Corporate Strategy and Governance: BMW Crisis Action Plan Analysis

This report analyzes the importance of a crisis action plan for natural disasters, using BMW as a case study. It explores the company's corporate strategy and governance structure, examining its industry life cycle and the effectiveness of its crisis management plan. The report delves into the challenges, opportunities, and strategies BMW employs, including a SWOT analysis and Porter's Five Forces. It reviews the literature on crisis action plans, their benefits, and the critical issues they address, such as power outages, IT system failures, and natural disasters. The research methodology includes primary and secondary research. The report offers recommendations and an action plan for BMW to enhance its crisis preparedness and response, ensuring business continuity and protecting its reputation. The study aims to determine the impact of corporate governance issues on BMW and provides insights into effective crisis management practices.

CORPORATE STRATEGY
AND GOVERNANCE

(To determine the importance of crisis action plan for
natural disaster. A case on BMW)

Table of Contents
CHAPTER 1: INTRODUCTION...................................................................................................4
Background.................................................................................................................................4
Review of the problem: ..............................................................................................................5
Challenges, Opportunities and strategies opportunities..............................................................5
CHAPTER 2: LITERATURE REVIEW.........................................................................................7
Importance of crisis action plan for natural disasters..................................................................7
Evaluation of industry life cycle of BMW on corporate strategy...............................................8
Corporate governance structure and its effectiveness in BMW..................................................9
Issue related to the Corporate governance and its impact on BMW.........................................10
CHAPTER 3: RESEARCH METHODOLOGY ..........................................................................12
Secondary and primary research undertaken............................................................................14
CHAPTER 4: CRITICAL REVIEW OF THE RESULTS OF THE RESEARCH.......................16
CHAPTER 5: RECOMMENDATION AND ACTION PLAN.....................................................23
CONCLUSION..............................................................................................................................25
Appendix .......................................................................................................................................28

CHAPTER 1: INTRODUCTION
Corporate strategy governance has attracted a large number of companies and they have
aided them in making strategies and policies that are beneficial for the organisation. It is a
mixture of three components legislations, regulations and self discipline. This, it ca be said that
strategic governance is an integral part of strategic management because it can assist companies
in managing and improving the performance of an organisation (Aebi, Sabato and Schmid,
2012). But some of the companies are unaware or have no such information about corporate
governance. Therefore, it is prime role of managers and investors to understand role of corporate
governance so that it can be explained to employees in an effective manner.
Good corporate governance practice can be seen if company entails active participation
of shareholders in both direct and indirect management of corporation. Henceforth, this research
is being conducted in order to know whether BMW is using corporate strategy and governance
or not and what impact it is putting on business whether positive or negative.
Background
BMW is a German multinational company that manufactures and delivers auto-mobiles
and motorcycles. Company was established in the year around 1916. Firms comes under twelfth
largest producers of vehicles around the world and till date they have manufactured
approximately 2,279,503 motor vehicles. Company's first motorcycle, R 32 was announced in
this a boxer engine was used which was longitudinally positioned cylinders and shaft drive.
According to a study it has been analysed that BMW's revenues was around £98.678 billion and
operating income is approximately £ 10.655 billion. In addition to this, company's Net income is
nearby £8.706 billion and combining all BMW's total assets is near around £193.483 billion. In
this company there are around 129,932 employees are working who are giving their best for
providing benefits to the company. As a result, BMW across the globe is one of the leading
companies that manufactures and deliver best class cars to every section of the society whether
belongs to small, medium or large.

Review of the problem:
A crisis management plan is an effective document that outlines the processes which is
used by an organisation to respond critical situation. This situation negatively impact on
reputation, profitability and ability of company. In BMW, there are different teams such as
emergency management, crisis management, business continuity and damage assessment, all
these team are used crisis management plan with purpose to avoid or minimize damage as well
as to give direction on resources, staffing and communications. It is a biggest issue that highly
impact on profitability and performance of BMW. There are different examples of crisis in an
organisation such as management crisis, service crisis, business continuity issues and critical IT
system issue caused by natural disasters. Shareholders and Customers may speedily forget the
information of what caused the situation but how they manage the crisis will be graven into their
memory and shape its perception of long into the future. For different organisation, how a crisis
is managed could mean the variation between a healthy recovery and going out of business.
Thus, it is a main issue in an enterprise that impact on business reputation and image in direct
manner.
Challenges, Opportunities and strategies opportunities
It is not possible that each company gains benefits and profits for whatever services and
facilities they are provided. Thus, there are some challenges which can hamper business
activities in an effective manner. Therefore, in order to have a better understanding SWOT
analysis is being explained below:
Opportunities
 With the change in course of time it has been analysed that there may be an increase in
demand for autonomous vehicle.
 Other than this, company can manufacture vehicles on a regular basis and release new
models.
Threats
 Changes in rules and regulation or implementation of any tax policies can act as a threat
for company.
 Other than this, increase in competition in this sector can create problem for the existing
companies for providing better services and facilities.
Porter's Five Forces Analysis

Threats of new entrants: This basically depends upon the challenges which company
can face while entering into the new market. In case of a auto-mobile company they cannot face
such problems because establishing business in this industry can cost a large amount of money
for setting a manufacturing plant.
Threats of substitutes: BMW is a renowned company and has a strong brand image.
Company comes under making cars that are comes under exclusive car range and there are
companies who are dealing in the same sector and popular as well such as Mercedes, GM etc.,
Therefore, for BMW threat of substitute is high.
Bargaining power of buyers: In this bargaining power of buyers is higher because
customers have a choice of deciding what product they want to buy according to the needs and
requirements.
Bargaining power of suppliers: In terms of BMW they have a good supply chain with
long relationship. In this bargaining power of suppliers are higher because suppliers have the
freedom of deciding the price for the raw materials required.
Competitive rivalry: For BMW competitive rivalry was high because most of the
companies are selling their products targeting the requirements of customers
Research Objectives
 To determine the importance of crisis action plan for natural disaster
 To evaluation of industry life cycle of BMW on corporate strategy.
 To understand the corporate governance structure and its effectiveness in BMW.
 To examine Issue related to the Corporate governance and its impact on BMW

CHAPTER 2: LITERATURE REVIEW
Importance of crisis action plan for natural disasters
According to Bender, (2013), Unplanned events can occur in business at any time and
this can affect company's performance. Some can have a small impact and some can be worst
and it can even destroy businesses. But if company makes good planning to eradicate all these
situations than all circumstances can be eliminated. Thus, there is a need of having a proper
action plan so that different situation can be avoided such as fire, flood, IT system failure etc.,
Crisis management plan can be stated as a set of strategies which is designed by an
organisation so as to deal with sudden issues or significant negative events. Along with this, it is
crucial that company make changes in these plans on a regular basis so that issues and crisis can
be handled in a better manner. In terms of company, they can first make a list required elements
such as important contacts, necessary parties, safety protocols etc., Other than this, it also
includes laws and regulations so that workplace safety can be maximised. For example: BMW
must notify their employees about accidents and things they should do in priority. Therefore,
importance of crisis action plan can be provides these benefits: Crisis action plan assist firm in
increasing the safety and well-being of workers and normal public as well (Crisis Management
Plan, 2018). If a company follows and have a better crisis management plan than they can be
able to manage a good public relations which can further aid them in preventing their reputation
from getting tarnishing. Along with this, it helps in minimising the downtime which gradually
improves the productivity of a company.
But before, these importance it is necessary for company to evaluate major issues that can
have an impact on business operations and some of them are explained below:
Power Cut: This is one of the serious concern for a company because it can hamper all
the activities which are operated by electricity such as computers and other key machineries.
IT system failure: Big Companies like BMW, most of their task depends upon the
department of Information Technology. Thus, they have to manage the entire process of
computer viruses, hacking or system failure as this can have an impact on worker's ability and
effective workforce (Bushee, Carter and Gerakos, 2013).
Loss or illness of key staff members: In a company every individual is important as
they perform their task in order to provide benefits to an organisation. If any of the staff member

who is in a crucial post is sick or not well than company can face difficulties in operating its
business. Thus, for this, it is crucial for companies to have one person as a backup plan who can
handle the situation in a better manner.
Natural disasters: Company should also mention natural disaster in this crisis action
plan and must make strategies for providing safety to employees who are working in their
organisation.
Therefore, all these action plan can be implemented in a better manner if it is
communicated to employees using appropriate tools and technologies. Thus, on the basis of this,
company must develop a crisis communication team who can give all the related information to
its workers in a quick time.
Evaluation of industry life cycle of BMW on corporate strategy
Every business go through a cycle of birth, growth, maturity and death. The concept is
moreover taken from the analogy of biology. There is a time when a business is established
which can be said as birth and than it grows and try to sustain in the market. At the level of
maturity firm is provides with better services and facilities to its customers and than substantially
decline which is the end of the company (Castañer and Kavadis, 2013). Thus, talking about its
glorious history BMW was founded around 102 years ago in the year around 1916. company
manufactures auto-mobile and motorcycles for their customers. It is a German brand and
provides service all over the world. In this organisation approximately 129,932 employees are
working and they are giving their best for providing best class services to its consumers.
Basically, company's life is longer than product life cycle there is a possibility that a firm
can last for over 100 years with no sign of declining. So, company try to make changes or
manufacture a whole new product for their customers and this assist them in winning the loyalty
of customers for a longer period of time. In relation of BMW firm was established in the year
1916 and during that period company use to make Aircraft engine but later after World War 1 in
the year 1918, organisation was forced to cease aircraft-engine production under a treaty named
Versailles Armistice Treaty. Later, in the year 1923-1939, BMW started manufacturing
Motorcycle and cars after the restriction of the treaty lifted from the company. Their first model
of motorcycle was R32 model. Than in 1932, model number BMW 3/20 became the first BMW
auto-mobile which was solely designed by the company itself. This was having four-cylinder
engine. The year from 1945 – 1959 was rebuilding era for the firm as during the period of World

War II most of the areas of BMW was destroyed and heavily bombarded. Other than this,
remaining facilities were banned because East Germany was seized by Soviet Union (Chan,
Watson and Woodliff, 2014).
Therefore, the production was started in the year 1952, with BMW 501 large sedan but
this didn't provide any kind of profit and company was in 1959 BMW was in debt and in
situation of bankruptcy. Later after the meeting held on around in the year 1959, company started
making new series of their cars and since than BMW has never looked back. On a regular basis
they have modified their designed and developed models that are attractive and best in class.
Later in 1994-1999, BMW bought the ownership of British Rover Group for around six years.
BMW's first SUV model named BMW X5 (E53), was introduced in the year 1999 in in this year
company has developed many cars with large number of variance.
2006 – 2013 was a year of shifting from normal engines to turbocharged engines and F10
M5 became the first car to use a turbocharged engines. According to recent scenario, company
has is now electric/hybrid power cars and BMW i3 is the model which was completely made of
carbon-fibre and it is also a first hybrid sports car.
Corporate governance structure and its effectiveness in BMW
According to Coates IV, (2012), Corporate governance structure majorly comprises of
following parties that assist firm in performing their task under framework. Some of these are
keeping high standards of business ethics and integrity, having better connection or dealing with
shareholders and different stakeholder's interest, giving proper information about material
matters that are required for accomplishing the work in an effectively. In relation with BMW
they have a corporate governance in which all departments of the company are included. Firm
has a transparent reporting along with corporate governance policies which basically aim at the
stakeholder's interests and the traditions which BMW is following. Cooperation shared between
Board of management and the Supervisory Board in this organisation works with mutual
understanding which is enabling members in building trust towards every person who is a part of
the organisation. Thus, this is the reason on the basis of which BMW group manages all its
activities in an effective manner. Other than this, recommendation and suggestions are highly
supported by Board of management and Supervisory Board as they are looking out for all the
positive and negative factors (Donaldson, 2012). So, that flaws can be changed and better

services and facilities can be provided to its customers. In order to know more about structure of
BMW it is given below:
Board of Management: In an organisation they are responsible for providing leadership
and it can be directly or with the help of committees so that long term value can be provided to
its shareholders and other stakeholders. Harald Kruger is the Chairman of the Board of
Management, Therefore, all the important decision are taken by him after discussing about a
specific topic with other subordinates. Other than this, Milagro S Caina Carreiro- Andree look
after the human resource and consider all the requirements which is important to be fulfilled in
order to execute the plans in an effective manner.
Supervisory Board: In an organisation they work with the motive of managing all the
task in a proper manner and they often call board of directors for promoting their interest or ideas
which can give benefits to the company. DR.-ING. DR.-ING. E.h. NORBERT REITHOFER is
the chairman of Supervisory Board whereas Manfred Schoch is deputy chairman and the
member of supervisory board along with this there are other three members of supervisory board
of BMW (Edmans, 2014).
In addition to this, there are other 9 Board Committees such as audit committee, CSR,
Executive committees, Remuneration, risk management committees etc.,
Company Secretary:They are majorly responsible for alleviating Board process as well
as they look out for communication process amongst board members.
Shareholders: Every company has its shareholders and they assist company in electing
representatives as a directors. This is majorly done with the help of general meetings. BMW's
most powerful shareholders is Stefan Quandt as they have more than 46 percent of shares in the
company.
Other Stakeholders: Basically, stakeholders are the one who influence company and its
business operations and in terms of BMW their stakeholders are its employees, customers etc.,
therefore, they providing services as per the needs and wants which is enabling them in winning
the loyalty of customers for a longer period of time (Formentini, M. and Taticchi, P., 2016).
Issue related to the Corporate governance and its impact on BMW
According to Fernando (2012), in order to run a business a company needs efficiency,
transparency and accountability. Corporate Governance is said to be a process that is majorly
used for controlling and directing companies so that long term benefits can be achieved in a

limited period of time. Some of the problems which can take company towards failure are
explained below:
Accountability Issues: Accountability is necessary and important for effective corporate
governance. From the upper-level executives to lower-tier employees in BMW, each level and
department of the organisation should report and be responsible to another as a system of checks
and balances. It is a major issue faced by BMW which impact on its sales and profitability in
direct manner. Above all else, the actions of all level of the company is responsible to the share
owner and the public. Without accountability, individual department of the BMW might
endanger the success of the whole organisation or cause shareholder to lose the wants to continue
their investment.
Conflict of Interest: This is an issue which can hamper the performance of company
thus, it requires more attention because there can be chance of loyalties get compromised in
relation with personal benefits. Generally, conflict of interest originate when all the members
shows their importance and try to interfere in decision making. Thus, in terms with BMW they
have a conflict related to material but it is on temporarily basis because members of supervisory
board in quick time.
Transparency: In an organisation this is an important component which is to be looked
after although in context with BMW, there is transparency in their work because all the members
of each department work for a common goal. But in some situations this can arise and company
can lie about their accounts for different reasons.
Audit Failures: This is one of the serious issue which can arise in companies and this
can happen because of the audit failure by the accountants or finance departments. Therefore,
company should have a check on a regular basis so that any kind of illegal activities can be
identified and proper actions can be taken in return (Frias‐Aceituno, Rodriguez‐Ariza and
Garcia‐Sanchez, 2013).
Short-termism: In order to be success in business it is important that company set goals
and objectives which are achievable this can be short or long term. But in relation with BMW
they are making short terms goals just to make their shareholders happy but it is putting lot of
pressure on managers so as to manage their task. For example: in order to achieve their set
targets or company's stock price they are dropping their earning per share. Short meetings is
another problem which BMW is facing as meetings are conducted for a short time period

because of busy schedule of board of directors and because of this most of the important points
are even no touched which are required to be discussed for better results.
Therefore, these are some of the issues which BMW is facing, other than this there can be
a possibility of pressurising employees such as executive directors are dominated by non-
executive directors because of which their work can gets hampered. In many of the cases, if a
company give most of its power in the hands of individual than he/she can misuse the same and
consequences can be faced by rest of the employees. So, it is required that work is divided
equally amongst employees so that conflicts and clashes can be avoided (Amran, Lee and Devi,
2014).
CHAPTER 3: RESEARCH METHODOLOGY
Research methodology is identify as an effective process used by researcher to accumulate
information related to the topic. There are some important methods which are determined as
under:
Research approach: There are mainly two research approaches such as inductive
approach and deductive approach. As per the given topic, inductive approach is used because it
is more suitable and provide primary data related to the topic. On the other hand, deductive
approach is not suitable according to the topic because it require information in form of figures,
facts etc.
Research reliability and validity: Questionnaire is more essential instrument of primary
research which is used by researcher to collect reliable and valid data related to the topic.
Therefore, questionnaire will be used by researcher to collect data related to the impact of crisis
management plan on profitability of BMW.
Sampling: Probability and non-probability are introduce as an effective method of
sampling. According to the research topic, non-probability sampling is used because it not
require maximum resource, time and cost of an organisation as compare to probability sampling.
With the help of this method, 30 respondents are selected which is sufficient for analysing
information about the topic.
Primary research is conducted in order to get the effective results which have not been
used earlier by any other the researcher. Thus, in order to know the performance and the
effectiveness of corporate strategy governance BMW is conducing a primary research and it is
mentioned below: It is a research which is conducted by self and it is generally linked with