1972 The BMW importer in South Africa was facing bankruptcy.
1985 BMW Technik GmbH was set up as a think tank to realise ideas and concepts for the future.
1991 BMW car recycling initiative begins. BMW E1 electric concept car unveiled.
1994 BMW acquire Rover Group from BAE. With the purchase of Rover, BMW take over Oxford plant.
2001 MINI is launched. MINI One and MINI Cooper go on sale.
2002 MINI Cooper S launched. New 7 Series on sale in the UK. Hydrogen World Tour visits the UK.
2007 The millionth MINI is delivered. BMW Hydrogen 7 available to selected customers.
The table below shows some of the key events above in more detail, and how they have affected BMW.
As shown in the table above, world events affect BMW and its business. BMW responds to these events by taking opportunities and risks such as expanding and buying up other companies to build on it success and remain in business.
Political, Economical, Social, Technological (PEST analysis)
A PEST analysis is a checklist of the political, economical, social and technological aspects of the environment and how they affect businesses. BMW, to remain successful, will need to continually be undertaking PEST analysis.
BMW needs to be aware of any general election that a country may have, as a general election may lead to a change in Government and therefore a change in economic policy, which may affect BMW.
Legislation could also have an effect on BMW for example new tax laws, or new laws on company subsidies.
Political alliances will also affect BMW, for example BMW are expanding into China, which a relatively new trading power and BMW will be aware of both German and UK Governments trading intentions with China.
One of BMW’s raw materials is steel and the top five steel producers in the world are the: US South Korea, Brazil, Japan and China. BMW need to be aware of any political instability in these countries because if steel is not produced then this will affect BMW’s car production.
The high Euro will affect BMW. 2006 and 2007 showed a high Euro which meant there was a 14% quarterly drop in profits, from the April to June period. Nevertheless BMW’s revenue, which added an 11% rise in the yearly profits.
Interest rates also affect BMW in 2006 the high interest rates worldwide affected the price of crude oil and other raw materials and this caused higher costs for BMW’s production and reduced consumer buying power.
Labour costs also affect BMW to try and to try and keep costs down BMW have launched a labour plant in India; this was a wise business move I think, as India is a very large untapped market. Also in doing this, they avoided a 60% car duty tax, from cars shipped from abroad and India provides cheaper labour. BMW’s only competition includes very small, local car companies and Mercedes, who has been assembling cars in India since 1993. The luxury segment at the moment is tiny, only accounting for 0.03% of the market but this has been anticipated to grow massively in the next few years as India economy grows which makes the population wealthier.
Due to the recent world banking crisis it is predicted that there will be a depression although it is unclear how bad this will be, this will affect BMW as it may slow down car sales and therefore profits. BMW will be looking at how they can absorb this problem by looking at new markets in new countries that may be less affected.
BMW will need to be aware of the ‘carbon debate’ they will be closely looking at how much people care about this and will it affect their car sales. BMW make a point of putting information about their carbon footprint in their annual report, and try and publicise what they are doing.
The eighties and nineties shows and increases in women working and therefore this may have had an knock-on effect on disposable household income and also families may have two cars. BMW will be insuring that some of their cars will be suitable for this market, for example, the MINI, BMW 1 series.
In the late eighties small, fast, high-spec sports cars became more popular as a status of wealth and so there was a general move away from very large cars, such as Rolls-Royce. BMW were aware of this and launched their BMW Z1.
BMW also have to be aware of technological advances, not just from their competitors, but they need a very strong and skilled research and development department. BMW spent €2544 million in 2006 on research and development.
BMW are working with one of their competitors, Mercedes-Benz, to develop hydrogen fuelled engines.
BMW will install new technology to make car manufacturing more efficient for example in 2006 the MINI car plant in Cowley was updated to increase capacity without increasing the workforce.
BMW GROUP
MARKETING ACTIVITIES
Any business that develops its production and marketing activities with the needs and ultimate satisfaction of the consumer firmly in mind, will be a successful business. BMW have been very successful in finding out what their market is, and ensuring marketing activities are targeted accordingly. There are four marketing tools that are used by business to influence consumer buying decisions. They are collectively known as the four Ps: Product, Price, Place, and Promotion.
Product:
Product is a general term for the goods or services supplied by a business. Businesses look at features of the product that will appeal to the customers, such as:
- Features the product has, such as airbags.
- Optional Services, such as the warranty of the product.
- The quality of the product, i.e. so it won’t fall apart.
- Staff quality, i.e. sales personnel and mechanic.
- Style of the product, i.e. the product fits in with the current styling trends.
- Brand name, so that when potential customers see the logo on the car, they think of the brand, i.e. when customers see the BMW logo on a car, thy automatically think of quality German cars.
- Guarantees, i.e. guaranteeing the car will take corners smoothly, or guaranteeing the car have cruise control.
Place (distribution)
Place is another term for distribution, it covers the range of activities necessary to ensure that goods and services are available to customers. Deciding on the right place involves a range of decisions, such as:
- Locations, such as the location of the car show rooms or the depot that you can order the cars from.
- Frequency of service, i.e. the show rooms are open at a reasonable time of the day, throughout the year, so that as many customers as possible have the opportunity to purchase cars.
- Transportation, i.e. using BMW’s online ordering, the transportation of cars to the desired location from the factory has to be reasonably speedy.
- Distributers, this links in well with transportation, the distributers have to be reasonably placed around, and people aren’t going to purchase cars that have to be imported through several different countries first.
- Inventory, this is very important so that customers know exactly what they’re buying, and any alternatives from BMW they could purchase that would also suit their needs.
Promotion
Promotion is a series of marketing activities designed to make consumers aware of products. The ultimate aim, is to persuade them to buy those products. Promotion is an important part of the marketing mix, and businesses use a variety of different types of promotion, such as:
- Publicity, i.e. being widely known so that a large potential customer base is available such as sponsoring a well know television program.
- Sales promotion, such as the promotion of BMW through contests, free samples i.e. miniature model cars. This motivates customers into associating a good experience with the brand, and this may lead to a purchase i.e. testing a car out may lead the customer to liking the car and thus buying it. Sales promotion is very good for immediately boosting sales.
- Personal selling, this is where someone from BMW will talk to you person to person and try to sell you the product, for example, the meeting between a company representative and potential customers, this is usually very effective at swaying prospective customers into actually buying cars.
- Advertising, such as the promotion of BMW through paid advertising i.e. on the radio, newspapers or television.
- Mailing List, e.g. the distribution of a email or letter to potential customers, advertising about new cars or products, or deals on older cars or products.
Price
Price is the amount charged by businesses for its products. The factors determining the price of the product can be summarised as the three Cs: cost, competition and customer value.
- List price, such as the recommended retail price (rrp). These are the current retail price, either after reductions or before reductions to the price are made. E.g. BMW selling a car for £15,000 when its list price is £20,000, this causes potential customers to think that they are going to save a fortune buying now and so persuading them to purchase the car. This is also an example of discounting.
- Credit terms, e.g. when the money for the car has to be paid, if the car is bought on credit.
- Inclusive/not, this is used a lot by car manufacturers they advertise a car with all the bells and whistles, then the car you actually buy is slightly different, unless you pay more to get what was advertised. E.g. advertising a car with automatic windscreen wipers, then saying automatic windscreen wipers, not included or included for £1000 extra.
BMW
BMWs products are obviously very successful; BMW wouldn't be a big company if this were not the case. BMWs cars are of a very high standard and BMW know this and so market towards the wealthier end of the market, marketing their cars as luxurious cars.
Obviously, if BMW are going to make these high quality cars, they are going to Price them accordingly. Price is another P in the Four Ps, BMW are very good at pricing their cars, they hit a wide range of the market they're aiming for. When people pay for a BMW car, they also pay for the brand name, BMW know that they are a large global brand and so they know that they can put their prices up more. The exception to this is the MINI, at which BMW target to younger car buyers, with less money. The MINI is seen as a fun and exciting car to drive.
BMW are not that good at distributing their cars, this is because the volume of orders that they receiv , but this doesn't matter, people are willing to wait a few weeks for the car. As BMW market their cars as these luxurious cars, that will cause other people to envy you, meaning that people are willing to wait a few weeks for their new car to arrive.
This is only the case if you buy online, BMW also have an extensive range of licensed dealerships, where you can buy, second hand and brand new BMWs. Mini, a car that is owned by BMW, have separate show rooms, this is because the mini is marketed differently, it's aimed at a different end of the market. Rolls Royce, a car that is aimed at the very wealthy, is also shown in separate show rooms.
BMW are also very successful in promoting their cars and their brand. They do this in many ways, such as the sponsoring of large events, which will ensure that their logo is splashed everywhere. They also advertise on the internet, on television and radio. This ensures that they get seen by a large audience, and lets them know that their “bigger better new car” is launched, and that you should upgrade.
Strategy
BMW have a very successful marketing strategy, they use a variety of methods to advertise their products. Such as Product placement, where BMW will pay some money, for their product to appear in a film or TV show. A well known example of this is James Bond films and his car, the Aston Martin, or in the newer films, BMW cars are used.
They also use Sponsorship, such as BMW sponsor events, as I've said, and they also sponsor formula 1 cars. They sponsor various American sporting events and groups too, such as the “Americas Cup” and the “BMW Golf Club International. Sponsorship plays a large role in BMWs marketing, apart from advertising. BMW recognize it as a good way to get there brand noticed, if they sponsor charity events then they'll get a lot of good press too. The main area BMW sponsor is the formula 1, it gathers huge crowds onto stadiums and stands, and millions more watch the events on television. BMW sponsor two racing teams, that both compete, these are the BMW WilliamsF1 team and the BMW Sauber F1 team.
BMW also have websites set up for public use, a good example of this is the BMW films, from the website which features directors short films, making up a series called “The Hire”. Many famous directors have directed these films, directors such as: Guy Ritchie, Alejandro Gonzales Inarritu, Ang Lee, John Frankenheimer, John Woo and Joe Carnahan. This was an extremely big success where the films, had 100 million+ downloads and views.
Examples of advertising campaigns
BMW over the last few years have had a lot of advertising campaigns, I have already mentioned a few, such as BMW films, but there are a lot more such as on TV, where BMW advertise their products. BMW also use radio, to advertise not only for cars, but for apprenticeship positions too. BMW also take advantage of press, such as magazines like, Vogue, Tatler and other various magazines, they also use both broadsheet and tabloid newspapers.
A large advertising campaign that BMW have been conducting yearly for a while is their April Fools Advertisments. These appear as normal advertisments, in newspapers, but often have tongue in cheek humour involved, usually about the latest technology that BMW have taken advantage of, like “The new in-cabin Klimatabeiter Climate Control System (KCCS), which - supposedly - can recreate any of the world's 23 registered climates inside your BMW and comes as standard in BMW 7 Series models.
BMW are very good at getting their logo, slogan and cars noticed, by advertising and various other projects.
BMW has a few weaknesses in marketing, such as the pricing, they’re targeting only the rich end of the market, we can see this by the BMW premium priced status, and also the even pricier Rolls-Royce cars. Mini, BMW’s cheap run around car is also expensive for its class, £15,000 pounds for a new Mini. The Mini’s threats in its target group are priced a lot cheaper and so this is a weakness in BMW’s marketing.
BMW also use outdoor campaigns such as big launch event for a new car model, or car series. These usually attract celebrities and are often a BMW spend a lot of money on these events. Handing out prizes and freebies too.
The common features of all of these campaigns is that they all have BMWs logo everywhere, they all have BMW cars features, and they all contain similar colours, such as blue white and silver. There are obviously some differences, such as the Radio advertisements wouldn't contain any pictures, and television advertisements would be more picture orientated.
April Fools Advertisements
The April Fools Advertisement campaign consisted of BMW’s advertising agency producing an advert which appears in broadsheet newspapers for April 1st. The actual adverts consist of new ideas and concepts that are advertised as revolutionary new technologies, but BMW push the idea beyond plausibility. The adverts follow the same format as all non-spoof adverts and it is down to the reader, or potential customer, to distinguish between the April Fools advert and a real one.
Company of Ideas
The company of Ideas campaign was a series of advertisements, which no longer stressed the idea of having the most fastest/powerful car, but aimed to project its design ‘brilliance’ and corporate culture that fostered innovation. This promoted BMW as a “Company of Ideas” that strive to create new and brilliant designs and features to their cars..
Mini adventure
This campaign originally started as a small public information campaign, due to increasing levels of fake MINIs appearing in Britain. This information campaign then turned into an advertising campaign showing real MINIs next to ‘fake’ MINIs, which were vessels like a lorry with MINI colours. This then quickly turned into a marketing point, having an advert of a MINI experiencing a highly dramatic adventure into a compressed space of advertising time.
Analysing trends
BMW follow the market very closely. They look at current trends, events and changes in fashion or consumer behaviour. Such as the recent trend to minimise your 'carbon footprint'. BMW saw this trends, and adjusted ho they market their cars, such as they now talk about how little CO2 their cars spurt out each year, and about how many miles to the gallon it can do. They also say how much research they're doing to minimise their cars CO2 emissions.
Another trend which has been ongoing for a while is making the car driving experience easier and more comfortable, such as new technologies, gadgets and car parts.
I think that BMW have been pretty effective at their market research, I think this because, to be a branded international name, then they must be doing it okay, but they could be more effective.
BMW could be more effective by:
Advertising is a communication whose purpose is to inform potential customers about products and services and how to use and obtain them. Every major medium is used to deliver these messages, including: television, radio, movies, magazines, newspapers, video games, the Internet, and billboards. Advertising is often placed by an advertising agency on behalf of a company. This is expensive, but is highly successful in influences customer’s purchase decisions.
Advertising can be informative, by setting out to increase consumer awareness of a product. This type of advertising is based on facts rather than images and sound. Nevertheless, persuasive advertising attempts to convince consumers to purchase a particular product. Persuasive advertising aims to persuade that the advertised product is better than the competition.
Sales promotions are directed at the customer. Some sale promotions, particularly ones with unusual methods, are considered gimmick by many. Sales promotion is any activity that provides a financial incentive to purchase product. This includes things like:
- Coupons and money refunds
- Competitions
- Free samples
- Point-of-sale materials
- Demonstrations
- Frequent user incentives
- Price-off offers
- Loyalty cards.
- Merchandising
The term merchandising covers a range of tactics used by businesses at the point of sale, this would be the show rooms for BMW, to achieve higher sales figures. For example, BMW might offer their show rooms special display stands or point-of-sale adverts to encourage them to place BMW’s products in a more favourable position within the showrooms like outside or raised up. Merchandising can be important when: consumers make decisions at the point-of-sale, for example enticing a customer to make a purchase that didn’t initially intend to buy that car.
- Improving public relations
All businesses seek good publicity, and public relations is designed to improve a business’s standing in the eyes of the customers and so the customers think of them first and relate the products as being good. Larger organisations usually have their own public relations staff. Businesses engage in a variety of public relations activities including: Making donations to charities and campaigning for charities; sponsoring sporting and cultural activities; allowing the public to visit the business. Public relations can be a vey expensive form of marketing, and it can be difficult for businesses to assess the effect of their public relations activities.
BMW Group
ORGANISATIONAL CULTURE AND MANAGEMENT STYLES
Management is the act of directing and controlling a group of people for the purpose of coordinating and harmonizing the group towards accomplishing a goal beyond the scope of individual effort. This involves the managing of a team of people, this means instructing them so that instructions get turned into actions, that complete a goal. In business, there are many different management styles used in many different ways, for example:
Autocratic Management Style.
Autocratic style is where the managers make all the important decisions, supervise and control workers closely and they expect to be obeyed. It's a very 'one-way' system the managers give the orders and the workers perform these tasks, there is no real feedback.
The advantages
- Useful in certain circumstances such as when quick decisions are made in a time of crisis for a company, such as where the company is in liquidation, or during a takeover.
- It's also useful for controlling a large number of unskilled workers, where the workers need to be told what to do and there's no real thinking involved.
The disadvantages
- Restricted communication: communication is one way therefore can be de-motivating
- Promotes the “them and us” attitude between the managers and the workers.
Paternalistic Management Style.
This is where managers are more interested in the workers; both the managers and workers get feedback from each other, and the managers care about their views. They receive feedback from the workers and take it into consideration, but they still do what they think is best for the company, and the workers. It is similar in context, to the autocratic style, apart from, feedback from the workers is received but the manger still makes the final decisions.
Advantages
- More motivating because workers views are taken in to account and this makes people feel valued
Disadvantages
- Communication is involved, but this causes the decision making to be slower because there is a consultation process and often negotiation on the final decision.
Democratic Management Style.
This is where the managers put the power into the workers hands and encourage them to make decisions. They give the workers the power to do this, and the managers listen to the workers advice. This requires good two way communication and so a lot of meetings are needed between managers, workers and between managers and workers. The decisions are based on the majority view of the workers,
Advantages
- This is useful when decisions are made needing people that are specialised at their job.
Disadvantages
- The workers do need to be quite specialised and skilled, otherwise, mistakes or errors can be made when making decisions.
Laissez-faire Management Style.
This is where the managers try to interfere as little as possible in the jobs of the workers, except where necessary. It believes strongly that there should be no interference between the workers job and the manager’s job. It’s self regulated by the workers.
Advantages
- The workers would obviously know a lot better how to do their job, e.g. the managers wouldn’t know how to perform the same task that the workers can.
Disadvantages
- The workers do need to be very honest with both themselves and the managers, so the company works. This honesty will involve actually getting on with the job when needed and to do the best they can.
The Style of Management of BMW
BMW has a blend of all these management styles. This is because higher up, there is only a board of directors and so as they are all in the same position, they would be quite lassiez faire. Any decisions they make would get passed onto the divisional managers autocratically, e.g. Make 10000 cars this year. This instruction to make 10000 cars would get passed onto plant managers. The manager/worker relationship between the divisional managers and the plant managers is paternalistic. The relationship between plant managers and the team managers is democratic, they would give the decision, the team managers would decide how to go about this decision, e.g. make 10000 cars by the end of the year, and act upon it the best way they see fit. This is a chain of decision, e.g. the decision gets passed along the chain.
I think this works well in BMW as the management set specific goals, such as make 10000 units of a certain car, and then the workers make up a team, to hit this target. Workers in BMW are now encouraged to make these teams, as BMW have realised that it speeds up the rate of work that the workers perform at. So basically, BMW have a hierarchical structure at the top but at the bottom, it turns into a web of teams.
The Culture of Organisations
As well as there being a lot of different management styles, there are also business cultures. These are also vital to the success of BMW, and BMW knows this and uses its culture to benefit its management style. Organisational culture is the company’s shape and behaviour and the type of power control present. It is also how the managers govern people’s relationships within the company, such as the workers and their teams. The culture in a business is important, as this is how BMW develops to cope with its business environment; it’s how the managers help the workers to cope and to form teams. BMW is very good at this as it has a very teamwork driven culture.
There are four main cultures in business:
Power Culture.
Strong leaders are needed to distribute resources and give instructions. Leaders are firm with what they want, but are also fair and generous to workers who perform at a high standard and follow out the instructions carefully. If the power culture is badly managed, then it forms a risk of becoming a dictatorship, that is ruled by fear, for example, threatening pay cuts, or loss of jobs, if tasks are not met.
Achievement Culture.
Achievement culture is where the managers reward results and doesn’t reward for un-productive results, for example, if the workers didn’t meet there targets for that day then they may not get paid as much, then if they had. The work teams are usually self directed, meaning that the managers don’t give instructions, they only set a target, and if it’s not met then there are no rewards given, if the targets are met, then rewards are given to the team, this causes the team to strive towards good work, to earn those rewards. A downside to the achievement is that after a period of time, workers may become less enthusiastic at getting those rewards.
Support Culture.
Support culture is where the employee is valued as a person, not just as a worker, this links in quite well with the paternalistic management style, where the manager is checking up on how the worker is doing. In this culture, it is important that employee harmony is maintained if not, this could cause a rift in the team, causing less productivity. Support Culture aims to minimalism this, by giving support to those parties in the team that may be having problems, and thus sorting out those problems. There is a possible weakness in that this culture is more harmony orientated and not task orientated, so more time is spent making sure the team is okay and not making sure that tasks and instructions are being completed.
Role culture.
Role culture is a mixture of the other three cultures. Role culture is where the business has a clear responsibility in supporting the workers, it makes sure that all tasks are completed and if they are completed then rewards are given. This provides stability, justice and efficiency. The only weakness that this culture has is that, it creates quite an impersonal environment and operating procedures, which could cause a lack of creativity and innovation. This may not be a bad thing for BMW, as their factory workers need to be given instructions, which they carry out. They don’t need to be creative or innovative; BMW already has teams of people, being creative and innovative.
BMW’s Culture.
BMW has a mixture of all of these cultures but mostly, it's a role culture because the workers in BMW are supported well, BMW rewards them when tasks are met to the high standard BMW expect. This works well for BMW as the tasks or objectives that are set are achieved and to a high standard. Business Culture is important for BMW, this is so all instructions are interpreted that same, everyone knows where they stand in the business and their role; also so that tasks are all achieved to the same standard. Loyalty of workers is increased. Motivation is increased and because of this so is productivity. Management control is also increased. These all obviously benefit BMW so BMW would find the best business culture for it.
I think that having a role culture complements BMW's management style as everyone knows what they have to do and get on with, and everyone knows who they take orders from, does as they're told and meets the targets. This goes hand in hand with Business Culture where everyone works to the standard they’re expected to.
I think that this works really well and we can see that this is obviously successful as BMW is a large organisation, so it obviously works well.
Teamwork.
These mixtures of cultures and styles encourage teamwork, especially with the lower paid workers such as people who work in the factories bolting on parts along the production line, who would have to work in a team and meet specific targets. Teamwork between these workers is obviously critical, if they didn't work as a team, then work productivity would vastly decrease. Teamwork in teams of workers is important for workers to be willing to work and if done successfully it builds competitive and high performing teams. Teamwork is vital for success in building a car, as BMW have specialists, who do their required job, then pass it on to the next worker down the line, who does his/her part of the job, if there was no teamwork here then the production line would be greatly flawed. Having a Role Culture emphasizes this teamwork, as each worker knows what they have to do and if they meet the targets and get what they are required to do, then they get rewarded. This means that the workers strive to be part of this team, so that they can meet those targets, any problems that may occur are then dealt with by the managers in a Paternalistic Style and this also creates the Support Culture. The same also goes for departments and branches within BMW, these all need to work together, to strive for that ingenuity that BMW strive for.
There are lots of different types of production systems that all rely on teamwork these include
As we can see from the above table, teamwork is needed in all of them, less so in the Large batch, Mass and Process production. Even though the table shows that Large batch and Mass production lines, need only little teamwork, BMW have decided to improve their teamwork, this leads to a more efficient production line, where the cars are made more frequently and produced to a higher quality standard. BMW, who mass produces its cars, would fall under this Large batch and mass production manufacturing cycle. This would mean there would need to be teamwork between the development team, the marketing team and the marketing team, so all targets of BMW are bet in the manufacturing of new products.
Organisational Chart of BMW
Organisational structure is the pattern of relationships among workers and divisions in the organisation. The purpose of organisational structure is the division of work among members of the organisation, and the co-ordination of their activities so they are directed towards achieving goals and objectives of the organisation. The structure defines tasks and responsibilities, work roles and relationships, and channels of communication. Structure makes possible the application of the process of management and creates a framework of order and command though which the activities and directions of the business can be planned, organised and controlled.
BMW has a distinct hierarchical structure as shown by my diagram. This diagram also shows how tasks are passed down, i.e. board of directors gives a task to manufacture 1000 units and the regional director passes it down to the factory directors who instruct their division managers and so on. Realistically, as the shareholders own the majority of BMW, they would be at the top. This is an example of a decentralised structure, meaning that tasks are passed down the line instead of being passed from one central source. This decentralised hierarchical structure reflects BMW’s management style and culture, as tasks are passed down the hierarchy, in the different styles. This is because BMW is a Public limited company; the shareholders needs are fulfilled before anything else. Even though they don’t run the day to day running of BMW, they still give the organisation its long term aims and objectives. They also choose the Board of directors, and so have a say in that too.
Structure can be organised by:
- By function: arranging the business according to what each section
or department does
- By product or activity: organising according to the different products made
- By area: geographical or regional structure
- By customer: where different customer groups have different needs
- By process: where products have to go through stages as they are made
BMW Group
HOW TEAMS CONTRIBUTED TO THE SUCCESS OF BMW
Teams have contributed a lot to the success of BMW. They aim to be the most successful premium manufacture in the industry. To do this they need to complete certain objectives, these objectives could be:
BMW Group
ENTERPRISE SKILLS
Timeline
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Founding of Bayerische Flugzeug-Werke (BFW) on March the 7th. Purchase of the first BFW site.
- Founding of Rapp-Motorenwerke and then renamed Bayerische Motern Werke GmbH (BMW GmbH). It grew rapidly, as a result of the war.
- BMW GmbH changed its name to BMW AC. As a result of the company changing into a Public Limited Company.
- After the war, the company turned its attention towards manufacturing rail vehicle brakes, after the ban on manufacturing aircraft engines. The company then merged with BFW; because of this the date of establishment is seen to be 1916 and not 1917. The company is now known as BMW AG.
- Production of aircraft engines continued. BMW separated off a side branch to manufacture this; this Aircraft Engine Division was called BMW Flugmotorenbau GmbH.
- Both of these companies reformed, and established Flugmotorenfabrik Eisenach GmbH.
- Flugmotorenfabrik Eisenach GmbH encorporated BMW into its name. Brandenburgische MotorenWerke GmbH (Bramo), and BMW combined their efforts into the development of aircooled aircraft engines.
- BMW took over Bramo and incorporated the aircooled aircraft engines into BMW AG as BMW Flugmotorenwerke Brandenburg GmbH.
- The main BMW plant took serious damage in the second world war air raid. Another plant was then used to repair the US army vehicles and in return was allowed to manufacture spare parts, agricultural equipment and bicycles. It was also authorised to start manufacturing motorbikes again, but was not able to do so. BMW’s main Munich plant is dismantled. As a result of this BMW lost control of its assets until 1949.
- BMW’s motorcycles started to be produced again.
- BMW’s motorbike sales rapidly increased as their market hadn’t found its feet again yet as a result of the war. 18 percent of all BMW motorbikes were being exported to countries abroad by 1950.
- BMW remains to be an independent company, even though various other offers from other companies were made, such as from Daimler-Benz. This was rejected by the small amount of shareholders and workers. This prompted Herbert Quandt, who then saved BMW from bankruptcy, by increasing the shareholding and restructuring it.
- BMW planned to build new plants and factories but then bought over Hans Glas GmbH and its three plants. One plant, at Dingolfing, became home to the largest BMW plant in the world.
- The production of motorcycles was moved to BMW’s Berlin plant, as the Munich plant as now being used for automobiles.
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The new BMW chairman was named as Eberhard V. Kueneim. Under his leadership BMW went from being a large national company, to an international brand of global standard. BMW AG established the Herbert Quandt Foundation to mark the 60th birthday of its principal shareholder. The Herbert Quandt Foundation quickly became a large supporter of transatlantic exchange of ideas.
- A new subsidiary BMW Kredit GmbT was set up to overlook and finance the business transactions of both the company itself and its dealers. This paved the way for a boom in financing and leasing business.
- The BMW importer in South Africa was facing bankruptcy. In an effort not to lose this market, the BMW Board of Management decided to set up a factory in South Africa; this was the first factory outside of Germany.
- The exterior of the new BMW head office was finished in time for the 1972 Olympic Games. By the time the company occupied it in 1973, continuing growth meant the BMW had already outgrown its new home. This office symbolised prosperity, autonomy and technical perfection. Plus a hint of Utopia. The Head of Sales, Bob Lutz instigated that BMW took over responsibility for sales of importers in all key market area and then entrusted this responsibility to all of its subsidiaries.
- BMW Steyr Motoren Gesellschaft was established jointly by BMW AG and Steyr-Daimler-Puch AG. And engine plant was built in Steyr, Austria, according to BMW AG’s plans. BMW assumed sole responsibility for this plant in 1982 renaming it ‘BMW Motoren GmbH, Steyr. The first diesel engine was built there one year later. This plant is now the group’s competence for diesel energy.
- BMW took the decision to build a new factory in Berlin-Spandau. Germany’s head of state visited BMW to mark this occasion. This plant now manufactures car parts as well as BMW motorcycles.
- A BMW Technik GmbH think tank was specifically released from the obligation to create products for volume production. Free from the constraints of everyday routine, it brings together some of BMW’s best designers, engineers and technician in realising ideas and concepts of BMW vehicles of the future. One of the first major projects of BMW Technik GmbH was the Z1 Roadster, which went into small-scale production in 1988.
- To relieve the pressure on the BMW Munich plant, where now onle the BMW 3 series was built, the decision was taken on November 26, 1982 to erect a new plant in Regensburg in response to growing demand for this model. Following the foundation-laying ceremony in 1984 in the neighbouring municipality of Obertraubling, the Regensburg plant was opened in 1987; it has since been gradually expanded.
- The site of an old barracks in north Munich acquired by BMW in the early 1980s became the home to the Research and Innovation Centre (FIZ), which comprises design, construction and testing facilities, a prototype construction unit and a complete pilot plant. The first departments started work there in 1985. The FIX was officially opened in 1990, since then it has been extended a number of times.
- BMW decided to build a car plant in the USA, thus emphasising its status as a global player. The plant in Spartanburg (South Carolina), designed specifically for the production of the BMW Z3 roadster, was opened in 1994. The Z3 was exported all over the world from there. In the late 1990s, the plant extended its production facilities for the BMW x5, which is likewise built only in Spartanburg.
- In order to expand rapidly and gain a presence in market segments in which it had not previously been involved, BMW purchased the British-based Rover Group, with the active brands Rover, Land Rover, MINI and MG. In addition to modernising the plant, the task for the next few years was to rejuvenate the product lines.
- The BMW Group acquired the rights to the name Rolls-Royce for cars – which at that time were being built by the Volkswagen Group. In accordance with the terms of the agreement, the BMW Group was not permitted to exercise the brand rights until 2003, but it already started planning new models and a new Rolls-Royce factory in Sussex.
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Since the acquisition of the Rover Group, the pound sterling had appreciated by almost half – and the costs of restructuring the company had risen even more sharply. The prospects were looking increasingly bleak. The BMW Group sold Rover and MG for the nominal price of ten pounds. Land Rover was likewise sold shortly afterwards. The MINI brand was retained by the BMW Group. To mark the 70th birthday of its outgoing Supervisory Board Chairman Eberhard v. Kuenheim, the BMW group decided to set up a second foundation alongside the Herbert Quandt Foundation, named after v. Kuenheim, within which context this architect of BMW’s success could continue to pursue his goals; promoting the idea of free enterprise and the creation of elite groups with a modern outlook. With the brands BMW, MINI and Rolls-Royce Motor Cars, the BMW Group has been focusing systematically on selected premium segments of the international car market since 2000. Over the subsequent years, the model range in the premium segment of the lower midsize class has been extended by the BMW 1 series. The MINI brand was launched in 2001, with production commencing at the Oxford plant. The BMW Group assumed brand responsibility for Rolls-Royce Motor Cars in 2003, concurrently with the construction of a new worldwide head office and manufacturing plant in Goodwood, Great Britain.
How does BMW foster enterprise?
BMW fosters enterprise by:
- Providing lifelong learning and training for their employees. This is through the Qualitative Personnel Planning program.
- BMW recognise employee capabilities for the future and deploy suitable training schemes, for individual employees.
- School graduates can choose among 23 different commercial and technical apprenticeships, at BMW Group.
- BMW’s attractive pay entices potential employees into working for BMW, this also provides the employees with motivation through money.
Everyone of these factors help BMW foster enterprise through employees. this can be seen by: Providing lots of learning and training schemes this provides self confidence and motivation; they allow employees to receive the training, qualifications and education they need to advance through BMW, this means that BMW get highly skilled workers in the places where the workers want to be, and are good at. This means that there is more motivation throughout BMW, both financial and through their interests.
How has enterprise contributed to BMW’s success?
In the past enterprise has definitely contributed to BMW’s success. We can see this throughout the timeline; examples of this are various mergers with other companies that have helped keep BMW alive. A good example of this is one of the first mergers BMW had, with BFW. This kept BMW on top of the market, manufacturing rail vehicles, after the ban on manufacturing aircraft engines was implemented.
Another way enterprise has contributed to BMW’s success, is the German industrialist, Herbert Quandt, who saved BMW from bankruptcy by spotting gaps in the market and using other failing companies to BMW’s advantage, either by buying them over, or merging with them. He also increased shareholding, claimed aid from the government, and restructured BMW. I think that it is because of this turning point that BMW went from a small national company, to the big international company that it is now.
How does enterprise support teamwork and marketing activities within BMW?
Marketing affects the enterprise of BMW, as if there is a particular consumer trend then BMW will aim to release a product that matches that trend. For example, SatNav, lots of people were going out and buying SatNav, and BMW took to this consumer trend and started selling cars with SatNav pre-installed. Also if a particular type of company seems to be a popular enterprise, then BMW would shift their company to fit this type of company.
Teams affect the enterprise of BMW too. A good example of this is if the teams consist of mainly technical engineers, then the car would have a lot of new and exciting technology, but may not be a car built to go fast. Another example is the opposite of this, where the teams could mainly consist of engine mechanics, and so the car could be built to go fast, but not a comfort car, with all the gadgetry.
Enterprise affects marketing in different ways too. Such as, if BMW’s selling point as an innovative, boundary stretching company, then they would market accordingly, think up new ideas, and horizon spot, for a ‘I did that first’ company. This is the type of company BMW wants to be, and so marketing is especially important, as they have to market their new ideas as if they were exciting and would ‘change the market’.
This is really just the opposite of how Teams affect Enterprise. If BMW wanted a selling point as being the innovative car manufactures, like they do, then they would recruit teams of ‘thinkers’ and have technological engineers, and car designers that can bring the idea into reality.
BMW Group
MARKETING, ENTERPRISE AND TEAMS
How do teams, marketing and Enterprise work together to make BMW successful and achieve its aims and objectives?
BMW Group
MEASURING SUCCESS
What information does BMW collect to measure its success?
This task demonstrates how BMW collects a wide range of information, and uses this information to measure its business performance. The information BMW uses comes from a variety of sources and BMW uses a variety of criteria to measure its success. This information comes from both internal and external sources. These include:
Internal information
Sales figures are information about the company’s sales and these are often separated into individual products the company sells. Sales figures are a very good way of determining how well BMW is doing. Sales figures can be shown in either monetary terms or number of units sold.
BMW produce sales figures in either monetary terms or number of units sold.
This table below shows the sales figures in terms of units delivered, this is assuming that BMW didn’t sell other cars without delivery.
BMW GROUP DELIVERIES TO CUSTOMER
This table below shows the sales figures in monetary terms.
As you can see the last figure on this table is measured in Euros, this demonstrates BMW’s European operations are its main market area. BMW would use both of these sales figures to set its aims and objectives, for short, medium and long-term goals.
This shows that the more sales BMW makes, the more successful it is, and these figures show that BMW has become more successful over the last couple of year, apart from MINI, where in 2006 the sales decreased.
Information on sales figures is split into lots of different sub categories, this allows BMW to assess how their products are doing in a range of situations, for example the percentage of sales volumes across the global market. BMW can use this information to concentrate in building and developing its product in certain markets across the globe. For example one of the recent statements by the CEO of BMW was to increase volume sales in China.
Staff satisfaction is important as it influences the morale. It is very important to have a high morale, as this creates:
- A sense of importance in their job. Staff should have a feeling of meaning and belonging in their job. Be set challenging and reasonably demanding jobs and a sense of accomplishment based on competent performance.
- Teamwork, among the staff. There should be a sense of group pride and self-esteem, a high level of human interactions and good relations with co-workers, team effort and the support of other staff including supervisors and top management.
- Management care about staff welfare. Staff should receive fair rewards for their contribution and fair treatment for their efforts. There should be a clear statement of management goals and efforts. Management should show concern for staff welfare, and attempt to create a feeling of mutual trust and respect with the staff.
- Economic rewards fair and individualised. Attention should be given to payment of sufficient wages and the fair distribution, of wages. If fringe benefits are added management should attempt to meet individual needs and preferences. There should be opportunities fo job promotion and cross-job postings, i.e. moving from BMW’s shop floor to marketing.
Staff and customer surveys are a very good way of monitoring how well BMW are meeting their needs. Things like: ‘Are you happy?,’ ‘Could you be doing anything more efficiently?’ and so on. BMW conduct a lot of surveys on their staff, to see how satisfied the staff are. In the most recent employee survey, from 2005, 92.6% of employees stated that they were either satisfied or very satisfied with their work at the BMW Group. The outcome of the survey was that the high level of satisfied employees (91.1%) registered in the previous survey made in 2002 was once again surpassed.
External information
BMW need to analyse how well their competitors are doing in comparison to themselves. They use this information to decide where their strengths and weaknesses are in their products. They would also use competitors information to look at any opportunities in the market and any threats in their products.
BMW’s competitors can be split into the different types of cars. For example the BMW 1 series, is on competition with Mercedes A Class. BMW will analyse closely how this car is doing in the market comparatively to their own. The table below shows the sales figures and profit for the whole Mercedes Company. The second table shows the percentage of these sales for each class. From this BMW can make some assumptions around how well Mercedes is doing. BMW would be doing this for each of their product’s competitors and they will be building up information over a period of time that will be able to give them much more in-depth information.
Total profit for the Mercedes Car Group.
Percentage of sales of each Class for Mercedes Car Group.
Not only would BMW be looking at individual products and how they’re comparing with whole companies. Using the example of Mercedes, which is part of the Daimler-Chrysler Group, the table below shows the sales figures, comparing the average change in the 4 years is +1.6%, in comparison to BMW’s change which is, +0.7%, we can see that Daimler-Chrysler is performing better. BMW will use this information as well particularly as BMW like to be seen as a brand leader and so therefore they need to be as competitive as possible.
Daimler-Chrysler Group summary of business.
Customer satisfaction is another way that BMW will measure its success. If customers are satisfied with their products, the likely hood is they will make a repeat purchase. A satisfied customers re very good advocates for the company, telling their friends about BMW’s good service.
BMW will also be looking at figures of repeat customers to monitor customer satisfaction, to ensure loyalty to the brand.
BMW regularly undertakes research into its customers' profiles, such as age and sex, lifestyle, their views on motoring and the way in which they use their cars. The information is used across all areas of the business, from the design and development of the cars themselves, to the way BMW advertises its brands. This ensures that their cars fit with what the majority of customers want, and so they sell their cars and that customers are satisfied with their products.
Customer profiles have demonstrated that what BMW customers have in common is their appreciation of driving fun and sporty, yet elegantly designed cars. Within the BMW product range, we see various differences in our customers' profiles. For example, our female customers tend to prefer open driving, reflected in a preference for the BMW 3 Series Convertible and BMW Z4.
BMW’s profiling shows that families like the spaciousness and interior versatility of the BMW X Models, X3 and X5. These cars are likely to be bought by families with children (50%-60% having at least one child).
Customers of our 3 Series and 5 Series Touring models are characterised by an active lifestyle, with an exceptionally high interest in outdoor activities, such as water sports, cycling and skiing.
Together with the Z4, the BMW 1 series shows the highest share of urban customers aged 39 years or younger (40%). This truly makes the BMW 1 series, not only in terms of its launch date, a young model in the BMW portfolio.
BMW profiling to ensure that largest customer base is targeted and its marketing aims can be measured against this.
Cash flow forecasts are detailed estimates of when and how cash is expected to flow into and out of the business. The purpose of cash flow forecasts is to help the business maintain its position so that sufficient funds are available to finance its day to day operations. Cash flow is the money that enters and leaves BMW as it makes and receives payments
Successful businesses ensure they can pay their suppliers on time; they can pay their employees on time. If they have any large bills coming up, they can pay for it and developing cash flow forecasts enables BMW to anticipate periods of cash shortages or surpluses. BMW need to understand the flow of money and avoid a poor cash flow position as this may cause business instability and poor performance.
- Other reports and information BMW collect.
BMW would keep other information on its business, for example financial accounts as these are a good way of measuring success as they can see how much money they’re making. BMW would also keep information vehicle production, how many vehicles were manufactured for each of the 5 years. The percentage change can be used to look at growth of its product lines. Vehicle Production, keeping track of how many vehicles are being manufactured by BMW.
Vehicle Production
Information made on deliveries made to customers is another useful tool because it shows the UK market share they would be interested in having this information separated from the BMW group as a whole because they would be concentrating on what they can do to increase sales and deliveries in the UK market.
Table comparing worldwide sales to UK sales.
How well has BMW achieved its aims and objectives?
BMW collects and uses information to measure its success in achieving its aims and objectives. Its aims are sales growth, profit maximization, growth into new markets and meeting stakeholder’s needs.
BMW has achieved its aims and objectives successfully.
- Sales Growth in all aspects of BMW, i.e. in both its car and motorbike range. BMW meets this objective by spending a lot of BMW’s cash, into research.
As we can see from this table, BMW’s sales are growing in most aspects of the company. The only area in which sales have fallen is within MINI, this is because BMW didn’t manufacture as many MINIs as they had done in previous years. As we can see here:
Vehicle Production
- Profit Maximization, this is also important to BMW as, to be able to invest into research for new products. Profit maximisation can be done in various ways, one of which is to produce cars more efficiently and keep costs down, this ensures more profit without putting up prices for the customer.
Revenue is the income the business earns from selling its goods and services, a large increase of revenue and low costs ensures a high profit margin.
The table below shows how much revenue BMW has made since 2001.
BMW (UK) Ltd's revenue
We can see from this that the total revenue that BMW gained throughout these years has increased a lot. This shows that BMW is maximizing its profits, is growing successfully and doing well out of it. The profit of BMW can be worked out by taking away the capital expenditure from the revenue.
Information of the percentage of global sales volume can be used in two ways, firstly to look at increasing its sales in a particular area and secondly to look for new markets.
The BMW Group sold 337,354 BMW, MINI and Rolls-Royce automobiles in North American in 2006, 2.6% above the previous year’s figures. 313,921 vehicles were sold in the USA, the BMW group’s largest single market, representing an increase of 2.1% compared to the previous year.
In Europe, where sales volume of 816,829 units was recorded, BMW Group sold 1.7% more cars than in 2005. At two largest markets in Europe (Germany and the United Kingdom), model life-cycle factors relating to the BMW Brands and restricted availability of the MINI had a major impact on sales volumes. In Germany the sales volume recorded by the BMW Group fell by 2.8% to 287,715 units. In the United Kingdom, it edged down by 1.4%t to 154,069 units. The number of cars sold on the remaining major European markets either remained at, or surpassed the previous year’s level. In Italy the BMW Group sold 96,462 units, 6.8% more than in the previous year. The total number of cars sold in Spain 63,043, increased by 126. %. At 528,848 units, the sales volume in France remained at a similar level to the previous year -0.1%.
The BMW Group achieved its highest growth rates in 2006 on the Asian markets. With 142,084 of the vehicles sold, the total sales volume but I was 13.0% higher than one year earlier. In Japan, the BMW group’s largest single market in Asia, the increase was 5.6% and with 62,115 units handed over to customers. The Chinese markets: China, Hong Kong and Taiwan, have recorded the highest growth rate. 44,766 units were sold here, up by 35.4% against the previous years figures.
- Meeting stakeholders needs
Each stakeholder has different interests in the company and the organization must make the delicate balance in the business strategy to meet their individual needs. BMW can use information to see who the stakeholders are, and see if BMW have achieved their aims by meeting their needs. The following example stakeholders can demonstrate how successful or not BMW has been.
Employees:
Using the information from the staff surveys I can conclude that BMW are successful at ensuring that BMW have met the employees’ needs and are satisfied. The information collected shows that 92.6% of employees are either satisfied or very satisfied with their work at the BMW Group. Not only does this high percentage show that it is successful, they have also received awards for their employment record, and therefore I can assume that by receiving awards that they are one of the top rated employers
Suppliers
BMW uses the cash flow information to ensure that suppliers get paid on time and meeting the suppliers needs. This also ensures that BMW create a good relationship with suppliers which may give BMW an advantage if there are any problems with raw materials. Satisfied suppliers will also ensure that BMW are prioritised and that delivery dates are met, which will also increase BMW’s success. This aim is met by potential suppliers going through an appraisal system, to assess their technical competence and their financial strength if BMW are satisfied the supplier can meet their strict criteria, they are then selected. I can assume this process coupled with payment on time fosters good relationships.
Shareholders
Shareholders can be split into large and small investors and their interest in BMW will be to ensure that their return on their investment is maximised. Using information from the revenue and market share tables I can conclude that shareholders would get a good return on their investment. This also ensures a large amount of new investors will invest in BMW if they can publically see this information.
BMW Group
THE KEY REASONS FOR BMW’S SUCCESS
Top five reasons for success
BMW is a very successful company, this is reflected by the information they collect to measure their success. The main reasons for BMW’s success are:
- Organisational Structure
- Product
- Employee relations
- Marketing
- Organisational Culture
Organisational structure
The organisational structure of a company is very important to be successful. The structure of an organisation affects not only productivity and economic efficiency, but also the moral and job satisfaction of the workforce. The structure should be designed, to encourage workforce participation in the organisation and high and effective performance. A clear structure makes it easier to see which part of the business is doing what, and makes it easier for everyone to know their roles.
BMW’s has a hierarchical structure, with the Chairman and the Board of directors at the top. BMW is then split into divisions; these divisions are the home division and overseas division. The home division is then further split into: production plants, subsidiary companies and areas of research and development. The overseas division is split into Europe, Asia and America.
Splitting BMW like this creates teams, having teams means that the tasks set are easier to understand and accept. Also everyone within the team knows what they have to do and team members are familiar with each other’s backgrounds and work methods. To work successfully as a team you would need to negotiate with their team members, for example, to decide who is to complete certain tasks. You would also need team management skills to ensure that the teams project is completed by the deadline. Also there would need to be a monitor to measure the team’s performance and achievements against set targets and/or other teams. These targets would need to be agreed to by the other team members and sculpted around the teams’ strengths and weaknesses. Having a hierarchical structure allows these teams to be formed by splitting BMW into different teams, for example marketing team and a car building team.
I think BMW’s organisational structure works very well because all tasks are handled efficiently, teams are encouraged within workplaces and the hierarchical structure ensures workers know who is responsible for them.
Enterprising behaviour can be seen in a wide variety of job roles and positions across BMW and BMW will encourage enterprising behaviour across its organisation, e.g. the marketing team have been allowed to develop a new advertising campaign for MINI (MINI adventure) that is innovative and exciting.
Marketing is a specialised department within the BMW Group. Each series of car has their own marketing team, this is effective so each marketing team has their own series of cars and they can get to know their product and their target customers. This structure supports BMW’s success.
Product
Product is the general term for what is produced. Businesses make their products appealing, by including characteristics or features, which many customers and potential customers are likely to find desirable. BMW’s products are marketed as premium brands, this is so the customer who purchases one of BMW’s products knows exactly what to expect.
BMW Group is split into different companies, i.e. MINI, Rolls-Royce, BMW and BMW Motorcycles. Each division here has their own team working on their products, this fosters team working, which leads to increased productivity, job satisfaction and pride in their work.
At the end of 2002 BMW’s research network consisted of 10 locations in 5 countries with an approximate of 9400 employees. The research and development budget was increased by 3% from the previous year, which is just over 5% of the total expenditure (2006). Therefore I can conclude that they value enterprise. BMW was also presented with a design award for two of its cars showing innovation and enterprise.
BMW have very successfully marketed their products as premium brands. They invest substantial sums in marketing and profiling their customers. Overall BMW have been very successful at marketing individual products to particular life styles and capture trends of today. This then means that their products arouse emotions in people as they can relate their lifestyle to them.
Products are supported by good marketing, for example the expertise campaign in America, BMW’s largest market, explained various technological advances in an un-conventional and humorous way, such as the workings of the xDrive 4-wheel drive system which was illustrated by using a ‘Jumping Jack’ toy figure. The company of ideas advertisements make general hints to the idea of independence and BMW’s ability to innovate.
BMW also market its products in different ways for example using audio and video podcasts at trade fairs and giving free downloads of BMW audio book thrillers.
Employee relations
The effectiveness of any work organisation is dependent upon the efficient use of resources, in particular human resources and the human element plays a major part in the success of the organisation. BMW is a successful business because it recognises the importance of employees and the benefit of recruiting and retaining workers. BMW have an appraisal system which establishes objectives for the individual, it indentifies need of training and development. This gives employees a feeling of value and this ensures they have more of a commitment to BMW.
BMW create teams and team-working, which leads to the success of the company. For example, the car building team on the production line, working together which results in more efficient production because people get to know who they are working next to, they feel part of the group and this leads to job satisfaction. Individual workers working on the production line, see themselves as part of the bigger picture and this leads to an increased level of motivation and therefore higher efficiency.
Enterprising skills across the organisation are important and one way BMW might encourage this is through its appraisal systems for its managers. All employees have an appraisal system and this appraisal system identifies skills and training needs. Appraisal systems also can create self confidence and motivation which would contribute to BMW’s success as highly motivated and confident managers will create good employee relations.
BMW’s managers are likely to be able to build and inspire their divisional teams they will be able to share their goals and objectives of the organisation to the workforce. Enterprising managers can also identify and exploit marketing opportunities, and BMW do this effectively and thus creating success and an example of this would be BMW expanding into China and India. China and India are economically emerging markets and BMW managers have seen this opportunity to build on the base BMW already has.
BMW can use employee relations as a way of marketing their company. BMW undertake staff satisfaction surveys and the company have very good feedback from the employees about what it’s like to work there. BMW use this as a more subtle marketing tool by receiving awards for this and getting their name in the papers and television. In Oxford’s MINI car plant the employees all wear a uniform, with MINI written on the back, this uniform not only advertises the company it could be used to give the employees a sense of belonging. The belonging could increase staff motivation and morale and therefore reduce turnover of employees. BMW’s success will be enhanced to have a workforce that is highly skilled and trained and therefore it is important that employees stay in the company.
Marketing
Marketing is a process of researching customer’s wants. Marketing is crucial to any businesses growth. The marketing teams have to create the awareness around products for the customers. Marketing involves: advertising, distribution and selling. It is also concerned with anticipating the customers' future needs and wants, often through market research. Essentially, marketing is the process of creating or reorganising an organisation to be successful in selling a product or service that people not only want, but are willing to buy.
BMW employ extremely good marketing techniques which makes the company very successful and spends a considerable amount of time and effort knowing what their market is, for example, consumer profiling is used effectively for each car and target group.
BMW have an experienced and skilled marketing team. In 2006 BMW spent €4039 million which was for marketing, advertising and sales personnel. Having such a large proportion of BMW’s revenue spent on just marketing, would make the marketing team feel valued. The marketing team would work to promote the overall goals, aims and objectives of the company and this contributes to BMW’s success.
The marketing team show enterprise and innovation, this can be seen on the advertising campaign ‘MINI adventure’. The MINI adventure was a new concept in advertising because previous car adverts had been a car driving along a winding mountain road to accompanying music or focusing on the speed and features. The MINI adventure was new because it told a story about the owner of the car which people related to their own lifestyle and this was successful for BMW.
BMW marketing strategy creates a strong identity to each brand and the customer profiling helps target each brand to a certain segment of the customer base. BMW also employ a variety of marketing strategies such as advertising: television, newspapers, internet and magazines. BMW also offer sponsorship, for example, F1 racing team, a racing yacht that participated in the America’s cup, BMW Golf Club International and rally racing. Sponsorship campaigns are used to place your product with another product and so the two are associated, and for BMW this reinforces the ‘lifestyle image’ they are trying to create. The recent James Bond film was also sponsored by BMW and the cars that James Bond drove were the: BMW Z3, BMW 750iL and the BMW Z8. This was hugely successful for BMW and reinforced its premium brand image.
Organisational Culture
Organisational culture is a difficult definition to define and although people may not be aware consciously of culture it still has a persuasive influence over their behaviours and actions. A more detailed definition of culture is: “The collection of traditions, values, policies, beliefs, and attitudes that contribute a persuasive context for the BMW.” BMW’s culture has developed over time and like many large organisations, they have a formalised structure and culture. This formalised culture has led to BMW being a successful and effective organisation.
Organisational culture will be evident throughout the entire workforce. The top management team from the chief executive and the directors will set the organisational direction and objectives and this then determines the culture of the organisation. The culture or “how things are done in an organisation” are then communicated to the workforce. However culture is also determined by the nature of staff employed and whether they accept the management philosophy and policies. Therefore BMW will have a very strong middle management team reinforcing the culture of the organisation. How they do this is through ensuring staff morale is high, employees are committed to BMW, there is a high degree of communications of BMW’s aims and objectives, also promoting staff within the teams through staff training and development programs. For example, the BMW education website tells us about employees like the Managing Director, BMW Group Ireland, who started off as a apprentice technician and has worked and moved around different divisions within BMW and has been promoted.
Top managers and middle managers also reinforce BMW’s culture by working across the different divisions and again the website gives examples of people who work in different companies, this movement of staff will reinforce the business culture of BMW.
BMW’s culture supports the organisation’s ability to adapt and change and in a competitive market like car manufacturing this is important for success. Examples of adapting to change can be seen by BMW’s research and development into hydrogen powered vehicles. Also BMW are always looking for new markets to increase their sales. BMW’s expansion into India and China in the last two or three years has shown enterprising skills, because at present there are only a few other car manufacturers in India. BMW recognise that manufacturing cars in India and China is better for the company because it gives jobs and so increases the local economy and this also reduces the costs of importation.
BMW also use their enterprise skills to increase the efficiency of the organisation, increased efficiency would maximise their profits. For example BMW invested £100 million in the Oxford MINI plant to increase its efficiency and maximise production. This efficiency and production maximisation reflects BMW’s culture which adds to its success.
Enterprise skills can also been shown in how the management deal with the workers and this is embedded in the culture. All workers have an appraisal system, which identifies skills and training needs and therefore encourage the workforce
The organisational culture is also embedded in the marketing team, and this is reflected in the innovative advertising campaigns. An example of the BMW’s culture being embedded in the marketing team is that one of BMW’s main goals are that its products are seen as premium brands, the advertising campaigns and the sponsorship links with sporting events reinforces this goal.
Summary
BMW remain one of the most successful car companies in the world, this is supported by clever marketing, product innovation and clear aims and objectives from top management. Success is a combination of good structure that enables communication of its goals to the employees, a good product which is innovative and marketed effectively. The culture ensures employees have job satisfaction and training and development, this then keeps turnover and sickness absence to a minimum.
BIBLIOGRAPHY & WEBSITES
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Surridge M, Chapman T, Merrills S, Cornelius D, Applied Business, HarperCollinsPublishers, 2005
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Mullins L J, Management and Organisational Behaviour, Pitman Publishing, 1993
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BMW Group, Annual Report 2006
