BMW Global Operations
The BMW Group, a German automobile company headquartered in Munich, is known for producing high quality vehicles including coupes, convertibles and sedans, and motorcycles. BMW's operates in three segments: Finance, motorcycles and automobiles.
The company has manufacturing plants in Germany, USA, UK, Brazil, Mexico, Egypt, South Africa, Malaysia, Indonesia, Thailand, Vietnam and Philippines. Vehicle sales across the world occur via dealer networks, subsidiaries and BMW's own showrooms.
BMW is one of the world leaders regarding the production of high performance vehicles. BMW sold 382,758 vehicles worldwide in the first quarter of 2011. This generated ? 16,037 million, and the gross profit for the first quarter of 2011 stood at ? 3,313 million. Though Q1 has been very profitable, experts at BMW feel that the political events in the Middle East and North Africa, the consequences of the catastrophes in Japan, and the sovereign debt crisis may bear an impact on the other quarterly results.
BMW constantly strives to implement innovative technology for automobiles. It believes in the concept of working in networks, as against the concept of hierarchy which is the driving force of Toyota Motors. BMW feels that hierarchy obstructs the freedom of employees, and hampers innovation. It believes that ideas are nested in the heads of thousands of its employees and not on servers. Hence, all the BMW employees are encouraged to create their own set of networks with various departments from day one, and drive innovation. The speciality of BMW is that each vehicle is customized according to the customer's requirements. Hence, each vehicle that moves in the auto line every day is different, which proves that innovation from all directions is important.
Some of BMW's innovations include disc brakes, electronic speedometer, double ellipsoid headlights, electronic injection control for diesel engines, navigation system, natural gas propulsion, personalized central locking system, etc. More recently, it has developed a new engine that can run on hydrogen, but the production has been limited as there are no proper locations to refuel vehicles using these engines.
The company has also been looking at other opportunities such as introducing new products, analyzing the customer's interest in comfortable and cheaper cars, globalization of markets, new alliances, innovating new technologies for automobiles, etc.
Despite being a strong player in the automobile market, the company faces several threats. One of the threats is competition, both new and existing. Some of BMW's competitors are Mercedes Benz, Lexus, Audi, Volkswagen, Toyota, etc. The other threats include fluctuating fuel prices, new stringent legislations related to the automotive sector, economic recession, takeover bids, expansion of automobile companies in the Far East, breakneck competition for resources and customers, etc. The customer is also uninterested in BMW as he perceives it to be very expensive.
In order to beat the competition, and to remain one of the leading automakers, BMW is considering a fundamental strategic realignment. This will involve one of three strategies mentioned below:
- A brand new business model
- A major acquisition or merger
- A restructuring, with mass layoffs
-- Will BMW be able to beat the competition after the successful implementation of one of the strategies mentioned above?