Strategic Analysis of BMW's Global Business Environment and Challenges

This report offers a comprehensive analysis of BMW's global business environment, focusing on the key elements driving global commerce and trade, such as cost, market dynamics, competition, and environmental factors. It delves into the strategic challenges BMW faces when operating internationally, including customer expectations and cost management. The report examines the effects of globalization on organizational governance, leadership, structure, culture, and functions, as well as the impact of ethical and sustainable globalization on organizational functions. Furthermore, it explores effective decision-making processes in a global context and identifies various routes to internationalization, considering potential barriers. The report provides insights into BMW's expansion strategies and the complexities of operating in a competitive global market, offering a detailed overview of the company's approach to international business.

Global Business Environment

Contents
INTRODUCTION.................................................................................................................................3
TASK 1.................................................................................................................................................3
P1: Key elements of cost, market, environment and competition that drive global commerce and
trade...................................................................................................................................................3
TASK 2.................................................................................................................................................5
P2: Complexness of strategic challenges faced by organisation while operating in global
environment.......................................................................................................................................5
TASK 3.................................................................................................................................................5
P3: Cause of globalisation on organisational governance and leadership, structure, culture and
functions............................................................................................................................................5
P4: Effects of ethical and sustainable globalisation on organisational functions...............................6
TASK 4.................................................................................................................................................7
P5: Various ways through which decision making can work effectively in global context................7
P6: Assorted routed to internationalisation which can adopt by BMW, including key barriers.........8
CONCLUSION.....................................................................................................................................9
REFERENCES....................................................................................................................................10

INTRODUCTION
Global business environment refers to a situation in which various organisations
operate its business functions in order to compete with their rivals and sustain in competitive
market for longer period. Here, the management play an important role to determine all such
factors which affects their sustainability as well as profitability, globalising a company means
expanding business to different countries in order to capture large market share and attain
strong brand image in competitive market. BMW, a multination company which deals in
manufacturing automobile and motorcycles is taken for the purpose of preparing this report.
The project covers the key factors that drive global commerce and trade. Along with this,
complexity of strategic challenges has been also covered under this report. The project report
also summarises the effects of globalisation on firm’s decision making process and different
barriers which may affects company’s profitability (Acar, Kadipasaoglu and Schipperijn,
2010).
TASK 1
P1: Key elements of cost, market, environment and competition that drive global
commerce and trade
Global environment is important to understand by the management of every
organisation irrespective of the size whether small, medium or large which help them in
expanding their business operation in different places. Such environment includes factors
which affects company’s profitability and goodwill in market. In order to expand business
operation in different countries, the management may find difficulties and challenges that
may related with competitor’s legislations, taxes, lots of barriers etc. But it can be possible
when the managers should consider all aspects related with cost, market, competition etc.
through which they can achieve sustainability in market at international level. Thus, it is
essentially required for the management of BMW to first analyse environment exist in
different countries and accordingly make an effective decision regarding expansion of
business operations (Banerjee, 2010). Some aspects or elements which need to be considered
are as follows:
Competition: It is such a factor which brings challenges and problems towards an
organisation while expanding business operations at international level. It may affect it
profitability and productivity as well. Therefore, it is important for management of an
organisation to carefully analyse the strategy, working style, technology etc. which are
currently used by their competitors. It can help them in making an effective decisions and
plans in order to compete with them in more effective and efficient manner. Through this,
they can provide products and services to the customers and implements changes according
to the needs and preferences of customers. BMW, German company which deals in
manufacturing automobile and motorcycles thus it is important for them to make innovative
changes in their products which adds extra value to products. At the moment, the company
have analysed that South Africa is the better place where they can expand their business as
South Africa. It can be also being identified that there are lots of automobile manufacturing
companies who operate its business operation in South Africa more successfully.

Cost: To expand business to different countries, the management must require to
identify all such elements through which they can reduce cost of products and services. This
may help company in attracting and influencing the buying behaviour of customers. As
BMW produces expensive automobiles products due to which they mainly targeted people
having higher income which can afford to buy their products. It must require by management
to provide the information about the value added features thy offered in their automobile
products. Through this, they may attained loyal customers and achieve good brand image in
market (Budhwar and Debrah, 2013).
Market: While expanding business to different countries, the management may find
difficulties in understanding the culture and environment in which they will operate in future.
Thus, the management need to analyse such environment and culture critically and
accordingly make plans and strategies which help them in executing business decision in
more effective and efficient manner. There are huge amount of risk arises due to high
completion, purchasing power of people etc. which may affects the chances of achieving
growth and success of business in new areas. R&D team of BMW need to conduct research
in order to find out which country will beneficial for company to expand. On the basis of
collected information, the management need to make plans and strategies to build new
production plant after understanding the customer’s purchasing power, competency etc.
Environment: There is another important element which is required to consider by
the management of firm in order to operate business more smoothly. Environment includes
internal and external which affects business operation either in negative or positive way.
Internal environment includes the elements present within an organisation such as employees,
culture, funds etc. whereas external environment includes political, social, economical etc.
which affects their decision of expanding business to different countries. For this, the
management need to conduct SWOT and PESTLE analysis through which they properly
evaluate such factors that made huge impact on business at international level (Carroll and
Shabana, 2010).
Therefore, it is essentially required for BMW to understand all above elements before
thinking to open new manufacturing plant in new places such as South Africa. Through this,
the company can able to achieve competitive advantages and attained strong brand image
across worldwide. Thus, it can be achieve only when the company improved their products
through implementing valuable changes. Therefore, the management of BMW should
required to make an effective decisions and strategies related with alteration of products,
identifying foreign cultures and tax systems etc. through which they can easily set up their
new store in different countries. As BMW company offers expensive automobile vehicles due
to which it is important for management to move their business operation to such developed
countries where the citizens has more purchasing power. They also need to plan a strategy to
attract customers to show their interest in purchasing company’s products. Such strategies
include marketing strategies through which the marketing manager can easily communicate
with the people and tell them about the features and luxury services they provide with their
products.

TASK 2
P2: Complexness of strategic challenges faced by organisation while operating in global
environment
In today’s world, every organisation irrespective of the size whether small, medium or
large wants to expand its business operation in many countries with a motive of capturing
large market share and achieve goodwill.
As BMW wants to expand its business operation in South Africa where the people are
having different culture and background. Thus, BMW may face various challenges and
complexities which need to handle by management through making an effective and
profitable strategies. Certain problems the company may faced while moving business at
international level are defined as below:
Customer expectation: The management of BMW Company need to give
responsibility to their Research and Development team to find out what is the customer’s
expectation from the company’s automobiles vehicles in order to make changes accordingly.
Thus, R&D team need to conduct research and communicate with their loyal customers in
order to identify the changes they want in company’s product. Thus, it will help management
to add new value added features in their automobiles accordingly which help them in
attracting and influencing interest and buying behaviour of customers towards purchasing.
Mostly the people having higher income can afford to buy BMW’s vehicles thus their views
and suggestions should be mainly considered (Crane and Matten, 2016).
Cost: As expanding business to such country where the tax rate is high on automobile
products will affects the sales figure and profitability of BMW. The price of vehicles should
increases due to implementing various excise duty, taxes and other elements which may
lower the interest of customers to buy. Therefore, the management of BMW Company need
to make an effective strategies regarding adoption of efficient technologies in manufacturing
process through which they can manage cost of product. The marketing manager of BMW
also required to inform their customers about new features the company add in their products
and ensures them to provide luxurious services with the products in exchange of price they
charged from them.
TASK 3
P3: Cause of globalisation on organisational governance and leadership, structure,
culture and functions
Corporate Governance is a process by which the multiple numbers of members in an
organisation give their efforts in making corporation more disciplined and controlled. Such
members include managers, directors, auditors, creditors and so many which help in
controlling and directing business activities in an effective e and efficient manner. Therefore,
expanding business at international level, these all members need to give their maximum
contribution in making business in new place more successfully (Dos Santos, 2011). The
investigator need to first analyse the needs and requirements of shareholders, investors etc.

from whom the company can able to raise funds to achieve future goals and objectives. Apart
from this, there are other elements as well which also may affected by globalisation. Such are
as follows:
Leadership: An individual will become a good leader who has ability and skills to
take major initiatives and guides their employees to perform in right direction in order to
achieve desired goals within short period of time. Therefore, leader also plays an important
role in growth of an organisation. Globalisation may affect company’s plans, missions, vision
etc. thus need to be analysed by manager all such elements which may brings risk to them. In
context of BMW company, Leader are focusing to moving company’s product to South
Africa but before implementing such decision, it is important to first identify the number of
customers who can afford to buy and what are the requirements they expect from company’s
product. This will help production team to modify changes in order to maximise customer’s
interest level (Griseri and Seppala, 2010).
Structure: The structure of company may also affected due to globalisation, As
BMW wants to expand business operation at international level which requires large number
of workers who support them in opening new offices in new places. For this, the company
first need to recruit skilled and knowledgeable employees who can communicate with new
customers and influence them to buy company’s product. The Board of Directors of BMW
need to make an effective strategies regarding allocation of roles and responsibilities in order
to operate business in new areas. This will help company in sustaining in new place for
longer period of time.
Culture: Different nations have different culture thus it is important to understand
culture of such country in which the country decides to operate. The management of BMW
need to first consider their target customers who can afford to purchase their expensive
product and accordingly attract them through following various marketing strategies.
Functions: As BMW company focuses on capturing large market share and give
tough competition with their rivals such as Mercedes. Thus, to achieve their goals and
mission the management need to perform different functions s such as planning, staffing,
organising, directing and controlling through which they can successfully implement new
plant in South Africa.
P4: Effects of ethical and sustainable globalisation on organisational functions
Today’s world is full of unprecedented transformation. Mostly the companies which
ate large in size such as BMW implement number of strategies and follows all rules and
regulations of countries in which the company want to operate. But it may affect their
decision if the company cannot perform ethically. Ethics includes the moral principles which
are followed by an organisation with a motive of influencing customer’s behaviour in
positive manner. As BMW decide to expand its business to South Africa therefore it is
essentially required for management to understand all rules and legislation implemented by
government of South Africa. The management required to perform operational, production
activities by using valuable ethics in an effective way (Kardes. and et. al., 2013). It is also

required for management to examine all such issue and problems that may come in the
process of building new plant in South Africa.
Therefore, to avoid such problem, the company need to comply with all rules and
regulations of South Africa. However, if company fails to follow such riles and standards and
perform unethically then the existence of new plant in South Africa may come in danger. It
will also affect the current goodwill of company. For this, the management need to make
effective strategies to help their employees to work in right direction without indulging in any
illegal activities. As manufacturing Automobiles creates harmful pollution which affects the
health of citizens residing in country and thus increases the chances of opposing new plant of
BMW in South Africa are high. Therefore, to reduce such harmful affects the management
need to implement advanced and latest technologies in production process so as to
manufacture products without damaging environment (Kew and Stredwick, 2017).
TASK 4
P5: Various ways through which decision making can work effectively in global context
There are mainly two members in an organisation that supports maximum in
achieving growth and success within short period of time. Such members include manager
and leader. They are the one whose supports and contribution help company to achieve
profitability and productivity. Therefore, at the time of expanding business to new areas they
both play a crucial role in formulating plans and guiding employees to perform their best.
Thus, the manager and leader both need to focus on implementing changes in company’s
product on regular basis so as to fulfil changing needs and requirements of customers. While
operating new plant in South Africa, the managers and leaders should required to understand
the techniques and tools which are currently used by their rivals and accordingly make an
effective decision in order to proven the decision of choosing south Africa to operate
business. Generally there are two types of decision which are taken by management and
leaders. Such decision is briefly described as below:
Programmed decision making: This type of decision is taken by management and
leader of an organisation with help of analysing previous result. These can be defined as tried
and tested process in order to get maximum possible outcomes. Under this, all activities
which will be performed in future are pre-planned. In addition with this, previous strategies
are also followed on the basis of outcomes received in past. For example, the responsibility of
employees is to resolve troubleshooting issues if faced by an organisation. This can be done
by employees in repetitive manner (Kolk, 2016).
Therefore, the management of BMW need to first analyse the previous result and
accordingly make decision regarding implementation of tool and techniques in order to utilise
them in right manner.
Unprogrammed decision making: Business environment is full of uncertainties and
complexities which create lots of risk and difficulties towards an organisation to perform
effectively. Therefore, the management should ready to face such sudden challenges with

plans and strategies in order to deal with them in more effective and efficient manner. For
example, In case of BMW company found any defectives in their automobiles due to which
their sales figure affected then the management should required to make quick planning and
implement effective technologies in order to improve such defects as soon as possible in
order to retain loyal customers with them (Lasserre, 2017).
Therefore, such two type of decision Help Company to cop up with different
situations and achieve god reputation at international level.
P6: Assorted routed to internationalisation which can adopt by BMW, including key
barriers
BMW corporation can face lots of barriers and challenge while enlarging their business to
different countries, Therefore, the management are held liable to determine all such risk
factors so as to make an effective decision and suitable planning. Through this, the company
can able to prevent such barriers and move ahead from their competitors. The main barrier
which may restrict BMW Company to build new plant in South Africa is the number of
customers having higher income. As BMW provides quality and expensive automobile and
motorbikes in market due to which their customers are also limited. Thus, they mainly
targeted such people which have more purchasing power to buy their products. The
management should also require to analyse various departments such as marketing,
production, financial and sales which supports them to move business in different countries
(Trevino and Nelson, 2016). Henceforth, there are other barriers as well which may restrict
company to expand business at international level and forces management to think twice on
their decision. Such barriers are listed below:
 Opening new Plant in South Africa requires huge investment on the basis of which the
management perform further functions. Therefore, the managers should require
inviting investors and shareholders and influencing them to best mainly through
conducting meeting among between them. They should require to bring investors into
confidence and ensures them to pay maximum return on their investment in future.
Due to having prices of BMW vehicles, it ay difficult for company to attract large number
of customers. The success of new plant in South Africa got success only when the people
have more purchasing power who can afford to buy their products. Therefore, marketing
strategies should be made in order to inform about the luxurious services and other benefits
the company provided with their product (Wheelen. and Hunger, 2011).
 Application of new technologies in product helps an organisation to survive in market
for longer duration. If the company uses outdated technology and old features in their
automobiles product then it may failed to attract interest and buying behaviour of
customers. This will affects the goodwill of company in market as well.
All above barriers may affect the decision of company regarding expanding business to
South Africa thus need to properly analysed and evaluated by management to company in
order to achieve desired goals and objectives (Globalization Challenges for Businesses, 2018.).

CONCLUSION
It has been concluded from the above project report that Global business environment
contains different elements which may affects the business operation of company. Therefore
ht management need to consider all such elements and make an effective decision and plans
in order to achieve desired goals and objectives within short period of time. Providing
luxurious and value added features in product easily attracts and influences the buying
behaviour of customers. There are various barriers as well which forces the management to
think twice about enlarging business in different counties thus also need to be considered by
management.

REFERENCES
Books and Journals
Acar, Y., Kadipasaoglu, S. and Schipperijn, P., 2010. A decision support framework for
global supply chain modelling: an assessment of the impact of demand, supply and
lead-time uncertainties on performance. International Journal of Production
Research. 48(11). pp.3245-3268.
Banerjee, S. ., 2010. Governing the global corporation: A critical perspective. Business Ethics
Quarterly. 20(2). pp.265-274.
Budhwar, P. S. and Debrah, Y. A. eds., 2013. Human resource management in developing
countries. Routledge.
Carroll, A. B. and Shabana, K. M., 2010. The business case for corporate social
responsibility: A review of concepts, research and practice. International journal of
management reviews. 12(1). pp.85-105.
Crane, A. and Matten, D., 2016. Business ethics: Managing corporate citizenship and
sustainability in the age of globalization. Oxford University Press.
Dos Santos, M. A., 2011. Minimizing the business impact on the natural environment: a case
study of Woolworths South Africa. European Business Review. 23(4). pp.384-391.
Griseri, P. and Seppala, N., 2010. Business ethics and corporate social responsibility.
Cengage Learning.
Kardes, I. and et. al., 2013. Managing global megaprojects: Complexity and risk
management. International Business Review. 22(6). pp.905-917.
Kew, J. and Stredwick, J., 2017. Business environment: managing in a strategic context.
Kogan Page Publishers.
Kolk, A., 2016. The social responsibility of international business: From ethics and the
environment to CSR and sustainable development. Journal of World Business. 51(1).
pp.23-34.
Lasserre, P., 2017. Global strategic management. Palgrave.
Trevino, L. K. and Nelson, K. A., 2016. Managing business ethics: Straight talk about how to
do it right. John Wiley & Sons.
Wheelen, T. L. and Hunger, J. D., 2011. Concepts in strategic management and business
policy. Pearson Education India.
Online
Globalization Challenges for Businesses. 2018. [Online]. Available through
:<https://yourbusiness.azcentral.com/globalization-challenges-businesses-22245.html>.