Innovation in the Automotive Industry: A Detailed Report on BMW

This report offers a comprehensive analysis of BMW's innovation strategies within the automotive industry. It begins with an executive summary and introduction, providing an overview of BMW's history, product portfolio, and innovation milestones. The report delves into BMW's organizational structure, existing innovation performance, and capabilities, including an examination of its value chain and both primary and support activities. It also explores BMW's innovation history, highlighting key product and process innovations. Furthermore, the report provides an industry overview, focusing on the automotive sector in 2020 and applying Porter's five forces analysis to assess the competitive landscape. The analysis examines the threats of new entrants, supplier power, buyer power, and substitutes. The report concludes with a summary of key findings, offering insights into BMW's strategic approach to innovation and its position within the automotive industry.

Managing Innovation

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................3
INTRODUCTION...........................................................................................................................4
Organisation and Industry Overview...............................................................................................4
The Organisation and its Innovation History...............................................................................4
The organisations existing innovation performance and capabilities..........................................5
The Industry in 2020....................................................................................................................7
Conclusion.......................................................................................................................................9
REFERENCES..............................................................................................................................10

EXECUTIVE SUMMARY
Innovation is a key strategy which is used by companies to manage their worth within market.
There is requirement of innovating products and services of the company in order to you have
successful business. Innovation is an essential factor which is used by organisations for
improvising the sustainability. This can be defined as creation of a new product or addition of
value to existing procedures. In other words, innovation basically helps a business organisation
in developing a range of strategic edge that would aid in surviving within the market. All
organisations require to improve the overall performance level by managing innovation that is
taking place within the organisation. This report includes information about the innovation of
BMW which is operating in automotive sector. There is discussion about the Organisation and
Industry Overview and The Industry in 2020.

INTRODUCTION
Innovation is defined as one of the major factor which is is affecting the business profit directly.
It is very important for all companies to to adopt innovation strategies in order to remain
successful within market. Innovation is a distinctive process which is used by organisations
while launching any new product or service within market (Goolsbee, and Krueger, 2015). The
following report includes information about innovation in a well reputed automobile brand
naming BMW which is Bayerische Motoren Werke. This company was launched in 1916 and
founder of this company are Camillo Castigiloini, Karl Wrap and Franz Josef popp. There are
several brands or product portfolio of this company which includees BMW, Rolls-Royce. This
report includes discussion about The Organisation and its Innovation History, existing innovation
performance and capabilities of BMW and The innovations that are going to take place in the
Industry in 2020.
Organisation and Industry Overview
The Organisation and its Innovation History
BMW is a German multinational company that produces luxury motorcycles and vehicles.
This company was founded in the year 1916. This company manufactured aircraft engines at
initial level of business. Other products which are offered by this brand include rolls Royce and
mini e vehicles as well as motorcycles. Headquarters of this company are located in Munich.
History of innovation
The 4ps of innovation are known as a strategic tool which is used by the company for analysing
the innovation process within organisation. These phase include paradigm, product, process and
position. Innovation includes improving the way in which business is operated in market.
product innovation includes improvement and adding new feature in the existing product or
service offered by the company. Process innovation includes providing any change and
improvement in preparation process of the product or service (Dodgson, 2018). Position includes
the area in which the company is working. BMW who is involved in doing the product
innovation. This company is involved in providing new and innovative cars and vehicles to
customers.

Innovation in BMW - in the year 1917, the company produced first aircraft engine that includes
aluminium pistons. After that in the year 1935, the company introduced BMW R 12 and BMW
R17. Days have hydraulic front fork and BMW was the first innovator of this kind of product. In
1936, BMW 328 sports car was developed which was having innovative lightweight feature. In
1954, BMW launched the world's first aluminium engine which is known as BMW 502. After
few years in the 1957, BMW introduced market research and appointed Heinrich Richter Brohm.
BMW design head office as high rise suspension building which is having four suspension pillars
in the year 1973. This company became the first automotive organisation which has appointed
and environmental officer in the year 1997 ((Zhou, Yang, and Wang, 2020). BMW launched
its first diesel car in the year 1983. This new car consists of 6 cylinder engines which are
providing excellent driving performance. first motorcycle was launched in the year 1988 which
has electronically controlled Anti lock braking system. In 2001, BMW became the first
manufacturer which is producing fully variable valve lift system. BMW 316 t1- 2001 • World’s
first fully- variable valve lift system. BMW I3-2003 • Zero emission and no odour -
sustainability BMW i8-2008 • Most progressive sports car.
Process innovations: Co –creation labs, Automatic car park parking, 3D development through
virtual reality, Own IFTTT solutions (BMW labs) – access to more than 260 services. BMW
welt (use of robots). This is the First company to appoint environment officer. There are also
Market research departments in this company.
The organisations existing innovation performance and capabilities
The value chain analysis model given by Michael porter and according to this model, there are
various activities like production, sales, marketing as well as customer service which are
managed by organisations to have success within market (Grandori, ed., 2012). All stages
provide value to the production of final product. There is requirement of optimising the value
chain as this still help in achieving desired results. Different organisations can increase the
operational efficiency by minimising the operational cost and developing competitive advantage.
There are basically two types of activities which are involved within the value chain model.
These are primary activities as well as support activities. The analysis of BMW value chain helps

in knowing the different way of working and bringing higher agility for strengthening the
competitive advantage.
Primary activities – in the value chain, these activities are concerned with creation of products
and services.
BMW inbound logistics - there are approximately 12000 suppliers of this company across the
globe ((Vieira, and Radonjič, 2020)). This organisation has 31 production plants and assembly
plants across the world. BMW has largest supplier network in Germany. This company deals
with a well known logistics DHL. This is helpful for managing the operations of company and
handling the supply chain in proper manner. The partnership of DHL and BMW is extended to
Asia Pacific region. The inbound logistics strengthen BMW , in terms of its innovation.
BMW operations - the headquarters of this company are situated in Munich Germany. 10
companies operating globally and providing services since 1916. This is one of the most well
reputed and successful automobile company around the world. This company is having 31
production locations in approximately 10 countries. There are sales subsidiaries and financial
services locations which are also operated by this company. There is a good research and
development centre in Germany. BMW started business operations in North America in the year
1975. The company got famous by launching Rolls-Royce LLC within market in the year 2003.
Outbound logistics - this is associated with outward flow of services and goods. BMW is able to
establish and extensive network of retailers and dealers. This company operates main business in
Germany and in other countries there are subsidiary companies of BMW which are managing Di
services and sales (Xiang, and Xu, 2020). The logistic partner DHL manages the outbound
logistics for BMW.
Marketing and sales of BMW. - BMW is one of the well reputed and strong brand which has
global recognition. This company focuses on quality as well as innovation which is helpful in
building strong brand equity in order to provide good customer service. This company uses its
official website to provide information about the new vehicles which it is launching and new
innovation which is done within the automobile ((Bonesso, 2020)). This company also uses
social media for advertising and marketing the new vehicles. promotional strategy is used by
BMW for increasing the customer engagement. BMW has extensive network of dealers and
retailers in different countries. Effective marketing is done by this company to manage profit and
sales.

Products and services - BMW's product range consists of motorcycles and automobiles. This
company provides cars and owns car under the Rolls-Royce brand and mini brand. Rolls-Royce
is a brand which provides ultra-luxury service to luxurious segment of customers. This company
is planning to electrify all the brands.
Support activities - these are associated with primary activities and improves the effectiveness
and efficiency of primary activities.
Technology - there is lot of competition within the automobile industry. Main factor which is
important for analysing the work in automobile industry is the use of latest technology (Schork,
2020). BMW group is involved in in using latest technological innovation and producing new
products. There are good research and development centres of BMW which are located in
Germany and these try to innovate the products by using new technologies. BMW invest a huge
amount of money in the R&D as it helps in in increasing the value of company’s product within
market.
HRM - there is high competition within the automobile industry. There is need for every
automobile business to hire talented employees who are able to work properly and help
company to maintain competitive advantage. BMW has more than 200000 employees across the
world working with this organisation and providing service (Guellec, Paunov, and Planes-
Satorra, S). This company provides effective rewards and attractive salaries to employees for
making them work properly in order to achieve organisational goals.
Infrastructure - basically, BMW is having mainly two business segments which are motorcycle
and automobiles. This company also deals in finance segment. This company managers different
functions like finance, human resource, procurement and legal as there are head or directors of
each segment who are talented and skilled for managing the business operations.
Procurement - BMW is dependent upon different suppliers in order to provide good quality
products from raw materials and increasing customer satisfaction level (Khurram, Hassan,. and
Khurram, 2020). A source of quality raw material for this company is Germany as it provides
38% of raw material to BMW. This company and ensure proper management of quality control
within supply chain.
The Industry in 2020
Porter’s analysis of Automobile industry

Automobile manufacturers are facing problem due to occurrence of recession and this has
resulted in decreased revenue and profitability. There are various well known brands within the
automobile sector which have reached the verge of bankruptcy (Lechner, 2020). These
manufacturers must focus upon great technology and design as well as customer safety. There
are many factors which affect the success of automobile industry at global level. the five forces
analysis of automobile industry is mentioned below –
Threat of new entrants - this is not possible for new brands to enter the automobile industry as
there is requirement of large amount of investment for establishing a car brand. This industry
requires huge amount of investment for setting up manufacturing facilities distributing network
and hiring talented staff. Other in this industry is high competition (Jurkovic, and et. al., 2015). It
can be said that threat of new entrants is very weak within this industry.
Buying power of suppliers - in context of automotive industry, bargaining power of suppliers is
also very weak. The threat of forward integration is minimum from the supplier as they have to
work according to the rules which are given by car brands. Some of the most reputed car brands
like Toyota, fault, BMW and Volkswagen are having immense cloud as the raw material is
available in plenty and they can easily shift from one supplier to other (Munich, 2020). The
bargaining power of suppliers is very low.
Bargaining power of buyers - this is moderately strong within the automotive industry. There are
various government agencies and corporations which are buying vehicles. Some of the buyers
bargain for lowering prices. There are opportunities for small as well as large buyers to shift
towards a new brand. Automotive industry does not require big amounts and cost which is
involved in in analysing the mode of transportation..
Threat of substitute - this is very weak within the automotive industry. There are various
substitute and alternative modes of transportation like buses, trains, plains, taxis which can be e
used by people while travelling. Having a personal vehicle is a very e essential service as it will
provide accessibility as well as convenience while travelling from one place to other (Kafmann,
2020). When a person is having his or her own car it is matter of prestige and convenience.
Competitive rivalry in the industry - there are low recognised and influential brands within this
industry. If any brand wants to exit from this industry has to be a large loss. Automobile industry
is very large and customer loyalty is high. Big brands like Toyota, BMW, Ford are involved in
maximizing customer satisfaction and computing in order to provide best customer experience.

SWOT analysis of BMW
Strength Weakness
 This is a well known brand which is
operating at global level
 This provides automobile vehicles at
high price and the company has higher
budget
 Good advertising strategy
 This company has highly skilled labour

 The R&D department of this company
is not working properly
 Price of product offered is very high
Opportunities Threats
 As this company details in automotive
industry, there are huge opportunities
of innovation in the vehicle and making
money.
 This company can also diversify its
business into other businesses.
 BMW has threat from manufacturers of
other countries
 If there is rise in fuel prices, people
buying vehicles is minimised
 Other reputed brands like Audi and
Mercedes give good competition to this
company
Conclusion
From the above discussion, it is concluded that innovation is the best strategy to tactics that
can be used by big organisations to remain successful within market. This is very important for
any organisation that they are continuously innovating their products in order to manage the
profits earned by the company. It is concluded that BMW is a well reputed company and it is
involved in continuous innovation in product as well as process for meeting the demands and
needs of customers.

REFERENCES
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