Strategic Management in Multinational Companies

This assignment provides an in-depth analysis of strategic management in multinational companies, specifically in the auto industry. It includes a comprehensive review of relevant literature, including case studies and research articles. The assignment is designed to help students understand the key concepts and theories of strategic management and their application in the auto industry.

STRATEGIC
MANAGEMENT
Table of Contents

INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
TASK 2............................................................................................................................................4
TASK 3 ...........................................................................................................................................7
TASK 4............................................................................................................................................8
TASK 5............................................................................................................................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................12
.......................................................................................................................................................12

INTRODUCTION
Strategic Management is the process of identification and description of the
organization's strategies so that company can achieve its goals, improve its performance and
sustain in the competitive environment. It is a bundle of various steps viz. Planning, setting
objectives, analysis and monitoring the results attained by it. The manager of the company is
responsible for the successful implementation of various plans and strategies to increase the
customer base. It is crucial to long-term success of a business (Doz, 2017). It involves planning
for projected as well as unfeasible contingencies. The chosen company in this project report is an
auto-mobile company named Bayerische Motoren Werke (BMW). This report covers, the past
strategies followed by it, detail strategic and competitive advantage analysis, prospective
situation in the existing market, degree of alignment in mission and vision statement, strategic
capabilities, potential strategies that could be implemented and recommendation on the basis of
evaluation.
Overview of the company
BMW is one of the top car manufacturers in the world. It was founded in 1916 and has its
headquarters at Munich, Germany. It is a multinational company engaged in production of
luxury auto-mobiles and motorcycles. It started as an aircraft manufacturing company but the
business ended in the year 1945 owning to Versailles Armistice Treaty (Annual Report of BMW,
2017).
TASK 1
BMW Group is the leading premium car manufacturing company which have always
included advanced and innovative technologies, digitalisation and sustainability in its strategies.
The strategic is directed towards expansion of the existing technological competence, customer
satisfaction and to sell or provide services in a manner to become the leader in this industry for
long-term. It saw enough potential in the Rover Group which pushed it to enter the mass car
market in the UK. This strategy was supported by UK government because of the prospective
investment opportunities and exploring new export markets. The formulation of any plans and
strategies is for delivering high quality, reliability and high-level customer service support. All
these were based on the services provided to the customer which resulted in high growth of the
company in the market. To rise above these hurdles, BMW improved its existing customer

service for which, it formed a customer constitution at all the exclusive BMW dealership outlets.
The charter was prepared with an intention to enhance competitiveness, realign its operations and
make all its dealers to be customer-centric. The sales of BMW UK reached to 251,577 in the
year 2016, which recorded to be the best ever sales it has made so far. The number consisted of
both BMW and MINI. The percentage was increased to 8.9% as compared 2015. Further, it
conducted R&D to analyse the current position and business environment (Coporate Strategies
of BMW, 2018). However, 2017 was a challenging year for it due to which it felt a need to focus
on marketing strategy. It came with slogans like “The Ultimate Driving Machine” and “Sheer
Driving Pleasure” to make people realise the comfort and high quality with updated features in
the car. In the last 5 years, it has implemented various marketing strategies to mark a strong
brand image and position in the international market by offering variety of premium products for
increasing its sales. It has appointed Rob East as Corporate Sales General Manager to overlook
the BMW and MINI sales in UK (Frynas and Mellahi, 2015). BMW has become more
committed towards the ecology and society by creating value chain, comprehensive product
responsibility and to conserve resources as an vital part of its strategy. These were the strategic
direction that it has developed in the last 5 years and will continue to follow and implement in
the future to set an exemplary mark in the industry of luxurious cars.
TASK 2
The company operates in auto-mobile industry as well as provide premium financial and
mobility services. Strategic analysis is the process of researching the business environment in
which an entity operates. It is important for making decisions related to strategies which the
company desires to implement for smooth working of the organization. For understanding the
business environment and to identify the key factors of change, BMW conducted PESTLE and
SWOT analysis (Bailey and De Ruyter, 2012).
PESTEL
 Political factors- The political factors are the laws and regulations including the
restrictions applicable on the automotive industry at macro level. These factors impact
the willingness of a customer to pay for BMW cars and also the other matters. Since it
operates in global market through its 17 production unites in China, UK, India etc., BMW
group has to co-ordinate and comply with various regulations in each of the countries.

Further, the laws may be related to CO2 emission or any other concern. BMW might
have to pay high tax in international market due to the political riots and conflicts.
 Economic factors- The economic factors influence the performance of BMW due to the
fluctuations in the economy. It also depends upon the price that customers are willing to
pay on its products. Since it is a global company, therefore, the inflation rates and the
financial crisis of a country affect its service facility and behaviour of the buyers.
Exchange rate is also an important factor affecting the revenues of BMW group (Tjemkes
and et. al., 2017).
 Social factors- The buying pattern of BMW will be affected and changed because of the
recession also on the basis of how fuel-efficient a car is. BMW operates in different type
of culture due to which it is earning huge income and is taking care of the factors that
might affect it.
 Technological factors- It is the core element which has made it the upper-middle and
upper class preferred car. However, it should take care of the features and its outcomes in
the context of environmental pollution so that technology embedded cars become
efficient.
 Environmental factors- People have become more concerned about the environment
from last few days, hence, the demand for fuel-efficient and environment-friendly cars
have increased. Therefore, BMW should make more hybrids, energy efficient and
technology embedded cars.
 Legal factors- BMW group is devoted to its customers by increasing the satisfaction
should work towards securing the interest of customer and society.
SWOT ANALYSIS
Strengths:
 Workforce- More than 100,000 employees work in BMW group who are highly
qualified and skilled (FitzRoy and et. al., 2012).
 Product portfolio- BMW offers variety of products ranging from SUVs to Sedans to
sports cars. It make sure to launch the products which will be able to fulfil the customer
needs by delivering best quality and design.
Weaknesses:

 Cars recalled- The cars that have been recalled till now have affected the brand image of
BMW. It make sure to meet each and every requirement, so that the number of such
incidents gets reduced.
Opportunities:
 Market expansion- New markets provide increased market opportunities for generating
high revenues. BMW has already established its manufacturing units in developing
countries such as India. Targeting developing countries has gained it success. This will
help it increase its market standing in the global market.
Threats:
 Price: People are becoming concern about high prices of all the products in the market.
They are more interested in saving the money rather than spending it on premium or
expensive products (Hwee, 2015). Economic crisis: Issues like financial crisis, inflation rate, fluctuations in the currency
rate etc. affect the decision of the consumer.
PORTER'S FIVE FORCES MODEL
 Threat of substitutes- BMW's brand image, products and services are very strong in the
market and also it is a preferred brand by most of the people worldwide. It is a reputed
brand, hence, it may face risks ranging from its director competitors.
 Power of competitors: The list of the competitors in the auto-mobile industry is huge.
Some of the rivals of BMW are Audi, Mercedes Benz etc. and under the bike brands,
Ducati, Yahama etc. They are all posing a powerful competition in the domestic as well
as global market (Gaubinger and et. al., 2015).
 Power of buyers- Now-a-days, people rely on the reviews, comments and rating of the
product which are provided in websites or magazines.
 Power of suppliers: Suppliers are the most important part in any business as they
provide the raw material to convert it into a finished product. A business is carried by
combining the materials, labour, and other materials.
 Threats to new entrants- An entity requires to invest huge amount to enter into the auto-
mobile industry to compete a prominent brand like BMW (Mahr and Lievens, 2012).
Brexit has affected the whole automotive industry. In UK, the companies in this industry
are facing difficulties not just due to BREXIT but also, because of political issues and decline of

diesel are two main forces that influencing BMW and other brands in the same industry. The
chief executive of automotive supplier has even warned the entities about the devastated
potential of BREXIT.
TASK 3
BMW Mission: “The BMW Group is the world's leading provider of premium products and
premium services for individual mobility.”
Further, there are different vision statement for it other brands viz. MINI and Rolls-
Royce (Shabbir, 2015).
BMW Vision: “To be the most successful premium manufacturer in the industry.”
The vision represents the core objective of the company. It has been delivering products
that provides Sheer Driving Pleasure, and it aims continuing this vision for next 100 year.
Ever since it started manufacturing cars, it made sure to become the leader of premium
products and services (Ramsbrock and et. al., 2013). From the past analysis about the company,
it can been seen that BMW Group keep updating its engines with latest technology and
innovation. The employees of the company are well aware about what the company and
customers want to make it a global leader in luxurious cars.
BMW's Strategic Capabilities:
Strategic capabilities implies the business' ability to implement its strategies to survive in
the competition and increase the market value of the company (Budde and et. al., 2015).
Engineering Excellence: The company has gained success by using excellence
engineering design in its cars. It an expert in this sector, hence, uses light-weight but reliable
material combined with comprehensive energy and heat management mechanism in the vehicle.
Value-added Workforce: It is one of the leading premium car manufacturers across the
world. This is because of its offers attractive workplace for employees. It considers employees as
its most important assets. They are responsible for achieving the company's goals to make it
successful. It search young talents to give productive results.
Brand Management: When the BMW entered the car manufacturing market, it one
thing in the head, that is to capture the large market consisting upper middle class and upper
class. For this purpose it has managed its brand to sustain in the competition and be recognized

as the premium car brand. Its brand signifies sporty, performance oriented that has been designed
with high level craftsmanship and innovative (Berger and Kuckertz, 2016).
Innovation: The investment in R&D has crossed 6 billion Euros from 2007 to 2017.
BMW Group has invested 6108 million Euros to research the innovative design as per the
demand of the customers. The R&D ratio will be between 6.5 to 7 percent of sales in 2018. It
uses Advanced Technologies and is always included in strategic planning and decisions to
increase profitability by being sustainable (De Massis and et. al., 2012).
Customer Focus: The BMW group is customer-centric, for meeting the customers'
requirements, it keep itself update of new preferences or choices. This has helped the company to
manufacture the products exactly the way the customers want. Along with this, it has made
changes in the delivery service process to deliver the product to its destination in minimum time
i.e. between 2 to 6 weeks. It also, provides a video of their car being manufactured. A customer
can customised its car, BMW asks the what additional things a buyer need in his car and make
the changes accordingly.
TASK 4
The strategies implemented by BMW group were to become the leader in the auto-mobile
industry across the world. Since, the company has always put the customers first, the future
strategies should also be devoted to the buyers and other dealers of it. It is planning to improve
its strategic position by maximising the profits and retain the status of one of the best and
preferred premium car brand by exploring the new areas of auto-mobile industry. For
accomplishing this, it will reduce the costs by reducing the number of employees and cut the cost
on Research & Development (Ganescu, 2012). However, the cost can be reduced by minimising
the manufacturing cost of the cars. Further, infusing more funds in R&D will help it to find the
specific demands of its existing as well as potential customers. It will manage its supply chain
management effectively to reduce the costs.
At currently, cars that are fuel-efficient and that cause reduced emission are being
manufactured by company but it will design the more advanced version which will reduce the
emission to a very low level (Steinbach and et. al., 2012). In the next 5 years, it will have at least
25 models in the electrified product portfolio. The group will make the global production system
flexible enough to manufacture all-electric, hybrid-electric and conventional models on a single

production line. By the end of 2019, it has a target to produce and sell more 0.5 million
electrified cars all over the world. The demands for batter-electric cars have increased therefore,
the group has constituted a joint technology consortium with two international companies. This
collaboration will help the company to develop sustainable value chain for battery cells in
Europe. Further, the alliance strategy will provide a cost-effective way to recycle the battery-
cells through comprehensive recycling. This will provide a flexibility in the whole operations of
manufacturing the desired cars. The company should improve the quality of customer support by
involving its buyers for taking feedbacks (Wagner, D., and et. al., 2017).
This will form a healthy relationship between the group and its customers. Further,
specialised training sessions should be conducted more frequently to make the current employees
capable of doing the tasks that are important to it. It should form a committee to review the
performance its personnel to determine the efficiency of the current employee. The alliance will
be done in the form of joint ventures to use the expertise and skills of the technicians to make
advance version of the current bike models. The future strategies will be implemented to make
the product more worthy with advance technology embedded into it. Also, the company will be
more competitive and will be able to achieve its mission and vision.
TASK 5
The scale at which BMW group carries its business is high. It is a leading multinational
company in the auto-mobile industry. The main reason is to reduce the costs and provide the best
quality products to satisfy the customers. Therefore, it will require the following resources and
implement its strategies effectively:
Funding: It is important for every organization to carry its business activities smoothly.
BMW group will utilize the funds to for effective execution of various strategies. It is imperative
to choose the right source of funding before proceeding to raise funds. BMW is a multinational
company, it will have to take care of the various legal implications while selecting the sources.
Since, it operates at such a huge level, the requirement of funds will be high to invest in the
R&D. For collaborating with other manufacturers, enough funds should be available.
Human Resource: BMW group employs one of the best employees, designers, engineers
and technicians to produces its products. Some of the current personnels have become ineffective
to make the products as per the specification of company. It always search for the excellent
human resources to carry out the work. It is focusing on manufacturing the advanced version

through innovation and technologies for which it will require highly skilled and qualified
workforce (Charan, 2012).
Infrastructure: The company manufactures premium cars in 31 production units which
are assembled at the facility centres provided in 14 countries. As per the 2018, statistics, BMW
group sold more than 2,463,500 cars and 164,000 bikes. This was the sales when there was no
demand of electrified vehicles. From the volume of sales, the average number of cars that are
produced every year can be assumed.
Technology: The future strategies include the production of car without drivers i.e.
autonomous vehicles. Making a car that will control itself will need excellent technologies as
core elements. It should be efficient to avoid any accidents. Artificial intelligence will be use for
making such premium cars and it involves huge costs. Company will be investing to established
the engines that will be suitable for a self-control car (Kedia, 2013).
Suppliers: The company is already a reputed brand in the international market, therefore
suppliers feel privileged to join with this group to supply the raw material. BMW has strong
suppliers base but more suppliers will be required due to the future targets of the company. It
will collaborate with more suppliers who have the raw materials that will necessary to
manufacture the future cars. Not all the suppliers will be able to provide the required inputs
(Mazur and et. al., 2015).
Intellectual: BMW is the first company that will be producing cars which will require
artificial intelligence, will be electrified. Its competitors such as Audi, Mercedes etc. are lagging
behind this.
Information: It is the key resource for any company, be it a small or large entity like
BMW. A product can not be manufactured without proper information. The company will use
the data and information for producing the future generation cars that will increase the customer
satisfaction.
Analysis: BMW is one of the top companies due to quality products its produce.
Customers are its top priority along with retaining the position in the marketplace. The PESTEL
analysis revealed that there are environmental and economics factors that posses high risks.
Along with this, SWOT analysis depicts its strong position on the basis of employment and
product range (Rainey and Peteros, 2016). However, there are certain weaknesses which has
occurred just for once. Since, it is a leading manufacturer in automobile, the threats can not

shake the stability of its workings. In addition to this, it is very particular about its image due to
which threat of various threats as analysed in Porter's Five Forces is less. However, it should
work on improving the quality and make cars as per customers' demands. It is well co-ordinated
with all the capabilities that makes its compete in cut throat competition. Innovations are
introduced at a rapid pace which adds in its profit. Along with this, it focuses on engineering
excellence to avoid incidents like car recalling and make customer's experience better. It can add
more skilled employees in the workforce so that productivity can be increased.
CONCLUSION
From the above report, it has been concluded that, strategic management is crucial to the
success of the company. It helps in forming proper co-ordination among all the departments of
an organization. Further, strategic planning provides a direction to the company to move in for
achieving the future goals. Organizations should track its strategic direction for making the
decisions that will be implemented within it for making it successful. Along with this, a company
should emphasize on the level of resources to be used for accomplishing the future targets of the
company to strengthen the financial position.

REFERENCES
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Online:
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<https://www.bmwgroup.com/content/dam/bmw-group-websites/bmwgroup_com/ir/
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