Business Organisations and Environments in A Global Context

This report discusses the business environment of BMW and its expansion into the Czech Republic. It covers the background of the organization, the business environment, PESTLE analysis, Porter's Five Forces model, and concludes with opportunities and threats.

Business
Organisations
and
Environments in
A Global Context

Table of Contents
INTRODUCTION...........................................................................................................................3
Background of the organisation..............................................................................................3
Background of Business Environment...................................................................................4
PESTLE ANALYSIS ............................................................................................................6
PORTER'S FIVE FORCES MODEL...................................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12
.........................................................................................................................................................1

INTRODUCTION
Business environment is the one which comprises of both internal and external factors
which are affecting the business operations and situations. These factors within internal and
external environment can be employees, customers needs and expectations, supply and demand
etc. The following report is written on the business of BMW which is leading company in the
field of automotive industry. Even though the market share of the business is huge but the
business still seeks to expand their business into the nations that is Czech Republic where there
is a huge scope for the firm to operate so that higher profit can be generated. In order to operate
business into new nation the business have to analyse each and every factor starting from
PESTLE to porters five models(Botha, Kourie and Snyman, 2014).This study also focuses on the
inheritance of the association,along with the data about its organisation environment. This also
focuses on the companies strengths and weakness by carrying the PESTLE and five forces model
of the BMW.
Background of the organisation
BMW stands for Bayerische Motoren Werke which is the leading company which deals
in automotive industry by providing the cars with extreme quality and designs. The business has
established its headquarter in Munich, Germany in the year 1916. the business deals in
manufacturing of the Aircraft engines. First product of the company BMW was a straight six
aircraft engine which was named as BMW Illa. Later on by the ending of the world war 1, BMW
sustain in the market by the production of motor cycles engines, equipments which were related
to the farms, household items and railways brakes. First product which was produced is BMW R
32 motorcycle in the year 1923. the business of BMW has a unique logo which has made it
attractive and unique. The Logo consists of blue and white BMW logo with a circular model.
The logo of the BMW was created in the year 1917. The business of BMW operates with the
slogan that is The Ultimate Driving Machine which was intended to become more approachable
to the ultimate customers so that the business can serve their potential customers with the best
and better experience (Adekola and Sergi, 2016). The company started its production of
motorcycles in the year after the world war 1 where the brand of Motorcycle and Motor engines
was also coined as BMW Motor-rad. The motorcycle which was at the level of success without
getting failure was R32 during the year 1923 for which the production was started way back in

the year 1921. the business in current times deals in different different model lines which is
named with the x series, m series and I series. Apart from this success of the brand the
association has now planned to expand their business in the country that is Czech Republic so
that the organisation can attain a world wide renounced position.
Background of Business Environment
A business environment is coined as the term related to the concept of marketing which is
also refers to as the ingredient or the forces which have influence the firms ability to build strong
relationship with its potential users and the customers. The organisation operating its business is
affected by both internal and external factors which directly impact the profitability of the
business(Black, Morrison and Gregersen, 2013). The GDP of the Czech republic has increased as

manifold due to FDI as various investors has focused towards the country especially towards the
Paraguay. The major countries which are the sources of FDI are Germany and Netherlands.
With more of FDI options the GDP of the country will increase as with this they can easily
attract more companies. All these external factors are those which involve political , social,
economical , technological, legal factors which adversely affect the working and productivity of
the business. Along with this internal factors of the association environment consists of the
availability of finance, marketing, productions etc. In order to operate business in a successful
manner the automotive industry is required to adopt all the changes in regard to technology.
Adoption of the new technology will allow the business of BMW to stand out in the market by
providing better quality of cars to their customers in comparison to their competitors prevailing
in the market. This technological factor of the external environment if not adopted than the
business of BMW has to suffer from the chances of its suitability in the competitive market. All
these factors of the outside surrounding affects the execution of the association in the direct
form. The component which it focus are owners, customers, suppliers,investors, competitors. As
the business is operating its activities in the dynamic environment there are number of factors
which will be affecting the business such as new ways of productions, government legislation,
tax rates by the government, inflation and deflation rates, replacement of the current higher
authority in the government, etc(Botha, Kourie and Snyman, 2014).
BMW is the automotive companies which deals in rending their customers with the better
quality of cars and motorcycles. While operating the enterprise in the Czech Republic the
business has to undergo certain issues and challenges which are as mentioned:
STRUCTURE : As the business is operating their operation on a large scale in a
successful manner is just because of its effective structure of working where all the members
including employers and employees perform by giving their best. Through this effective
structure of the company the data is exchange among all the members, employers and
subordinates in a proper way so that desired level of work can be carried out. In order to launch
business in the new country the management of the BMW needs to focus on the factor of
providing training and development to their potential staff so that they can easily communicate
with the public of Czech Republic and can full fill their target within a short frame.
CULTURE: In order to execute business in Czech Republic the business of BMW will
focus on the utilisation of the culture model. As implementation of this model within the

association will enable them in focusing on all the aspects so that the desired level of outcome
from the expansion can be gained. While expanding the business the culture also affect the
business in their employing of the personnel who has the knowledge to work in different and
diverse culture(Cavusgil, and Knight, 2015). In order to this the management of the BMW is
required to select the candidate who foster the diverse culture knowledge so that functioning of
the business operation can be done in a smooth manner.
PESTLE ANALYSIS
In order to operate business by grasping opportunity and identifying the threat which the
business is going to face in the future while expanding their business to Czech republic the
business will focus on the model of PESTLE analysis:
Political Factor: In regard to introduce venture in the new country the management of
the BMW is required to focus on all the rules and regulation of respective economy which have
been laid by the government so that BMW can easily expand and execute their operation within
that economy. The government of the Czech Republic promotes the FDI by way of Greenfield
and Brownfield investment. Also they provides the tax reliefs to the MNC's for up to 10 years.
This has advantage for BMW to expand their business. Other than this the country has provided
highest returns to the FDI to the EU and OCED which will increase the profitability of BMW.
If the business of the BMW does not focus on the political factors rules and regulation of Czech
republic than the business has to undergo the situation of failure and lowered rate of profitability.
The business here can also sustain for longer time as the economy does not undergo changes and
is stable in nature(Crane, Matten and Spence, 2013).

Economical Factor: The inwards FDI stocks of Czech Republic has been increasing
which ensures availability of funds in the country thus introducing a new venture in the country
that is Czech Republic will be beneficial for the BMW. The major source of FDI is from the
countries like Germany, Netherlands and Luxembourg. As per the graph in the recent years the
share of Germany is highest in FDI. The economy of the Czech republic enjoys increased GDP
rate due to which the business have the great opportunity to start up their new ventures as the
economy of the Czech Republic is growing. Due to this the financial companies and the
insurance companies increased their share by enhancing their operations. And if the business
tries to start a new business by investing the capital in the area where the rate of GDP is
decreasing with decreasing rate than the business have to suffer from failure.
Social Factor: Social factor is the one which includes the changing taste and preferences
of the customers, their demand for the products and services. So in order to start a new business
in Czech Republic the management of BMW is required to analyse at their prior notice about the
needs and demands of the customers for the motorcycle and cars of BMW in respective country
so that after determining their can produced the cars and other products as per the customers
expectation which will lead the business with increase amount of profitability. Also with the
expansion of the economy by way of more businesses the income in the hands of the people will
Illustration 1: Critical success factor of BMW

also improve. This offers an opportunity for the company to expand their businesses in the
country as they will have demand for their products in future.
Technological Factor: This factor is the must which the business of BMW must focus as
this will enable them in surviving in the competitive market. Adoption of the new technology for
the production of car must be done by the firm BMW so as the large number of customers can
be attracted towards these new technologies car's and the firm can easily earn higher amount of
sales revenue in the country like Czech Republic(Black, Morrison and Gregersen, 2013).If the
business does not consider this technology inventions than has to suffer from the loss and failure
in operating the business at Czech Republic (Adekola and Sergi, 2016).
Legal Factor: Before operating the business in Czech Republic the management of the
BMW must focus on all the rules regulation different different legislation which the higher
authority of the economy has laid for the businesses to follow so that the growth within the
industry as well as the economy can be earn in a effective manner. If the business does not
consider all the legislation given by the government than the business has to suffer from too
much government interferences in the business and lowered goodwill of the firm in the market.
The regulations related to the wages, salaries, contribution of the employers to the social security
of the employees etc. are high on MNC which can have influence on the operations of the BMW.
But the conduct of the company is ethical and focusses upon compliance of all the requirements,
this offers the opportunity fo9r the company to operate in long run effectively.

Illustration 2: Main FDI partner countries in 2016: shares in total inward FDI stocks
(Source : Main FDI partner countries, 2016)
Environmental Factor: The manager of the BMW must ensure that the operating of the
business in the new country has been done in such a manner that it does not harm the
environment. All the raw materials and equipment used by the business must be of better quality
and should be of modified quality so that it does not harm the environment and helps the
business of BMW in maintaining their sustainability for longer period of time(Kolk, 2016).
Thus, all the above mentioned factors of the macro environment will enable the business
of BMW in successfully introducing their business in new country that is Czech Republic as all
these factors are favourable for the economy as political will helps the business in smooth
running and expanding the business whereas all the other factors are also beneficial for the
business as the economy of the Czech Republic is at the stage of growth and the GDP rate of the
economy is also increasing which will lead to increase in business market position.
Opportunities and threats from the macro environment
the operating of BMW in the new country will come up with many opportunity and threat for the
business as well as the economy. Below mentioned are some of the opportunities and threat:
Opportunity to the BMW Threat to the BMW
 The opportunity to the business of  The business has to face the problem

BMW will be that it can easily attain a
position of the growth within the
market as the economy of Czech
Republic is developing as the GDP rate
of the country is higher.
of the lack of brand consciousness as
the people over the Czech republic are
less brand conscious and prefer buying
the products which can be replaced
within the tenure of 5 to 6 years.
Opportunity for the country Threat for the country
 As the new business in entering in the
market of Czech Republic the economy
can easily reduced their unemployment
rate by hiring the people who are not
working.
 This new entrant of the business will
serve the economy in earning foreign
direct investment(Lasserre, 2017).
 The country has to undergo a threat by
the entrance of this new business is that
the local market of the economy will be
at failure due to this new business car
of the BMW.
 The country has to undergo a problem
of scarce resources within their
economy.
PORTER'S FIVE FORCES MODEL
Porter's five forces model is used within the business in order to find their own
competitive strength and weakness in the industry. This model is the most powerful tool to
identify the firms competitiveness and attractiveness within the competitive market. This model
is utilised by the business in order to identify their bargaining power of customers, bargaining
power of supplier's, threat from substitute, threat of new entrant and rivalry firms:
Bargaining power of suppliers: There are number of supplier within the industry in
which the BMW is dealing that is automotive industry. Which has lowered the control of the
suppliers within the market on the prices due to which there is bargaining power of the supplier
in case of BMW is weaker.
Bargaining power of the buyers: In terms of the company like BMW the bargaining
power of the buyer is also weaker as there are less firm producing the product. So the buyers
here has less control over the prices as they don't have much option to buy this product by
choosing it from different different firm.

Threat of new entrant: As the business has a reputed and higher market position and is
producing the car with higher quality so it is quiet difficulty for the other firm to enter the market
in order to compete with the BMW as it will be costlier to them to produce the cars as the BMW
do. So the threat of new entrant in this is a weaker force to the automotive industry(Laudon and
Traver, 2016).
Threat of substitute products: There are very few other industry which produce the
products as the BMW do. So the threat from the Substitute to the BMW is weaker as there is no
other firm which is operating their business at much higher earning in compared to the business
of BMW. If the business Lower its prices as compared to its few substitute than also the
customers will prefer the quality which the BMW serve so its is the most weaker force to the
industry(Meyer and Bromley,2013).
Rivalry Among existing firms: This is also the weaker force for the industry like BMW
as there are very few industries which are operating their business the same way the BMW does.
And the positive growth of the firm in the industry will make them the market leaders due to
which the rivalry among the existing firm will be low.
Thus, the business can easily expand their operation in the Czech Republic as the
business has the several benefits in introducing the new business. As all the competitive firm
which are dealing in the same areas has less power as compared to the business of BMW and all
the conditions of the porters five forces model are favourable for the business(Lewis, 2019).
The Czech Republic is one of the FDI intensive country where financial services has
major portion of the FDI but investment in the manufacturing of the vehicles is increasing
continuously which offers an opportunity for BMW to expand their business.
CONCLUSION
As per the mentioned report it can be summarised that global business environment plays a vital
role in the economy. As this enables the firm in successfully operating their action worldwide by
formulating the various tactics and policies so that a sustainable position in the industry can be
earned. Here the management of BMW has also analysed all the factors through the PESTLE
ANALYSIS which can hinder their business in operating in the country like Czech Republic.
Along with this the competition level has also been identified through porter's five forces model
so that the expansion of the business can be done in the most effective manner.

REFERENCES
Books and Journals
Adekola, A. and Sergi, B. S., 2016. Global business management: A cross-cultural perspective.
Routledge.
Black, J. S., Morrison, A. J. and Gregersen, H. B., 2013. Global explorers: The next generation
of leaders. Routledge.
Botha, A., Kourie, D. and Snyman, R., 2014. Coping with continuous change in the business
environment: Knowledge management and knowledge management technology.
Elsevier.
Cavusgil, S. T. and Knight, G., 2015. The born global firm: An entrepreneurial and capabilities
perspective on early and rapid internationalization. Journal of International Business
Studies. 46(1). pp.3-16.
Crane, A., Matten, D. and Spence, L. J., 2013. Corporate social responsibility in a global context.
Chapter in: Crane, A., Matten, D., and Spence, LJ,'Corporate Social Responsibility:
Readings and Cases in a Global Context. 2. pp.3-26.
Kolk, A., 2016. The social responsibility of international business: From ethics and the
environment to CSR and sustainable development. Journal of World Business. 51(1).
pp.23-34.
Lasserre, P., 2017. Global strategic management. Macmillan International Higher Education.
Laudon, K. C. and Traver, C. G., 2016. E-commerce: business, technology, society.
Lewis, L., 2019. Organizational change: Creating change through strategic communication.
Wiley-Blackwell.Nagle, T.T. and Müller, G., 2017. The strategy and tactics of pricing:
A guide to growing more profitably. Routledge.
Meyer, J. W. and Bromley, P., 2013. The worldwide expansion of “organization”. Sociological
Theory. 31(4). pp.366-389.
Online
Critical success factor of BMW, 2019. [Online] Available through:
<https://writepass.com/journal/2012/11/strategic-analysis-pestel-porter-and-swot-of-bmw/>
Main FDI partner countries, 2016. [Online] Available through:
<https://ec.europa.eu/info/sites/info/files/economy-finance/eb042_en.pdf>

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