Contemporary Development in Business and Management at BMW

Explore the contemporary development in business and management at BMW, focusing on external influencing factors, marketing communication mix, effectiveness evaluation, and areas for improvement.

CONTEMPORARY DEVELOPMENT IN BUSINESS AND MANAGEMENT

EXECUTIVE SUMMARY
There are several changes that have been observed by BMW in the business that influences
their position in the market. The effective policies and procedures of BMW help them in
managing the changes effectively. This report focuses on the contemporary development in
the business and management of the BMW’s business environment with help of different
tools such as PESTLE Analysis, Porter Five Forces, etc. BMW is one of the leading automobile
industries in the world that continuously attained growth in the market. In the current
scenario, different changes are discussed regarding the existing market trends.
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Table of Contents
EXECUTIVE SUMMARY...............................................................................................................1
INTRODUCTION..........................................................................................................................3
TASK 1.........................................................................................................................................4
OVERVIEW OF THE PRIMARY EXTERNAL INFLUENCING FACTORS TO THE ORGANIZATION
AND IMPORTANCE OF EACH TO THE ORGANIZATION...............................................................4
MACRO ENVIRONMENT.....................................................................................................4
MICRO ENVIRONMENT......................................................................................................8
TASK 2.......................................................................................................................................10
2.1 MARKETING COMMUNICATION MIX AND ITS RELEVANCE TO BMWAND HOW IT
INFLUENCES POLICIES AND DECISION-MAKING..................................................................10
2.2 EVALUATION OF THE EFFECTIVENESS OF THE BMW RESPONSE...................................14
2.3 AREAS FOR IMPROVEMENT IN THE RESPONSE OF THE BMW.......................................16
CONCLUSION............................................................................................................................17
REFERENCES.............................................................................................................................18
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INTRODUCTION
BMW is one of the leading automobile industries in the UK that provide luxury cars. The
operations of BMW are conducted in several countries of the world such as the UK, the USA,
France, Germany, Indian, Brazil, Australia, etc. The company generally focus on the
automobile sector but with the enhancement of the business environment, they are
expanding their business for attaining huge growth. This report will be helpful in analysing
different areas in order to develop suitable strategies for the business operations of BMW.
There are various tools such as PESTLE Analysis, Porter Five Forces, Stakeholder Analysis,
etc. which will be helpful in analysing the business environment in order to develop suitable
strategies (Schaltegger and Burritt, 2017). Moreover, the report will also help in
understanding the contemporary development in the BMW. The marketing communication
mix is helpful in evaluating the current position of the organisation and their strategies
regarding the changes in business environment.
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TASK 1
OVERVIEW OF THE PRIMARY EXTERNAL INFLUENCING FACTORS TO
THE ORGANIZATION AND IMPORTANCE OF EACH TO THE
ORGANIZATION
BMW is known as one of the leading company in the world and who are German-based
automotive manufacturing that conducts the operation at the multinational level. Currently,
they are producing motorcycles and automobiles and previously, they also produce aircraft
engines. It was founded by Karl Rapp, Franz Josef Popp, and Camilo Castiglioni in 1916. The
business operations of BMW are conducted in Brazil, India, the United States, Germany,
China, and South Africa. BMW has expanded their business in the different market of the
world. The automobiles which are provided by BMW in the market are based on the latest
technology in order to safeguard the environment (Wirtz, et al. 2010). In the current
business environment, several challenges and issues are affecting the business environment
of BMW and it is necessary for them to effectively manage and handle them for gaining
market effectiveness. The internal and external factors of the business environment should
be effectively analysed and suitable strategies should be formed. Here, PESTLE Analysis
would be used in order to effectively understand the macro or external environment of
BMW.
MACRO ENVIRONMENT
PESTLE ANALYSIS
Figure – PESTLE Analysis
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[Source - http://www.latestquality.com/advantages-disadvantages-pestle-analysis/]
 POLITICAL
The BMW Company is negatively influenced by several political elements. The
political elements are issues regarding CO2 emission, enforcement legislation, etc. In
addition, the recycling is also considered as the important political elements that
affected the manufacturing process of BMW. The political stability will give a positive
influence on BMW else there are different risks to investments. Several decisions are
taken by the governmental authorities regarding the expansion of business by BMW
(Rosemann and vom Brocke, 2015). BMW may face challenges like high taxes and
disadvantages like conflicts, political riots, which would result in an adverse effect on
the spending of consumers.
 ECONOMIC
The performance of BMW has been influenced by the economic elements. The
fluctuation of GDP and its direct influence on the spending of consumer base result
in a substantial influence on the BMW. In addition, the revenue of BMW is also
influenced by the exchange rate. There are strong distinctions of manufacturers
which affected the global inflation rates. The behaviour of customers regarding the
services of BMW affected due to the financial crisis.
 SOCIAL
The social elements directly influence the manufacturing of BMW and
enhancements in the demographics and cultural aspect. The changing pattern
further influences the buying behaviour of the consumers. The aforementioned
elements will be affecting the automobile industry and also changing the perception
of consumers regarding the buying of automobiles (Jeston and Nelis, 2014). The
automobile should be fuel efficient as awareness of harmful emission makes the
customer buy eco-friendly automobiles.
 TECHNOLOGICAL
The technological elements are helpful for BMW in building a competitive market for
the other companies. The increase of technical elements is helpful in gaining an edge
over others. The new and advanced designs will be helpful in overcoming the
margins in the industry. The restrictions and modifications in the business will result
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in environmental pollution which required cars to be efficient. The quality and
functionality for the customers will be enhanced by the new embedded technology
in BMW.
 LEGAL
The legal elements are the norms and legislation in the US and the European
markets that affect the business operations of BMW. It further helps in developing
Euro standards in developed and under developed countries. These elements are
necessary to consider for the business environment and they are also important
regarding the interest of behaviour, satisfaction, and customer activities. It is the
responsibility of BMW to safeguard their customers and society.
 ENVIRONMENTAL
Environmental elements comprise of elements like weather changes and climate.
The climatic changes directly affect the farming, tourism, and insurance. It is one of
the major issues for BMW Group regarding their business. The purpose of
safeguarding the environment is affected by the issue of transportation which results
in the emission of harmful gases and other non-recycling elements. Nowadays, the
preference of customers is fuel-efficient and eco-friendly automobiles. The choices
result in energy efficient, hybrid and technology embed vehicles.
PORTER FIVE FORCES
Figure – Porter Five Forces
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[Source - https://www.strategicmanagementinsight.com/tools/porters-five-forces.html]
 Threats of New Entrants
It is the difficult task for a new company to establish in the automobile industry and
understand the strategies of well-established brands. There is a huge competition in
the automobile industry and the major competitor is BMW (Instruments, 2011). In
the future time, the automobile industry will need huge amount of investment,
qualified and skilled employees, funds, capital, and engineer for attaining a leading
position in the market. Very few companies invest in such kind of environment that
comprises of lots of risks and low rate of return as compared to the investment.
There are best engineers, designers, and technicians in BMW that are the backbone
of the success of the organisation. Innovative and new designs and models are
designed by BMW for the manufacturing of their products.
 Threats of Substitutes
It is difficult for the market and the customers to find the substitute for the huge
brand like BMW. BMW has developed a strong position in the market and they also
develop a reputed image in the eyes of the potential and valuable customers at
national and international level. However, the chances of competition from other
automobile companies also arise. In addition, the government also develop
problems and threats for BMW regarding the emission from fuels and other
environmental hazards that are caused by automobiles (Schneider and Spieth, 2013).
In recent time, several customers have moved to public transport services in order to
reduce the transportation issues. Still, it has a low influence on BMW due to the
techniques and strategies followed by them regarding their luxury cars.
 Bargaining power of Buyers
For gaining the attention of the huge number of customers it is essential for BMW to
conduct suitable marketing and promotional strategies. It requires the huge amount
of budget for conducting the strategies. Nowadays, the products that are purchased
by the consumers are based on reviewing several websites and blogs. The rating of
the product is considered by the consumer before purchasing the product. The
review comprises of product information such as positive and negative features. It
also includes the price, models, characteristics, etc. of the product (Vom Brocke and
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Rosemann, 2010). The information provided further helps in increasing the
negotiation power of the buyers. For overcoming such kind of elements, it is
necessary for BMW to develop brochures and catalogues to gain the number of
customers.
 Bargaining power of Suppliers
The role of suppliers in the automobile industry is important. The organisation
required labour, spare parts, resources, and other services for manufacturing cars.
The delivery of vehicles to the customers is affected by the delay of resources
regarding the production which should be considered by the BMW. The profit of the
organisation is also influenced by the supplier cost. It has an adverse effect on the
distribution and cost of the products. The demand for more cost than the usual from
the supplier affects the price of vehicles (Sabherwal and Becerra-Fernandez, 2011).
Here, all the suppliers are not included as some suppliers work on low cost for
maintaining their reputation in the market by associating with a brand. BMW focus
on achieving excellence in their product by considering the cost as well as quality
from the suppliers.
 Rivalry among existing firms
There are several competitors in the automobile industry that are the major threat
to the business operations of BMW. The list of competitors of BMW involves both
national and international industries. The competitors also possess the huge amount
of target audience in the market. The automobile competitors of BMW are Mercedes
Benz, Audi, etc. and the competitors in the bike are Yamaha, Ducati, Suzuki, etc. The
industries are giving a powerful and tough competition to BMW. The demands of
hybrid cars in the market has been increasing daily due to the advancement of
technology (Alvarez, 2016). It is a positive factor for BMW that they are
manufacturing automobiles which are eco-friendly and also minimises the issue of
transportation. The only competitor who is providing hybrid car is Toyota.
MICRO ENVIRONMENT
The internal elements of the environment comprise of management, employees, suppliers,
customers, etc. The micro environment of BMW is explained as follows:
 Employees
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They are considered as the prime stakeholders of the organisation. The management
of BMW focuses on providing the most effective environment in order to accomplish
desired objectives. The employees are most effective and important for the
functioning of the organisation which further helps in the accomplishment of the
management objectives (Chang, 2016). The employees should be satisfied with the
services of the company towards to them which result in high growth.
 Customers
BMW is one of the oldest automobile organisations in the industry and it is their
responsibility to provide high-quality services to the customers and maintain the
healthy relationship with them. There is a large number of BMW consumers in the
world that are happy with their product and service.
 Management
The major focus of management team is to provide the high-quality products and
services to the customers as per their requirement (Schaltegger, et al. 2012).
Motivation and encouragement are provided by the management to employees for
high productivity.
The micro and macro environment of BMW is effectively understood through above tools. In
addition, the positive and negative points of the business operations of BMW are also
analysed that will be helpful in developing suitable strategies for the business growth.
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TASK 2
2.1 MARKETING COMMUNICATION MIX AND ITS RELEVANCE TO BMWAND
HOW IT INFLUENCES POLICIES AND DECISION-MAKING
Marketing is the vast business function which incorporates distribution and merchandise
processes and pricing, product research and development, as well as promotion and
communication. In general, marketing communication mix refers to the process or set of
processes used to promote the organization and its product to the targeted or potential
consumers in the target market. Majorly, the communication mix includes seven elements;
advertising, personal selling, promotion and discount, relationship with people, direct
marketing, mouth to mouth publicity and event sponsorship (Hodgkinson and Healey,
2011). Considering the BMW, marketing is the vast and important function of the
organization which includes research and development of the new automobiles and other
services, reaching to the targeted population and having the pleasant relationship with
them. The framework of marketing communication mix is given below:
[Figure: marketing communication mix framework]
[Source: https://catalog.flatworldknowledge.com/bookhub/reader/2861?e=cadden_1.0-
ch07_s08]
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ADVERTISING
BMW group majorly utilizes media and print advertising to communicate its message to the
target customer segment. Also, the organization is shifting towards the mobile media which
is an effective advertising platform. For instance, in 2015 the organization has started
advertising through Wechat application. In addition, the organization is using viral marketing
which refers to the marketing i.e. relied on the circulating the marketing message among
the existing members. It is the cost-effective method which is the most beneficial thing
about this marketing tactic (Trkman, 2010). But the marketing team should be aware of the
drawbacks of the advertising associated with the viral marketing. The disadvantages of the
viral marketing are the high level of vulnerability and lack of control over tools.
SALES PROMOTIONS AND DISCOUNTS
Sales promotion generally refers to the short-term enticements for the existing or potential
customers for committing to the buy products and services. The BMW group occasionally
uses this strategy of sales promotions and more specifically the organization offers
occasional seasonal sales promotion campaign. In addition, the BMW groups are associated
with the various customer loyalty programs in the major market segment as part of the
promotional strategy of the company (Becker, et al. 2013). For example, in North America,
the company provides loyalty of USD 500, 1000 or 1500 depends on the model of vehicle.
PERSONAL SELLING
Personal selling generally refers to the part of the direct selling of the organization so here
in this element of marketing and communication mix highly skills marketing and sales
department and workforce are included. In addition, the distribution team and salesperson
of the company promoted their products according to the decisions made by the company.
Further, the salespersons associated with the retail attempt to reach to the smaller areas.
RELATIONSHIP WITH PEOPLE
Public relation or publicity is the most important part of the communication mix of the
company because it significantly supports the overall business operation s of the company
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(Andersson and Holm, 2010). The BMW has chat support and feedback strategy to deal with
the different issues of the public also the company has effective after sales services.
Altogether, the company attempts to implement all the actions required to maintain
exceptional public relations.
DIRECT MARKETING
The direct marketing is interrelated with the sales and promotion where the BMW utilizes
interactive communication in transferring the communication message to the targeted
consumers. There are several tactics such as direct emails, invitation, events and much more
as part of their direct marketing plan. These activities save the huge amount of time and
efforts of the company because it directly sends message to the existing as well potential
customers.
MOUTH TO MOUTH PUBLICITY
Mouth to mouth publicity directly depends on the services and products of the services and
their quality because the mouth to mouth publicity is gained by the honest and loyal
employees and satisfied customers of the company (Hutt and Speh, 2012). Considering the
BMW, the organization has an effective brand image in the market as the company provides
immense services to their consumers before as well as after purchasing the product.
EVENT SPONSORSHIP
Event sponsorship refers to the process of supporting something (event or program,
activity) financially or through the provision of services and products. BMW provide support
various different events in different countries to leave it footprint and gain popularity.
Various auto expos are supported or hosted by the BMW in different countries. The events
supported by the companies are product launching events, nonprofit events and other
general events.
EFFECTS OF THE MARKETING COMMUNICATION MIX ON THE POLICIES AND DECISIONS OF
THE COMPANY
Marketing communication mix plays an important role in forming the policies of the
organization and making the important decisions for the products and services of the
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company (Amin, 2014). For example, the regular and positive feedbacks help the
organization in developing the effective policies which further helps in maintaining the
public relations of the company. Further, focusing on all elements of the aforementioned
mix, lead to the effective accomplishment of goals and objectives of the organization.
Further, the marketing communication is also helpful in enhancing the accessibility of the
consumers towards the company. The policies of the organisation are considered during
conducting marketing communication so that the values and principles of the organisation
are shared with the consumers (Young and Conboy, 2013). It is helpful for BMW in gaining
effectiveness in the market which provides huge development in the revenue and profit
along with developing the positive image of the company.
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2.2 EVALUATION OF THE EFFECTIVENESS OF THE BMW RESPONSE
The change in the business environment should be effectively managed and handled by
BMW. The changes are proposed in BMW are eco-friendly technology, modern trend of the
electric vehicle, etc. Due to some changes, huge enhancements would be made in the
overall strategies of the company. The management of BMW will be developing suitable
strategies and methods for analysing the changes effected in order to attain the business
objectives effectively (McDonnell, et al. 2010). The market trends and conditions are also
analysed by BMW before developing the strategies for business.
Suitable marketing strategies are used by BMW in order to handle the micro and macro
environment of the business. In addition, the suitable marketing platforms will be helpful in
satisfying the requirement of the customers. BMW is known as the one of the oldest
organisation in automobile industry which possesses huge experience in running the
successful business in the industry. For instance, the prices of BMW car in India have been
affected due to the new reform of the government. Similarly, the price of BMW cars has
been increased in other countries such as Russia, the USA, and Russia, which should be
balanced by BMW in their costing. In present, the brand value of BMW is huge in the market
which will be difficult for other automobile company to overtake. Also, the consumer base
of BMW is huge and they are loyal to the company.
Regarding the rules and regulations of government, BMW has effectively followed the rules
and regulation of government in order to conduct the business operations. The legal
department of BMW effectively monitors and control the working operations of the
company as per the government. Due to different negative issues in past, the organisation
developed several strategies for attaining effectiveness. In addition to this, new
technologies are implemented in the manufacturing of the automobiles. Further, the
organisation is also developing vehicles that eco-friendly and fuel-efficient in order to
safeguard the environment (Piekkari, et al. 2010). The protection of nature is one of the
major focuses of BMW regarding their business operations.
Moreover, the elements that are affecting the business operations of the organisation are
effectively handled and it will be helpful for them in gaining effectiveness in the world. The
utilization of different strategies regarding the products and services is helpful in conducting
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attractive promotion and marketing for gaining the attention of the huge number of
customers. In addition, the marketing department has the responsibility of conducting the
marketing and promotional campaigns of BMW that attract several customers.
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2.3 AREAS FOR IMPROVEMENT IN THE RESPONSE OF THE BMW
The management team of BMW has taken the suitable response for the improvement in the
major areas. The management team along with the marketing team analyse the methods
which are beneficial for the organisation in attaining effectiveness in the required areas
(Maylor, et al. 2016). The superior authority of the organisation doesn’t focus on the
marketing strategies because their prime focus is providing high quality to their potential
customers which result in gaining huge popularity in the market.
There are different areas in which BMW is conducting improvement such as the weight of
the automobiles, effective handling, enhancement of tyres, air conditioning, the new design
of cars, etc. The focus of BMW on the enhancement of business is definite such that there
are several opportunities available for them to make required changes in the business for
attaining the desired position in the market. BMW has maintained the standard of their
services as per the current trend in the market which strengthens their business position.
The strategies which are formed by the team in BWS focus on three different areas such as:
1. Increasing the profitability of their core business at all over the world.
2. Leading the market by providing best vehicles through innovation and advanced
technology.
3. The working operations should be flexible and effective.
For gaining huge profit from the market it is important for BMW to conduct huge
investment at the global level. The business of BMW could be expanded in emerging
countries like China and India. The strategy of the company to promote their high-quality
engines should be involved in the portfolio in order to initiate their business in Asian
countries. An association has been done by BMW with CASE (Connected, Autonomous,
Shared and Services, and Electric) that helps them in becoming the leader in the market
(Dumas, et al. 2013). The aim of BMW is to attain effectiveness in building electric and
hybrid cars of high quality till 2022 in all the developing countries. The cultural framework of
the company focuses on different kind of people as they are conducting operations in
different countries. BMW knows the strength of local culture and society in the business
such that they effectively develop strategies according to them. Moreover, it is evaluated
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that the organisation is functioning very well and maintaining their leading position in the
market.
CONCLUSION
There are several aspects which have been evaluated from the aforementioned report. The
above report is helpful in gaining a deep understanding of the current business operation
and the tools that are helpful in conducting the analysis of the required areas of the
business for attaining growth in the business. The report also helps in identifying the
improvement in business operations of BMW by considering all the business aspects.
Moreover, the report has developed the required understanding and knowledge of different
tools and operations that are helpful in terms of enhancing the business for attaining
development.
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