314 Final Paper Project Final

8/8/2019 314 Final Paper Project Final

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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




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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.

Works Cited (Herb)

1. "Corporate Strategy and Intercultural Management - Project Management."Super Business - Project Management. Web. 21 Apr. 2010.

.

2. Lull, Pavan. "BMW's 2010 Strategy... - BloombergUTV.com." BloombergUTV:Latest Business News, India Business News, Stock Market News, Live Stock

Quotes, Latest India News, Financial News and World Business News. 19 Mar.

2010. Web. 21 Apr. 2010. .


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3. "Fiat/ BMW Alliance." PistonHeads.com :: Speed Matters. 9 July 2008. Web. 21Apr. 2010. .

4. "BBC NEWS | Business | BMW and Fiat Mull Parts Alliance." BBC NEWS |News Front Page. 8 July 2010. Web. 21 Apr. 2010.

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5. Ireson, Nelson. "BMW Joins Forces With Carbon Fiber Manufacturer ForMegacity Vehicle - MotorAuthority." Car News, Car Reviews, Spy Shots and

Videos - MotorAuthority. Web. 21 Apr. 2010.

.

6. "HTC | Electronics Brands | Brandchannel.com | Brandchannel.com."Brandchannel.com | Always Branding. Always On. Web. 21 Apr. 2010.

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7. BMW Group. Web. 21 Apr. 2010..

8. Chang, Anita. "The Associated Press: Rich Chinese Driving Growth of LuxuryAuto Market." Google. Web. 21 Apr. 2010.

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9. "BMW Posts Hefty Quarterly Loss - The Local." The Local - Germany's News inEnglish. Web. 21 Apr. 2010. .

10.Krause, Stefan. "BMW Group Increases 2007 Sales by 9.2 Percent | HULIQ."HULIQ | Citizen News Review. Web. 21 May 2010.

.

11."Siemens to Deliver Conveyor System for BMW Facility in South Carolina -Today's Automation News Headlines from Automation.com."Automation.com

- Industrial Automation, Factory & Process Automation, Motion Control,

Instrumentation Resources. Web. 21 Apr. 2010.

.



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