Analysis of Contemporary Developments in BMW's Business and Management

This report provides a comprehensive analysis of contemporary developments in BMW's business and management. It begins with an executive summary and introduction, followed by an examination of external factors influencing BMW, including a PESTLE analysis to assess political, economic, social, technological, legal, and environmental factors. The report then delves into the influence of policies and decision-making within BMW, focusing on technological disruption and disruptive innovation. It evaluates the effectiveness of BMW's response to these factors and identifies areas for improvement. The analysis highlights how BMW has leveraged technology to enhance production processes and customer experience. The report concludes with a summary of key findings and recommendations for future strategic development. The report also includes references and appendices for additional information.

Contemporary Developments in
Business and Management

EXECUTIVE SUMMARY
This report will describe the contemporary developments in business of BMW which can
lead company to deliver great experience to its customers. This assignment is designed to focus
on external environment and its impact on business doings and deeds of a company. Over the
years, automotive companies have used technology at vast level to produce or manufacture cars
and bikes considering high speed and made cars much more fuel efficient. Both technological
disruption and disruptive innovation impacted positively on production process of BMW and has
helped them in building cars and bikes with an ease.

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................1
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Influence of external factors on working of company and significance of each element on
business activities...................................................................................................................1
TASK 2............................................................................................................................................5
Influence of policies and decision-making within BMW.......................................................5
Critically evaluate the effectiveness of BMW's response......................................................7
Areas for improvement in the response of BMW..................................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................11
APPENDICES...............................................................................................................................12
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INTRODUCTION
Contemporary developments within an organisation can lead firm to improve its
performance and raise benefits. On behalf of this, business environment plays a crucial role for
every single business which consist with both internal and external factors that can impact upon
operations and decision-making process as well (Baillie Smith and Laurie, 2011). It is essential
for the organisation to analyse both macro and micro environment that may help in taking right
decisions for the company. Modern environment, in which organisations produces quality based
products and offering it with affordable prices cannot be considered as enough for this firm but it
is also essential for firms to participate in various activities as well. Famous manufacturer of
motor vehicles has been taken in this report i.e. BMW which was found in the year of 1916 by
Karl Rapp. On the other hand, assignment is going to be enclosed with Influence of external
factors on working of BMW and significance of each element on business activities of this
organisation. Assessment have also kept its focus on influence of policies and decision-making
within BMW, critical evaluation of the effectiveness of BMW' response and lastly, report will
show areas for improvement in BMW.
TASK 1
Influence of external factors on working of company and significance of each element on
business activities
World's famous multinational manufacturing brand BMW was found in the year of 1916
by Karl Rapp. Company's headquarter is in Munich, Bavaria and doing business worldwide.
United Kingdom, US, South Africa, China, Brazil, India are some of main countries in which
organisation is mostly doing business and selling its manufactured cars. Around 130,000
employees are performing their tasks on a regular basis which is helping BMW in offering right
cars to correct consumers (Bučiūnienė and Kazlauskaitė, 2012). Since, BMW is doing business
at international level. Thus, it can be said that external environment can affect business of BMW
in both positive and negative manner because every nation in which BMW has its presence
consist with different governmental policies, tax rates, technology, economy and many more
others. In order to get deep knowledge related to impact of external factors on business of BMW,
PESTLE Analysis of BMW and importance for every single factor is being done beneath:
PESTLE Analysis
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Illustration 1: PESTLE analysis
Source: PESTLE analysis, 2017
(Sources : PESTLE analysis, 2017)
Political factors: BMW and its cars has its presence mostly in United Kingdom, US,
South Africa, China, Brazil, India and all of these nations are having different conditions of
economy and are following different tax policies that may affect operations of BMW. Therefore,
it can be said that it is necessary for this company to keep its focus on these areas as they carry
rapid changing nature and this may lead firm to face various issues. In present context, major
elements which cover in this are political stability, legal framework, participation of government
in rubber industry, intellectual property protection, pricing regulations, trading partners,
industrial regulations, tax rate, policy and many more. BMW, if wants to do business in an
appropriate way at international level then they have to deal with all the changes that a country
makes in their policies and frameworks (Chen and Farh, 2010). Importance: This factor plays a crucial role for every single business organisation, that
are doing business at international level. In present context, one of the main advantage of
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this factor is that it helps BMW organisation in getting knowledge related to policies of
government of different countries that are against and favour of operations of the
company. Main importance of this factor for BMW is that if manager or BOD of the
company does proper analysis of business deeds within a country related to political then
it may lead them to take right decisions for future context which can give great benefits to
BMW.
Economical factor: It is another crucial factor of external environment which needs to be
studied by business organisations considering as the important one. In context with BMW, who
is doing business at international level where countries are having different and rapid changing
economical conditions (Collis and Hussey, 2013). Here, some of economic factors that mainly
involves are inflation rate, deflation rate, interest rate, saving rate, economic cycle and foreign
exchange rate that can affect business doings of BMW. Importance: Major importance of this factor that can be seen in BMW related to the
business is that it helps in identifying and formulating better strategies related to setting
costs of cars. Here, if interest rates is high and income level of customers is low, BMW
should keep its focus on expanding its business considering or using FDI (Foreign direct
investment) in much effective manner.
Social factors: Culture and society are two main elements that mainly covers this factor.
Here, BMW is performing its operations in different nations that are having their own culture
and carrying different business ethics. Therefore, these two factors needs to be understood well
by BMW in order to perform well at international level. Apart from this, behaviour and belief of
people living in society largely affect the activities of BMW. Skills of labour and culture
followed by them needs to be understood by BMW while performing its tasks. Importance: As, BMW identifies social factors and keep its focus on firm than it will
assist firm in operating its business accordingly. Here, importance can be seen with the
help of an example of BMW. If BMW tries to execute CSR activities in an appropriate
way, then this may lead firm to gain competitive advancements and raise in reputation as
well. Thus, with the help of this organisation will be able to maintain a positive image in
front of customers. This help company in get support of public and also helps in get
competitive advantage (Frey and George, 2010).
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Technological elements: Technology in past decades has been one of the crucial factor
which played an important role for BMW. Being a manufacturer of cars and motorcycles, BMW
have kept its focus on using updated technology which is already helping them in performing
well and aiding them in gaining competitive advantages. Furthermore, if BMW fails to adapt the
new technology then it decrease its international market share.
Importance: Adopting new technology in right time can help BMW in developing highly
tuned engines. This can help company in offering right technology based cars and motorcycles to
its customers. This will directly aid in giving excessive rivalry to BMW's competitors like
Mercedes-Benz, Jaguar, Audi, and many more. Away with this, main importance that has been
found i.e. technology helps in manufacturing cars and bikes with high speed where the
consumption of limited resources like fuel can be reduced to minimal (George and Jones, 2015).
Environmental factors: BMW is an automotive manufacturer, building cars, bikes,
trailers and semi-trailers requires testing as well before launching it in the market. This leads to
create heavy water, air and environmental pollution which can be a cause of increasing global
warming. All this harm to environment can give rise to criticism by members of society and
negatively affect the business operations of BMW. Importance: Major importance that has been found in past few years is that, heavy
wastage and pollutions created by BMW can impact on firm's reputation which will
directly impact upon its customer base. Therefore, using less polluting tools, following
lays and creating a waste disposal system can help organisation in improving benefits for
BMW.
Legal elements: This is being considered as an effective element of external environment
that mainly plays a crucial role for BMW as it involves business laws which needs to be
followed by company in order to perform well at international level. Discrimination law, health
and safety law, copy right, intellectual property rights and many more are some of laws which
needs to be followed by BMW at the time of performing tasks in much effective and appropriate
sense.
 Importance: This factor consist with high importance when it is talked about BMW as it
is doing business at international level. Implementation of various laws of different
countries such as health and safety, discrimination help BMW in getting trust and
confidence of its employees (Hodgkinson and Healey, 2011). All this can help BMW in
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maintaining long term relations with workers and at the same time ensure achievement of
business objective on timely basis.
TASK 2
In this context, technological disruption and disruptive innovation that are major factors
that has played crucial role for BMW while doing its business at both domestic and international
level. Disruption being considered as a process whereby both small and large companies with
few or heavy resources successfully challenges a larger established incumbent business or
invents entirely new markets.
Often times, larger necessary businesses are focused on their largest and most demanding
customers, which opens the door for disruptive companies to target overlooked customer
segments and gain a foothold(Jeston and Nelis, 2014).
Influence of policies and decision-making within BMW
BMW has kept its focus on using the newest or latest technological systems like they
have used AI which is benefiting them in manufacturing cars and bikes with the help of robots.
This helped them in reducing errors in whole process of building motor cars and bikes.
Therefore, this created a whole new market from existing market, this led them in creating higher
values for themselves. The Disruptive technology is being considered as important alterations
which mainly impacts upon entire industries operations. Most of the times, technologies mainly
force companies to alter the way they approach their business, or risk losing market share or
becoming irrelevant. In present context, BMW have kept its focus on technology which has
helped them in bringing innovation among their existing products like cars, bikes, trailers and
semi-trailers as well. Away with this, disruptive innovation is being considered as an innovation
which mainly develops a whole new market along with value network as well which majorly
changes existing market and values at the same time. It has been analysed that BMW have kept
its considerations on technological aspects which has helped them in bringing favourable
innovations in their cars. At the time when BMW was found, innovation was being one of the
major factor that has helped BMW in raising their reputation among both domestic and
international level of market. In the field of technologies and mobility, in particular, they are able
to realise their full potential and show how they can contribute to mobility and progress in all
different areas.
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On the other hand, Technological disruption and disruptive innovation have also
influenced policies of BMW because firm have kept its focus on bringing in innovation in its
existing cars. Policy related to technology and innovation which has been made by BMW are :
light and art melt into one, new testing of cars, bikes where technology have been one of the ho
point for this company as it promotes innovation, LED head lamps, auto parking capability in
cars and others are some major innovation which brought change in existing cars of BMW and
this has also helped company in stepping into the whole new market to give good rivalry to its
rivals like Mercedes-Benz, Jaguar, Audi and many more. Away with this, it has also been
analysed that company have kept its focus on delivering right product to consumers and here
they made a policy named as Worldwide Harmonized Light Vehicles Test Procedure where new,
realistic measuring process for determining a car’s fuel consumption, range and emissions. It is
mandatory for BMW and will be binding in all participating countries in which this company is
offering its cars. Here, proper testing of cars is showing that BMW have been influenced with
disruptive innovation because it brought changes among existing market and pushed company
towards new market where consumers were expecting much more innovative and hybrid car
models (Mosse, 2011).
On the other hand, it has also been analysed that disruptive innovation have impacted
upon decision making process as well of BMW, as technology has carried a rapid changing
nature, it has impacted severely on decisions of engineers that are performing tasks related to
building new car design and many more other perspectives. It has also been analysed that at the
time of developing or building automatic car park system in cars of BMW like i3. Organisation
faced number of issues because rivals were already using the technology already when BMW to
decided to adopt it, here, it became much important for company's engineers to build the most
safe, independent and dynamic remote valet parking assistant which will directly help consumers
in parking cars at congested areas. It was highly essential for engineers to develop right system
so that car can itself without any sort of damage while parking i3. Thus, it was much required to
take right decisions which will BMW in making its reputation in new market where its rivals
were already at a good place (Myers, 2013).
Therefore, it can be said that disruptive innovation have been one of the crucial aspect
which has helped BMW in bringing in innovation among life of its consumers. Here, it is pretty
much required for company to focus on making innovative moves and develop distinctive
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strategies that may aid BMW in reaching to an all new level where they can deliver best
experience to its customers. Decision making process has brought up many questions against
BMW because of its strategic alliances. This impacted on performance level of the company and
on reputation as well at the same time.
Critically evaluate the effectiveness of BMW's response
According to Bughin, (2018), companies that adopt bold offensive strategies in the face
of industry digitization will come out as winners. Reason behind author's point can easily be
considered as a correct statement because in past few years, innovation/technology have played a
crucial role for firms and took them to the highest peak whoever business organisations were in
favour of bringing in changes (McDonnell and et. Al, 2010). Here, it has been analysed that,
BMW's effectiveness can be seen with the help of alterations they have made in there cars and
innovation that they brought among manufacturing process. Here, it is one of the successful car
of BMW which raised their performance and profit margins at the same time, innovative action
which was taken in this car which has been offered to customers is auto car parking system.
Away with this, it has been critically analysed that BMW have used aggressive digital entrants
techniques that overturned a long-held non-aggression pact between traditional. Here, from past
decade it has been analysed that i3 which is one of famous car of BMW has been a great
response of the company which showed it used disruptive innovation because coming out of
traditional approaches and using new technology with keeping an aim of bringing innovation
was the strategy that has been followed by the organisation. Few authors have also argued on
digitisations disruptive influence is growing rapidly. But surprisingly little empirical evidence
has captured either the magnitude of digital disruption here broad scale approach was used by
BMW which was a good response related to disruptive innovation.
Apart from this, BMW also knows that there is a problem is going to stay in there
working operations and it will also impact on there performance level as well. It is required for
them to keep on monitoring their own performance and the technological aspects as well related
to all the modifications that are going to be faced by the company at international market
(Rosemann and vom Brocke, 2015). Here, company needs right guidance (strategic alliance) so
that it can actual compare from existing performance and actions that are needed to be taken for
improvement.
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Disruptive innovation have also helped BMW in continuously making appropriate
decisions where they left the existing market in which they were already performing and
switched to new and innovative market which has helped them in raising profit margins of BMW
and it also helped them in giving good rivalry to its competitors like Mercedes, Audi, Jaguar and
so on. Across countries, digitization has a significant negative impact on the profits of
incumbents through two loop effects: digital entrants competing with incumbents through
disruptive models, and incumbents responding to disruption and creating more intense
competition with each other.
Henceforth, the performance level of BMW have been successfully influenced with the
help of innovative disruption and it has also impacted positively on profit margins of the
company. BMW is already working on a number of projects for future with new and updated
technology like Artificial intelligence (AI) which will help human (consumers) in dealing with
number of risks like accidents in the best ways. On the other hand, response have been great of
BMW when it is compared with its rivals which raised its reputation and helped company in
building effective relations with its customers (Stokes, Wilson and Wilson, 2010).
Areas for improvement in the response of BMW
As past experience, BMW suffering from various technical issues because of limited
strategic alliances which was leading more complication in their segment. So company need to
concern on this area for technical improvement and high competition. It can be perform through
creating joint ventures and adding to technical experts. They provide better assistance in existing
and new technologies in auto mobile industries. BMW must know about future goals and risky
circumstances about the potential products. Today's era, there are number of mechanism which
provides strategic alliance such as shared management or a particular assignment and delegate to
experts. Most common errors in cars for instance: gasket leaks, looseness in the front suspension,
strut bushings problem, proper light reflection and air bag related issues can be resolve by them.
Through few initiators managers can reduce recurring errors in their products. Intelligent
engineers in management can design a new technologies by observing all existing functions of
products and solve minor issue such GPS vehicle tracking. Company have basically two options,
disruptive innovation and techniques when managers seek for market growth for their business.
Here, high risks take places throughout sustaining innovation for product. It will create either
new market or high competition to rivals in existing market which fascinate to potential
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consumers. BMW have best performance in research and development department, although
managers should consider on strategic planning for innovation. BMW people should prepare for
suitable price by considering on future economic crises. Operational management need to
increase cost efficiencies throughout reducing raw wastages in production department. Those
improvement will provide quality products that assists in creating better image in customer eye.
Moreover, last technical issues can be reduce by hiring new skilled experts who will supervise
properly in test drive and other related observations (Sturdy, 2011).
On the other hand, there have been significant number of cases as well where BMW has
engaged in recalling of cars. Recalling means requesting the customers to return an already
delivered product due to defects in the product. BMW has executed the recalling of cars due to
fluids leakages in cars posing a threat of occurrence of fire, air bags not opening at the times of
emergency, system defects in engines etc. Some of the other issues that are highlighted by the
customers are electrical faults, safety issues posing threat to the lives of people. These faults
have largely occurred because the company hired people with low technical knowledge or semi-
skilled people. These people when engaged in the manufacturing process resulted in the making
of cars that were not safe as some of the renowned features of BMW cars did not function
properly. Lack of knowledge of system engineers and their prime focus on use of labour
intensive technologies have largely resulted in these defects.
There is a vital need for the company to provide induction training to the workforce as
they influence the lives of many people. It is important for management of company to design a
working structure where the major processes are automated. The company also has a scope of
improvement in hiring of employees. The manpower hired needs to be skilled and possess all the
technical knowledge required for the manufacturing of cars. The management also needs to
upgrade the processes as per the technological advancements taking place in economy. It is also
required for the company that before a car is finally delivered to customer, it is properly checked.
Checking must be done by the management of BMW with respect to variables like car running
system, seat belts, engine, tyres, air bags and other safety issues that can pose threat to lives of
people (Van Der Aalst, 2013).
CONCLUSION
From above mentioned report, it has been concluded that external environment consists
with ample number of factors which may impact upon performance and working of a business
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