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intro Company Description www.bmwgroup.

com Bayerische Motoren Werke Aktiengesellschaft (BMW group) manufactures automobiles and motorcycles worldwide. The activities of the BMW Group are divided into three segments that include the Automobiles, the Motorcycles, and the Financial Services segments. The Automobiles segment The Automobiles segment engages in the development, manufacture, assembly, and sale of cars and off-road vehicles, under the brands BMW, MINI and Rolls-Royce, as well as spare parts and accessories. BMW and MINI brand products are sold in Germany through branches of BMW AG and by independent, authorized dealers. Rolls-Royce brand vehicles are sold in the USA through a subsidiary company and elsewhere by independent, authorized dealers. The Motorcycles segment The BMW Motorcycles segment engages in the development, manufacture, assembly and sale of BMW brand motorcycles, as well as spare parts and accessories. The Financial Services segment The Financial Services segment focuses primarily on leasing automobiles, providing loan finance for retail customers and dealers, accepting customer deposits and insurance activities. The BMW Group operates in the world markets with 22 production and assembly plants, 34 sales subsidiaries and a research and development network. Significant Events Deutsche Telekom AG entered into a partnership with BMW Group, as part of which the two companies would organize joint research and development projects in areas, such as data security and vehicle maintenance. BMW Group is collaborating with Mercedes-Benz Cars. Both firms are collaborating to develop, produce and purchase car components. Mercedes-Benz Cars and BMW are exploring cooperation, on a project-by-project basis, in developing and producing components, including engines. BMW Group introduced new variants of its 5 Series sedan in July 2008. The new variants, BMW 520d, 530d and 530d Highline powered by diesel engines, would be additions to its existing petro variants BMW 525i and BMW 530i. BMW Group has extended its collaboration with Daimler AG. The collaboration is targeted at purchasing certain vehicle components. Both companies had earlier collaborated to develop hybrid drive train technology. Vattenfall Europe AG and BMW Group, in November 2008, announced that they would launch a field test in Berlin, Germany that would see 50 Mini E cars on the streets and public access to recharging points. The project is supported to by the German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety. GENIVI Alliance founding members BMW Group, Delphi Corp., General Motors Corporation, Intel Corporation, Magneti Marelli SpA, PSA Peugeot Citroen, Visteon Corp., and Wind River Systems, Inc. are collaborating to create a shared GENIVI platform - a common software architecture that is scalable across product lines and generations. The GENIVI platform would accelerate the pace at which automakers can deliver new solutions, bringing them closer to the lifecycle of consumer devices, and accelerating new business models, such as connected services. On November 29, 2009, SGL Carbon SE and BMW Group have set up a joint venture (JV) to manufacture carbon fibres and fabrics for the automotive industry. Two sites - a carbon fibre production plant in North America and a fabrics plant in Germany would be constructed, with work set to begin in 2010. History Bayerische Motoren

Werke Aktiengesellschaft was founded in 1916.

Company Background The BMW Group is the only manufacturer of automobiles andmotorcycles worldwide that concentrates entirely on premium standards andoutstanding quality for all its brands and across all relevant segments. With the brands BMW, MINI andRolls-Royce Motor Cars, the BMW Group has been focussing on selected premiumsegments in the international automobile market since the year 2000. In thesucceeding years, the launch of the BMW 1 Series meant an expansion of themodel range in the premium segment of the lower middle class and the BMW 6Series did likewise in the segment of the large Coupés and Convertibles. TheMINI marque was launched and production began in the Oxford plant in 2001. In2003, the BMW Group assumed marque responsibility for RollsRoyce Motor Cars.At the same time, the Worldwide Head Office and Manufacturing Plant inGoodwood, GB, was built. ( AnInternal and corporate analysis in terms of strength, weaknesses, opportunitiesand threats (SWOT) will assist in gaining an understanding of where BMW iscurrently in terms of strengths and where improvement is required within thebusiness and what outside environmental threats it may face as well as what newopportunities are available to the company in the short and medium term. Figure 1:BMW SWOT Analysis STRENGTHS •Diverse ranges of Products BMW, MINI and RollsRoyce •Strong Cash Flow Position •Increase turnover and trading profits •Strong Balance Sheet •World's leading Premium Quality Automobile Manufacturer •Brand Awareness •Human resources •Capabilities to turn resources into advantages OPPORTUNITIES •New Products •Market shift to globalisation •Innovation & Alliances •Customers demand change to more comfortable and relevantly cheap cars •Diversification •New Technologies in Automobiles

WEAKNESSES •Perception of High Prices •Customer disinterest •Environmental issues: Pollutions •Buyer sophistication and knowledge •Substitute products or technologies

THREATS •New & existing competition •Volatility in Price of Fuel •New legislations •Consequences of the oil crisis •September 11th •Economic recession •Market shift to globalisation •Takeover bids •Far-East Automobile companies expansion •Extremely high competition for customers and resources

The Five Forces Model

Figure2: Five Forces Model - ACCA Paper 3.5 (2001) Threats from Potential entrants Suppliers Competitive Buyers Bargaining power

Bargaining Rivalry power Threats from Substitutes

Porterexplains that there are five forces inherent in a market, which will jointlydetermine the intensity of competition and profitability of BMW and theautomobile industry. The first is the threat posed by new entrants, the highcapital expenditure and confidence of customers represent significant barriersto entry and the market is also sensitive to reputation. However, the emergentof low cost manufactures do pose a significant threat (as illustrated by figure2). There is an opportunity in the low price/ low economy (fast)

sector. MaybeHyundai or Daewoo could consider introducing a low cost sport saloon. The second is the threats from substitutes, as thereare many make and model of other premium branded cars, hence, Jaguar, MercedesBenz, Audi etc. The third force is the threats from the bargaining power ofbuyers, is this strong for both BMW and the entire automobile industry with alarge number of alternative suppliers, hence, the aggressive pricing strategy.This results in a very strong competitive rivalry in the industry. This isintensified as a result of little or no differentiation in the basic productoffered. Finally the threats from the suppliers bargaining power, this isfairly low in the automobile industry, due to dual sourcing strategies, using arange of alternative sources of supply for parts. The five forces analysis gives an improved understanding of the degree of competition within the business environment. The analysis shows that the automotive industry is highly competitive, with buyers possessing and exerting a very powerful influence to the large number of substitute brands available to them. BMW Human Resources Policy In response to a changing business environment BMW is being more business and service focus. In the past decade the organisation has become much more proactive, dealing with new concepts to become more service and customer focus oriented. The structure of the organisation has been redefined to deal with the new ways of operating. Organisational structuredefines important relationship within the business for achieving businessobjectives. At the same time it helps to define the new business culture withinBMW. Culture exists with the minds and hearts of BMW's employees andcontributes to business strategies of the organisation. Therefore, BMW's humanresources policies are critical in the organisations structure, conduct andperformance. Competitive pressures on BMW and national economies haveincreased markedly in recent decades. Therefore, organisations are constantlychanging, as powerful entities have arisen at the international level, theEuropean Union being a good example and multinational corporations increasinglydominate particular sectors such as cars. New competitions are emerging andforcing older companies to adopt or reform to survive. Different structuresaffect the way in which human resources are managed. BMW like all otherbusinesses require the same basic human resources activities like recruitment,development and training, appraisal and reward systems, and control andfeedback mechanisms. Organisational structures are influenced by culture.Employees have strong feelings towards the organisations they work for. Germanfirms have inherently a flat, less rigid structures. The McKinsey 7 'S' modelis often used to identify all the areas that make up an organisation.Structure, Style, Staff are three such areas. BMW has an equal opportunities none sexual discriminatingculture within its organisation. BMW actively supports young female executivesand gives females insight into the field of technology. BMW also offersextensive training for all level of staffs; BMW Group's Trainee PromotionProgramme (TPP) provides the perfect combination of theoretical studies andpractical work. BMW Group trainees receive many benefits in addition to theirpay, other social payments such as holiday and Christmas bonuses, meal

andtravelling expenses subsidies, health programme and PC training. BMW claims that it does not see its staff as a cost factorbut as an essential performance factor. Also the employees are referred to as'associates' rather that works. BMW in its human resources policy states thatany policy that is not oriented towards its associates will lead to negativecost effects in the long-run. As a future-oriented company, we seek to pursue anexemplary, creative and associateoriented human resources policy, makingsignificant contributions to business success through our human resourcesactivities. The human resources policy of the BMW Group is an integral featureof our overall corporate policy in both strategic and operative decisions. (Corporate appraisal (or SWOT analysis) consists of the internal appraisal ofthe organisation's strength and weaknesses and an external appraisal of theopportunities and threats open to organisations in competition within industry.