BMW’s Mission Statement, Vision Statement, and Corporate Policies
BMW is the largest motorcycles and automobile manufacturing company established in Germany and it operates all across the world. The company’s main focus is on maintaining a high productivity along with a large market share, and in order to do so BMW focus on creating policies whose main aim is to maintain a good and moneymaking business (Lechner 2020). One of the significant corporate policies of the organization of BMW is customization of the car parts. The company implements effectual process along with advanced technology that accomplishes the needs and demands of their valuable customers (Kukkamalla, Bikfalvi and Arbussa 2020). The mission statement of BMW is to become the important provider of finest products and services for individual’s flexibility across the world. The mission statement of BMW demonstrates that the organization has come a longer way and they know longer settle on offering satisfactory products to their customers. Rather, the organization goes beyond their customers expectation to bring first-class automobile, which explains the fact why the German corporation is held at a high ostentation across the world.
The vision statement of BMW states it to be the most positive and premium manufacturer in the industry of automobile. BMW’s vision statement demonstrates the company’s focus on constant growth (Ershova and Kuznetsov 2019). The current core value of the organization agrees with the original expectations of the founder of the organization. The consistency of BMW has been recorded from previous few decades which are directly related to its culture of responsibility in all of its manufacturing factories. The company has been operating successfully; however, they have faced several issues during the Global Financial Crisis GFC. The paper is aimed at focusing on the critical analysis of management processes of BMW highlighted in the case study along with the critical analysis of internal and external challenges that the organization is facing. The report will furthermore recommend strategies to the organization so that they can achieve a sustainable competitive advantage by overcoming the challenges that they are facing.
The BMW case study intentions to show how several practices of the organization relate to sustainable leadership model and how it has subsidized to its regaining after the global financial crisis or GFC. Furthermore, the case demonstrates how the organization of BMW has instituted the 23 honeybee leadership principles and practices which are defined in the case study. The examples mentioned in the case study in accordance to the honeybee practices depicts how the organization has taken help of these aspects in order to arise successfully from the GFC (Avery and Bergsteiner 2011). From the context of the five performance conclusions in relation to the sustainable leadership pyramid, the company of BMW has clearly surpassed expectations in the year 2010 on both shareholder value and financial returns. Therefore, it can be said that clearly that the organization provides a long- term value for all of its stakeholders, shareholders, suppliers, customers and employees, which is expected from a sustainable enterprise. The business model of BMW focuses on an advanced approach to problem- solving and focuses on sustainable leadership practices which reinforces its capacity to endure a crisis such as the GFC if it occurs in the future.
Customization: A Key to BMW’s Success
BMW has supported their employees and have retained them even during such a crisis and the challenging situation which was going on in the organization. The company has even considered and helped the other stakeholders and where required, which includes its clients and suppliers. The processes and values of the company is associated to its communal vision of having premium brand in each vehicle segment it manufactured. Another founding element that the organization has emphasized on is long- term thinking which allowed the company to make numerous decisions during the ongoing situation of GFC. Some of the significant decisions included retaining of the trained workforce and helping the suppliers to survive during the recession. In addition to this, the company has even developed a young board of management team to bring a considerable experience and be future- ready for any type of crisis that might arise.
BMW has also made efforts in offering a continuous training and development opportunities to its workforce. In order to make the training and development effective, the company invested over €179 million in the year 2010 which can be compared to the budget of a small university. The formal training was provided by the organization to its employees even during the ongoing period of recession, where the staffs were averaged to over 1 .6 days per year, increased to 2.4 days in 2010 (Avery and Bergsteiner 2011). Additionally, BMW has also constantly focused on training and apprenticeship development programmes in order to provide their workforce with an immense knowledge and make them skilled. This effort taken by BMW demonstrates the sustainable practices as the company has focused on both the employee’s personal as well as professional development. Valuing employees it is another significant aspect that the organization focuses on as it provides several benefits to its workforce. Some of the benefits include maternity leave, sick pay, holiday bonus, staff share scheme, annual bonus and protective clothing. The employees of BMW take part in the profit- sharing plan directed by the organization but during the GFC, the company was not able to provide performance bonuses or holiday bonuses to their workforce. However, the company was successful in offering a special payment to the workforce as they have sacrificed for the organization during the ongoing crisis of GFC. The special bonus was paid to the employees in 2010 where every employee received 1.6 months of extra compensation. Apart from this, the case study has even highlighted the focus of BMW on exchange management approaches where the company has collaborated with unions in reducing workforce and using it as a tool of risk management in order to support their suppliers at the time of GFC (Avery and Bergsteiner 2011). The company has demonstrated ethical practices as they have taken numerous steps to endorse and ethical workplace culture and accountable governance.
There are several internal and external challenges faced by an organization which needs to be recognized in order to overcome the challenges and gain a competitive advantage to succeed for a long term. This section of the assignment will judgmentally analyze the internal and external challenges of BMW in relation to the case study. In order to do so, a situation analysis will be conducted with the help of marketing frameworks which will demonstrate both the internal and external challenges of the organization along with the opportunities it might have in order to overcome those.
Training and Development: Investing in Employees
SWOT analysis is an abbreviation for Strengths, Weaknesses, Opportunities and Threats. Among these, the Strengths and Weaknesses are said to be the internal factors of the organization on which the company can have direct control; however, the Opportunities and Threats are said to be the external factors on which the company does not have any type of control as it exists in the external environment (Teoli, Sanvictores and An 2019). With the help of SWOT Analysis, the challenges faced by the company of BMW can be demonstrated.
Strengths- BMW is a well- known automobile manufacturing company across the world. The organization has a wide product portfolio along with a diverse revenue stream. The company adapt sustainable practices as it helps its employees to grow and develop for both of their personal and professional benefits (Bykovskiy and Goya 2017). The company focuses on strong and ethical workplace culture which makes it one of the sustainable organizations across the world.
Weaknesses- As the demographic ageing of society, it is expected that by the year 2020, around 45% of BMW’s workforce will grow older to 50 or over. The company emphasizes the skills, wisdom and experience of its older employees in order to keep them productive and healthy; however, the workforce is expected to retire soon which can be one of the greatest weaknesses for the company.
Opportunities- The company has an opportunity to recruit younger employees with required skills and knowledge so that they can overcome the weaknesses they that they might face in the future after the retirement of their older employees (Singh and Chaudhary 2014). In addition to this, BMW also has an opportunity to train the younger workforce within the organization with the help of their older employees so that their skills and expertise can be passed on to the younger workforce.
Threats- BMW faces threats from the increased competition within the automobile marketplace as it might decrease the sales and profitability of the business. The company of BMW focuses on their older employees rather than recruiting the younger generation, which might lead to a threat as the younger employees with skills and knowledge might be recruited by the competitor brands.
VRIO analysis is an analytical tool which is used for the evaluation of organization’s resources and capabilities and determine whether they have a competitive advantage within the marketplace or not (Yudiono, Wilopo and Iqbal 2019). VRIO is an acronym of Value, Rareness, Imitability and Organization. This section of the assignment will discuss about the competitive advantage of BMW in order to demonstrate if they have the opportunity to overcome the challenges faced.
|
Resources/ Capabilities |
Value |
Rareness |
Imitability |
Organization |
Competitive advantage |
|
Strong brand name |
Yes |
Yes |
Difficult to imitate |
Yes |
Realized sustainable competitive advantage |
|
Ability to attract talent |
Yes |
Yes |
Difficult to imitate |
Yes |
Strong competitive advantage |
|
Customer community |
Yes |
Yes |
Difficult for rivals to imitate |
Yes |
Strong competitive advantage |
From the above analysis of BMW, it can be said that the company has the opportunity to attract talent both from the local and global markets as this factor provides the organization with a strong competitive advantage as it is valuable, rare, difficult to imitate by the competitors and organized. Also, the company has a strong brand name which provides it with a realized sustainable competitive advantage through which this opportunity can be achieved by the company.
Ethical Practices and Responsible Governance
PESTLE analysis is used to examine the external factors of an organization, mainly the industry or region in which it operates (Islam and Mamun 2017). PESTLE is an acronym for Political, Economic, Social, Technological, Legal and Environmental factors. This section of the assignment will highlight the factors of external environment that might influence the business of BMW and will highlight the challenges.
|
Political factors |
The political factors comprise of government rules and regulations which can impact the company. From the context of European Union, after the Brexit, there has been shortage of skilled and experienced workers and it can challenge and put a threat on BMW in attracting the younger candidates (Henry 2021). |
|
Economic factors |
The economic factors comprise of rate of interest, inflation, exchange and economic growth. These factors can impact the company because the company has already faced GFC where they had to cut employees as a part of the change management process and if any such thing augurs in the future, then it will be difficult for the company to attract or retain employees within the company. |
|
Social factors |
The social factors of the region comprise of the growth rate of population, age distribution, attitudes towards career, education and more (Stanislavscaia 2021). The social factors can impact BMW as there has been a growth of ageing population and it is expected that by the year 2020, around 45% of BMW’s employer will be 50 or over. This is a threat for the company as the employees will have to retire and it is difficult to find the same expertise and knowledge within the younger generation. |
|
Technological factors |
The technological factors comprise of research and development activities, automation, technological advancements and more. These particular factors can either be opportunity or threat for the organization. If the company implements advanced technology, then they will be able to work even with reduced number of workforces (Chodakowska 2018). On the other hand, if technological advancements are not implemented by the company, then they will have to attract talent who might not be skilled enough for a well- known company such as BMW. Apart from this, the ageing workforce does not have the required expertise and knowledge about the updated technology as they come from a different generation and it might hamper the overall productivity of BMW and the other brands can gain a competitive advantage. |
|
Legal factors |
The legal factors comprise of the laws related to discrimination, consumer, anti- trust, employment, health and safety of the employees. By keeping the ageing workforce within the organization can have legal consequences on the company as the law encompassed within the organizational policies include the retirement age of an employee, which might be 50 or 60, and companies cannot keep them beyond that. |
|
Environmental factors |
The environmental factors of a particular region include the ecological and environmental aspects comprising of the weather, and climatic changes as it might affect the automobile industries (Bees and Williams 2017). The manufacturing of process of BMW must focus on sustainable practices as it might lead to negative impacts for the organization if they try to harm the environment. |
Porters five forces is a framework which helps the company to analyze the competitive landscapes in its external environment along with the factors affecting the overall industry (Genoveva and Siam 2017). This particular analysis emphasis on evaluating the organization’s position grounded on several forces including threat of new entrants, threat of substitutes, bargaining power of buyers, bargaining power of suppliers and competitive rivalry. This section of the assignment will discuss about the challenges faced by BMW in relation to the five forces which will determine its competitive landscape.
|
Threat of new entrants |
BMW is a worldwide recognized premium manufacturer of automobile which makes the threat of new entrants is relatively low within the industry of automobile as both the entry and exit barriers are high. The new entrants require a huge amount of capital investment along with a highly trained human resource as well as a thorough knowledge for research and development in order to compete the brand of BMW (Musonera and Cagle 2019). Any new player entering into the market will take a lot of time to establish themselves and start the operations across the world. |
|
Threat of substitutes |
The target segment of BMW purchasing in this particular segment maintains a class and status symbol in the society. They mainly want to improve their quality of living and the products of BMW are seem to be expensive which attracts them. However, there has been an increased awareness among people regarding environmental protection due to which they are shifting towards electric vehicles. Despite of these hurdles, BMW attracts a niche crowd with whom they have maintained brand loyalty and therefore, it can be said that the threat of substitutes is moderate for the organization. |
|
Bargaining power of buyers |
Nowadays, the customers are becoming more informed and aware and they are supported by the government rules and regulations which favor them, and likely to make research before the final purchasing decision. The products provided by the organizations are not only the attractive factors but the entire customer experience before and after the sales service matters a lot to them. BMW focuses on maintaining a high- quality of products in order to make their customers satisfied and maintain the brand reputation (Khurram, Hassan and Khurram 2020). Also, the customers of BMW are loyal towards the brand therefore the switching cost of customers are low which leads to a low bargaining power of buyers. |
|
Bargaining power of suppliers |
BMW has a well- known brand reputation due to which it focuses on maintaining a standard quality in all of the raw material it uses. This is the reason that BMW carefully chose their suppliers and control their practices. The suppliers on the other hand, must agree on the terms and conditions of the organization and stand by their code of conduct in order to keep a sustained relationship with the organization. BMW contracts with around 12,000 suppliers across the world, which includes several other automobile firms and therefore the organization cooperates and establishes an average process of operations with them (Wang, Qin and Zhang 2021). As there are several suppliers within the marketplace, the switching costs are low and there is no such differentiation within the products supplied. This makes the bargaining power of suppliers low within the automobile industry in which BMW operates. |
|
Competitive rivalry |
The competitors of BMW include Mercedes, Audi, Tesla, Skoda and more who constantly focuses on increasing their market share and attracting new customers from their rivals. The automobile industry has a fierce competition and all the organizations invest in research and development in order to improve their customer experience. Apart from this, the competitors even put emphasis on their human resource in order to attract the highly trained and skilled candidates who will help them to succeed within the marketplace. In addition to this, advertising and market costs play a significant role in the competition as it helps to communicate the brand image to their target customers. Therefore, the competitive rivalry in the auto mobile industry in which BMW operates is high. |
From the above information of BMW’s internal and external analysis, it can be said that there are several factors which are impacting the company and has posed a challenge on them. One of the major challenges that the company is facing is due to its ageing workforce and the changing behaviour of customers towards electric vehicles. Both of these challenges can severely impact the overall organizations management practices if the company does not implement strategies. However, the company has opportunities which were found out from the internal and external analysis, and it can help the company to overcome the challenges and gain a sustainable competitive advantage. From the case study, it has been analyzed that BMW emphasizes their ageing workforce as they have been in the organization for several years. Apart from this, the older workforce also has the required expertise and knowledge which has contributed to the organization’s success. However, there are certain challenges which relate to the ageing workforce such as the older employees within the workplace are observed to be less motivated, less flexible and take more leaves as compared to the younger workforce. Apart from this, it has also been observed that the older workforce treats the new employees unfairly which can create partiality within the team. Also, there is an increased rate of absenteeism which mainly occur due to the health concerns of older employees. These particular factors can often make the workplace culture worse and it can impact the productivity of the employees as well as the overall organization.
After the overall analysis of the case study provided along with the external and internal analysis, the main challenge that was highlighted was the issue of ageing workforce in the organization of BMW. It is significant for the company to strategize ways in which they can overcome these challenges. Therefore, this section will highlight several recommendations for the management and leaders of BMW that will help the company to overcome its challenges and operate successfully within the marketplace. As the company will not be able to retain its ageing workforce, it is recommended that they must offer their older employees with a flexible work schedule along with part- time working opportunities in order to train the younger workforce within the organization. This particular strategy will help the company to train and develop the younger workforce and take the expertise from their older employees. Apart from this, the company can even develop a mentoring culture which will put emphasis on assigning the knowledge and expertise of older workforce to their younger ones who are comparatively less experienced in relation to the contexts about organizational values, culture and operations. This will not only help the younger workforce within the company but will also help the older workforce to have an opportunity to work part- time within the organization as a mentor or coach for as long as they can work.
Internal and External Challenges Faced by BMW
Conclusion:
In conclusion, it can be said that the company of BMW has faced several issues during the financial recession which has impacted their operations. However, the company has made several implementations and have taken sustainable approaches within the direction of sustainable leaders of the organization that has helped the company to regain its business operation and successfully operate within the marketplace. However, the internal and external analysis of the organization has posed several challenges that the company is facing, among which, one is the issue of ageing workforce. BMW is highly dependent on its older employees but due to demographic changes, a massive number of its older employees will be retiring soon. Therefore, recommendations have been made for the company to retain some of their older employees as a coach or a mentor within the organization who will train the younger employees and will provide them with the required expertise and knowledge about the company and how it operates. These recommendations will help the company to use the opportunities presented by its external environment which will also help them in gaining a competitive advantage. BMW has a well- known brand name through which they will be able to attract experienced and skilled workforce within the company who will take place of the older workforce.
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