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Global Business Environment: A Case Study of BMW

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Added on 2024/07/02

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This report analyzes the global business environment and its impact on BMW, a multinational organization operating in various countries. It explores key factors driving globalization, strategic challenges faced by BMW, and the influence of globalization on organizational governance, leadership, structure, culture, and functions. The report also evaluates the influences of ethical and sustainable globalization on organizational functions, explores effective decision-making strategies in a global context, and determines various routes to internationalization, including potential barriers.

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Table of Contents
INTRODUCTION.............................................................................................................................. 2
P1- ANALYSING THE KEY FACTORS OF COST, MARKET, ENVIRONMENT AND COMPETITION
THAT DRIVE THE GLOBAL COMMERCE AND TRADE...................................................................3
P2- EXPLAINING THE COMPLEXITY OF STRATEGIC CHALLENGES FACED BY THE ORGANIZAIONS
WHEN OPERATING IN A GLOBAL BUSINESS ENVIRONMENT SUPPORTED BY SPECIFIC EXAMPLES
................................................................................................................................................... 5
P3- EVALUATING THE INFLUENCES OF THE GLOBALISATION ON ORGANIZATIONAL
GOVERNANCE AND LEADERSHIP, STRUCTURE, CULTURE AND FUNCTIONS..............................7
P4- EVALUATING THE INFLUENCES OF ETHICAL AND SUSTAINABLE GLOBALISATION ON
ORGANIZATIONAL FUNCTIONS.................................................................................................. 9
P5- EVALUATING THE DIFFERENT WAYS DECISION MAKING CAN WORK EFFECTIVELY IN A
GLOBAL CONTEXT....................................................................................................................11
P6- DETERMINING AND ARTICULATING THE VARIOUS ROUTES TO INTERNATIONALISATION AN
ORGANIZATION MAY ADOPT INCLUDING THE BARRIERS........................................................13
CONCLUSION........................................................................................................................... 15
REFERENCES................................................................................................................................. 16
1

LIST OF FIGURES
Figure 1- Company’s Logo............................................................................................................. 3
2

INTRODUCTION
The term globalization can be defined as the worldwide movement towards the trade, financial,
economic as well as the communications integration. This leads to the opening of local and
nationalistic perspectives to a wider interdependent world and that can have a free transfer of
the services, goods and capital, across the national frontiers. In this report, a global organization
BMW has been selected to gain an understanding of the wider global business environment and
its operations where it wishes to expand its business. The key factors that drive to the
globalization and the strategic complexities that are being associated while operating in a global
environment have been explained. The various benefits and the challenges of the global business
environment have been also determined. The influence of the global market on the
organization's culture, structure and function along with its decision making and strategy are
further evaluated.
Figure 1- Company’s Logo
3

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P1- ANALYSING THE KEY FACTORS OF COST, MARKET, ENVIRONMENT AND
COMPETITION THAT DRIVE THE GLOBAL COMMERCE AND TRADE
BMW is one of the German multinational organizations which are operating its business in 7
nations of the world and all around the planet (MadlaniJ and Ulvestad, 2012). The factors that are
driving the change in the globalization includes factors like cost, market, competition, traded and
environment which are defined as below-
MARKET FACTORS
BMW has been facing a tough market completion as all the major players in the automobile
industry have started to expand their operations globally. This makes it essential for the BMW to
expand its operations globally and in the emerging economies of the world so as to gain an
advantage of the favourable trade barriers (Schaltegger and Wagner, 2017).
ECONOMIC FACTORS
The rising economies of the developing countries like India and China are one of the economic
factors that are driving globalization. As. The economy is growing the purchasing power of the
people which provides a large untapped market for the BMW that needs to be explored by the
the organization.
LIBERIZATION IN CROSS-BORDER TRADE
The trade restrictions have been removed by many of the countries and various company stores
and the plants are being welcomed by them to establish their firms in their countries. The basic
facilities like water, infrastructure and electricity are offered by the government due to the
increased employment opportunities and economic activities which drive the globalization of
MNC’s (Tate, et al. 2014).
COST DIFFERENCE
There is a difference in the cost of the raw materials and man power due to the changing
demographic and political conditions. As the workers of China and India are working in fewer
4

wages, the multinational organizations outsource their work these nations to gain the cost
advantage and increased profits which result in globalization.
GLOBAL COMPETITION
The competitors of the BMW are launching new cars that provide BMW with a reason to
collaborate with the global players and expand their business by upgrading their technologies
(Falkner, 2017).
5

P2- EXPLAINING THE COMPLEXITY OF STRATEGIC CHALLENGES FACED BY THE
ORGANIZAIONS WHEN OPERATING IN A GLOBAL BUSINESS ENVIRONMENT
SUPPORTED BY SPECIFIC EXAMPLES
STRATEGIC CHALLENGES
The strategic challenges can be defined as the number of factors that impacts the working of the
BMW while operating in a global environment and in the countries like Germany, South Africa,
China, United States, Brazil and India. The strategic challenges are defined as below-
IMPACTS OF INTERNATIONAL TRADE LAW
The international trade law is impacted by the cultural, social, political as well as economic factors
as certain variations in law are given by them. The way BMW does it business internationally is
influenced and also impacts the trade relationship between the countries. The difficulty has been
faced by the organization in the separation of the foreign policies, country trade and politics in
the trade section obligatory and exports control in the national security. Issues in investments
and trade are the challenges faced by the BMW. The international business of the organization
has been also affected by the global issues like the international criminal law and human rights as
the violators get locked out o0f the common trade organizations. The ethical issues and social
responsibilities are the strategic challenges that are also faced by the BMW. There are various
laws which include the human rights, child labour, worker right, code of consult etc. that impacts
the principles of international business (Pauwelyn, et al. 2016).
ECOMICAL IMPACT OF GLOBALISATION
BMW has to take care of the logistics, electrification and tariffs on shipping while designing the
budget of the organization. The operating cost of the organization is impacted by the economic
factors like foreign exchange rates (Crane and Matten, 2016).
6

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ENVIORONMENTAL IMPACT ON ORGANIZATION
As there are different environmental laws of every county so BMW needs to study complete
environmental laws of the country in which it is trying to expand its operations and must plan to
reduce the carbon footprints (Aragón-Correa, et al. 2016).
IMPACT OF GLOBALIZATION ON SUPPLY CHAIN MANAGEMENT
The management of the supply chain activities of the BMW has become complex by the advent of
the globalization. As BMW is operating in some countries and its customers are throughout the
world and in order to manage its global operations, it outsources its activities to third party
organizations across the globe. The supply chain cost is reduced by the outsourcing if not
managed properly (Hutchinson and Persyn, 2012).
7

P3- EVALUATING THE INFLUENCES OF THE GLOBALISATION ON
ORGANIZATIONAL GOVERNANCE AND LEADERSHIP, STRUCTURE, CULTURE
AND FUNCTIONS
Globalization has impacted the culture, structure, governance, as well as the leadership of the
BMW as the principles of global trade, has been adopted by it while working in many countries.
The organizational structure of the BMW has been affected by the globalization and there are
seven areas in which the organization is divided based on the soft and hard areas according to the
Mckinsey model. The hard elements of the BMW include the strategy, structure and systems.
Structure- Global market impacts the organizational chart and the information associated with it
like who will report to whom and how the work will be divided.
Strategy- The strategy of the BMW to attain a competitive advantage in the automobile industry
gets influenced and the plan is also devised (Mazanec, et al. 2015)
Systems- The day to day activities of the organization and the procedures thorough which the
employee’s get engaged in the work gets influenced.
Skills- The capabilities and competencies of employees also get enhanced by the globalisation.
Staff- It impacts the number of employees and type of employees who will be working in the
organization.
Style- The ways the top level managers manage the organization gets influenced along with their
actions and ways of interaction (Bakir, et al. 2015).
Shared Values- The norms and the standards of the BMW gets influenced that helps in guiding
the actions of the company and employee behaviour.
IMPACT ON LEADERSHIP
The components of the BMW needs to be standardized in order to work efficiently in the global
market and it must be communicated to every country. The leaders of the BMW are effectively
monitoring the whole process with the help of their managers in different countries to control the
8

operations. It is essential that the leaders of the BMW gives proper instruction to its employees
and must monitor the results. Video conferences and phones cannot always address the global
issues so the central managers to visit the countries of expansion to address these issues.
INLFUNECE ON CULTURE BASED ON HOFSTEDE’S DIMENSIONS
As BMW is doing international business so the dimension of the culture is very important as
different culture is followed in the international market. BMW needs to standardize its products
because of the globalization and adapt itself to the culture which will be suitable for its business.
The internal structure and culture of the BWM get impacted by the globalization like some big
changes in the employee culture (Davies, 2016).
INFLUENCE OF GOVERNANCE
The concept of the governance is employed in the BMW to regulate the interdependent links in
the hierarchy of the political ascendancy. Political interaction is done by the organization to
resolve the issues that are faced while doing the international business (Brannen, et al. 2017).
9

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P4- EVALUATING THE INFLUENCES OF ETHICAL AND SUSTAINABLE
GLOBALISATION ON ORGANIZATIONAL FUNCTIONS
The strategies that are environmentally sustainable are adopted by the organizations like BMW
which impacts its various organizational function which is described as below-
ETHICS AT BMW
Various challenges are faced by the BMW to maintain the ethical standards related to the safety,
regulatory compliance and production as some countries accept bribing as common practice to
gain permission for their business. Sustainable business practices have been adopted by the
BMW like waste management and recycling to reduce the industrialization impacts on
biodiversity and ecology of the other countries (Elmer, 2013).
PRODUCTION
A negative impact has been resulted on the manicuring process and on the manufacturing of the
product of the BWW and it has become absolute as its customers have become more aware of
the carbon footprint, emission and waste management. In order to manage this budget of the
company needs to increases which increase the cost of production and their final price of
products (Epstein, 2018).
MARKETING
The overall brand image of the BMW gets enhanced by the adoption of ethical and sustainable
ways in production and the customers are attracted towards the organization by their
responsible ways of production and creates a positive brand image. This results in increased
brand awareness (Bende-Nabende, 2017).
LEADERSHIP
The leadership of the organization has been affected and they have shifted the production of the
company from traditional to ethical and sustainable ways. The employees of the organization
have been convinced by the leaders to adopt ethical ways in production and help in the
protection of society and environment.
10

RESEARCH AND DEVELOPMENT
The overall cost of production of the company has been increased by the huge investment in the
environmentally sustainable products. The research methods have been modified to develop
new ways of waste management and effluents treatment (Epstein, 2018).
HRM
The HR department has been impacted negatively as changes in the business process need to be
done for the ethical and sustainable business practices which impact the employees working
hours, shifts and skills. The positive impact has also resulted in new employees with better ideas
of environment protection are employed (Brondoni, 2014).
COST REDUCTION
Energy conservation efforts have been taken by the BMW for ethical business practices like
proper waste management and switching off the lights when not needed which results in the cost
cutting and savings.
11

P5- EVALUATING THE DIFFERENT WAYS DECISION MAKING CAN WORK
EFFECTIVELY IN A GLOBAL CONTEXT
In order to attain long term sustainability in the business and working on international level
strategies to attain the vision of the company following steps should be taken by the BMW in their
decision making-
DECIDING THE TARGETED MARKET
In order to decide the right targeted market, BMW must make strategies that must be aligned
with its vision, long and short term goals. In order to decide the targeted market, the marketing
department of BMW deeply studies the culture and demographics of the host country along with
their political and economic conditions (Ruckelshaus, et al. 2015).
CURRENT POSITION OF COMPANY AND MARKET ENVIORONMENT
The current market conditions must be researched well before making a strategy of
internationalization which includes the factors like fuel price, inflation rates and foreign exchange
rates of the countries. Before establishing new showrooms in countries their current financial
position and capital availability must be accessed.
CULTURAL DIFFERNECES STUDY
BMW must be able to accept the local customs of the country in which they are trying to expand
as they have their own ways of making the buying decisions because one strategy must be
working fine in one country but might not in other. In order to market and advertise the products,
BMW must make pamphlets and brochures in their local language to expand their business
(Evans, 2017).
COMPETITOR ANALYSIS
There are tough competitors of BMW like Volvo, Mercedes and Audi so a close watch on their
business activities must be kept by the company. The market share of the company can be
reduced is a similar car is launched by the other company at lower rates. The technological
advancements like electric cars have also impacted the competitive environment of BMW so tis
12

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decisions must be based on the detailed analysis of the different factors (Ruckelshaus, et al.
2015).
KNOWING THE LAW OF LAND
The specific rules related to employees, natural resources and environment must be analyzed
and followed by the BMW but there are some rules which are crucially related to community and
violating them can result in the negative brand image and reduced sales of the company (Baylis,
et al. 2017).
13

P6- DETERMINING AND ARTICULATING THE VARIOUS ROUTES TO
INTERNATIONALISATION AN ORGANIZATION MAY ADOPT INCLUDING THE
BARRIERS
BMW does not need to establish its plant in every country to take advantage of the emerging
economies or new trade regions for which a centralized manufacturing system has been
established in which the transportation of the good around the world is done through modern
logistics medium. The different routes of internationalization are-
FRANCHISE
In this permission is given by one organization to the other to use their brand name, trademark
and business systems which can outfit the parent company without huge investment and can
help in the business expansion in new countries (Kuada, 2016).
MERGERS AND ACQUISITIONS
The company can merge or buy other organizations and can attain diversification of products
which will minimize the risks in business. This enlarges the organization's production capacity
sales, profitability and can lead to reduced cost of goods.
The barriers to the internationalization of an organization are defined as follows-
TECHNICAL BARRIERS
The overall cost and the expansion of a company can be increased by the standardization of
products and other norms. Sometimes unnecessary burden is created on the organizations
because the government ask them to standard procedures which are old and outdated (Cao, et al.
2018).
CULTURAL DIFFERENCES
A barrier can be created in internationalization the cultural norms of the other country is not
accepted by the organization and a considerable amount of time must be given by the
organization to analyze the local people habit and culture to become successful in the new
14

market. One of the other barriers is of language that hinders the communication in global
expansion (Sharma, et al. 2016).
TRADE BARRIERS
There are certain foreign trade barriers like product certifications, testing and other standards
which are imposed by the government on the companies. In such cases, legal permissions form
the local officials will be required which is difficult and result in unethical practices like bribery.
MEDIA
In order to gain the popular sentiments, the local media of the country creates a bad image of the
organization against the foreign companies. There is a need for carefully handling these issues to
avoid the misunderstandings (Vauterin and Virkki-Hatakka, 2016).
CONSUMPTION HABITS
People with the different age group, lifestyle and health have different consumption habits of the
products which impact their decision making and not recognizing them can act as one of the
barriers in internationalization.
15

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CONCLUSION
All the global organizations are expanding their business processes to expand globally and
globalization has increased their financial activities. The impact of the globalization on the BMW'
functions and operations along with its international business has been described in this
assignment. There are various strategic challenges that have been faced by the organization
while expanding its business globally. The ethical and the sustainable ways are adopted by the
BMW which has impacted the organization in certain ways which are described well. Lastly, how
different ways the decision making can work effectively and various routes organization can
adopt for internationalization are determined.
16

REFERENCES
1. Aragón-Correa, J.A., Marcus, A. and Hurtado-Torres, N., 2016. The natural environmental
strategies of international firms: old controversies and new evidence on performance and
disclosure. Academy of Management Perspectives, 30(1), pp.24-39
2. Bakir, A., Blodgett, J.G., Vitell, S.J. and Rose, G.M., 2015. A preliminary investigation of the
reliability and validity of Hofstede’s cross cultural dimensions. In Proceedings of the 2000
Academy of Marketing Science (AMS) Annual Conference (pp. 226-232). Springer, Cham
3. Baylis, J., Smith, S. and Owens, P. eds., 2017. The globalization of world politics: an
introduction to international relations. Oxford University Press
4. Bende-Nabende, A., 2017. Globalisation, FDI, regional integration and sustainable
development: theory, evidence and policy. Routledge.
5. Brannen, M.Y., Piekkari, R. and Tietze, S., 2017. The multifaceted role of language in
international business: Unpacking the forms, functions and features of a critical challenge
to MNC theory and performance. In Language in International Business (pp. 139-162).
Palgrave Macmillan, Cham
6. Brondoni, S.M., 2014. Global Capitalism and Sustainable Growth. From Global Products to
Network Globalisation. Symphonya. Emerging Issues in Management, (1), pp.10-31.
7. Cao, L., Navare, J. and Jin, Z., 2018. Business model innovation: How the international
retailers rebuild their core business logic in a new host country. International Business
Review, 27(3), pp.543-562
8. Crane, A. and Matten, D., 2016. Business ethics: Managing corporate citizenship and
sustainability in the age of globalization. Oxford University Press
9. Davies, A., 2016. The globalisation of corporate governance: The challenge of clashing
cultures. Routledge
10. Elmer, S., 2013. BMW targets 2020 for self-driving cars. AutoGuide, February, 26.
11. Epstein, M.J., 2018. Making sustainability work: Best practices in managing and measuring
corporate social, environmental and economic impacts. Routledge
12. Evans, M., 2017. Policy transfer in global perspective. Routledge
13. Falkner, R., 2017. Business power and conflict in international environmental politics.
Springer
17

14. Hutchinson, J. and Persyn, D., 2012. Globalisation, concentration and footloose firms: in
search of the main cause of the declining labour share. Review of World Economics,
148(1), pp.17-43.
15. Kuada, J., 2016. Internationalisation of Firms in Developing Countries: An Integrated
Conceptual Framework. Perspectives on international business: Theories and Practice,
pp.71-98
16. Madlani, J. and Ulvestad, J.C.A., 2012. Fundamental Valuation of the BMW Group
(Doctoral dissertation, Master Thesis, Copenhagen Business School).
17. Mazanec, J.A., Crotts, J.C., Gursoy, D. and Lu, L., 2015. Homogeneity versus heterogeneity
of cultural values: An item-response theoretical approach applying Hofstede's cultural
dimensions in a single nation. Tourism Management, 48, pp.299-304
18. Pauwelyn, J.H., Guzman, A. and Hillman, J.A., 2016. International trade law. Wolters
Kluwer Law & Business
19. Ruckelshaus, M., McKenzie, E., Tallis, H., Guerry, A., Daily, G., Kareiva, P., Polasky, S.,
Ricketts, T., Bhagabati, N., Wood, S.A. and Bernhardt, J., 2015. Notes from the field:
lessons learned from using ecosystem service approaches to inform real-world decisions.
Ecological Economics, 115, pp.11-21
20. Schaltegger, S. and Wagner, M., 2017. Managing the business case for sustainability: The
integration of social, environmental and economic performance. Routledge
21. Sharma, S., Dixit, M.R. and Karna, A., 2016. Design leaps: business model adaptation in
emerging economies. Journal of Asia Business Studies, 10(2), pp.105-124.
22. Tate, W.L., Ellram, L.M., Schoenherr, T. and Petersen, K.J., 2014. Global competitive
conditions driving the manufacturing location decision. Business Horizons, 57(3), pp.381-
390
23. Vance, C.M. and Paik, Y., 2015. Managing a global workforce. Routledge
24. Vauterin, J.J. and Virkki-Hatakka, T., 2016. A typology of knowledge collaboration: A case
study of an initiative to accelerate the internationalization of Finnish cleantech
entrepreneurship. Industry and Higher Education, 30(4), pp.292-301
18

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