Environmental Scan
Discuss about the Marketing Consumer Behaviour for CSR Policies.
It is necessary to analyse environmental scan of the organization so that the factors could be evaluated which affects organizational operations. These factors affect organization present as well as future business operations. While executing the environmental scan of any business corporation, it is necessary to consider organizational strengths, weaknesses, opportunities, threats and company’s CSR policies and strategies. Concerning this, it is necessary for the organization to analyse the market conditions so that desired outcomes could be attained (Paisal & Sharma, 2017). As per the given scenario, BMW is a giant player of automotive industry and it is mainly known for producing and delivering premium and luxurious cars, motorbikes, trucks, etc. BMW is one of the top automotive brands of Germany and it is known for delivering highly venerated and regarded automobile company. It has acquired immense reputation across the globe by delivering high quality cars and other automobile products in the marketplace. Along with this, organization has strong financial position, which has also helped the organization to grow and improve its brand image rapidly in the global automotive industry (BMW Group, 2018).
Macro environment analysis is necessary for every organization as it helps the organization to determine the conditions of market so that appropriate strategies could be developed or adopted in order to enhance its performance along with the attainment of competitive advantage. In terms of BMW, numbers of competitors are present and the major factor which affects organizational business changes in consumer preferences, technological shift, etc. (Dodourova & Bevis, 2014). Environmental scan includes external factors such as social, demographic, economic, technological, political and competitive which are as follows:
There are numerous political factors which affect organizational performance directly. These factors include law enforcement, legislation, and the rules related to the CO2 emission. Apart from this, recycling is another crucial factor which may affect BMW’s manufacturing process. Thus, political stability is necessary for smooth functioning of BMW other their investments will be subject to market risk. Government rules and regulations are another factor which affects organizational performance and these factors majorly affect organizational business especially when it comes to the business expansion (Khurram, Kumar, Chandak, Sarwade, Arora & Quach, 2016). Along with these rules, regulations and legal implications, another major factor which could affect organizational functionalities is tax implications because tax is much high over luxurious products and BMW is engaged in manufacturing luxurious cars, thus, company’s cost of production will be increased which will ultimately enhance final prices of their cars and other products. In relevance to this, risk of emerging disadvantage will also arise for the organization due to political riots and conflicts. This mainly arises due to adverse influence of consumer spending pattern. Governmental regulation such as restrictions for producing environmental friendly and high mileage cars so that natural habitat could be protected but as BMW cars are known for speed, high performance and for providing relished experience to the drivers, thus, these regulations also acts as barrier in terms of accomplishing organizational operations (Parker, Boulos, Visintini, Ritchie & Hayden, 2018).
Political/Legal Factors
All these political factors have negative influence over organizational performance and in order to eliminate these factors, it is necessary for the organization to adopt appropriate strategies through which these obligations and regulations could be tackled along with enhancing organizational performance (Law, 2017).
Mainly economic factors include exchange rates, interest rates, inflation rate, and economic growth across the globe. Apart from this, there are lot of factors which affect organizational performance such as GDP fluctuations, customer spending, and the demand for the luxurious cars. It has been observed from the market research analysis that demands for luxurious cars are directly influenced with consumer purchasing power and the economic conditions of particular place (Yeung & Coe, 2015). In addition to these factors, there are various other factors such as exchange rates and the cost of production. Inflation rate is another major contributing factor which affects BMW’s manufacturers as they have strong distinctions. In relation with this, financial crisis affects the buyer’s behaviour in negative manner. Apart from this, demand for luxurious cars like BMW, Mercedes, Audi, etc. is increasing rapidly in the developing countries like India and China. The major factor which affects organizational performance in the global automotive industry is the decrease in exchange rates and due to this, the market share of BMW cars has been decreased (May, 2015).
In relevance with this, organization is required to adopt appropriate measures in order to match up with the economic stability and consumer’s demand and preferences. Organization could also manufacture low cost cars in order to set up its effective image in the upper middle class and middle class segment market in order to enhance their revenues, profitability and market share.
Social factors are changes in consumer’s needs, wants, preferences, demographics and the change in buying pattern of the target audience. Impact of social factors is huge over automotive industry and with regards to this; organization requires entertaining these factors so that appropriate measures could be adopted for the fulfilment of target audience’s demands and wants along with the attainment of set goals and objectives. Social factors which affect the BMW’s performance are:
- Changes in consumer preference from car as a status symbol to fuel efficient cars which will not affect natural habitat and emission of pollution will also be low (Gereffi & Lee, 2016).
- Recession in the mature market is another huge factor which affects consumer buying pattern.
- Due to huge environmental issues, public have shifted their interest towards eco-friendly vehicles.
- In luxurious vehicle category, purchasing power of the buyers also impact organizational overall revenues and sales.
In terms of dealing with these factors, BMW has adopted appropriate CSR policies through which they are dealing with every type of culture in an appropriate manner which is resulting in enhancing their income along with making their effective goodwill in the target market (Luthra, Garg & Haleem, 2016).
Economic Factors
Due to technological factors, competition level have been increased in the automotive sector and in terms of creating a distinctive image amongst the competitive and dynamic industry, every car manufacturing company is adopting latest technological factors for enhancing the performance of their cars along with gaining competitive advantage. Technological improvements also help the organization to be up-to-date as per the market’s conditions and consumer demands and wants; thus, it is required for the organization to launch new designs and latest cars on regular basis with the objective of meeting with the target audience’s demand and wants. In relevance to the technological advancement, expectations of consumers are increasing rapidly and with regards to this, it is necessary for the organization to implement new embedded technology in BMW cars so that the customers’ expectations could be fulfilled along with maintaining the acquired place amongst the target audience. Competition in automotive sector have been grown rapidly and to sustain for longer period of time in the competitive business environment, it is necessary for the organization to adopt appropriate technological measures so that customers’ requirements could be fulfilled along with attaining sustainable growth and development in the dynamic and competitive business environment (Timmer, Dietzenbacher, Los, Stehrer & De Vries, 2015).
Demographic factors include customer type, their preferences, taste, buying pattern, behaviour, marital status, income, education, occupation, etc. and these factors have direct impact over organizational performance, growth and development. This is because when an organization launches new product in new or in existing market, these factors are considered in order to evaluate the appropriate target market segment for the particular product. BMW is a luxurious car manufacturer and one of top car manufacturers across the globe, thus, there target market segment for BMW is the high income group and upper middle class people. Apart from this, they could also target other segments of the market on the basis of consumer preferences and choices, psychological and benefit sought. BMW has huge product offering which includes luxury, sports, and business class cars and every segment has its own target audience and in order to function well, it is necessary to provide new and unique features in their cars to maintain their interest in BMW cars. If these factors will not be considered, organizational customers may shift to the competitors of BMW (Sierzchula, Bakker, Maat & Van Wee, 2014).
Competitors of BMW are Audi, Mercedes-Benz, Volkswagen, and Porsche Automobile, etc. All these companies individually or together play key role in terms of taking whole automotive industry to another level. With the objective of gaining competitive advantage, every company has invested huge part of their earnings in research and development so that unique elements could be extracted for the objective of gaining competitive advantage. Luxury car industry is well established and this industry is growing rapidly and setting up effective position in the developing countries in order to enhance the demand of luxury cars. This has enhanced opportunities for every luxury car manufacturer. Audi, Volkswagen, Mercedes and other companies have adopted various unique and advanced strategies with the objective of acquiring the market share of BMW by providing advance features in comparison to the BMW cars. This affects organizational business in negative manner and in order to defend their acquired position in the global premium car industry, it is required for the organization to adopt unique strategies in relevance with the attainment of competitive advantage in the global automotive market (Hashmi & Biesebroeck, 2016).
References
BMW Group. (2018). Compliance at The Bmw Group. Retrieved from: https://www.bmwgroup.com/en/company/compliance.html. [26/07/2018].
Dodourova, M., & Bevis, K. (2014). Networking innovation in the European car industry: Does the Open Innovation model fit?. Transportation Research Part A: Policy and Practice, 69, 252-271.
Gereffi, G., & Lee, J. (2016). Economic and social upgrading in global value chains and industrial clusters: Why governance matters. Journal of Business Ethics, 133(1), 25-38.
Hashmi, A. R., & Biesebroeck, J. V. (2016). The relationship between market structure and innovation in industry equilibrium: a case study of the global automobile industry. Review of Economics and Statistics, 98(1), 192-208.
Khurram, M., Kumar, H., Chandak, A., Sarwade, V., Arora, N., & Quach, T. (2016). Enhancing connected car adoption: Security and over the air update framework. In 2016 IEEE 3rd World Forum on Internet of Things (WF-IoT) (pp. 194-198). IEEE.
Law, C. M. (2017). Restructuring the global automobile industry. Routledge.
Luthra, S., Garg, D., & Haleem, A. (2016). The impacts of critical success factors for implementing green supply chain management towards sustainability: an empirical investigation of Indian automobile industry. Journal of Cleaner Production, 121, 142-158.
May, C. (2015). The global political economy of intellectual property rights: The new enclosures. Routledge.
Paisal, R., & Sharma, M. (2017). Role of Stakehoders in Implementing Green Supply Chain Practices in Indian Automobile Industry. BOOK SCAN, 17.
Parker, R. M., Boulos, L. M., Visintini, S., Ritchie, K., & Hayden, J. (2018). Environmental scan and evaluation of best practices for online systematic review resources. Journal of the Medical Library Association: JMLA, 106(2), 208.
Sierzchula, W., Bakker, S., Maat, K., & Van Wee, B. (2014). The influence of financial incentives and other socio-economic factors on electric vehicle adoption. Energy Policy, 68, 183-194.
Timmer, M. P., Dietzenbacher, E., Los, B., Stehrer, R., & De Vries, G. J. (2015). An illustrated user guide to the world input–output database: the case of global automotive production. Review of International Economics, 23(3), 575-605.
Yeung, H. W. C., & Coe, N. (2015). Toward a dynamic theory of global production networks. Economic Geography, 91(1), 29-58.
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