Understanding Business Organizations: A Case Study of BMW

Explore the different types, size, and scope of organizations with reference to BMW. Analyze the interrelationship of organizational functions and structure. Evaluate the impact of macro environment on BMW's operations. Assess internal strengths, weaknesses, and their relation to external factors.

Table of Contents
Introduction...........................................................................................................................................2
LO1. Explain the different types, size and scope of organisations with reference to BMW.................3
LO2. Demonstrate the interrelationship of the various functions within an organisation and how they
link to organisational structure with reference to BMW........................................................................6
LO3. Use Contemporary examples to demonstrate both the positive and negative impact the macro
environment has on Business operations of BMW................................................................................9
LO4. Determine the internal strengths and weakness of BMW and explain their interrelationship with
external macro factors.........................................................................................................................11
Conclusion...........................................................................................................................................13
References...........................................................................................................................................14
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Introduction
A business organisation is the one which combines group of people for a specific aim or
objective which is relating to a particular purpose such as generation of income, serving the
society etc. it involves contribution from various
people who are expertise in their field to do proper
planning, organising and co-ordinating various
organisational activities. BMW is a multinational
national company based in Munich, Bavaria, Germany
which was established in the year 1916 by Franz
Joseph Popp. The BMW group deals with
manufacturing of the automobiles and motorcycles.
The organisation has faced various changes in the
global environment. The demands for automobiles have
been decreased in the past decade because of the global
recession and also the constant increase in the prices of
the fuel has reduced the demand of automobiles. However, from past few years again the
demand for automobile have increased and as BMW is involved in the production of luxury
cars, the target market for BMW product is quite different than other. In this assignment we
will be discussing about different types, size and scope of the organisation along with the
interrelation of the functions in the organisation. The macro factor which exists in the
business environment also affect the organisation working pattern and BMW as a company
also face challenges from the external environment which will be discussed in this
assignment in the later section. (BMW Group, 2017)
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LO1. Explain the different types, size and scope of organisations with reference to
BMW.
Business organisations are established for a specific purpose and they have their own set of
goals and objectives. Similarly BMW was also established with a purpose to provide world
class cars for the consumers. The BMW group always seek for innovation in their product so
that they can deliver best quality of the product to its customers and they are the number one
car manufacturer company in the luxury segment of cars. The different types of organisation
are as below:
1. Commercial organisation: These types of organisation are established with an
objective to earn profit. The people who are involved in formation of this type of
organisation could be a single buyer, corporations; which has limited liability and
accountability is also limited as per the share in the business. The main benefit of
establishing this type of organisation is that in case on insolvency the liabilities are
limited to the person’s share in the company profit. Each and every business related
work is limited in the hands of the company. The creditor does not have any access on
the other property of the shareholders. BMW is an organisation which is established
to earn profits by manufacturing the automobiles and motorcycles.
2. Non-For-Profit-organisation: these are those organisations which are established for
serving the society and it does not have profit motive. Charitable institutes, old age
homes are the example for such type of organisation. The main objective of these
companies is to help the people who are need of certain things.
3. Public sector Organisation: These are those firms which are retained by the public
which are managed at the national level or worldwide as per the size of the
organisation. This type of organisation is managed by the government and the right to
make the decisions lied in the hand of the government. British Council in UK is the
example of such type of Organisation.
4. Non-governmental organisation: these are those organisations which are established
for the purpose of serving the society and they are voluntary in nature. These
organisations are also based across the globe which has one head office. Various
associations in United Nations are based in this category.
5. Co-operatives: these type of organisations are managed by those individuals who
labour in the administration. Various type of agriculturalists established co-operative
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organisation to arcade their foodstuffs. The main purpose of these type of organisation
is to get more benefit in terms of government taxes and other policies. (Sinha, 2003)
Scope of Business organisation:
In the present business environment it is essential for the organisation to develop their
business worldwide so that it can increase their opportunity to conduct their business across
the globe. The scope of the business organisation varies with the type of the organisation
which is established by an individual which are as follows:
Sole proprietorship: in this form, an individual is the sole owner of the business who has the
decision making power for its business, the entire share of profits belongs to him and also he
is the only person who has to bear the loss if any. He is the main planner, worker, manager,
supervisor for his firm and he is the only one who is responsible and accountable for the
efficient and proper working of the organisation.
Joint Stock Companies: in this type of organisation different type of people are involved in
the working of the organisation. The company has its own legal existence with its common
seal and the liability of all the shareholders is limited. The shareholders of the company select
the Board of directors which are the representative of the company and they are the one who
has the power to make decision for the company. In case of insolvency of the company the
liability of the shareholders are limited as per the share holding in the company.
Partnership: In this method of business two or more partners are involved in the
establishment of a business organisation. All the partners are responsible for management of
the organisation and the liability of the partners are limited as per their share but the creditors
may have right on the personal properties of the partner in case if the firm default and does
not have enough assets to recover the debt. (Zkjadoon, 2016)
BMW groups is established as a joint stock company and the shareholders have appointed the
Board of directors and Managing director who are responsible for the smooth functioning of
the organisation. As we know BMW is a multinational organisation which means the
decisions taken by the management affects the entire BMW group ad its companies
worldwide. (Palmer, and Hartley, 2006)
Size of Organisation
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The size of the organisation depends upon its workers, the procedure, and its presence in the
national as well as in the international market. The organisation which are based globally like
BMW has to manage its operations worldwide and the organisation employs large amount of
employees and it is essential for the firm to manage its operations effectively in order to meet
the goals and objective of the firm.
The main features of the administrative size are as follows:
1. Technology: In today’s competitive era, it is essential for the organisation to innovate
the new and advanced technology to surpass the competition. The core Competency
of BMW group lies is that the organisation beliefs in the development of those
products which are based on innovative technology.
2. Management Team: The success of any organisation lies in the hands of the
management team. A strong management team will be able to use their expertise to
increase the revenue for the organisation along with the development of the
organisation.
3. The level influence in the organisational structure reduces they way in which the size
upsurges.
4. The employees who are working toward the development of the organisation should
be competent and they should also contribute towards the development of the new and
innovative products through which the organisation can achieves its goals and
objectives. (Gupta, 2010)
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LO2. Demonstrate the interrelationship of the various functions within an organisation
and how they link to organisational structure with reference to BMW.
Every organisation follows various set of functions which are crucial for the working of the
organisation. Similarly, BMW group also focuses on various functions for the smooth and
effective functioning of the company which are as follows:
 Research and Development
 Human resource Management
 Financial Management
 Designing and Manufacturing
 Administration
 Sales and Marketing
Each and every function which are performed in the organisation has requisite which is
composed by the similar goals and objectives which needs to achieved by the organisation.
And thus to attain these goals and objectives various functions need to be performed by the
organisation which is an essential part of the organisation. The first and foremost requisite to
carry out any functions effective is to plan each and everything in advance so that all the
functions can be co-ordinated and controlled properly. Consistent evaluation of the functions
performed need to be taken into consideration in order to improve the performance of the
organisation. BMW is a large scale organisation which manages its functions worldwide.
Henceforth, it is highly important for the organisation to manage the organisational functions
effectively. All the functions are interrelated with each other which are as discussed as below:
 Research and Development: the main goal of this particular function is to analyse
the need and requirement of the customers according to which they need to develop
proper product which can fulfil the demand of the customers. As we Know, BMW
always strives for excellence in its product which can be only possible through
extensive research and development function through which the organisation is able
to bring advanced and innovative technology in the automobile industry.
 Financial Management: the monetary transaction made by the organisation needs to
be investigate timely so that appropriate allocation of budget for performing various
activities can be allocated properly. To carry out any activity it is essential to allocate
the budget so that it can be accomplished. BMW has its worldwide operations and
they target niche set of customers and the product developed by the organisation is
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based on high quality and the each and every parts which are used for the
manufacturing of automobile is highly expensive. Appropriate finance management is
crucial for the organisation.
 Sales and Marketing: The marketing function of any organisation needs to be
designed effectively to meet the requirements of the customers. BMW has niche
target audience which are usually very high class people and the expectations of the
customers are quite high which needs to be taken care of. It is essential for the
organisation to design an effective sales and marketing plan for the BMW product.
The company marketing process is quite effective which attracts lot of customers. The
main reason behind the increase in the demand of the BMW products is the placement
and promotion of its products is very advanced and the quality of the product offers
value for money to its customers.
 Human resource Management: these are the people who are accountable for the
purpose of staffing, assortment and expansion of the business operations. The
employees which are working for the BMW group are highly expertise in their work
and try to bring innovation at their workplace and work towards the betterment of the
organisation. BMW group employs more than 1 million employees across the globe
and it is essential for the firm to manage its employees appropriately. (Statista, 2016)
 Administrative Function: The day to day management of the accounts and other
administrative function is also essential for the working of the organisation. the
organisation need to manage the records of the daily inventories, stock updating, daily
working capital management, turnover and assembly of the various parts is highly
important for the organisation
 Designing and Manufacturing: BMW group believes in being number one for
providing world class luxurious cars to its customers which can be only possible if the
organisation focuses or strives to design and manufactures its product which are
highly innovative and based in the latest technology. BMW group is known for the
comfort and luxury that it offers to its customers because of its world class designing
and manufacturing of the product. (Boutelle, 2002)
The organisational structure which is developed by the organisation along with its functions
is also inter-related as they all the functions are assigned through an individual department
which follows a specific structure which is designed by the organisation. Similarly, BMW
group also follows a specific structure as per the requirement of the organisation. An
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organisation may have one or more structure as per their needs, geographic location etc. The
business structure can be arranged as per the organisational functions and in case if the
organisation fails to interlink it than they will influence each other. The various
organisational structure which they organisation can have are as follows:
 Divisional Structure: This type of structure is spread across various different
types of functions in different locations or branches of the company. The
organisation which has different line of products, in which the division of each
product has their own marketing and research and development, sales and
accounts departments usually, follows this structure. The main benefits for this
type of structure are that each branch or locations has specific personnel who are
responsible to perform various functions in the organisation. at times duplication
and redundancy of similar type of work occurs in the organisation which follows
this structure may result in disadvantage.
 Matrix Structure: Using this particular matrix in the business is quite
advantageous for as it offers more flexibility in the functions performed in the
organisation than the normal hierarchal organisation. In this particular matrix each
employees works in a function based department such as research and
development, finance etc but they can be align to the several projects with a
different superior authority and can be join in a team of the employees which are
working in different functions. This type of structure usually is open to adapt the
new changes in the needs of the organisation. at times the chain of command
under this matrix can create difficulties.
 Functional Structure: Most of the organisation adopts this particular structure for
the working of the organisation. Different types of functions which are performed
in the organisation are separately performed and they are reported to the higher
authority who will further report it to the top management. There are clear lines of
authority in this structure and only the top management has the power to make all
the decisions relating to business operations. All the employees has to follow
proper guidelines so that they can focus on the work which is assigned to them. In
this structure the innovation and leadership skills cannot be developed. (Sherman,
2016)
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LO3. Use Contemporary examples to demonstrate both the positive and negative
impact the macro environment has on Business operations of BMW.
PESTEL analysis is an strategic tool which is adopted by the organisation extensively to
understand the influence of the macros factors on the functioning of the business
organisation. BMW Pestle analysis will help to understand the potential impact of the macro
environment factors on the long term growth of the organisation.
Political Factors:
There are numerous political factors which impacts the BMW group in various methods. One
of the important impact is the enforcement of new laws relating to the Carbon Emission and
changes in the EU legislation with regard to the end of life Vehicle (ELV) and Recycling are
few of the crucial political factors which has affected the manufacturing Processes of BMW.
Countries like Russia, China are political stable and few other political instable nations like
this will continuously impact the working of BMW and will have strong impact on the
consumer pattern for spending. The investment which are made by BMW in the which are
political instable are at higher risk.
There are certain incidents where BMW has tried to control or rather influence the external
political environment in order to create a positive political environment for its business
operation. The restriction by the European commission for Carbon emission in 2012 was
more stringent. It was also observed that during that period BMW was also lobbying the
water down of the European plan in order to improve the efficiency of the fuels in the car
during the same period when it was trumpeting the credentials for green environment as it
was a sponsor for the Olympic Games. (Dudovskiy, 2016)
Economic Factor:
The economic impacts have influenced the BMW group to a large extent. The GDP
fluctuations in the European Union countries from past few years which has direct impact on
the purchasing and spending power of the customers in the EU countries is one of the most
significant factor which has affected the Performance of the BMW group to a great extent.
The fluctuations in the rate of currency exchange are another economic factor which has
influenced the BMW group revenues directly. In the below example it is shown that the
EURO is declining continuously from past few years which is the Home currency of BMW,
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which has actually given advantage to BMW group as their exports to the international
market is more including USA.
The rate of inflation is another external factor which BMW has to tackle. With increase in the
rate of inflation BMW group needs to increase its prices on continuous basis in order to meet
the inflation. (Dudovskiy, 2016)
Social Factors:
The people from different culture demands different types of cars and BMW cars are known
for the Status symbols and the development of fuel efficient cars also influences the society.
The change in the purchasing power of the buyers due to changes in the trends of the industry
also impacts the sales of car. The development of fuel efficient car has benefited the society
at large which has given a positive impact to the BMW group.
Technological Factors:
BMW group is known for making the latest technology product in the market which resulted
in increase in the demand of its automobiles. Advancement of technology does not result only
in reduction of cost but also brings more comfort in terms of designing and driving. The
development of eco-friendly product is also result of technological advancement.
Environmental Factors:
With increase in the awareness about the global warming, go green concept etc has affected
the demand of the automobiles. the consumers taste, preference and choices has also impact
the business of BMW cars at large. Now-a-days consumers are more inclined toward those
cars which are eco friendly, fuel efficient which becomes costly affair for the business. The
pollution norms in order to control the pollution have also become very strict which
negatively affects the company.
Legal Factors:
The strict laws and norms regarding the carbon emission, global warming etc has affected the
company at large. The taxation policies in different countries also affect the organisation.
(Rodrigo, 2012)
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LO4. Determine the internal strengths and weakness of BMW and explain their
interrelationship with external macro factors.
The internal strength of the company can be understood properly with the help of SWOT
Analysis which gives a clear picture regarding the company competitive position in the
market. The internal strength and weakness of the company is also related to the macro
environment factors as through that the company can gain its competitive edge by working on
its strengths and utilising the opportunities available in the market in the right manner.
SWOT Analysis of BMW:
Strength:
 The brand value of BMW is Quite known in the market and it is one the prestigious
and oldest Manufacturer of automobile in the market.
 BMW group is able to maintain their competitive position in the market through
development of innovative and exclusive car.
 BMW group has hired highly qualified personnel which work toward development of
innovative products for the company which has given them a competitive advantage
in the market over its rivalry.
 BMW is known for high end quality product, price, innovation and technology
 The supplier relationship which is maintained by BMW is very strong because of
which they are able to manage effective supply chain.
 The development of eco friendly vehicles has also given advantage to the company.
 The company is quite effective when it come to maintain the corporate social
responsibility in terms of societal benefits, upliftment programmes etc. they also
provide health insurance, sponsorships etc to its employees.
Weakness
 The image of BMW group is quite serious and conventional as compare to its other
competitors like Mercedes and AUDI
 The products which are made by AUDI, Mercedes are relatively priced at lower rate
than BMW.
 BMW is more dependent on US and European market and they have not focused on
much on new and emerging market.
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 The Alliances and partnerships’ which are required to develop the company brand
image is quite low
 The Brand portfolio of BMW is relatively weak. The company only holds Rolls
Royce, BMW and Mini. Though they are one of the best performing brands but at
times they fails to meet the needs of the high class consumers demand.
Opportunities
 The increase in the cost of fuel attracts the customers to buy fuel efficient cars and
Hybrid car. Thus increase in the demand of these cars resulted in reduction of the fuel
expenses and it also contributes towards environment which is free from pollution.
 With increase in the concept of go green, the demand of eco-friendly product has also
increased.
 To cater the needs of different sets of costumers it is essential for BMW to increase
their brand portfolio to get more visibility in the market by developing high end
models
 The interest rate has also decline which means the finance availability for the firm
will be very easy which can help the organisation to expand in the new and emerging
markets.
Threats
 Even the automobile industry is capital intensive their is cut throat competition in the
luxury segments
 Falling in the price of fuel is also one of the threats which is faced by the BMW
group.
 The rising price of steel also impacts the costing of the car.
 The downturn in the economy, the BREXIT has also affected the organisation at
large. (Rodrigo, 2012)
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Conclusion
BMW business is growing at faster pace yet the company needs to develop various strategies
and tactics in order to expand their business. Every business organisation faces various issues
and challenges for which they have to plan properly. The external environment factors are
uncontrollable and cannot be predicted therefore the company needs to tackle it as and when
it arises but the internal factors can be controlled and the company can utilise its strength
towards the betterment of the organisation. The business environment is highly complex and
dynamic. An organisation needs to accept the change in order to remain competitive in the
market. Every organisation needs to bring co-ordination among all the functions in the
organisation so as to achieve the goals and objectives of the firm.
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References
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