dunn therefore needs an effective implementation plan of the monthly bonus. He should communicate the implementation of his bonus plan to his service technicians.

He should introduce the proposed bonus plan after having a clear measurement system of what success means to the dealership. The measurements should be posted on a notice board for all to see. There must be transparency in rating the technicians. Dunn should have a program allowing employees to suggest and implement changes. He should be flexible in changing the bonus plan according to the needs and targets of the company as time goes by.

BMW: Historical Background

Being one of the greatest automobile manufacturers in the world, BMW’s existing reputation and fame can be mostly connected with models produced in the last two decades. It has a history of 90 years in the field of production of motor vehicles and achieved numerous achievements by its efforts. This way BMW has established a unique and incomparable status in the automobile world. BMW, as everyone knows, got its popularity due to its incomparable quality which is distinct and best among other automobiles. The level of comfort that it provides is very high.

The Origin

In 1913, Mr. Karl Friedrich Rapp, a Bavarian, a renowned engineer in a German aircraft company, formed a company in a suburb of Munich called Rapp Motoren Werke. The company was exclusively established for making airplane engines for which it got specialization. But Rapp noticed these engines problematic as they suffered from excessive vibration. Mr. Gustav Otto who was also an airplane specialist, set up his own establishment nearby called Gustav Flugmaschinefabrik and started building small aircraft.

The company flourished and expanded very quickly. But Rapp, who failed to finish the contract of building V12 Aero engines under license with Austro-Daimler due to faulty engines, resigned from the company due to some financial problems. Consequent to his resignation Franz Josef Popp and Max Friz, two Austrians, took over the company. In the same year, Rapp Motoren Werke and Gustav Flugmaschinefabrik merged with each other and formed Bayersiche Flugzeungwerke. Shortly the merged firm was renamed as Bayersiche Motoren Werke (Bavarian Motor Works), or BMW, which is widely popular today.

In 1917, BMW developed its first aircraft engine with 6 cylinders called Type IIIa But in the same year the Treaty of Versailles was signed that prohibited BMW from manufacturing aircraft engines. As a result that the company switched the production over to air brakes for railway cars. Again BMW started building aircraft engines in 1922.

(The origin of the BMW logo –fact and fiction – Page-41).

BMW: Maker of Motorcycles

The company manufactured its first BMW motorcycle, R 32, in 1923. It has a power of 8.5 horsepower at 3300 rpm using a flat-twin engine transversely mounted in a double-tubular frame.

BMW Cars Pre-War Arrivals

The year 1928 was important for BMW’s automobile history as in that year it developed an opened roof, 743cc 4 cylinder 15 HP car, Dixi 3/15 PS, at the Eisenbach factory. The successor to the Dixi, BMW AM 4 called BMW’s first ‘real’ car was built entirely in-house by BMW in 1932. It was equipped with a 782cc 4 cylinder unit with suspended valves and a double chain driving the camshafts, producing 20 horsepower at 3500 rpm give a 50 mph top speed. The next year the first BMW inline-six-cylinder power unit called 303 was developed that used twin-kidney shaped radiator grilles, a welded tubular steel frame, independent front suspension, and rack and pinion steering, and it was a touchstone in technological achievements.

BMW Cars Post-War Models

Unfortunately, the company’s success came to an end with the Second World War as the automobile manufacturing factories had been dismantled or demolished. It got a three-year ban from Allies on production rockets and aircraft engines. The V8 equipped 501 luxury sedan was the first post-war model was delivered in 1951. But the after-war devastation adversely affected the sale of the 501. The next era started in 1962 with the inception of the model 1500, which is considered the predecessor of today’s BMW. It has a remarkable and striking design with an excellent suspension.

The company re-entered the field of aircraft engine manufacturing business In 1990 with the combined efforts with Rolls Royce thereby forming BMW Rolls-Royce GmbH. In 1998, BMW bought Rolls Royce’s name and logo from Volkswagen. In 2000 after suffering from heavy losses the company sold Rover Group PLC which was acquired in 1994.

Modern BMWs

At present, the Z3, Z8 along with all the 3, 5, 7, and Motorsport series models are reigning on the road across the world and got their unique recognition as excellent automobiles with respect to their style, performance, and technological advancements. BMW outsold Mercedes in Europe in the year 1992. Today you can find a number of different exclusive models like X3 X5 X6 Z4 and M. It is anticipated that BMW will continue to deliver great cars which would be identified for its performance, style, and best quality in the highly competitive world.

Audi’s History

AUDI Automobile makers history comprising of the amalgamation of four different companies viz; Audi, DKW, Horch, and Wanderer. Its history has seen considerable changes from a century back of its tradition of building cars and motorcycles. The brands were basically from Saxony – Wanderer in Chemnitz-Siegmar, DKW in Zschopau, and Audi and Horch in Zwickau, all of which contributed a significant role to the upliftment of the automotive industry in Germany.

In 1932 the above branded were merged and Auto Union AG was formed. On a comprehensive analysis, it is seen as the second-largest motor vehicle company in the world. Consequent to the Second World War, Auto Union AG’s production plant in Saxony was destroyed and dismantled by Soviet forces. After that, some of the top management officials assembled at Bavaria to have a discussion to form a new company. As a result, a company known as Auto Union GmbH was established in 1949 with a brand sign of the four rings.

In 1969 Audi NSU Auto Union AG was formed by merging two companies Auto Union GmbH and NSU. Soon after merging Audi NSU developed an entirely new car, the Audi 80 which was voted as ‘Car of the Year 1969’ in four countries. Later Audi 100 of similar series was launched in 1972. The last model of this ‘building block’ series, the Audi 50 was developed with weight-saving design and tailgate, modern overhead camshaft engines, and front-wheel drive and got international acclaim. In the second generation, Audi 100 the initiative of using 5 cylinder petrol engine was introduced in 1976. After four years the Audi 200 was launched.

In December 1980, a unique car with four-wheel drive technology, the Audi Quattro Coupe was built. The word Quattro is a system exclusively developed and patented by Audi that transfers the car’s power across every wheel, which results in great stability, handling, lower tire wear, better traction, and thereby better safety in different road conditions. It gained special recognition from the entire world for its power to pass the steepest roads without having any traction-related problems. The quality of traction less drive of Audi Quattro is maintained up until now.

The merged company was later renamed AUDI AG in 1985 and its head office was shifted to Ingolstadt. The four rings emblem was unchanged and remain as its brand symbol.

Due to their two great innovations regarding fully galvanized, rust-resistant bodies and the Procon-ten system in 1986 Audi secured a powerful position in the world market. The anti-corrosion system of their car provides a guarantee for six years. The second innovation, Procon-ten, was an early precursor of airbag passenger safety technology, and considerably minimized the risk of an accident by hitting the driver’s head/chest at the steering wheel.

Due to all of these innovations, Audi won many international recognitions and awards like German Industry’s Innovation Prize. As the best example of its performance to cost ratio regarding petrol consumption a modified Audi 100 TDI drove 4814 km by crossing nine countries in Europe by consuming only one tank of petrol.

In this modern world, Audi has introduced many luxurious models like Audi Q5, A3, A4, A5, R8, TT lounge, Q7 Globe. The difference in ideas and technology provides a particular category of customers to Audi. With the continuous exploration of technological research and innovations in the automobile field, its business arena will be extended across the world.

BMW – Environmental contribution

In terms of efforts to environmental sustainability and contribution, the company is doing a very credible job. BMW had already incorporated the concept of environmental protection way back in 1970 itself. As a part of its policy, the company expects each and every employee to act in the interest of the environment. The company has integrated the concept of sustainable development into the company strategy as well as culture.

According to the BMW Group website, the company conforms to the ten principles of the Global Compact and the Cleaner Production Declaration of the United Nations Environment Program (UNEP), agreements of the International Labor Organization (ILO) and the OECD guidelines for multinational companies, and the Business Charter for Sustainable Development of the International Chamber of Commerce (ICC).

The company also boldly states that all these efforts are intended as ways to building the image of the company along with a contribution towards sustainability. It does not want its efforts to be seen as an act of philanthropy and patronage. Conscious efforts are being made towards “the most efficient and conservation-oriented deployment of resources” across all its production facilities and markets worldwide. The company claims that its resource deployment is five times more efficient than the German national average. (Achievements, Strategy and organization, Page 12, Sustainability Management).

Another feature of its policy is that instead of relying on rigid rules of implementation, the company relies more on the knowledge and responsibility of its nearly 106,000 employees. The company also views all its stakeholders seriously and engages in constant interaction with them. The group website has produced a graphical representation of its sustainability policies as well as the relationships between its stakeholders, both of which are reproduced in the appendix as figures one and two.

Moreover, stakeholder perception of BMW towards its efforts at sustainability is also given in Figure 3. The figure shows that nearly 71% of stakeholders view its commitment as ranging from good to very good (35% very good and 36% good). The company has ISO EMAS and ISO 1400 environmental management system certification across all its plants and CKD facilities worldwide. The company also puts a lot of resources into producing low emission automobiles and bikes and also fuel-efficient and low pollution hybrid cars.

BMW- Contribution towards the economy

BMW automobiles are renowned for their quality and also for the high prices of their models. Due to this commitment, the company employs only the best workers and pays them accordingly. This is true for all its plants whether in Germany or other places. It contribution to the economy can be illustrated by its investment in South Carolina. The company invested nearly 1.9 billion USD for its South Carolina plant providing jobs for nearly 4000 workers.

This facility indirectly provides an additional 16,000 jobs with wages to the tune of nearly 700 million USD. It has had a employment multiplier effect of 3-9, meaning for every direct job in the plant, additional 3.9 jobs are created elsewhere in support and other related activities. BMW pays nearly 300 million in wages (2001 figures) in its South Carolina plant which is spent by the employees mainly in the local establishments and shops which will in turn boost up the economy. This feature can be seen in varying levels for any large investments made by huge organizations. This benefit has accrued to all the places where the company has plants boosting the economy of the region by varying degrees depending on the volume of investment.

BMW – Contribution towards product lines

BMW has high commitment to quality which can be seen across all its product lines. As mentioned earlier its efficient deployment of resources has not resulted in a compromise of the quality for their vehicles. The Company’s commitment to quality cars has also reflected in its efforts to reduce environmental pollution. For example, their production facility in Leipzig, Germany has an ultramodern sophisticated system that can handle up to five different models at a time.

Moreover, a new production process can be added to an exiting one without stoppage of work. Normal production lines are unable to do this and they have to stop work to start on a new process. The production process is also handled to customize vehicles within the assembly line itself. Workers stationed at required points in the line enables them to do this, thereby reducing wastage of time and resources.

Their concept of BMW EfficientDynamics has equipped nearly one million of their cars with fuel saving technology as standard. The company has also manufactures and markets highly efficient hybrid cars using multiple drive trains and incorporating petrol/diesel engines with electric motors. Some of the company’s outside suppliers are situated within the plant itself, again eliminating wastage of resources like high inventory or scarcity of inventory.

Audi – Environmental contribution

Like BMW, Audi is also an international brand renowned for its commitment towards quality. The company has also a high commitment towards production of low emission vehicles. It has been successful in this regard by taking into consideration the fact that the company sports the European Union Emblem for environment protection as a trademark. (Awarded by the European Union, Commitment to the environment, Audi).

The web site adds that “Audi was the first car manufacturer in the premium segment to have its plants – Neckarsulm in 1995 and Ingolstadt in 1997 – validated in accordance with the European Union Eco-Audit and Management Scheme”. The company follows its policy of environment protection in the following three ways namely vehicle technology, production technology and customer/traffic conditions. The company focuses on production of light weight bodies using aluminium in order to reduce emissions. The company also incorporates alternate fuel technologies, principles of dynamics and electronic assistance systems for many of its models.

Audi also produces a series of models named efficiency models like A3 1.9 TDI e, A4 1.9 TDI e, and the 2.0 TFSI e. The company has since the last nine years installed a plant that can generate steam to produce electricity. This has resulted in lower consumption of natural gas and CO2 emissions by about 25%. Audi has a team of specialists labelled energy officers whose task is to take periodic checks on machinery for any wastages or leakages. Optimising logistics through IT is also a step taken by the company to reduce emissions by transportation of cars and spare parts. Taking care to purchase energy efficient machinery for manufacturing and recycling of up to 95% of waste materials (100% for metals) are other ways by which Audi plays its part in environmental protection.

Audi – Contribution towards society

The investments made by Audi will also have some of the benefits that were enjoyed by the society due to the investment made by BMW. So a similar comparison is not required here. But, Audi has a different way to contributing to society. The company usually donates its top models to non-profit foundations which will use it or auction it to use the money from its proceedings. Audi donated a TT Coupe to the Cheetah Conservation Fund in the year 2005.

In a more recent happening, the company donated a Audi A5 Sports coupe to the G & OP Foundation for Cancer Research which was subsequently auctioned and the proceeds used for research purposes. The previous year a R8 Sports car was donated to the Elton John Aids Foundation which was also auctioned for 210,000 USD. Audi has formulated a profit sharing plan with its employees. In the year 2007 a record amount of 81 million euros were distributed among its employees due to outstanding performance the previous year. This was almost four times of the amount paid in the previous year.

Audi – Contribution towards product lines

Like BMW Audi is also a technology intensive company that uses high levels of technology in the manufacture of its cars. The philosophy followed by Audi is reflected in the German phrase “Vorsprung durch Technik” which roughly translates to advancement through technology. This philosophy is adopted in developing new models as well as improving existing ones. Research has enabled the company to produce high performing, but fuel efficient engines. For example, the three liter TDI V6 diesel engine has a top speed of 137 miles has an efficiency of 33.5 mpg. New developments include the seven speed S Tronic dual clutch transmission and the Audi select drive select control system.

Legal forms of business

There are many legal forms of business that can be adopted to do business. They include the sole proprietorship, partnerships, companies, cooperatives etc. These type of business and the laws that govern them vary from country to country. For example, the four business forms that can be adopted usually in Germany are sole proprietorship, branch offices, partnerships and corporations. (Step one; Choosing the legal form, Invest in Germany).

A sole proprietorship is the easiest to form and conduct. It does not require too many legal and other regulations. The drawback is that the amount of capital that can be raised by this method is limited. This type of form is more suited for individuals who run small to medium sized organizations. The sole proprietorship in Germany must be registered with the local trade office. An entry in the commercial register is required only if annul sales exceeds EUR 250,000 and the profit is over EUR 25,000.

This form is again divided into Small business person and commercial business person (sales exceeding 250,00 EUR). A branch office is when a foreign company establishes its office in Germany. A branch office can be autonomous or dependent depending upon the level of head office control in the branch. Partnerships are when partners pool in their commercial and personal resources to form a business entity. There are many forms of partnerships with regard to liability of the partners.

This form is better than sole proprietorship in the sense that more capital can be raised and the existence of a team to run the business. But problems will arise in case of disagreements or if a partner wants to retire. There are four types in Germany namely Civil Law Partnership (GbR), General Commercial Partnerships (oHG), Limited Partnership (KG), Partnership Company (PartG) and Corporate Partnership (GmbH & Co. KG).

The final form is the corporation or companies. This form of business is complicated, but is useful for forming large companies that require huge capital. Another advantage is that companies can be formed with limited liability which is beneficial for its promoters and share holders in case the company business fails. Capital us usually raised though private investment of the promoters or from the public, both by issue of shares. Three types of corporations can be formed in Germany namely Limited Liability Company (GmbH), Stock Corporation (AG) and Partnership Limited by Shares (KGaA). Both BMW and Audi are stock corporations and have the words AG along with their names.

Comparative financial analysis between BMW and Audi Car Companies

BMW fundamentally caters to the premium car segment and is strategically positioned to meet future customer requirements, in fulfillment of international market demands for premium cars. It projects itself to be the No. 1 provider of premium automobile products, accessories and services, in order to maintain its market niche in this segment and desires to maintain this position in the long term by emphasizing on excellent safety, economy and design aspects while ensuring highest degree of comfort and riding benefits in its automobiles. However, Audi’s sports models are hot favourites in racing tracks; it has only recently come into the luxury car segment to offer competition to Mercedes Bentz or BMW.

How liquid are these organizations?

It is seen in terms of liquidity, Audi is far behind BMW in that while BMW’s cash position during 2007 has been € 2393 million during 2007, Audi’s has been around 7.9 billion during this year. Even in terms of net profits, while BMW recorded around €3134 Million during 2007, during this year Audi recorded over 2.7 Billion turnover. (Axel Strotbell: Members of the Board of Management: of Audi AG: P. 2: Finance and Organization: Speech at the 119^th Annual General Meeting.

Therefore it could be said that the liquidity position of BMW could be assessed as follows:

Current Assets/ Current Liabilities: for financial year 2007 = 32,378/33469 = 0.96

BMW Group: Group and sub-group balance sheet.

In the case of Audi Company, their liquidity could be seen as below:

Current Assets = 14,253, Current liabilities = 8,954

14,253/ 8954 = 1.59.

It is seen that while BMW’s current ratio is 0.96 that of Audi is higher at 1.59 times.

Therefore it could be safety said that Audi enjoys greater liquidity status than BMW.

Is the management generating adequate operating profits on the firm’s assets?

This could be analyzed by checking out the return on total assets of these two companies. The formula would be: Net income available to shareholders/ total assets

In the case of BMW, this is 3126/ 88,997 = 0.03

Again in the case of Audi, it could be seen as follows:

1654/22,578 = 0.07.

It is observed that Audi group makes lesser use of its assets than BMW, and is not generating adequate operating profits commensurating with its asset usage.

How are the firms financing their assets?

From a perusal of the financials of Audi, it could be seen that the company wishes to resource its assets and growth prospect entirely with its own internal resources and internal reserves, without resorting to any outside borrowings.

In the case of BMW it is seen that the underlying long-term objective of the Group’s internal management system is to increase the value of the BMW Group. The targets set for the Automobiles, Motorcycles and Financial Services segments all begin from this objective. Within the Automobiles and Motorcycles segments, this approach is implemented for specific product, process and structure-related projects.

In contrast, the Financial Services segment is primarily concerned with cash flows and risk positions resulting from its credit and lease portfolio. Therefore there is matching of assets with outputs and credit needed for its operational success, which is done through WACC techniques.

(BMW Group: Minimum rate of return derived from cost of capital)

Therefore it could reasonably be said that while BMW may be resorting to external debts and borrowings for asset accretion, Audi may be keener in investing internally created reserves and surpluses to finance capital projects. This is evident from the fact that the financial liabilities are to the tune of € 21,428 while current assets are € 32,378. (BMW Group: Group and sub-group Balance Sheets.)

What are the returns on investments (ROI) of each company?

For BMW, the ROI is as follows: Net income available for stockholders/ equity capital

3126 / 21,744 = 14.3 %

For Audi group the ROI is 18.6%, measures as a percentage of operating results after tax/average invested assets. (Management Report of the Audi group for 2007 fiscal year: P 141)

It is seen that the Audi group ROI is higher at 18.6% as compared to only 14.3% derived by BMW. Therefore, in terms of stakeholders returns and benefits being derived by stockholders from investments, Audi group has a better deal.

It would be unfair to judge a comparative rival business, especially in the automaker industry since a lot of factors impinge including the business milieu in which they operate and the global demand and acceptance of the kinds of cars they make catering to legal and statutory requirements of importing countries.

Financial aspects like import duties, excise duties, octroi, fuel charges and surcharges and plus the prevailing maintenance and resale value of the vehicle in its importing countries are also major factors. It has to be seen in the long term when brands cater to specialized individual requirements and changing trends in car designing, ownerships and performance criteria.

Appendix

Vision

The project that will be undertaken will enlarge the knowledge of the existing employees. The employees will be motivated and will be a source of competent and knowledgeable workforce guarantying Bavaria Motor Works (BMW) a steady flow of innovation and competency in handling global motor production.

Automobile production requires expertise and motivation to gain competitive advantage over competitors (Shatouri, Omar & Igusa, 2012). It is the vision of this project to develop a workforce that will be loyal to BMW. Dedicated workers will facilitate the company in its strategic plan to attain a competitive edge in the automobile industry.

Objectives

The objective of the proposed project is to develop a strategic human resource management concept that will facilitate the company to attain its corporate mission. The objective of BMW is to create an organizational culture that will facilitate the development of skills and loyalty within the employees. In order to attain this objective, the employees will be motivated through a variety of human resource programs.

The objective of the company will be assured by the creation of a defined pool of workforce that will meet the demands of customers. Additionally, the human resource function will ensure that the employees are not only financially endowed but also their career and development will have received a new lease.

Scope of project

The project consists of a variety of aspects. The motivation of employees is the main objective. It is important to acknowledge that motivating a huge workforce is a challenge. The project is a long-term strategy as it is geared towards the development of a pool of knowledge workers.

The targeted clients for this project include the upper class as well as middle class consumers of BMW products. Most of BMW adverts are aimed to reach these groups of individuals. In fact, BMW strongly feel that these clients are prone to buying most of its automobile products.

Key stakeholders

Automobile manufacturing has multiple stakeholders that need to be considered when implementing this project. The manufacturing begins with the designers. Typically, the designers are part of the company workforce. Automobile manufacturing involves teams that collaborate to produce a specific part. The relationship between the teams requires mutuality to be effective. The teams require flexibility and adaptability. Mostly, the teams are task-based and as a result, team authority is placed on each individual to accomplish the task assigned.

The supplier of the automobile is another stakeholder. Once the teams assemble the automobile, they hand it over to the supplier after the inspection of its functioning. The supplier is responsible for delivering the automobile to the user. The use is subsequently the third stakeholder. Once the automobile has been sold, the stakeholders such as public authorities and insurance companies emerge.

Roles and responsibilities of project team resource

The role of every team member is well defined. The manufacturing of automobiles requires skills and proficiency. In this respect, it will be imperative for every team member to execute his or her roles with precision. Team members are essential stakeholders in the development of automobiles. The supervisor will be charged with overseeing the accomplishment of tasks.

The HR will be the central player in ensuring the success of the initiative. The function will liaise with the finance department to facilitate the implementation of the project. The department will develop a training program that will not interfere with production.

Cost and time estimates and allocation of resources

In this project, the purchase of computers will be the most costly expense. The company does not need to build a computer laboratory. One of the rooms in the conference complex will be used for this purpose. Twenty computers will be purchased and installed in the room.

All these will cost $30,000. The computers will be customized for use in the automobile industry. Software will be purchased and installed. This will cost the company $20,000. The company will require training manuals and stationery to facilitate training. Every employee will be handed a hardcopy of the training manual. Additionally, they will be availed with a softcopy of the same for mobility purposes.

The computer will include a server that will be remotely accessible through the internet. The initial training will require the company to hire external service. Currently, the company does not have a trainer for the proposed initiative. The company will eventually employ an expert to train the employees upon the success of the pilot project.

The success of the initiative in other companies is the driving force for the project. Competitors have realized the importance of integrating the employees in propelling companies to higher performance levels. The initiative requires the development of technology-based culture.

The company must commit substantial amount of money to fund the project. The human resource department will be an essential resource towards the realization of the objective. The department will facilitate the creation of knowledge workers for the long-term benefits of the company. Since the project involves workers, the human resource manager will develop a schedule for training attendance. The production activities will not be significantly impacted by the absence of some of the individuals.

Major project milestones, delivery dates and criticality of milestones

Any project requires being measurable in terms of delivery of the objectives. Investing in the project will cost the company a substantial amount of money. Naturally, the shareholders will require the realization of return on investments.

In order to substantiate the investment the shareholders will make on the project, it is imperative to use assessment tools that will demonstrate that the project is important in the end. The approach to demonstrating that the project is significant in the attainment of competitive advantage will be facilitated by the utilization of performance appraisal tools.

The utilization of Key Performance Indicators (KPI) will be instrumental for this project. It is expected that between January 2014 and September 2014, Development Productivity (DP) will have improved by over 10 percent. The DP is the function points per man day and per platform annually. The quality of automobiles manufactured will have improved by 30 percent with innovative automobiles.

The milestones will be important in addressing a transformational approach to the Application Development and Maintenance. This will be achieved by actively engaging a culture of constant progression via performance measurement. The changes that will be introduced by this program require tracking and comparative analysis with time. In order to enhance comparability with previous performance, function points will be necessary.

The milestones that the project is expected to deliver include the production of modern sports utility vehicles having the ‘greener future’ features. This means that the development teams will be expected to suggest and develop the contemporary engineering applications in automobile manufacturing. Technological changes experienced globally means that individuals in every global location will demand the BMW products.

In view of the increasing demand for modern and convenient automobiles, it is imperative for BMW to focus on the delivery of novel automobiles. Since the project does not require the recruitment and training of new staff, it will take significantly minimal time to implement the HRM strategy.

The milestones achieved through this project will be determined by the satisfaction levels of the employees and shareholders. The attitude of the employees will change.

The sense of teamwork will be developed in the employees. The accumulation of knowledge gained through the initiative will present the employees with essential innovation skills. As a result, the company will gain competitive advantage over competitors. Knowledge workers will facilitate the development of green technology automobiles. This will move the company towards sustainable development.

Main dependencies, risks, issues and assumptions

The human perspective is critical in automobile manufacturing. The dimension is the most essential component for success. The management plays a fundamental role in the motivation and engagement of the team members to be innovative and collaborative towards a common objective.

Effective production of an automobile depends on the ability of the management to define and explain the objectives of the company. It then plays a central role in sharing the means to achieve the objective. BMW management requires motivating the employees to take challenging courses with the aim of attaining the highest degree of competence. The employees need to feel as part of the company. As the company develops, the employees should also develop financially and professionally.

Inherently, the approach proposed in this project has many benefits compared to the risks the approach attracts. The costs of producing an automobile are lowered significantly. The risks involved are multiple but preventable. The project seeks to ensure that the level of engaging outside expertise is minimized.

The company will depend on the employees for profitability, innovativeness and growth (Lopez-Nicolas & Mero-Cerdian, 2011). The success of the project will be the creation of loyalty and commitment to meet the objectives of the company. However, this does not guarantee the retaining of employees. There are companies that often poach skilled employees from other companies (Zapata & Nieuwenhuis, 2010).

This poses a major risk for this project. Consequently, it will be imperative for BMW to ensure that the employees are appropriately compensated. The company will also ensure that the employees are satisfied with their performance. Irrespective of the remuneration the employees receive, employees need to be psychologically settled when performing their roles. Dissatisfied employees are a recipe to the failure of any company. The cooperation of the management is critical towards ensuring minimal employee turnover.

Planning and managing a project involves a variety of risks. The most important risk is the failure of the project to deliver the projected outcomes. This is often brought about by the failure of the management to commit significant efforts in terms of resources. All kinds of projects require funding.

It is hence important for the management to establish a pool of financial resources to mitigate the stalling of the project. Another risk hat faces this project is the prospect of the employees resistance to change. In fact, change is usually unwelcomed in the organizational settings. Most of the employees have worked with BMW for years.

The introduction of the proposed human resource approach is bound to face resistance from employees who feel threatened. Inherently, the project will entail training of staff. However, the training will involve aspects that some employees may consider undesirable. In order to diminish the effects of resistance from employees, it is essential for the human resource function to communicate to the employees about the importance of the proposed organizational change.

Approved project budget

BMW management realizes the need for the creation of knowledge workforce. Currently, the initiative to move towards this objective may appear expensive but the benefits from the project will surpass the costs three-fold. Competitors have been implementing such projects as a long-term strategy for sustainable development in the increasingly competitive automobile industry.

In addition to the above expenses, the management has factored in the miscellaneous expenses such as consultation fees. The amount set aside for this purpose is $1000. Upon effective implementation of the project, the company has considered increasing the salary packages for employees who will demonstrate innovation.

References

Lopez-Nicolas, C., & Mero-Cerdian, L. (2011). Strategic knowledge management, innovation and performance. International Journal of Information Management, 31(6), 502–509.

Shatouri, R., Omar, R., & Igusa, K. (2012). Towards a new era of sustainability in the automotive industry: Strategic human resource management and green technology innovation. World Academy of Science, Engineering and Technology, 69(2), 217-222.

Zapata, C., & Nieuwenhuis, P. (2010). Exploring innovation in the automotive industry: New technologies for cleaner cars. Journal of Cleaner Production, 18(1), 14– 20.

Restructuring Programme

Change management is the process through which an organization changes its operations from the way it is operating at the present moment to a future desired mode. Change management is done to empower the employees and the business as a whole to keep up with the changes that are taking place in the business environment. Changes that can take place in an organization may include missionary changes, operational changes, strategic changes, technological changes and changes in the attitude and perceptions of the employees.

McDonalds undertook an organizational change which aimed at maintaining the company’s strength, capabilities and the competitive advantage it had over other companies in the food industry. This was as a reaction to changes which were as a result of generational change in its target customers.

Started in the fifty’s, McDonalds target customers have mainly been children and young adults. Through the variety of the fast foods that the restaurants have been selling, the business has been growing since then making good profit. However, at the present moment there has been a change in the taste and preference of consumers as a result of them being cautious about their health and nutrition.

McDonalds have implemented integrated marketing communication (IMC) as a part of their marketing strategy (Michelle, 2011). This strategy uses mediums of communication as a mode of advertising and promotion of their products. Through this campaign they have adopted a new health conscious strategy which is in line with the health awareness on obese children by introducing a new healthy and low fat menu for them.

This menu is called McKids meal and it is very different from the older menu that was present at the restaurants. For this innovation to be successful, a team of experts was put in place to check the progress of the change. The organization also used a combination of market mix and advertising strategies to reach out to more people. All this hard work aimed attaining consumer satisfaction so as to ensure that the loyalty of their esteemed customers is maintained.

Mergers and Acquisitions

BMW has been involved in a lot of mergers and acquisitions over the years. Its main aim is to join forces with other successful companies and produce powerful hybrid cars. Acquisition is the process by which one company gains control over another while merger is the process by which two or more corporations join up together in partnership so as to achieve certain goals and objectives.

BMW was for example motivated to purchase Rover and Land Rover so that it can strengthen and diversify its operations, gain market power and adjust to changes in the external environment (Lawrence 2003, p. 7).

At first the acquisition seemed to be failing because of several technicalities. The cars which they produced were somehow much expensive than those which were already in the market thus sales went down. BMW did not also conduct sufficient research on how this acquisition will add more value to the firm.

The anticipated growth into new market did not materialize due to the difference in the culture and backgrounds of these two companies; BMW is German while Rover is English. The culture clash made the loyal customers of each company to seek for alternatives (Lawrence 2003, p. 8).

To solve these problems, the management of BMW developed a business model that was based on excellence; a quality which has for a long time been associated with the company and started to manufacture luxurious and excellent cars which their consumers actually needed. This move was successful since the company started to sell more cars and earn profits.

Corporate culture

Executives at Starbucks normally credit their employees for the success which the business has been experiencing over the years. They refer to their employees as partners or their people giving the employees a sense of acceptance and belonging (Weber, 2008). The corporation has set up strict guidelines which have ensured that their employees maintain this culture.

Starbucks have got guidelines which managers have to follow during the process of recruiting new employees so as to ensure that they have got relevant skills, good behavior and are competent to work. They also have efficient communication mechanism that allows information to flow in all directions in the organization. This aids in ensuring that the information is not biased and employees are not afraid to talk to their superiors about their problems.

Employees have to maintain respect to one another and to their superiors while management is supposed to solve any disputes by using a common yardstick. Lastly, the employees are expected to treat the customers with courtesy and respect and ensure that they are satisfied with the services which the company offers. These guidelines have ensured that the corporate culture of Starbucks is maintained hence it continues to enjoy its success.

Role of IT in Change Management

In the early 1990`s Continental Airline was undergoing financial crisis which almost led to their bankruptcy. They however developed a new strategy which improved their operations and lead them out of bankruptcy. The only way out was to incorporate IT in their management and operations.

However, due to their financial constrains and lack of expertise in the field they had to partner up with an outsourcing IT firm. That is why they signed a ten year contract with EDS which provided the necessary skill and manpower in the field of information technology (Wejman, 2000, p. 22). This strategy was successful and by the mid 1990`s Continental Airlines had moved out of bankruptcy and had started to earn profits.

The strategy would not have been a success if the top managers of the company did not embrace technological advancement and realized that it was necessary for the maintenance of the progress which the company had made over the years. Top managers also realized that it was necessary to incorporate information technology in its operations since most of the innovations which they wanted to put in place required IT as a base.

This included things like online flight booking, checking of the flight status, communication among the staff and with customers all over the world and ease of making operations within the organization become faster and easier by the use of computers. The company therefore outsourced so that it can concentrate fully on its field of core competence and also to save money. The agreement it signed with EDS therefore gave the company a breathing space away from the pressures it was facing.

The IT which Continental Airlines use is flexible in nature so that it can cope with the changes in technology and the business world. This is because the world is dynamic and change occurs every day. For example, the IT which the company is been using has changed from mainframe to client-base and now the current system application is web-based. Therefore, the IT of a company has to be flexible to meet the future needs.

References

Lawrence, K. (2003) Why did BMW.s Acquisition of Rover Fail? Unpublished BA (Hons) dissertation, Bournemouth University.

Michelle, S. (2011) Management of Change: McDonalds Bahrain. Ivythesis.com. Web.

Weber, G. (2008) Preserving the Starbucks Counter Culture. Workforce.com. Web.

Wejman, B. (2000) Continental Airlines: Outsourcing IT to Support Business Transformation. International Journal of Communication, 2 (1), 19-25.

Introduction

BMW Group is known for its high-quality products and services. It is a reliable enterprise, which considers its strategy and implements the necessary measures to address the customers’ needs in a feasible manner to sustain the competitive edge and maintain the market share. The purpose of this paper is to conduct an external and internal environmental analysis of the BMW Group to be able to assess its strategy from different perspectives.

External Analysis

It is worthy of mentioning that BMW Group is an enterprise that furnishes diversified operations. In particular, the activities of the enterprise include premium class car and motorcycle production accompanied by the best services. In addition, they deliver software products and financial services that are considered premium quality as well (“Annual Report 2015” 163). Thus, it can be assumed that the company has its focus on high performance. Nevertheless, certain aspects are crucial for its feasibility and success.

PESTEL

In terms of the external analysis, there are certainly political, sociocultural, technological, economic, legal, and environmental factors to consider since they can influence the efficiency of the Group.

Political factors:

• Intense oil and petrol taxation in many countries leading to pricey vehicle surveillance;
• trade regulations in Asian and American markets;

Sociocultural factors:

• falling demand for sports cars;
• raising ecological awareness;
• diminishing demand for premium class vehicles;

Technological factors:

• technologically advanced products (innovative energy, electric cells, and combustion technologies);

Economic factors:

• increased inflation rates
• increasing unemployment
• increasing prices for raw materials
• increasing production costs

Legal factors:

• the possibility of alterations in environmental and safety regulation;
• changes in legislation;
• alterations in work and product safety;

Environmental factors:

• request for cleaner engines;
• need to be environmentally friendly.

Industry

It should be noted that the crude oil price is one of the most important aspects of this industry type. In that matter, the possibility of recession connected to the price volatility might result in a decrease in the demand for such cars. In terms of the industry, overall, it is highly investment-oriented. To be able to sustain the competitive edge, the automobile market requires manufacturers to attract heavy investments. The possibility of new entrants is rather low due to the expenditures linked with the plant and machinery needed to produce cars, distribution chains, and other factors that evidence the large costs for any manufacturer. BMW Group has reached large economies of scale, and its brand image is indeed high; therefore, it can be assumed that it will be extremely difficult for the new entrants to attain the same or at least close market share.

Importantly, the Group outsources parts of production to be able to cut down on expenses, which is also one of its advantages unachievable to other companies that are younger. Moreover, outsourcing ensures the enterprise might concentrate on its core competencies. Some of the countries from which BMW Groups outsources include Austria, India, and Indonesia (“Annual Report 2015” 201).

Strategic Group Maps

In terms of mapping, the main rivals can be assembled according to several different variables. The grouping strategy considers its reputation, price, and performance. The mapping can take the form of the following succession: General Motors and Ford, Nissan and Chrysler, Mazda, Toyota, Hyundai and Suzuki, BMW, and Mercedes, Volkswagen, and Honda. Notably, the farther is the distance on the map – the less rivalry is present. In addition, different positions imply varied pressures, profit potential, and strategies.

Internal Analysis

The internal company resources are both tangible and intangible. The tangible resources include a skilled workforce, flexibility achieved through outsourcing activities, and production facilities. The intangible resources of the enterprise are strategic alliances, customers’ perceptions, settled connections, and premium branding (“Annual Report 2015” 15).

The leading capabilities of the BMW Group include technical design knowledge and an efficient workforce that has been mentioned earlier. It should be stressed out that the company places a strong emphasis on its employees. Further on, the company is highly effective in terms of the marketing strategy and practices and it also has a global sales network. In general, the company executes effective marketing with excellent engineering and design.

Regarding the core competencies, the BMW Group brand is linked to products and services that are considered luxurious. In addition, the reputation of BMW is out of the question. BMW has highly skilled and qualified employees and executes control over the supply chain. Apart from that, it can be stated that the company is liable in terms of production facilities. To be more precise, the company is able to enhance its processes through the production triangle (“Annual Report 2015” 19). This approach has allowed BMW Group to reduce costs, increase production, and surpass one of the rivals in the industry. Needless to say, the company constantly invests in the Research and Development department to boost its performance. For instance, the department has worked on the execution of the hydrogen H2R or Hydrogen combustion engine (“Annual Report 2015” 27).

Conclusion

Thus, it can be stated that BMW Group is an enterprise with effective practices that allow it to sustain the competitive edge and maintain the market share that is, so far, unreachable to the new entrants in the industry. Nonetheless, certain environmental factors can strongly influence its performance in the future since the demand for the types of vehicles and services offered by the Group is diminishing, and the buying power of customers is unstable as well. Therefore, it is advisable that the enterprise considers the way it could retain its position in the market.

Work Cited

“Annual Report 2015.” BMWGroup, Web.

Nowadays, the creation of the value chain is an essential part of strategic management (Bitichi & Carrie, 2013). In turn, various technological innovations are used to advance the value chain in the modern business world (Kuglin & Hood, 2008). In turn, the quality of the operations is an essential attribute of the total quality management in the value chain (Kanji, 2012). In the end, paying attention to the quality of the processes in the supply chain forms the clear perception of the total quality management in the organization (Mukherjee, 2006). Nevertheless, the primary goal of this paper is to determine whether the findings from the article Value Chain Analysis in Quality Management Context by Popescu and Dascalu can be easily applied in the context of functioning of any business entities and companies, which actively emphasize the significance of the total quality management on the organizational level.

Nonetheless, the critical findings of the article Value Chain Analysis in Quality Management Context by Popescu and Dascalu including the analysis of the KPIs to enhance the delivery, complexity of the improvement, and the flow of the processes in the value chain management (Popescu & Dascalu, 2011). In turn, high attention has to the be paid to the existence of the primary and supporting processes such as procurement, technology development, and human resource management to support the flow of the critical operations within the organization (Popescu & Dascalu, 2011). The interdependence of these aspects and complexity of the value creation will be highlighted in the context of BMW, which is chosen as the primary company for the evaluation of the application of these findings. It remains evident that the company actively supports the total quality management and makes it an essential element of its car manufacturing.

Nonetheless, the first tactic refers to the understanding the importance of KPIs while creating the value (Popescu & Dascalu, 2011). In turn, the establishment of the KPIs help control the supporting processes, as they tend to set the organizational goals. BMW actively employs this strategy, as the flow of the processes remains unchanged. In turn, it devotes significant attention to the HRM and technology improvement, as they are the definers of the success in the car manufacturing. In this instance, setting the intermediate goals, defining the essence of the quality of the processes, and applying the KPIs into the operations process assists BMW in staying one of the trusting car manufacturers with the reputation for the high-quality products.

In turn, the article also underlines the interdependence and complexity of the processes while creating the value (Popescu & Dascalu, 2011). As for BMW, the company supports it on the international level by involving various suppliers in the product development (Handfield & Nichols, 2002). It could be said that application of this approach on the international level creates challenges, as the supporting and key processes might be located in the different parts of the world. Maintaining the sufficient informational system and applying innovation communication methods helps BMW create the value in the global context. In this case, the company advanced the strategy and used it at the global level to improve the company’s recognition by delivering only the best and high-quality products to the customers.

In the end, the value analysis helps determine the potential and most relevant approaches to the value formation in the organization. It remains apparent that the strategy is highly dependent on the value chain, and its role cannot be underestimated in the context of the given example. It remains evident that the tactics, which were described in the article, are actively supported in the functioning and processes in BMW. The active utilization of the fundamentals of the total quality management principles explains BMW’s ability to deliver high-quality products to its customers and receive valuable positive feedback.

References

Bitichi, U., & Carrie, A. (2013). The strategic management of the manufacturing value chain. New York, NY: Springer Science+Business Media LLC.

Handfield, R., & Nichols, E. (2002). Supply chain redesign: Transforming supply chains into integrated value systems. Upper Saddle River, NJ: Prentice Hall Publishing.

Kanji, G. (2012). Total quality management: Proceedings of the first world congress. London, UK: Springer Science+Business Media LLC.

Kuglin, F., & Hood, R. (2008). Using technology to transform the value chain. London, UK: CRC Press.

Mukherjee, P. (2006). Total quality management. New Delhi, India: Prentice-Hall of India Private Limited.

Popescu, M., & Dascalu, A. (2011). Value chain analysis in quality management context. Bulletin of the Transilvania University of Brasov, 4(53), 121-128.

Case # 1 Sunflower Incorporated

Topic: Managing change in a turbulent environment

Sunflower Incorporated

Over 5000 employees are working in Sunflower Incorporation and its gross sales are over $700 till (1991). Sunflower is a distribution company and details in snack foods and liquor. The financial management system that was used earlier by the company was malfunctioning and the profits were varying. Sunflower Inc. decided to standardize the system and because of this, a new position was created in the company to monitor pricing and purchasing practices. Agnes Albanese was hired for that and she was given total autonomy to implement any policies or procedures that would be feasible in these circumstances. She was encouraged to gather information from all regional managers and she decided to standardize pricing and purchasing decisions across all the regions. The financial executives of every region should notify her if a change occurs in prices of more than 3% and purchase more than $5000 should be cleared through her office. Albanese stressed a lot on standardizing operations and discussed her proposal with Mr. Mobley (VP finance). Mobley forwarded the proposal to the senior management and all the board of directors approved the plan. Albanese implemented the change the right way and sent an email to all the financial and purchasing executives. Mobley liked the idea of sending emails but commented that it isn’t sufficient. He requested Albanese to visit the regions and talk to executives directly but Albanese refused the offer by saying that it would be time-consuming and expensive. Albanese wanted to implement the change as soon as possible and an email was sent to the executives and they replied that they loved the idea and they will cooperate with her policies. Unfortunately, after 8 weeks Albanese didn’t receive any emails regarding price or purchase issues and the executives follow the conventional procedure.

Statement of the problem

In the initial stages the companies aim was to standardize reporting systems because the profits were varying and actual figures were difficult to obtain. Similarly, higher profitable regions were using low cost items which were lower in quality to experience a boost in profits margin. Other regions were facing severe price competition and it was becoming difficult to retain the market share. Market leaders were immensely cutting their prices and they were also launching newer products to enhance their market share. Agnes Albanese was employed to take care of this situation but the financial and production executives resisting change. They responded positively by confirming that they would cooperate with her but they never cooperated and the situation was getting worst.

The consequences of these problems would be severe and the organization would lose its market share and its integrity would be questioned in the long run. The reluctant attitude of the employees might produce negative results in both the long and short run.

Solution

This difficult situation is just because employees are resisting change. Training and development of executives might help the situation (Cameron & Green, 2004). Sending an email to the executives might not be a proper approach and it’s a bit informal approach. A proper presentation would be arranged on how this policy will work and what benefits the company would attain if the executives would share information on pricing and purchase with Agnes Albanese. Similarly, the organization must set certain objectives for the executives that are directly related to this policy and employees would be motivated intrinsically by change agents to coordinate with the director of pricing and purchasing (Cameron & Green, 2004).

Learning Application

Managing change is a necessary element for every organization and implementing effective change management strategies can be beneficial for an organization that is in a disruptive mode. Through this case we can learn that how employees in the organization resist change and how conventional methods are embraced by employees. Moreover, senior executives must be formally addressed in the organization.

Thus, we can conclude that training and development of employees is necessary and it will educate them and it’s highly possible that after seeing the benefits of the program they won’t resist it. Similarly, motivation is an essential factor and it can improve the performance of employees.

Case # 2 Gulf States Metals, Inc

Topic: Importance of Organizational Development

Gulf States Metals, Inc

Gulf States Metals is a company that refines nickel and it was created by its parent company International Metals Inc (IMI). GSM also deals is copper, cobalt and ammonia sulfate and it’s in the operation for 8 years. GSM’s performance is getting worst day by day and it lost $1 million last year. Company haven’t experienced positive trends and the reason for this slump are factors like diminishing demand for copper and nickel, condition of the equipment and labor problems. The cost of raw materials is increasing so it’s quite difficult to show profitable trends. Different changes occur in GSM’s policy because they want the company on right tracks. IMI hired a consulting company for GSM but the result was the same and GSM experienced downsizing. The organizational structure is quite similar to other production companies and the senior executive of GSM is the general manager who reports to the Group VP. After that there are Plant Managers, Director of operations, Director of Engineering and the Director of Administration. The production process is quite complicated and it can be stopped and the plant operates on 24/7 basis. The plant environment is rough and rusty in nature. IMI has promoted the plant manager to general manager and they are relying on him to change the current scenario. HR manager is interested in organizational development policies and he believes that this slum is due to poor management by the previous manager. The employees of GSM are unfamiliar with training and development and all the training they have was on the job. A series of interviews were conducted in order to get aware about the actual problem and how organizational development and restructuring is possible. The interviews resulted in wide and varied responses and all the employees are blaming other for this slump. The general manager has two years to fix the issue because IMI would close GSM if the same trend goes on.

Statement of the Problem

GSM is facing a number of problems and these problems have created chaos and havoc in the organization. Lack of training and development, prejudicial attitude of employees over other employees, lack of charismatic leadership and employee motivation, autocratic behavior of the senior employees, ineffective equipment, inefficient management style, lack of autonomy etc are the basic problems employees are experiencing. Similarly company is experiencing losses from day one and GSM haven’t experienced positive trends.

The outcomes of these problems are quite crystal clear that is if these problems can’t be solved then the company would continue its negative trends and it’s highly possible that IMI would shut down its sister concern.

Solution

There are a number of problems and it can’t be solved easily but what best the general manager can do is to train the employees. The lack of training and development leads to uncertain situations. Down the line workers must be motivated and a decentralized environment should prevail in the company in which a worker can also brainstorm for the betterment of the company (McLean, 2005). Management should trust their workers and motivate workers that are working directly on plants and on the equipments. The Middle managers and the supervisors must be motivated to take decisions and they must highlight key issues in the productions process. Thus, we can say that every department of the organization is facing this uncertain chaotic situation and in the initial stage organizational development and restructuring the entire organization is the only remedy to this problem.

Learning Application

Organizations that don’t spend on organizational development suffer in the long run. Elements of training and development within the organization are quite essential and those organizations that consider organizational development, training, motivation as just theoretical terms would face these circumstances. Similarly organization must work according to its mission and integration among all the departments is the key to success. Organizations that create disparity among employees or among departments face difficult circumstances and they can even wipe out from the industry. The ultimate objective of this case is that organizations and employees are integrated with each other and when certain employees are not working well due to certain situations the whole organization suffers. Management is the key concern of every organization and it will only work properly when communication will flow in the organization in a proper channelized manner.

Case # 3 Sharpe BMW

Topic: Disparity in the compensation plan

Sharpe BMW

Sharpe BMW is one of the dealers of Serra Automotive Group and it’s the only BMW dealership in the group. Tom Dunn was appointed as a new service manager for Sharpe BMW. He was appointed to increase the revenues and the customer satisfaction index. The director of service dealership Bob Deshane submitted a plan to correct this issue and that plan was handed to Dunn and he was required to implement it. This plan would initiate a massive change in the entire organization. Sharpe BMW was considered as a leader in the dealership industry and its competitors Lansing and Kalamazoo were not as big as Sharpe BMW. The company offers Virtual service department and cars of certain customers are picked and brought back and they don’t have to worry about that. Company generates hefty amount of revenues through this. Service departments of BMW are growing rapidly and two types of jobs are performed in Sharpe BMW’s service department the customer pay and the warranty pay. The customer pay is charged when the customer pay for the repair after the warranty is expired. Similarly, the warranty pay is charged when the vehicle is still in the warranty period and hen BMW pays the charges to the dealers. The compensation plan of service technicians are dependent on whether they are working on customer pay or warranty pay. Customer satisfaction index was developed by BMW in order to check whether the customers are satisfied or not. The higher the score is the better it is for the dealer. Financial incentives are given to the dealer and an industry average is set for that. CSI for Sharpe BMW was below the national industry average. As the previous manager left both the revenues and the CSI were declining. The problem was the differential rate of compensation for the two jobs offered by the technicians. Good technicians are difficult to recruit in the industry and job switching is in full swing in this industry. Sharpe offers training and development and provides top notch equipment to them. But the technicians are facing problems of wage disparity and that’s why CSI is going down. A new plan was initiated by Deshane in which monthly bonus would be offered to a service technician is his individual CSI is above 91%. It’s a radical change in the dealership industry and experienced technicians liked this approach of the company. However, Dunn was worried that plan might not work properly and CSI might not increase.

Statement of problem

The organization is working quite well and the only problem they are facing is related to the compensation plan. They are facing a disparity between the customer pay and the warranty pay wages for technicians. Repair shops aren’t facing this that’s why their technicians are happily working on standard hourly rate. Sharpe BMW is facing this issue its revenues re and CSI are also declining.

Effects of these problems would be huge in the long term and technicians might switch to other sectors on standard pays. Similarly, Sharpe BMW wouldn’t make more money as it’s not compensated more by the BMW because the CSI is dropping.

Solution

Extrinsic and intrinsic both the rewards are necessary for the employees. Down the line workers are tilted more towards extrinsic rewards that are illustrated in this scenario. Giving a bonus and relating it to the CSI factor is an effective plan. But the plan would satisfy the needs of technicians when the amount of bonus is increased. Moreover, company can break a single bonus on quarterly basis and quarterly bonuses can also be disturbed to the technicians in this way they would feel motivated and a sense of commitment might evolve in them.

Learning Application

Effective management and developing proper compensation plan is the utmost need of every employee whether he/she is manager of a down the line worker. Extrinsic rewards can be very beneficial for workers and they can produce results if a compensation plan is properly managed (Sttetner, 2000). Workers should be treated as assets in organizations and organizations should invest in them in order to retain them.

Case # 4 Black and Decker International

Topic: Globalization –Changing the working methodology

Black and Decker

Black and Decker was a struggling company in the initial phases but it has transformed into a powerful company and has progressed through leaps and bounds. Mr. Grunewald was the vice president of the international group (Power tools and Home Improvement Group). His job is to act as a catalyst for the group and he is responsible for developing company’s business from local or regional entries. Black and Decker recently acquired Emhart Corporation and they entered into the business of locks and locksets. His job is facing a challenging phase as he has to develop a strategic vision and a proper road map for the company. In phase of early 1900’s the company was experiencing fluid change phenomenon and it stressed on global issues rather than the local ones. The organization was a mixture of three forms these were functional units, SBU’s (strategic business units) and geo-graphic units. Mr. Grunewald was responsible for product and development but his areas were North America and European businesses. Mr. Grunewald is responsible for globalization issues and his job responsibilities include developing strategic plans, coordinating with field managers and researching markets. Similarly, he was working to developing a positive brand name and strategizing the brand name on global basis. Since the organization is entering into newer countries therefore proper strategy development and cultural requirements must be fulfilled by the organization. Diversification has to be managed by the company as its entering into countries like Japan and the Pacific Rim. Product –road bashing took place in the company as the product managers are interested in reducing the product lines. Since a lot of companies were integrated and the group was becoming bigger and stronger on the other hand it has to face the challenges of global marketing for their various regions. Since Emhart was in their group therefore they have to take care of their issues too. After entering into the lock business the international group has diversified its approach. The approach of Mr. Grunewald is to develop a local champion who would centralize the issues for that company and would report to the top manager. Mr. Grunewald believes that establishing proper communication channels between employees must be essential to ensure proper working between the employees.

Statement of the problem

The company is expanding and entering newer markets. It’s acquiring companies and expanding its operations. The brand is in the extension phase and the original company of hardware is entering into locks and locksets as well. Companies operations are expanding from one company to another and so do its employees. Black and Decker is experiencing growth but the only issue it might face is mismanagement of cultural issues related to employees and the globalization scenario.

The effects of this would affect the overall growth of the company and the company might lose its stand if it would be unable to manage these issues.

Solution

The most apt solution of this is to manage the company on strategic basis. The best strategy for these large organizations would be to develop a learning culture in the entire organization in which every employee can easily change its methodology of working if it’s needed (Drucker, 2008). Globalization should be handled with extreme care and the operations must be simplified by senior management.

Learning Application

Issues related to globalization and complexities can give us an idea about how companies enter into newer countries and what problems they face.

References

1. Cameron, E., & Green, M. (2004). Making Sense of Change Management: A Complete Guide to the Models, Tools & Techniques of Organizational Change. Kogan Page.
2. Drucker, P. (2008). Management. Collins Business.
3. McLean, G. (2005). Organization Development: Principles, Processes, Performance. Berrett-Koehler Publishers.
4. Sttetner, M. (2000). Skills for New Managers. McGraw-Hill.

Introduction

The BMW group is a renowned maker of premium automobiles. It targets the global market when manufacturing cars. The company has remained operational for close to a century now since its foundation in 1916. One critical aspect that has been successful in sustaining the group’s many years of business and production is its focus on sustainability management (BMW par. 1).

More importantly, the BMW Group has succeeded in formulating a practical business strategy, with the intention of minimizing risk, optimizing new business opportunities, as well as overcoming emerging social and business tough times in advance. This paper seeks to explore the resource based view and the dynamic capabilities of the firm.

In particular, the paper will investigate these important business aspects with respect to the company’s recent acquisition of a carbon fiber plant, the prospects of BMW working in partnership with Toyota in the future, as well as its anticipation of turning ecological in its operations.

Resource Based View

The BMW has continued to expand its strategic potential by investing heavily in new resources with the ability to assure its great success. This innovation has not only been focused on the internal capacity of the firm, but to the external capability as well.

In 2010, for instance, the BMW Group initiated plans with a partner firm, SGL Group, to form the SGL Automotive Carbon Fibers (BMW Group par. 1). This significant resource that the firm opted to build sought to establish an elaborate and modern carbon fiber manufacturing plant worth more than US$ 100 million.

The BMW group had plans of developing sufficient infrastructure to make CFRP for sale to other car manufacturers who want to incorporate the CFRP technology into the future concepts of car making. This special resource has since boosted BMW’s capability for a new car model that is targeting urban mobility (BMW Group par. 1).

Furthermore, the automotive carbon resource boosts BMW’s focus on achieving sustainable business operations at a time when environmental pressures faced by automobile manufacturers have grown in magnitude. The location the plant in Moses Lake, WA was a tactful move to take advantage of the available hydropower, which is both recyclable and environmentally friendly.

In addition, it was aimed at maximizing the benefits of the cheaper energy available in Washington. Other than energy reasons, the BMW Group decision to establish the carbon fiber plant in Washington targeted the favorable infrastructure conditions in the state, as well as the elaborately existing utilities, and the comprehensive skilled labor force available.

The combination of these strategically critical resources helps the BMW to boast of immense core competency that is not enjoyed by other industry players who also emerge as greater competitors. Valuable resources of any firm are characterized by uniqueness in terms of being hard to imitate. They should also be constantly upgradable.

The BMW Group’s carbon fiber plant passes as a hard resource to imitate, especially given the resources required to set up a similar plant (“Economic Indicators” 71). Additionally, since the inception of the plant, BMW has been planning for the gradual expansion of its production capacity from the current 3,000 tons to a larger capacity of 9,000 tons by the beginning of 2015.

Although other automotive players have explored on the carbon fiber technology, BMW’s venture makes it more valuable in the market because it entails a large scale productivity arrangement that makes it cheaper to employ in manufacturing vehicles.

In analyzing the above resources of the BMW, it is quite significant that the car manufacturer is seeking to uphold both resource heterogeneity, as well as resource immobility. Establishing the carbon fiber plant underpins BMW’s focus on addressing the heterogeneous and dynamic situation in the market, where the comparative advantage targeted is to ensure that a sustainable solution for car materials is provided before the need arises.

The most significant pillars of BMW’s resource base view and performance include the proprietary process, as well as equipment that the firm has built over time, significant knowledge and skills owned by the employees, and the necessary external learning acquired mainly from other partner firms.

The BMW has also channeled its resources to the production of its high-end brands to maximize the advantage of their premium features. Therefore, the company is betting on the Rolls-Royce, the MINI and the BMW brands to perform exceptionally. It has further established a strong position within the motorcycle market sector, in addition to operating a financial services division.

It has spread the proprietary knowledge and equipment to other strategic locations in the world, including the UK, South Africa, and the USA. Noticing the growing economic capability of China, BMW has further opened a production plant in the country and extended the same to Italy and Australia.

The firm protects its proprietary knowledge, while also seeking new knowledge from external partners by signing production contracts with third party players in some of the key international markets that it operates in. This has, in turn, presented the firm with an opportunity to offer appropriate product solutions to rising global market demands.

Another important production knowledge held by BMW, the “completely knocked down” (CKD) technique of production, enables it to connect its manufacturing plants in six different locations with partners who are based in Thailand, Russia, Egypt, Malaysia, as well as Indonesia and India. In Brazil, the initiative has focused mainly on linking the firm’s production plant for motorcycles with the relevant partner firms.

In the recent years, BMW has taken the necessary steps ahead of all its major competitors in the world to patent the electric turbocharger design to help provide a lasting solution to the challenges that have continuously occurred regarding this technology. Despite turbo engines having been existent for long, a major challenge that comes with the use of this technology is its failure to give maximum results, whether with small or large turbo designs.

BMW has moved with haste to solve the challenging scenario by creating a turbo engine design that will give optimum performance results, whether the engine is running at low-end power or at high-end power. The patenting of the BMW electric turbo charger has happened at a time when the production prospects for a car with such technology still lies in the future.

Thus, with regard to the resource base view, the firm has already moved to fill a void, using its technology, which promises to offer a superior engine response compared to what is available in the market. This is a significant competitive advantage for the firm, as the patenting implies that no rival car manufacturer can adopt the use of the technology without seeking BMW’s authorization. Moreover, the company is in a position to enhance the technology further to keep it competitive.

Dynamic Capabilities

BMW Group’s significant dynamic capabilities equally stand out to underscore the firm’s potential in integrating and building a stable internal competency as a means of addressing the fast changing industry environment. The idea of building a carbon fiber plant is a perfect example of the firm’s efforts to develop its dynamic capability.

In other words, the BMW management envisioned a future where the demand for using lightweight plastic material in the manufacture of vehicles would increase, thereby occasioning a gradual move from the current materials used. In essence, the firm saw the need for working in partnership with an expert company, the SGL, in manufacturing automotive carbon fiber to build a comprehensive ability to address the material transformation beforehand.

While this will serve as the main source of material supply for the BMW’s own internal needs, it also positions the firm as a major supplier of the material in the overall car manufacturing industry. This will ensure an optimized result for BMW in terms of its revenue performance, in addition to enhancing its market performance.

The BMW Group has equally initiated talks with one of the biggest car manufacturers in the world, Toyota Motors Company, with a view of achieving certain strategic advantages (Roberts par. 1). Most importantly, BMW’s cooperation with Toyota is targeting to acquire dynamic skills in hydrogen fuel cell technology, improve its modern battery technology, as well as the electric sports car technology.

Given that Toyota has registered great success in these fronts, the BMW Group considers the cooperation as an opportunity for it learn and integrate some of these crucial car design skills. The future of the car industry is gravitating towards a more eco-friendly automobiles, with greater efficiency in terms of fuel performance.

The exchange of ideas on the BMW i3 electric car model and Toyota’s hybrid car technology is likely to benefit both firms with crucial dynamic capabilities, as they target the growing hybrid and electric car market (Roberts par. 1). More important, Toyota boasts of a well-developed fuel cell technology, which it seeks to employ between 2015 and 2020 as it launches environment-free engines for its car models.

While the close partnership with BMW will help the firm to understand more about the technology, it will also open up an opportunity for the firm to integrate new ideas on how to improve on what already exists. Efficient engines with the capability of running on alternative fuels that are considered friendly to the environment remain as the next competitive battle for car manufacturers in the coming future.

The fact that BMW is already building this capability by virtue of its partnership with Toyota indicates its focus on building a significant dynamic capability that will enhance its position in the market. BMW’s extensive expenditure in the area of design and development (R&D) has equally sustained its dynamic capability in car production.

The trend in car manufacturing relies heavily on the tastes in the market regarding the design shapes and operational capacities of cars. Thus, BMW has adopted a proactive approach, which mainly relies on continuous research and development activities to ensure that it remains at the forefront as far as the development of new car models and designs is concerned.

The research laboratories initiate investigations seeking to incorporate new ideas and technologies, with a view of designing highly efficient cars. The firm has also established a strong human resources policy that seeks to retrain employees periodically to increase their productivity in design and engineering.

The employees are also rewarded competitively to motivate them in their performance in terms of increasing the company’s competitive advantage over other industry players. With the increasingly advancing technological skills, the efficient performance of the R&D function at BMW has enabled the firm to take advantage and initiate unique designs that have not previously been witnessed in the industry (BMW par. 1).

PESTEL Analysis

Politically, the car industry is facing new laws passed either by individual countries or by regional trading blocs, such as the European Union (EU), which require cars to meet the new carbon dioxide emission standards. These pressures have remained challenging for the BMW Group, as it requires extensive expenditure on new technologies to address them effectively.

The move by BMW to manufacture ecologically friendly cars, such as the BMW i3, underscores its greater focus on meeting the new policies being adopted in the market. Moreover, BMW’s intended cooperation with the Toyota Motors Company further seeks to expand the firm’s technical knowledge in the area of hydrogen fuel cells, as well as battery technology.

Despite these new technologies serving to address such new challenges relating to emission and pollution, car manufacturers like BMW are faced with the threat of new policies and laws that might seek to offer regulation on the overall aspect of car innovation. This might result in huge losses for the firms, as they will have already spent huge amounts of resources on research and development work.

Economically, the global motor vehicle industry experienced high inflationary pressures occasioned by the global financial crisis. Prices of raw materials increased as suppliers sought to sustain their businesses, making it costly for the manufacturers to acquire the same and sell to the customers at affordable prices.

High taxation in some countries, imposed on imported cars as a way of discouraging further acquisition of cars, also contributed towards making cars less affordable, as the prices remained exorbitant for the buyers. This had a negative impact on the market demand levels by lowering the disposable income for individual buyers significantly.

BMW suffered immensely, given that the recession hit hard some of its lucrative markets, including the EU and the USA. In some of the developed markets, such as the USA, credit facilities remained unavailable to the buyers, making sales of vehicles to drop significantly. The BMW Group implemented job cuts in some of its plants, as a move to cut down on employee-related costs.

The firm also lowered its overall production as the demand in the global car market also plummeted significantly (Papasolomou and Kitchen 63). In terms of the social characteristics, the EU market that is crucial for BMW’s business performance has been experiencing a general shift as a result of its gradually ageing population.

On the other hand, the developed countries are also characterized by rising life expectancy, as well as changing consumer attitudes that have witnessed potential car buyers consider saving their resources, as opposed to spending. This implies that most of the buyers in the markets, given that they are not youthful, are not interested in acquiring expensive stylish designs for their choice of cars.

These trends have triggered a design revolution in BMW, as the firm seeks to develop car models that can effectively appeal to the ageing customers. However, the changes in design also imply that the firm is spending a significant fraction of its resources to develop the alternative cars that can appeal to the market, which increases the cost of production.

The technological transformations in car manufacturing have been immense, as more manufacturers are targeting to release highly efficient and top quality products. The pressure from environmentalists and the growing concern from consumers to address the issue of emissions are creating a bigger challenge for car manufacturers to design new car models that have the ability to limit degradation effects.

BMW has undertaken significant innovations to integrate the latest technologies in the car manufacturing business. The most noteworthy technological innovation pursued by the firm has been the development of green technologies to reduce environmental degradation caused by fuel-run engines.

Additionally, BMW has sought to work in cooperation with Toyota Motors Corporation to learn how to integrate the hydrogen fuel cell technology, as an alternative to the fossil-fuel run engines. Other technological efforts involve integrating internet-enabled features within its range of new car models released to the market.

On the legal front, the car industry is faced with regulatory and control pressures, both within the local and the regional markets. Car models that fail to fulfill these strict legal requirements are barred from accessing the markets, thus making it mandatory for the manufacturers to put appropriate measures in place.

Additionally, in this era of high innovation, car manufacturers are patenting their innovations as a way of avoiding imitations from other industry competitors within the market. The existing legal frameworks are supporting the manufacturers in their quest to protect their innovations from being copied by other industry players. The car manufacturing industry is also witnessing an increase in the number of partnership deals pitting different brand owners, with the need for gaining mutual benefits.

The partnership deals are enforced through binding legal contracts signed between parties involved to ensure protection of the firms from losing. BMW has sought to register its patents and copyrights as a way of protecting its innovations from being copied by other manufacturers in the industry.

Most importantly, the firm has patented its turbo electric engine innovation as a way of dissuading other firms from emulating and employing its application on their respective car models. Additionally, the firm has patented its battery technology that it uses on its electric car models to protect the innovation from being copied. It has signed a binding legal contract with Toyota that spells out the extent to which the association between the two firms will go.

The ecological environment equally presents a challenging stance for car manufacturers across the world, with the most significant one being the need for firms to design cars with minimum degradation effect on the environment. The level of pressure faced by the manufacturers is further influenced by the growing demand from car buyers to only acquire models that have limited impact on the environment, in terms of reduced emissions.

BMW has been at the forefront to meet these ecological demands with its extensive research and development operations. The BMW i3 car model is as a result of the company’s efforts to design cars that can run on alternative energy sources like electricity, which have limited effects on environmental degradation.

Additionally, the decision to sign a future cooperation deal with Toyota Motors Corporation seeks to increase BMW’s potential to manufacture hydrogen fuel cells offer more practical alternative to the ecological-sustainability efforts by the firm.

Porter’s Five-Force Model

The car industry’s entry threat is significantly low, owing to the huge capital outlays required by firms seeking to venture into the industry. New firms require building manufacturing plants with extensive capacity to manufacture cars at low costs and reliable supply and distribution channels that are expensive to achieve in a short period.

Moreover, new entrants require highly trained technicians on various car concepts, but most of these technicians are expensive to maintain. Brand loyalty is also a huge barrier that new players can hardly achieve within a short period of their entry to the industry. BMW boasts of a strong brand name that has existed for many years, especially in the premium car market.

Its superior R&D operations that have seen the firm produce state-of-the-art car models, such as the eco-friendly BMW i3, makes it difficult for a new entrant to achieve or surpass within the short-term. It has developed a highly efficient and reliable workforce trained over the years of their service at the firm and compensated well to enhance their motivation standards.

Threat of Substitutes

The car industry’s substitution threat is considered moderate because of various factors. Firstly, technology has enabled car manufacturers to design new automobiles with great interactive features at affordable prices. Buyers, thus, have strong reasons to acquire and own cars, instead of seeking for alternative transport means, such as public buses and train transit.

Secondly, continued research and development operations have made it possible for individuals to order for customized cars that are made to suit the specific demands of a single individual. However, tough economic conditions have equally made it slightly difficult for buyers to afford owning cars, thus lowering the easiness of individuals owning cars.

In addition, the car manufacturing industry is encompassing significant technological integration, which is costly to the firms and it influences the increase in prices. BMW has worked towards dissuading the substitution threat by designing modern, high quality vehicles with superior efficiency results to convince buyers to purchase their models.

The BMW electric car, for instance, attracts greater demand from the market owing to its superior features and high functionality (Papasolomou and Kitchen 63). BMW also manufactures a range of other car models that do not necessarily target the premium market, thus making them affordable to a majority of consumers.

Supplier Bargaining Power

Suppliers’ bargaining power is equally moderate within the car manufacturing industry, especially because of established manufacturers’ ability to backward integrate. However, suppliers also wield significant powers, especially where specialized product supplies are involved. Accessories like tires are often supplied by third party firms and are critical to any car manufacturing firm.

In the case of BMW, for instance, the firm has taken an initiative, in collaboration with SGL Group, to manufacture its own viable ultra-lightweight plastics. The carbon fiber manufacturing plant co-owned by BMW and SGL has a significant effect on the power of suppliers of these materials because the firm does not rely on third party supplier firms for its ultra-lightweight plastics needs, but it supplies itself.

Additionally, the anticipated collaboration with Toyota Motors could create a significant technological skill and capacity for the two firms to manufacture and supply their factories with crucial components like batteries, thus eliminating the need for third party supply services.

Buyer Bargaining Power

Buyers in the industry enjoy high bargaining power, partly because of the high number of manufacturers in the industry and the readily available information in the market about cars. The presence of the Internet resource makes it easier for existing and potential buyers to search for all the information that they are interested about. Consequently, they make highly informed decisions concerning the choice of car they intend to own.

With the recent recessionary pressures across the globe, a majority of the buyers can only acquire cars that they consider to be affordable, as opposed to models that are priced at premium rates. However, BMW relies on its powerful brand name that has been built over the years to win over buyers from other competitors.

The high quality and superior performance efficiency of the BMW car models assures buyers of value for their hard-earned money, which curtails the buyers’ high bargaining power. The eco-friendly model of the BMW, which is a new entrant into the market, further attracts relatively higher demands from the market. In essence, it provides the manufacturer with the ability to lower the high bargaining power in the market.

Industry Rivalry

The car industry is characterized by very high rivalry levels among the very many brand manufacturers in the industry. There are many highly established industry players, such as Toyota, GM, Ford, and Volkswagen, all of which have greater capacities to produce high quality vehicles.

These firms have established their own supply and distribution networks across the globe, which provide them greater access to the market and allow them to acquire raw materials at huge discounts. Most of the well-established brand makers equally boast of highly efficient concepts, such as the lean manufacturing production from Toyota.

These concepts further enhance their competitive advantage against other firms. However, innovation has been BMW’s greater asset, as it seeks to tackle the high levels of rivalry amongst the industry players. Extensive R&D budgets by the firm and high skill development have ensured that the company enhances its capacity to design highly functional models, such as the BMW i3 electric car.

It has patented some of its key innovations in the industry, such as the electric turbo engine and the car battery technology to protect the ideas from being copied and used by others to compete against BMW. The move to own a carbon fiber manufacturing plant also underscores BMW’s efforts to achieve greater innovation performance, as the initiative seeks to supply the company with efficient raw materials for its wide range of car models.

Organizational Behavior

The BMW Group has successfully incorporated a design philosophy as part of its corporate culture. The firm associates the strong design philosophy to its strong expression of dynamism, as well as an entrepreneurial spirit. The design culture describes the firm’s strong commitment and that of its employees to ensure they produce the best that the industry requires (BMW par. 1).

Part of this design culture can be witnessed in the series of investments that the firm has pursued over the years. The modern carbon fiber manufacturing plant initiated by the firm provides viable ultra-lightweight plastics (CFRP) to the designers, who in turn transform them to highly efficient car models and designs.

The BMW human resources function (HR), on the other hand, creates a strong bond between the employees hired by the firm and the products that are finally released to the market. This is achieved by the continuous evolution of the firm’s dynamic operations. Consequently, it has created an immense experience within the workforce.

Past operations and activities of the firm are shared with the current serving workers as a means of empowering their design skills further. Furthermore, the core operations of the BMW Group are guided primarily by the notion of creating products that are emotionally charged to achieve a lasting appeal among the buyers.

The designers at BMW Group specifically focus their attention on achieving a momentum in every vehicle that is released to the market, such that people in the market can remain engaged emotionally for a longer period. This strong behavior developed in the firm’s workforce has achieved a permanent affiliation between high quality products and the BMW brand.

Right from the initial stages of idea conception to the physical production process, both the designers and the engineers at the firm strive to ensure that whatever they are working for achieves meaningful and functional perfection. This strong heritage built over the years is further guided by the past performance of the traditional car models that were designed by the firm.

Employees are also rewarded for their great performances in terms of their engineering and design contributions, which have gone ahead to help the firm achieve its strong brand position and quality performance results. These strong behavioral concepts are likely to sustain BMW’s efficient and unique performance in numerous fronts (BMW par. 1). The firm has succeeded to retain a minimal turnover rate of its workforce, which implies that little of its skills built over time are lost to the rival firms as a result workers moving out to be employed by the rival firms.

Conclusion

The BMW Corporation has succeeded to maintain its top position as one of the best car manufacturers in the world. This strong performance has been sustained by significant strategy activities that have ensured that the BMW model continuously enjoys a competitive advantage over its rivals.

In terms of the resource base view, BMW has initiated a carbon fiber manufacturing plant as it strategically positions itself to manufacture its own viable ultra-lightweight plastics (CFRP), as well as sell the surplus in the industry. This special resource has boosted the firm’s capability in terms of producing highly efficient cars, while also increasing its revenue base capability.

BMW has also explored on the possibility of working closely with Toyota Motor Corporation to enhance its dynamic capability, especially in terms of acquiring skills on hydrogen cell fuel and ecological car models. BMW has built a strong brand name over the many years of its operations, which are closely associated with top quality performance and high efficiency results.

More importantly, the firm has succeeded in creating a strong design culture among its employees. This has made it possible for the BMW models to be associated with good performance and high quality.

Works Cited

“Economic Indicators.” Chemical Engineering 117.5 (2010): 71-72. Print.

BMW Group. BMW Group and SGL Group to Triple Production Capacities at Moses Lake Carbon Fiber Plant. 2014. Web.

BMW. BMW Insights. 2014. Web.

Papasolomou, Ioanna, and Philip J. Kitchen. “Cause Related Marketing: Developing a Tripartite Approach with BMW.” Corporate Reputation Review 14.1 (2011): 63-75. Print.

Roberts, Graeme. Germany: BMW and Toyota Talking Roadster Cooperation. 2014. Web.