BMW is a German automobile, motorcycle, and engine manufacturing company founded in Munich in 1916. The BMW Group Company is a giant international company having subsidiaries all over the world and employing more than 94,000 employees. The company sells over a million vehicles annually, and this makes it one of the most profitable companies in the world. Importers of BMW products come from 120 countries, and in addition to these importers, the company operates subsidiaries and manufacturing plants in Austria, America, the UK, South Africa, Mexico, Brazil, Thailand, Egypt, Indonesia, Malaysia, Vietnam, and the Philippines (McKeown 2012, 12).
Some of the main activities that the BMW Group engages in include the manufacture of Rover automobiles and BMW motorcycles. Therefore, these activities necessitate a host of diverse financial dealings. The aforementioned activities require the engagement of workers who are proficient in the manufacture, assembling, and selling of automobiles, as well as the associated spare parts and accessories. The financial segment of the Group also deals with the leasing of automobiles and providing loans to its customers and dealers. In addition, the Group has a miscellaneous and consolidated companies segment which engages in aero engines business, software development, and other intra-segment activities (McKeown 2012, 12). The BMW Group is one of the most successful automobile companies in the world, and this has been made possible by a number of reasons.
Reasons for Success
BMW is reputable for what it stands for: excellent service, quality products, top-notch customer relations, and brand recognition. The main reason for the Group’s success is its independence in the auto industry. Unlike most of its competitors, such as Audi and Mercedes Benz which are part of other companies, the BMW Group enjoys total autonomy. This enables the group to take any necessary steps to ensure that it meets its targets. The achievements of BMW are due to several closely related factors, and these factors are explicated in its Quality Products/Services and Growth Policy (Moore et al 2000, 50).
BMW’s Growth Policy
Much of the success of the BMW Group in the auto industry is attributable to a consistent process of profitable growth that comes from concentration on high-profit market segments. There is no doubt that the products of the BMW Group are designed to satisfy the varied needs of customers. For instance, they avail a variety of models for luxury, middle, and also low-class segments; and this enables the company to attract an extra number of customers. The Group is always devising new technological advancements, and the associated improvements serve to set new standards in the global auto industry (Moore et al 2000, 50).
BMW Group is credited with having a strong design point of view. Unlike Audi car designs that are typically identical, BMW’s vehicles are differentiated through a host of individualized characteristics. There are the 1, 3, 5, 6, and 7 series which make the Group stand out for its product variation. Similarly, the Group has also made efforts to acquire Rolls Royce coupled with re-launching the Mini of the ’60s. The company has also diversified its market by putting the BMW brand on sport-utility vehicles, roadsters, convertibles, as well as compact cars. Therefore, the success of BMW can be attributed to its unique targeting strategy. The Group specifically targets customers who go for premium-priced vehicles. It does not strive to compete in every segment of the auto industry, as this would divide its efforts. Over the years, the BMW group has cultivated the culture of avoiding the high volume market of the middle-of-the-road cars. It has, however, focused on the luxury sector, as it is valuable and profitable (Pride 2006, 78). It is this effective strategy that makes BMW Group stand out in the highly competitive automobile industry.
BMW’s growth policy has largely been inspired by an extensive research that the company has been conducting with regard to its market. The company undertakes frequent research into the occupations, as well as hobbies that its customers engage in. It is worth noting that BMW invests about 25% of its profits into research and development activities. This information is then utilized in all areas of the business, including design and development, through such measures as premium pricing along with all elements found in the marketing mix. For instance, in the late 1990s, BMW noted that attitudes and values of most luxury car buyers were undergoing changes, with an extra focus being placed on family and leisure time (Kay 1993). Research carried out by the Group caused it to meet the changing lifestyles of the customers by providing a variety of vehicle choices of appealing designs. As such, BMW took an ambitious gamble of investing heavily in diversifying its single, narrow product line into the modern spectrum of upscale cars that are synonymous with contemporary lifestyle.
Quality Products and Services
The company ensures superior quality of engineering by utilizing highly skilled labor force as opposed to use of robots or workers of low-wage categories during the assembly of cars in other companies. The company has the privilege of benefiting from an educational system that offers basic technical skills to an unprecedented high proportion of the German population (Pride 2006, 78). This has enabled BMW to become a representative of much of the German manufacturing industry and led to enhancement of its reputation.
Furthermore, focused leadership has facilitated the enhancement of the quality of its products/services, as well as the company’s overall profitability. The management has been matching product development with segmentation, and this is a central requirement for any successful marketing. Similarly, the leadership has placed emphasis on the capabilities of employees and resisted the temptation of over-relying on technology to move the company forward (Seese 2008, 21). In this respect, the leadership of BMW Group has employed the functional management theory which allows for informal networks and noise and borderline chaos that are key to innovation. Therefore, stakeholders of the BMW Group appreciate the fact that knowledge can only be availed through manpower, and not through technology.
The company encourages feedback from its workers in an endeavor to enhance management. Through its leveraging of the workers’ tacit knowledge in its cross-functional teams, the group has been able to forge ahead of its competitors in the global automobile industry (Marsee 2000, 23). Being one of the few global companies that have embraced networks to manage their day-to-day operations, BMW is, in effect, superseding classic hierarchies. Workers have the freedom to use unconventional means to forge teams across divisions and attain the Group’s strategic goals.
The Journey to Success
The success of the BMW Group was neither easy nor certain. It has been a gradual tactical endeavor that has been laden with failures and wins. By the end of the Second World War, its headquarters were at Eisenach, which in the zone occupied by the Soviet Union. In the 1950s, the Group sought to stand out from other car makers by perfecting its products that ranged from tiny bubble cars to limousines. The company faced the danger of being declared bankrupt in 1959 when it was rescued by a new and powerful shareholder, Herbert Quandt (Kay 1993). The company discovered a market which had the capacity to enhance its profitability, i.e. a market for high-performance saloon cars. BMW’s engineering quality became reputable after the launch of the1500 series in 1961 (Maguire 2005, 7).
The company found its niche in terms of having a system of production, which made it have a competitive edge. The company became reputable for its product quality, as well as the brand that was identifiable with the needs of customers. In short, BMW’s success has been achieved through its market strategy and the manner in which it positions itself in the established markets. It has also actively sought ways to build relationships with its dealers, as well as component manufactures. This was possible through its excellent managerial strategies (Maguire 2005, 7).
Procedures Utilized at the BMW Group
The current auto industry is highly competitive, and thus it requires much strategizing to stay relevant, and the BMW Group is not an exception (Kay 1993, 98-100). It is, therefore, imperative for the company to take care of any ambiguous objectives before availing its customers with individualized and personalized vehicles in agreeable time durations. Particular emphasis has been placed on setting a new benchmark to process, as well as the amount of time it requires for a new car to be produced (Boutellier & Zedtwitz 2008, 12).
The BMW Group endeavors to develop automobiles with hydrogen-powered engines. The current projections in the auto industry are that the number of hydrogen-powered vehicles will increase in the future, especially due to the dwindling natural resources, such as oil. As such, the management of the BMW found it prudent to take a leading role in revolutionizing the automobile industry. To achieve this, the company ought to experiment with cars that utilize hydrogen as fuel. In fact, its reputation would enable it to tap into the full potential the future market presents in terms of the increasing number of customers (Ackel 2007, 8-11).
The Group upholds its reputation through its properly-defined personnel policy that enables it to treat the workforce as the key to its success. Nevertheless, the company should consider increasing the number of workers so as to match the increased number of customers (Maguire 2007). BMW should also advance its e-commerce platform to be able to manage further growth. For instance, it can utilize platforms, such as the Microsoft SQL Server 2012, to enhance its data querying and backup operations (Hiskisson et al 2008, 15). Full integration of Microsoft solutions would enable the company to handle some of the most critical engagements in an effective manner. Besides, the incorporation of mission-critical business applications would enhance performance, thus resulting in huge cost savings.
Manageable growth at the BMW Group is dependent on the effectiveness of the manner in which its suppliers play their part (Hiskisson et al 2008, 15). BMW has to continue searching for more high-quality suppliers to match the great experience that the group’s employees have. The company ought to ensure that its suppliers are highly reliable and able to meet customer needs in a timely manner (Herhausen 2011, 20-22). It is also prudent for the BMW Group to come up with extra sources of funds to finance research and development activities for the purpose of retaining the company’s competitiveness. Currently, the company is upgrading its facilities in foreign markets to be able to compete effectively on a global scale (Maguire 2007, 10).