314 final paper project final
TRANSCRIPT
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B M W G R O U P
International Business Final Project
By:
Aaron PrescottKris Miner
Micah Edmond
Travis Harrant
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Table of Contents
INTRODUCT
ION
.................................................................................................................... 2Aaron Prescott ........................ ........................... .......................... ........................... .............. 3
Products and Services.................................................................................................................. 3Product Development & Government Policy .......................................................................................... 4BMW Global Production, Outsourcing, and Logistics ......................................................................... 5Vertical Integration............................................................................................................................................... 7Foreign Direct Investment ................................................................................................................................ 9Greenfield Strategy ............................................................................................................................................... 9BMWs Operation Segments .......................................................................................................................... 11Works Cited (Aaron) ......................................................................................................................................... 12
Kris Miner ........................................................................................................................... 14
Culture .......................................................................................................................................... 14Works Cited (Kris) ............................................................................................................................................. 21
Micah Edmond ................................................................................................................... 23Marketing ..................................................................................................................................... 23
Acquisitions ........................................................................................................................................................... 23The Four Ps ........................................................................................................................................................... 26Push and Pull Strategy ..................................................................................................................................... 29Works Cited (Micah) ......................................................................................................................................... 31
Travis Harrant ................................................................................................................... 32Financial Analysis ...................................................................................................................... 32
Works Cited (Travis)......................................................................................................................................... 37
Herbert Bowen .................................................................................................................. 38Current Challenges and Solutions ......................................................................................... 38
Mergers .................................................................................................................................................................... 39Globalization Strategy ...................................................................................................................................... 41Strategic Alliance ................................................................................................................................................ 42Works Cited (Herb) ........................................................................................................................................... 45
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INTRODUCTION
BMW Group Company is powerful MultinationalEnterprise, represented all
over the world with more than 94,000 employees and over one million vehicles sold
every year. Importers in 120 countries represent the BMW and worldwide sales
organization comprised 24 sales subsidiaries. They are one of the most successful
multi-brand premium car manufactures in the automobile industry. They are the
only manufacturer of automobiles and motorcycles worldwide that concentrates on
the premium standards and outstanding quality for every one of their models.
Being one of the few automobile manufactures that concentrate exclusively
in the premium market of automobiles, they offer an array of products. The BMW
and Rolls-Royce brands of the company serve the premium and ultra premium
segments in the automobile market. They also serve the premium small car
segments with their Mini brand. BMW models include, Sedans, Coupes, Touring,
Compacts, SUVs, etc. BMW has been making cars for almost one hundred years. Theybegan as an aircraft company and then used the meticulous engineering to design
top of the line cars. BMW is synonymous with high quality and performance, which
is reinforced by strong brand recognition and customer loyalty.
Introduction by, Aaron Prescott
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aron Prescott
Products and Services
BMW provides its customers with premium luxury and sports model
automobiles and motorcycles. For almost a century BMW has maintained a
reputation of excellence ever since the first motor was built. The First BMW engine
that was produced was the, M2 B15 Victoria motorcycle(bmwdrives.com). BMW
began to move away from the aircraft industry because of the armistice agreement
Germany signed at the end of World War II, which prohibited the Germans from
making aircrafts. In 1922 BMW, constructed the R32 motorcycle that was BMWs
biggest seller, selling 3,100 bikes till 1926. The R32 showed a strong impression at
its world premier at the Berlin Automobile Show. With the great success of the R32
BMW began to move into vehicle construction even before automobiles were
invented. This movement is the point at which BMW established their trademark
boxer engine design and continue until present day.
1928 was the year BMW presented their first automobile for sale called the
Dixi 3/15. BMW purchased a car factory in Eisenach, Germany and with it a license
to begin building the small vehicle. Since then BMW has been producing top of the
line automobiles available all over the world.
The current models BMW produces today are, the 1-series, 3-series, 5-series,6-series, 7-series, Z-series, X-series, M-series, Xm-series. BMW uses a unique
numbering system to identify their models. Usually the lower the number the
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smaller and less expensive the car. The two digits following the series number
indicates the engine size and the, i or d specify fuel injection or diesel. In some cases
after the engine size numbers certain models will have a c or x, which indicates
coupe or all wheel drive. The Z-series is BMWs sports convertible model and x-
series is BMWs SUV models. BMWs M series is a unique model; it comes with high
performance and always a higher cost. The M models are offered in all the series
BMW produces and includes high performance engines and aftermarket parts to
enhance the driving experience.
Product Development &Government Policy
Since 2004 BMW has spent millions of dollars in R&D to advance the BMW
name in the alternative energy movement. BMW was the worlds first car
manufacture to prepare medium a long-term development of its vehicles in
alignment with a hydrogen-based operation. The move too hybrid vehicles over the
globe has become a growing concern for many automobile companies. In the
U.S,recently President Obama announced new fuel efficiency standards to increase
automakers research and design teams to produce newer technology that will
return higher fuel efficiency. BMW calls their alternative energy approach, BMW
CleanEnergy, and their focus is to, eradicate emissions and to utilize regenerative
sources of energy(Just-auto). Along with the hydrogen engine BMW announced
that the companies first mass-produced electric car would be released in 2013. The
Mini E, under BMWs Mini Cooper brand will be a fully powered battery-operated
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automobile. Although BMW and the other European automobile makers are late
arrivers in the electric hybrid sector, BMW plans to surpass other current hybrid
vehicles on the road. The Mini E, will be lighter, stronger, faster, and safer than any
other current electric car. Its light weight and stronger aspects will come from a
high tech carbon fiber that will allow the Mini E to have a 160 mile range on a single
charge. BMW Group is currently the only company that will be launching a volume-
production vehicle on the market that features carbon fiber-reinforced material
(GAS 2.0). BMW has a strong share invested in the U.S market and has government
regulations become stricter, BMW has to find ways to alter their strategies and
remain competitive in foreign markets BMW will effectively transition into the
hybrid sector and maintain the same line of excellence and instill their reputation of
The Ultimate Driving Machine.
BMW Global Production, Outsourcing, and Logistics
BMW manufactures products in thirteen countries on four continents. BMWs
worldwide subsidiaries and manufacturing plants are located in, Germany, Austria,
the UK, the USA, Mexico, Brazil, South Africa, Egypt, Thailand, Malaysia, Indonesia,
the Philippines and Vietnam. BMW automobiles are produced at twenty-four
different locations. BMW also owns the MINI and Rolls-Royce brands, which are
produced in Great Britain. Their motorcycles are manufactured in Berlin and the
Husquvarna brand in Italy.
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To Ensure customer satisfaction all around the world BMW maintains the
same standards of quality, safety and processes at all of their locations around the
world to guarantee worldwide premium products. (BMWgroup.com). BMWs
integration of production and logistics systems within the twenty-four
manufacturing sites around the world offers many advantages for its customers.
First and foremost, greater efficiency in the supply of production materials helps to
speed up the delivery of cars and motorcycles to customers, each plant making its
own contribution to the smooth operation of the production
network(bmwusfactory.com). BMW maintains premium automobiles throughout
the world; recently in 2009 BMWs manufacturing plant in South Carolina
celebrated fifteen years of vehicle manufacturing producing 1.5 million vehicles.
BMW has had a presence in the United States since 1975 as BMW of North
America LLC. In recent years BMW of North America has grown to include
marketing, sales, and financial service organizations all throughout the US. BMW
has over three hundred automobile sales centers, 335 BMW Sports Activity Vehicle
centers, 142 BMW motorcycle retailers, 90 mini passenger car dealers, and 31 Rolls-
Royce motor car dealers(bmwusa.com). BMWs group sales for North America is
located in Woodcliff Lake, New Jersey. BMW only has one manufacturing plant
located in North America and its located in South Carolina.
In the United States BMWs major manufacturing plant, located in
Spartanburg, South Carolina, is a subsidiary of BMW GROUP in Munich, Germany.
The Spartanburg plant is a Limited Liability company and is a subsidiary of BMW
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Groups global manufacturing network. The plant manufactures all of the BMW X5
and X6 sports utility vehicles for distribution around the world.
Interview from a BMW Representative (at their New Jersey Headquarters)
Mid way through the semester I spoke with a representative from BMW, Mrs
Wright from their New Jersey headquarters. I explained to her I was conducting an
international business project and had a list of questions I was wondering if I could
get answered. She was very helpful, I emailed her my list of questions and she
forwarded them someone who could answer them. About a week later I received an
email from a generic email account with my questions answered, but I never
received a name or title of the representative who answered them. I called Mrs.
Wright back and she assured me they were from a reliable employee but could not
remember who she gave them too. Of the various questions I asked, one in
particular gave an in-depth response (Does BMW use more of a vertical or
horizontal integration strategy around various locations in the world?) Based on the
response I believe the representative may be involved in managing BMW parts for
various assembly plants around the world.
Vertical Integration
Recently BMW has started preferring the make over the buy option in
some countries in an attempt to cut cost(Interview Questions). BMW began relying
on more vertical integration compared to past years in order to strengthen the
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capabilities of their OEM car parts. In 2007 BMW started the expansion of the
stamping plants in Leipzig and Regensburg with a total investment of 200
million(Interview Questions). BMW justified the upper level decision with the
rising high logistical cost of pressed parts. The shift to produce more in-sourced
parts came when, German automakers factories were running at significant high
utilization rates, 97% in 2005.
Many suppliers operating in such sectors of the component supply industry
fear BMW might re-in source all of the pressed parts activities thus undermining
their businesses(Interview Questions). BMW sees the move towards a higher level
ofvertical integration in some specific sectors in various countries, such as
Germany, will be beneficial to increase productivity.
Where available BMW employs a Just In Time supply strategy. BMW parts
are shipped directly to the assembly areas, and free up in housing of resources. To
maintain smooth and efficient flow of production materials to plants around the
world, BMW established the Integrated Logistics Centre (ILC). Each plant has a large
warehouse, connected directly to the assembly area by two tunnels through which
electric tow trains feed the production lines(Autointell.com). The ILC provides two
functions, act as a receiving and sequencing facility, and provide space for theJust In
Time suppliers to carry out their work as close as possible to production.
The move towards Just In Time supplying and using a more vertical
integrated decision making system is BMWs Six Sigma philosophy, to reduce
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defects, boost productivity, eliminate waste and cut costs throughout the
company(Hill).
Foreign Direct Investment
BMW Group is very successful in global production. As a global players
BMWs flexible network of 24 production plants in 13 countries ensures that
customers receive exactly the car they have ordered, tailored specifically to their
wishes and preferences(made by the BMW group). BMW realizes the importance of
creating opportunities of local production in foreign countries and they capitalize
on opportunities to penetrate and develop markets with long-term growth
potential(made by the BMW group). By establishing a local production plant, BMW
is able to enhance local acceptance in the market and become a local player.
BMWs Foreign Direct Investment in the United States has had provided
thousands of jobs for U.S citizens. In 2008 BMW announced that they were investing
1 billion dollars in their Woodcliff Lake headquarters, in New Jersey. The expansion
provided 1,00 jobs, to U.S citizens. This investment is the largest BMW has mad in
America aside form its manufacturing facility in South Carolina(Ofii.org).
Greenfield Strategy
By investing in Greenfield production plants in various countries, BMW can
reduce high import costs of importing fully assembled automobiles to specific
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countries. BMW calls these local production plants, completely knocked down,
(CKD), they can also be used in such cases to offer products in emerging market at
competitive prices(made by the BMW group). In the CKD process BMW assembles
cars locally from imported parts and supplemented by parts produced locally and
essentially fulfilling the local content requirements imposed by different countries
government regulations. One of BMWs current Greenfields investments is located in
Shenyang China, and BMW is planning to expand the production plant beginning in
2010. BMWs Greenfield expansion has the potential to make total production
capacity to increase to more than 100,000 units in the 1st step the capacity can be
gradually increased up to 300,000 units/year in line with growing market demand
in the long term.
BMW has also taken not of potential emerging markets for production.
Russia, India, Egypt, and ASEAN (Malaysia, Vietnam, Thailand, Indonesia) countries
will double their share of production compared to 2009(Bmwgroup.com). In 2013
these companies are only forcasted to account for 1.7% altoghether in the premium
market. The plants that BMW has in these countries do not feature full-fledged car
production buy only assembly of CKDs kits shipped from elsewhere to sidestep
import tariffs which are strongly enforced in these countries(autointell.com).
BMW is able to make use of these local Greenfield production plants for
natural hedging. BMW explains the benefits of natural hedging, A high level of
purchase volume in key sales regions with differing currencies serves to balance out
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the flow of merchandise as well as make up of currency fluctuations and the
associated trading risks(made by the BMW group).
BMW plans to reduce dependence on foreign exchange rates by utilizing the
natural hedging it has implemented over various countries. Exchange rates have
become a burden for the BMW GROUP in recent years. By increasing the CKD
assembly plants world wide BMW plans to cut down significantly on foreign
exchange rates. In light of its successful retail trend in the USA, the BMW Group
wants to expand its natural hedging sustainably over the medium term and thus
significantly reduce its dependence on volatile foreign exchange
rates(bmwgroup.com). BMW plans to expand the production capacity at
Spartanburg Plant located in the USA from 150,00 to 240,00 units by 2012. This will
allow BMW to decrease its foreign exchange rates to the US and decrease
transportation cost. One aspect is the local content of the vehicles manufactured in
the USA. In recent years, it was increased from about 30% to more than 60%.
Another aspect is purchasing in the NAFTA region for production in Europe and
other regions. In 2006, the NAFTA region accounted for some 9% of BMWs global
purchasing(bmwgroup.com).
BMWs Operation Segments
BMW is divided into three operation segments, they are, Automobiles,
Motorcycles, and Financial services. The BMW automobile segment includes
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research and design, manufacturing, and assembly. The segment also focuses on
selling cars and SUVs under one of the three BMW brands, BMW, Mini, and Rolls-
Royce. . This segment sells its cars and off-road vehicles through authorized dealers
and independent import companies(Businessweek). The motorcycle segment
focuses on manufacturing, assembly, and selling of the BMW motorcycles. Both the
automobile and motorcycle segments offer spare parts and accessories for purchase.
The last segment of BMWs operating segments is financial services. The main
concentration is mostly on leasing. The leasing aspect deals with retail customers
and dealer financing to ensure the leasing opportunities are available to all
customers and remain equal to all possible leases. The financial segments also
handles Fleets business, customer deposit business, and insurance ventures.
Works Cited (Aaron)
"gas2.org." Auto UK, 22. 04. 2010. Web. 1 May 2010.
.
"BmwFactory.com." The BMW Group Production Network. Auto UK, 2010.
Web. 1 May 2010.
.
"BmwUSA.com." BMW Group in North America . N.p., 2010. Web. 1 May
2010.
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"OFii.org." The Impact on the U.S. Economy of Greenfield Projects by U.S.
Subsidiaries of Foreign Companies . N.p., 2010. Web. 1 May 2010.
.
"bmwgroup.com." Strategies . N.p., 2010. Web. 1 May 2010.
.
"Businessweek.com." Bmw Stock Research . N.p., 2010. Web. 1 May 2010.
.
"Autointell.com." BMW Logistics. N.p., 2009. Web. 1 May 2010.
.
Hill, Charles W. L. International Business Competing in the Global Marketplace. 7th ed.
Boston [u.a.: McGraw-Hill/Irwin, 2009. Print.
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ris Miner
Culture
Culture is a word that does not have one solid definition. One of the most
popular definitions is that by Edward Taylor which he defines culture as, that
complex whole which includes knowledge, belief, art, morals, law, custom, and other
capabilities acquired by man as a member of society (Hill 89). The same can be
applied to a corporation instead of a man, in this case Bavarian Motor Works
(BMW). BMW is a multinational corporation, based in Munich Germany, which
covers more than one hundred and fifty countries. They have seventeen production
facilities, which are located in six different countries. These six countries are
Austria, Great Britain, South Africa, China, the United States, and Germany. BMW
also outsources to six other countries and has research and development in over
thirty countries. Many of these countries have very different cultures. BMW not
only has to look at how its German culture affects these countries, but also how each
countries culture is different and how these individual countries need to interact
with each other.
BMW, as a corporation and as a multinational enterprise, builds its corporate
culture through its management style and its employees. With over one hundred
thousand employees, BMW has managed to create a high efficiency culture with
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their goal being, to constantly incite each other to become even better, to offer even
better products. BMW employees are considered part of a team. In order for this
team to succeed, they need to have a high team spirit. It is this team that gives BMW
the reputation associated with them.
The following principles of the BMW Group form the basis of this long-term
and target-oriented action. These twelve basic principles are customer orientation,
high efficiency, responsibility, effectiveness, adaptability, disagreement, respect
trust and fairness, employees, exemplary function, sustainability, society, and
independence (bmwgroup.com). While the employees of BMW can be considered
a society, these are the societys values. The vision of BMW is to become the
worlds leading provider of premium products and premium services for individual
mobility (bmwgroup.com).
The first principle is customer orientation. Like all other companies who
provide a product, it is the customers who determine the success of the company.
This is why BMW builds their company around their customers. A second principle
is peak performance. It is a norm for everyone in the company to work to their best
potential. With this mindset from the employees, BMW is able to be highly efficient.
Another principle is responsibility. Each employee is part of the organization. If one
employee slacks off then it affects the entire company. Thats why each employee
has a personal responsibility to make the company successful. Next comes
effectiveness. BMW looks for effective results and production. If something is not
working as effective as possible management will look to improve it. Adaptability is
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also very important to BMW. With recent breakthroughs in technology, companies
have to be able to adapt. BMW takes this as a chance to create and then implement
their new technologies into production vehicles. A company that is able to adapt to
change, or stay ahead of change, like BMW will be a successful company.
BMW also allows and looks to resolve dissent once it is brought up. An
argument in any company is never a good thing. Like any argument, the longer they
drag out the worse they get. This is why BMW wants its employees to be upfront
and bring any disagreements to management who can hopefully resolve the
argument and send the workers back to work. With dissent, BMW also has a strong
belief in respect, trust, and fairness. Every employee is expected to treat each other
fairly and with respect. If this is done, then fairness should follow. This belief in
respect, trust, and fairness allows for employees to work with confidence and to
their full potential to create the best product possible.
Like the BMW website says, a company is only as good as its employees are.
Thats why the employees hold such a high responsibility to succeed. Each
employee is expected to lead by example. This belief ranges from the CEO to the
employees on the assembly lines. The company also strives for sustainability. In
this case they want the company to be successful economically. If a company is
economically successful, then it must be making a strong product that is desired by
consumers. BMW does this by making vehicles that are considered some of the best
in the world.
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The final two basic principles of BMW are Society and Independence. BWM
is committed to focus on its social responsibility. This social responsibility is for
BMWs employees, consumers, and everyone else that is affected by the decisions of
BMW. Independence is something that is very important to BMW. The way that
BMW stays independent is through sustainable and profitable growth. BMW not
only survives, it grows. BMW is the company who buys other companies instead of
being bought out.
These twelve basic principles are the guidelines, which BMW functions
under. These guidelines create a culture that is highly efficient and very successful.
This corporate and employee culture are not just for one location. Instead, they are
followed internationally wherever the company is located. Whether it is in
Germany, America, or South Africa, these basic principles are uniform and being
enforced to make sure that BMW continues to succeed. While the different
countries that BMW enters for business have different cultures, the employees
voluntarily accept the BMW culture. It is a culture pushes the employees to exceed
and respects them as well.
BMW continues to fill a large part of the vehicle segment worldwide. It does
this in all different types of political systems. While BMW is a company that has had
great success in democracies, which support individualism, it can also succeed in
totalitarian countries where socialism and collectivism are practiced. The high
efficient culture that BMW has created allows BMWs to be found in all different
types of economies. In market and mixed economies, BMW has had a steady
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following and made profit in most of these countries. The company is really starting
to make pushes in countries with command economies like China. China has a
market for large sedans. The fact that they are built in the country at the Shenyang
plant is a plus for the Chinese. This plant specializes in production of the 3 and 5
series for the local Chinese market. These two sedans alone make up for over fifty
five percent of the BMWs sold in China. When the 7 series sedan is added to this
number, about seventy three percent of all BMWs sold in china are sedans. This is
different compared to Europe where narrow streets and high gas taxes cause a
larger demand for small more fuel-efficient vehicles (www.bmwgroup.com).
While some companies often look at product safety laws as an inconvenience,
BMW often passes these with flying colors. According to the Insurance Institute for
Highway Safety (IIHS), all BMWs received a rating of good. Also according to the
IIHS, crash test ratings are a big reason why Chinese vehicles are not allowed in
America, as well as many other countries. They are simply not safe enough and do
not pass these product safety laws. This adds to the BMW reputation where they
build vehicles, which surpass the expectation being legal, and build something
special. Quality of work like this can be related back to the twelve principles that
are the guidelines BMW employees follow.
An important factor in understanding any corporation is SWOT analysis.
First are the strengths of the company. First off is its highly efficient culture, which
was already talked about. Next is the fact that BMW is owned by itself. As an
independent corporation, it is in control of its own destiny and able to make its own
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decisions (Dharmesh). While BMW controls itself, it also controls other companies
such as MINI and Rolls-Royce. These are two companies which are somewhat
specialized yet still profitable. Another strength is that it has a strong brand loyalty.
There are many people and families that are enthusiast and will only purchase
BMWs. BMW is also found in every corner of the populated globe. This large
market makes BMW a known competitor to everyone. Finally, since BMW is found
all over the world, it specializes production to best fit the culture of a certain area.
For instance, in Europe, less powerful yet more fuel-efficient engines are offered
while in America the engines are more powerful and less fuel-efficient. This is
slowly changing though as oil prices steadily increase.
While BMW has lots of strengths, like many other companies it also has some
weaknesses. While BMW controls itself, Mini, and Rolls-Royce, these cars are all
relatively expensive; especially in the American market. Only the base Mini Cooper
is available fewer than twenty thousand dollars. While the Rolls-Royce brand
reaches well above a couple hundred thousand dollars. Another problem is the
repair price. If something goes wrong with a vehicle, parts are not cheap. BMW
only puts the best parts in their vehicle so it is a tradeoff that owners have to accept.
While strength of BMW is loyalty, a weakness is customer dissatisfaction. If a
customer has a bad experience with a vehicle or an employee, it is very possible that
that customer will go to a competitor.
BMW has many opportunities ahead of itself. With the new trend of
globalization, BWM has the possibility to further spread its brand. Shipping cost are
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going down and allowing more BMWs to be in more places. They have an
opportunity to continue to influence China Also, new alternative energies are
coming out and BMW is not going to let any of these pass them by. BMW has pretty
much perfected their diesel engine, they have developed a functional hydrogen fuel
cell, and well be coming out with it soon, setting the standard for new hybrid
engines. All of these are opportunities for BMW to expand and grow.
Threats occur in all companies and the way in which companies handle these
threats determines their success. One threat BMW faces is competition. The
market, which BMW is in, is very competitive with competitors such as Mercedes-
Benz and Audi. These competitors are, like BMW, doing a lot of research in order to
stay on top of emerging technology. Oil is also another threat to BMW. With more
concerns about the possibility of an oil shortage, prices of crude oil and gasoline are
both on the rise. This causes people to drive less and buy more eco friendly vehicles
and BMW has yet to releases they hybrid models. With oil prices on the rise, many
countries are developing new standard such as Americas new Corporate Average
Fuel Economy, or CAF standards. These CAF standards require fleets of cars to
achieve an average pre determined fuel economy (NHSTA.com). If these threats are
not taken seriously and constantly watched, BMW could fall behind the trend.
BMW is a multinational corporation that spans all around the world. While
every country has a different culture, BMW has a culture of its own which it brings
with it wherever it goes. While BMW does have to adapt to different laws and
regulations in different countries, it brings an internal culture with it that people are
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willing to adapt to. BMW and its internal culture follow twelve basic principles, or
norms, which make it highly efficient and very successful wherever it goes. It is very
rare to see an international business have such a uniform culture in different
locations. As BMW says itself, Today we are active in more than 140 markets
worldwide. However, we can only tap into the full potential of international
business if we understand different customer groups, cultures and requirements.
Ideally, this task is handled by employees who have a deep understanding of this
diversity thanks to their own biographies, life situations, experiences and interests
(bmwgroup.com)
Works Cited (Kris)
"BMW Group." BMW Group . BMW, 04/23/1989. Web. 29 Apr 2010.
.
"CAFE overview." NHSTA.gov. NHSTA, 2005. Web. 29 Apr 2010.
.
"BMW Company AG: 2005 Company Profile." Just-auto.com . Aroq ltd.,
April 2005. Web. 29 Apr 2010 . .
"BMW in China, Joys of BMW." google docs. Web. 29 Apr 2010.
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w.scientificaward.com/e/0_0_www_bmwgroup_com/investor_rela
tions/ir_services/BMW_in_CHINA.pdf+bmw+plant+%22greenfield
%22&hl=en&gl=us&pid=bl&srcid=ADGEEShRAHeXpINj0A_QTsxMB
KSWV6pUxW7xrbNm4mMh313RSuw_ntfgxfmy5gN4JWLKxe6W_1k
Yb_GZXvTrXpjxLUMgNtTalJuZKOal5-
pGR2Yajy0KTbmuq8LZ0Z83KSB2mCsFOnql&sig=AHIEtbThZV-
YYlFfR9Pjc63J8jzIDDZVqg>.
Dharmesh, . "Marketing Strategies BMW." Slide Share. N.p., 08/02/2007.
Web. 29 Apr 2010. .
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Micah Edmond
Marketing
"With the three brands, BMW, MINI and Rolls-Royce Motor Cars, the BMW
Group has its sights set firmly on the premium sector of the international
automobile market. To achieve its aims, the company knows how to deploy its
strengths with an efficiency that is unmatched in the automotive industry. From
research and development to sales and marketing, BMW Group is committed to the
very highest in quality for all its products and services. The company's success to
date is proof of this strategy's correctness." (www.bmwgroup.com)
Acquisitions
BMW bought the British Rover Group in 1994, which consisted of Rover,
Land Rover, and MG brands. For years BMW held a small market to which they sold
cars, which needed to be changed. They needed to spread out across the market and
expand upon their product base. BMW had to be extremely careful when doing this
because they could easily destroy their very successful image. They had to make the
right decision on how to expand their product line but carefully, if they created a
more inexpensive line of cars, which would compete with Ford, Honda, Toyota,
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Volkswagen and Fiat it would unquestionably decrease the value of the BMW brand.
Many car companies in the past have failed miserably trying to connect the
extremely large gap between small budget vehicles and premium luxury vehicles.
When Fiat created the Croma they focused it as an executive car but it did not do
very well on the market, at the same time Fiat released their budget supermini car
the Uno, which did extremely well. The only times when large car companies were
able to be successful in multiple market areas was when they used multiple brands,
with a lower end going up to a higher end. The Volkswagen group was able to
achieve this going from their lower end brand Skoda, to their middle class that
consisted of Volkswagen up to their higher class Audi, topping it off with their
exclusive brand Bentley. BMW held a spot at the premium level and the exclusive
level with Rolls Royce.
There were only two options for BMW to expand; this was to either purchase
an already existing brand or to completely create a new brand. BMW looked into
developing a new brand, which could have been profitable for the company. Brands
such as Toyota and Nissan were successful with their additions of their luxury
creations Lexus and Infiniti. While BMW were researching and planning their
possible routes for expansion into the market an option took place where they were
able to look at Rover. Rover was planning their next addition the now extremely
popular Range Rover, when they came to BMW searching for a supplier that could
produce diesel engines. At the time British Aerospace owned the Rover Group and
were also searching for an exit from the company due to differing interests with the
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companies focus on airplane design and manufacturing as well as defense. BMW
was not the only company that had its eye on Rover; a competitor of theirs,
Volkswagen, was very interested in the company. This made it important for BMW
to seize the company before Volkswagen was able to. Rover fit BMWs premium
image and outstanding quality like the missing piece to a puzzle. The possibilities
of overlap between the two manufacturers were little to none. The one problem
among the transaction was Hondas partnership, owning 20% of the company. On
the other hand Rover owned 20% of Hondas United Kingdom manufacturing
facilities. Honda was not comfortable being partners with their competitor BMW,
resulting in a trade of ownerships. (www.aronline.co.uk)
BMWs choice to purchase the Rover Group was an exceedingly smart move
that benefited the company in the long run. Rover could have become Britains go-
to brand for a premium vehicle, which would have helped Honda enter this market.
With BMW breaking the tie between Honda and Rover, they were able to delay the
possible competitor from having a big influence on the European market. After five
years of BMW owning Rover they only released one new car, the Rover 75. BMW
closed the majority of Rovers dealerships as well. BMWs tactics at the
international helped them setback a possible competitor from entering a market in
another country. (www.aronline.co.uk)
BMW soon sold the Rover Group to Ford but was very smart in their moves
along the way. While BMW owned Rover they only invested in certain areas of
which they retained after the deal was done. BMW retained the Rover, Triumph,
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Riley, and MINI brands. BMW though did not sell the rights to the 4x4 to Ford,
which they kept and later used on their X5 model. BMW invested into multiple of
the Rover plants, Longbridge and Hamms Hall, and facilities, Cowley and Swindon,
during ownership of which they retained when they sold the company.
The Four Ps
The four Ps have a huge impact on how BMW makes their marketing
decisions internationally. These four controllable categories are product,
promotion, price and place.
The first of the four Ps is product, which is the physical product that is being
sold. BMW offers three levels of premium vehicles; they offer Rolls-Royce at their
exclusive level, BMW at their mid sized premium level and MINI as their smaller car
premium level. Rolls-Royce is currently producing two lines, the Ghost and the
Phantom. Both of these lines targeted towards exceptionally wealthy families and
people who are looking to be "highly individualistic." (www.rolls-
roycemotorcars.com) BMW currently has nine series of cars which include the; 1, 3,
5, 6, 7, X, Z4, M, and Hybrid. The 1 series is geared towards the middle class and is
BMWs new less expensive model. The 3 series is BMWs compact executive car,
which is pushed toward individuals who want a premium car but do not need a
large sedan. The 5 series is BMWs mid-size executive car that is for businessperson
who also has a family or wants more space. The Z4, M and 6 series is geared toward
a businessperson who is looking for incredible BMW performance as well as
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modern style. The 7 series is BMWs full size luxury car that is focused towards
people looking for effortless luxury and tremendous power, generally focused
toward a wealthy businessperson. BMWs X series is focused towards wealthy
families, directly mothers who are "socially conscious." (www.bmwgroup.com)
BMW also offers multiple lines of Hybrids, which is focused towards more
environmentally savvy individuals. MINI currently entails; Cooper, Cooper S,
Cooper Clubman and the John Cooper Works. MINI is more of a city car that is
geared to people who do not need space but are family oriented and active. MINI is
for individuals that looking for a premium level vehicle but fell that BMW is too
expensive. In Europe MINI is very popular because of small streets and the car is
easy to drive on these streets. Each of the companies has cars that are focused to
certain target markets, which vary internationally. Along with their multiple brands
and product lines, they provide premium customer service. (www.bmwusa.com)
The price section of the four P's of marketing is different depending on which
country you live in. In the United States, the product line of Rolls Royce ranges from
$245,000 to $450,000. BMWs product line ranges from $27,000 to $137,000
dollars. The MINI product line ranges from $17,000 to $34,000. There are many
factors that affect BMW Groups decision with choosing the price of a vehicle. Sports
versions of their vehicles that contain performance enhanced specifications and
different sized engines also influence prices.
The third P is Placement, which is based on how BMW makes their vehicles
available to the targeted customers. BMW only distribute their first-class vehicles
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through premium dealerships with BMW and MINI. Making the vehicles exclusive
gives their company an advantage in preserving their premium status throughout
the world.
The last of the 4 Ps of marketing is promotion. Promotion is one of the most
important factors when dealing with a business internationally. BMW has to use
different advertisements for selling their premium cars in different countries
throughout the entire world. One advertisement would not meet the needs of the
different cultures of different countries. In our textbook International Business:
Competing in the Global Marketspace by Charles W.L. Hill, he explains that cultural
differences between nations are such that a message that works in one nation can
fail miserably in another. Cultural diversity makes it extremely difficult to develop a
single advertising theme that is effective worldwide. (p. 607) For example an
advertisement created by BMW could possibly work with the German culture but be
insignificant to people in the United States. BMWs slogan though works equally
well throughout the world, which is The Ultimate Driving Machine that was
created thirty-five years ago. The Ultimate Driving Machine is straightforward and
can relate to any customer throughout the world that is looking for a premium car
with exceptional quality. (www.bmwblog.com)
When visiting the BMW websites for both Germany and United States the
home pages are similar yet they way they present the information is different.
When visiting both websites the navigation section are the same as they are at the
bottom of the page. What is different about the two websites is the central
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advertisement in the middle of the page, the main attraction. On the German BMW
website there are four pictures that you can scroll through. Each of these four
pictures give a statement about their new ad campaign "Joy Is" The website
describes their new BMW 3 series Cabrio as "Joy is Always in Season," and their new
hybrids as "Joy is Efficiency of Movement, Joy is BMW Active Hybrid." When you
arrive at the United States BMW website you are greeted with a short movie clip and
music. The website then explains the same ad campaign as in Germany but more
flashy. After the site automatically moves onto the next section it presents their
campaign "Build Your Own." This attracts the United States populations ongoing
obsession for everything to be customizable. It explains how each of their cars has
"hundreds of millions of possibilities" as to how to customize a BMW to make it your
own. These high tech and gaudy advertisements work well with their target market
in the United States. The only way to catch the eye of a potential customer is to have
an ad campaign that will draw them in to see what you have to provide. Which is
exactly what BMW does with this new campaign they are able to draw in Americans
to make a car of their own, and no one else in the world will have the exact same car.
The German site is more straightforward and geared towards giving the consumer
an exceptionally premium car with guaranteed quality.
Push and Pull Strategy
BMW Films was BMWs form of advertainment which is a mesh of
advertising and entertainment. Through these short ten-minute film series named,
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The Hire, BMW was able to promote their premium cars. In these films actor Clive
Owen is The Driver who is hired by various people to be a sort of transport for
their vital needs, though the real stars were the premium BMW vehicles.
(http://www.bmwusa.com/Standard/Content/Uniquely/TVAndNewMedia/BMWFi
lms.aspx) These short films highlight performance aspects of multiple BMW cars.
BMW was able to connect these films with multiple cultures throughout the world
by using various filmmakers from throughout the world. The nationalities of the
directors featured American, Taiwanese, Chinese, Mexican, and British. This diverse
group of directors allows BMW to connect with different cultures throughout the
world.
"The main decision with regard to communications strategy is the choose
between a push strategy and a pull strategy. A push strategy emphasizes personal
selling rather than mass media advertising in the promotional mix While "a pull
strategy depends more on mass media advertising to communicate the marketing
message to potential customers." (p. 604, Charles Hill) When BMW created their
short film series The Hire it was a distinct move in the way of a pull strategy. The
films demonstrated the high level of performance and the premium quality that
their vehicles contain. Individuals who watch would become potential customers
who would be attracted to BMW's cars, which were featured in each of the films.
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Works Cited (Micah)
Austin Rover Online. Web. 01 May 2010. .
BMW BLOG | BMW News, BMW Reviews, . Web. 02 May 2010..
"BMW Films." BMW North America. Web. 02 May 2010..
BMW Group. Web. 02 May 2010. .
BMW North America. Web. 02 May 2010. .
Hill, Charles W. L. International Business: Competing In The Global Marketplace. 7thed. Boston: McGraw-Hill/Irwin, 2009. 606-07. Print.
Rolls-Royce Motor Cars. Web. 02 May 2010. .
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Travis Harrant
Financial Analysis
The Bayerische Motoren WerkeAktiengesellschaft (BMW) Company uses
both International Financial Reporting Standards (IFRS) and the German
Commercial Code (HGB) for accounting policies and procedures. Both accounting
procedures are valid under the International Accounting Standards (IAS). In this
financial analysis I will be using the third quarterly report and the annual report
2009 for the BMW Company. The BMW Group uses consolidated financial
statements to report the companys financial position and its subsidiaries. They
enable the overall group of companys outlook as opposed to one companys stand
alone position. A consolidated financial statement combines the separate financial
statements of two or more companies to yield a single set of financial statements as
if the individual companies were really one (Hill 661). BMW Group uses the
current rate method to determine the exchange rate. Under the current rate
method, the exchange rate at the balance sheet date is used to translate the financial
statements of a foreign subsidiary into the home currency of the multinational firm
(Hill 664).
The third-quarter reported a net profit of euro 78 million for BMW Group.
This was euro 220 million (73.8%) lower than the 2008 third-quarter report. The
earnings for BMW Group are broken down into three categories- automobiles,
motorcycles, and financial services. The automotive segment is the companys
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largest revenue maker. The financial services place second; with the motorcycle
segment making the least amount of revenue. The automotive segment, based on
the third quarter, decreased from 66.2 million units in 2008 to 62.5 million units in
2009. Because of the economic crisis worldwide, BMW suffered losses from all
regions. The USA suffered about a three percent loss; even with the bonus program,
cash for clunkers(Annual Report). The bonus program in France helped boost
sales eleven percent. In the European Union the demand decreased around two
percent. Spain and Russia suffered the most from the economic crisis. Both
countries contracted by almost one-half. In Brazil, the car market was not affected
by the economic crisis. It grew by 9% because of the tax reduction for small cars.
India had the biggest increase, 18%, within the whole company.
The motorcycle and financial markets were also hurt from the worldwide
economic crisis. The motorcycle segment was reduced by one third from the 2008
year. In the USA, the largest market for motorcycles, sales dropped 40.9%. The
financial services were also hurting because of the international financial crisis.
Governments started to reduce interest rates to help compensate the recession. In
particular, they ensured the supply of liquidity to international money and capital
markets, which was also beneficial to the financial services sector (16 Quarterly
Report). This helped the BMW financial services sector with a profit of euro 94
million.
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Capital budgeting for BMW Group decreased from euro 4.2 million to euro
3.7 million. The main focus for BMW was product investment on new model set-ups
and infrastructure investments. In 2009, BMW invested euro 2.3 million in
property, plant and equipment and other intangible assets. This was decreased
euro 5.8 million from the previous year. The development costs rose 1.7 percent
from 2008.
Cash flows are classified into operating, investing, and financing activities.
Cash flows are the basis for dividends to stockholders, investments elsewhere in
the world, repayment of worldwide corporate debt, and so on (Hill 678). In 2009,
BMW generated a positive cash flow of euro 10.2 million, a 5.5 percent decrease
from 2008. The overall cash outflow decreased from the previous year. The
operating cash outflow, automotive segment, slightly decreased. Investing activities
fell euro 7.3 million from 2008. Financing activities also decreased from the
previous year, euro 2.1 million. Investing activities, for cash inflows, increased euro
1.3 million from the 2008 year. The total cash inflow also dictates the stockholders
dividend payment. For 2009, the dividend payment totaled euro 197 million.
BMW uses the Germany stock index, the DAX. The 2009 third quarter closed
at 5,675.16 points on the last trading day for the quarter. This was 18% higher than
the previous quarter. The automotive segment only increased by 3.9% for the
quarter. The index has gained 8.3% in value since the beginning of the year (14
3rd QTR Report). The common stock for BMW, at the end of the 3rd quarter, was
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euro 32.95, increased 22.8% from last quarter numbers. The preferred stock
increased 32.6% for the quarter. At the end of the quarter, the value of preferred
stock was euro 22.73. Because of the USA growing deficit, the US Reserve Bank had
lowered the interest policy causing the US dollar to lose value. In the beginning of
the year the US dollar was valued at 1.25 to the euro. At the end of the 3rd quarter, it
was valued at US dollar 1.46 to the euro. The US dollar has lost 4.1% of its value
since the previous quarter. This caused a 4.5% decrease for the closing rate. In
2009, BMW was the industry leader in the Dow Jones Sustainability Index. This
means that the BMW Group has been the most sustainable car manufacturer in the
world for the fifth time in succession (04 Annual Report). The BMW Group joined
the Carbon Disclosure Leadership Index in September 2009. This index applied to
companies in the Global 500 index that make a contribution to the climate
protection.
The current stock information, as of 4/27/10, has increased from the third
quarter report. The last trade value was euro 37.40. This was down euro .42 from
the previous day. The opening bid was euro 37.85. The bidding price was at euro
37.38. The asking price was euro 37.40. The days range was euro 37.08- 37.96.
The 52 week range was euro 28.28-37.85. The volume value was euro 2,164,814.
The market value cap was euro 22.53 billion. At the closing time, the dividend
increased euro .30 and yielded a .79 percent increase.
(http://uk.finance.yahoo.com/q?s=BMW.DE)
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Foreign exchange market is, a market for converting the currency of one
country into that of another country (Hill 324). The exchange rate is defined as,
the rate at which one currency is converted into another (Hill 324). Because the
currencies of different countries have different values compared to each other, the
overall value can be worth more or less than each other. The differences in the
countrys currencies value can let the company lose operating activities. The reason
behind this is because the company manufactures in one country and then sells in
another country. As noted above, the exchange rate does not affect the BMW
Groups financial worksheets. The BMW Group uses the euro for reporting
financial statements. The USA market has to use the exchange rate to compute the
earnings in the euro. Because the exchange rate is always changing, the results
differ from the previously reported amount. In some cases this makes it hard for the
company to compare the actual amount from quarter to quarter.
The BMW Group automotive segment sales volume is broken down into eight
markets- Germany, USA, United Kingdom, China, Italy, France, Spain, and Other. The
Germany market was the largest sales volume at 20.8 percent. The USA market
came in second at 18.8 percent. Spain came in last with 3.2 percent. In the
automotive market, the net sales volume decreased across the whole company. In
the USA, the units of volume fell 242,053, -20.3 percent. Canada, compared to USA,
surpassed their previous years sales volume by 2.9 percent. The European market
was hit hard by the global recession crisis. Sale volume was down 11.9% from the
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previous year. The European market only sold 761,887 units. The Germany market,
largest in the company, reported a volume of 267,539 units. This was down 4.8
percent from 2008 financial year. Spain sold 40,718 units, causing a 31.7 percent
decrease. Although the overall market sales volume was decreasing, the Asia and
Chinese markets increased. Asia reported a 10.5 percent increase. The Chinese
markets reported an overall increase of 31.1 percent. The total number of
automotives delivered by region, in 1,000 units, was 1,286.3 units. The European
market totaled, in 1,000 units, was 357.3 units. The Germany market, the largest in
the company, came in third with 267.5 units. The United Kingdom was the smallest
market with only 137.1 units.
Works Cited (Travis)
http://uk.finance.yahoo.com/q?s=BMW.DE)
Annual Report
Hill, Charles W. L. International Business Competing in the Global Marketplace. 7th ed.
Boston [u.a.: McGraw-Hill/Irwin, 2009. Print.
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Herbert Bowen
Current Challenges and Solutions
A strategy can be defined as the actions a manager takes to attain the goals of
the firm. Since, the pertinent aspect is the firm; a firm must maximize the value for
the firm, its owners and shareholders. Managers and firms alike must seek
strategies that increase profitability of the enterprise and rate of profit growth over
time. What exactly do I mean by this? BMW, engages in industry-level strategizing,
it analyzes global trends in the automobile industry and then positions itself in
relation to its competition (1). At the industry level, a global company progresses
to the stage of formulating and implementing strategies at the international level
(1). Now you must adapt and mutate the company strategy, in order to adhere to the
guidelines of the foreign company at hand.
To view some of these goals and missions that BMW has lets take a look at
Dr. Norbert Reithofer comments, 2009 was unequivocally a year of challenge for
the entire automotive segment, and BMW has emerged leaner from the experience
with a focus on cost reduction, design and ecological innovations... and, of course, a
keen eye on the growth markets of tomorrow. That the company has emerged
leaner is a result of a reduction of about 4% of its workforce - significant when you
consider that the group employs close to 100,000 employees. Then the company
slashed capital expenditure by almost 800 million Euros and maximized on its
financial services segment (2).
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In his comments, one can derive four components that appear to be the focus
of BMW, cost reduction, design, ecological innovations, and preparing for growth
markets of tomorrow. Through cost reductions BMW has become leaner by
reducing 4% of its workforce, which employs 100,000 employees, where cuts of
.04%*100,000 equals 4,000 employees being laid off. In addition, they slashed
capital expenditure by 800 million, all ways to cope with and war against the
tumultuous economy.
Moreover, BMW was able to become leaner due to learning effects and
economies of scale. Learning effects refer to the cost savings that come from learning
by doing. For example, labor, over time, gains efficiency and effectiveness, as they
are ameliorated, due to the managers and firms learning new and efficient ways to
increase revenue and cut down on operation. Thus, they are producing a better,
revamped economy of scale, for instance, the alliance between BMW and Fiat. This
entryfor BMW into the mini brand of cars would be a vehicle that is cute, but not a
luxurious (2).
Mergers
The merger was a signed agreement to build cars and share components,
(engines, know-how, especially when it comes to small cars). Board member
Friedrich Eichner, We are examining with the Fiat Group possibilities of joint use of
components and systems in Mini and Alfa Romeo vehicles, in order to achieve
economies of scale and thus cost reductions (2). (In fact, Minis are produced at the
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BMW in Cowley, Oxford.) Examining further economies of scale refers to the
lowering of a firms unit costs and the increases in its profitability. Fixed costs are
the costs required to set up a production facility, develop a new product, and the
like (Hill, 430).
Therefore, BMW and Siemens Energy and Automation aligned together, as
Siemens delivered turn-key automated conveyor and end-of-line testing systems
for BMWs new assembly North Facility in Spartanburg, S.C. (11). BMWs history of
production and factory innovations has been a good match with Siemens
technologies and services. We are pleased to begin these latest projects and look
forward to growing along with the Spartanburg facility, said Raj Batra, vice
president, Automation and Motion Division, Siemens Energy & Automation (11).
What is illustrated are two companies combining resources to propel BMW to new
heights and eventually industry leader. But what plagued them in the past, two
years ago in 2008 was the economic slowdown, or in other words the international
financial crisis. BMW had to cut 40,000 of additional units in 2008, as third quarter
sales fell by 8.6 percent to 12.6 billion, while net profit plunged by 63 percent to
298 million.
Along with the financial crisis, BMW had additional setbacks, such as
parsimonious consumers in main markets, lagging used car markets affecting
leasing operations, and rising financing costs. The group sold 349,098 of its BMW,
MINI and Rolls-Royce cars between July and September, a fall of 4.2 percent.
Compared to 2007 BMW reached sales of 1,276,793 vehicles, beating the previous
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year's level of (1,185,088) by 7.7%. MINI in comparison with the previous year of
(188,077), increased by 18.5% to 222,875 units sold to customers. Rolls-Royce
Motor Cars increased by 25.5%, as 2006 sales of 805, rose to 1010 cars, placing
annual sales into the four-digit range for the first time. Over time Rolls Royce has
seen figures rise four times in a row, asserting Rolls-Royce as tops in the super
luxury car market (10).
Those figures are presented to display why BMW finds it necessary to
administer and acquire outside sources like Siemens to further their technologies
and find ways to cut costs, perhaps in operations. Siemens has implemented a
technique called PROFINET, the international open industrial Ethernet standard for
automation. Another technique thought by Siemens is the TIA platform (Totally
Integrated Automation), based on a three-fold integration of uniform engineering,
high-performance communications and consistent data management. This enables
users to easily expand existing operations or build new lines without having to
overhaul the entire automation system (11).
Globalization Strategy
Thus, BMWs actions and goals perfectly align with theglobalization strategy,
where focus is on increasing profitability and growth, while reducing costs from
economies of scale, learning effects, and location economies. Advantages of alliances
dictate four aspects: strategic alliances to proliferate into a foreign market, hence
easy entry. Next, would be sharing the fixed costs through R&D. Third, skills difficult
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to develop by one firm should be complementary to the other. Finally, an alliance
should push technological innovation to leap ahead of competition, in this case
Mercedes, Toyota, and Honda.
Strategic Alliance
The alliance not only aids BMW, but Fiat the largest Italian automaker. Fiat
CEO Sergio Marchionne, The proposed cooperation with BMW is a significant
cornerstone of our strategy of alliances. We are delighted to work with such an
esteemed and respected partner in the automotive industry with the clear objective
of improving the competitive position of both parties (3). With this strategy, BMW
wants to put a standardized image, one that will be noticed worldwide, but also
garner more profits. For about four decades BMW has made itself known to have
efficient dynamics, sustainable mobility, providing a name coupled with high-class,
and quality performance (6).
To uphold this moniker one must transmute with the times, and in the
modern era focusing on ecological innovation is where governments and
automakers alike are investing their dollars. BMW wants to lower emissions of
carbon per kilometer travelled. Along with ecological standards BMW has formed
with SGL, a company based in Seattle Washington, parts and technology will be put
into the Megacity vehicle, which is a BMW sub-brand. Once again, economies of scale
are kept in mind to produce carbon fiber reinforced plastics at volumes and prices
realistic for mass production (5). The US has invested $100 million with 80 local
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jobs that would be created, now the Megacity Vehicle powered by electricity has a
base in the USA.
With dedication to ecological standards, a plant located in Moses Lake uses
carbon fibers for large scale production in the automotive industry, said Robert
Koehler, CEO SGL Group. It will be the worlds most cost efficient carbon fiber plant
using state-of-the-art technologies (7). Additionally, the Mini Es body will be
fabricated in the Moses Lake plant. But its most notable feature is the creation of
energy by hydropower, friendlier for the environment. So, BMW not only is
becoming more eco-friendly, but innovative with the new technology in carbon
fiber, to make light weight cars. In addition, the Moses Lake plant hopes to recycle
all the carbon material, to remain eco-friendly. This effort is by works of their
Efficient Dynamics strategy, to foster lightweight cars reducing CO2 emissions and
ameliorate fuel storage.
The fourth component speaks towards the growth of future markets. If we
look at BMWs recent advancements in China, we see investments of a billion dollars
to increase production. For example, BMWs operations went from 40,000 to
100,000 units. Why? In China there are more drivers who are starting to drive, and
desire a luxury car. For 2010, China is becoming a hotbed for competition. The new
rich have made China an integral asset for the market of luxury goods makers in the
U.S., European, and Japanese makers of high-end automobiles. China is boasting
staggering sales and manufacturers are creating enticing bells and whistle for
Chinese buyers.
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Currently, the Audi A6L is favored by government officials, and was up 14
percent. But, in the super luxury end Rolls Royces revenue has increased
significantly as they have had to hire more workers in producing the vehicle to meet
Chinese demand. I see China will even overtake the U.K., our home market, this
year and that we will see the Chinese market as the second-most-important market
after the U.S.," CEO Torsten Mueller-Oetvoes (8). In fact Rolls Royce has set up
dealerships in Chengdu, a mountainous southwest city that holds private gatherings
for buyers who want to share their enthusiasm for cars. "The growth in China
doesn't come for free. You have to invest and it will come" (8).
This quote speaks to BMWs intent, as they plan to deliver 120,000 BMW,
Mini, and Rolls-Royce vehicles in China in 2010, a 33 percent increase from last year
and 20 percent more than a previous projection, he said at the Beijing auto show.
Moreover, The BMW X1 could be one of the first products for our new plant in Tiexi
in the Shenyang region. We are currently exploring this possibility together with the
authorities here in China, Reithofer continued (7). The X1 is manufactured
exclusively in Leipzig at present. Tiexi would increase production capacity in China
to 100,000 vehicles a year from 2012 on. In addition, thought and construction of
two plants with combined potential for as many as 300,000 vehicles a year would
depend on market trends, but may be needed in long term.
In essence, BMW alliances focus on ecological concerns, new innovation in
design and operation systems, prescience into future markets, and improving
economies of scale, propounding BMWs name across the globe. Their goals of cost
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reduction are realized through the skimming of jobs in the United State sector, but
with demand rising steadily in China, BMW can transport jobs. Economies of scale
are paramount as the alliances between Fiat, Siemens, and the SGL GROUP all allow
BMW to lower their fixed cost and increase profitability. Modern times and
regulations call for more miles to the gallon, and cleaner emissions. We see this from
the Megacity Vehicle powered by electricity, also, the carbon from the Moses Lake
plant that will be recycled after use, to maintain the pulchritude of the Earths
landscape. Finally, the source of all the luxury car activity is China. With the boom of
opulent persons in China, BMW, Mercedes, Audi, Toyota all are competing to
become top seller in China. However, due to Rolls Royce and the success of the
brand, BMW is emerging as the industry leader.
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