External Environment of BMW and Task Environment Factors: Analytical Essay

1.1 Industry of BMW

BMW is a one of the leading luxury carmakers in the European automobile industry. In this automobile industry. BMW faces huge competition from its competitors who are Audi, Honda, Volkswagen, Porsche and etc. BMW Group also provides premium financial and mobility services with the help of its three brands, BMW, MINI and Rolls-Royce. As a global company, the BMW Group operates 30 production and assembly facilities in 14 countries and has a global sales network in more than 140 countries. In the era of modern, BMW is now focusing on the digitalisation of production. Digitalisation in production, also referred to as Industry 4.0, opens up new opportunities for the entire BMW Group production system – enabling fulfilment of individual customer wishes and enhancing the flexibility and quality of production processes. Modernisation also benefits our associates over the long term.

1.2 History, Achievement & Future of BMW

Bavarian Motor Works or known as BMW is a German automobile manufacturer founded in March 1916 by Camillo Castiglioni, Franz Josef Popp and Karl Rapp . BMW is headquartered in Munich, Germany.BMW is one of the top industries in the world for multi kind finest motor manufacturers . BMW is a German motor, motorbike and appliance manufacturers that have been widely trade since 1969. In 1928, the first car of BMW was built under license. The company’s slogan in English is “The Ultimate Driving Machine” and Sheer Driving Pleasure”. The original German slogan is “fraud am Fahren,” which translates to “joy in Driving” in English. According to the Chairman of Board of Management of BMW AG, Harald Krüger , their vision is that “ To be the most successful and sustainable premium provider of individual mobility.” and the mission is “ To become the world’s most successful premium manufacturer in the industry.” BMW is known for its performance and luxury vehicles while it is also own and make the tiny product.

In 2018, BMW Group’s global revenue stood at roughly 97.5 billion euros. The German vehicle manufacturer sells vehicles under the BMW, Rolls-Royce, and MINI brands and was among the leading luxury car brands worldwide in 2018. Following the financial disaster of 2008-2009, BMW recovered rather quickly, surpassing pre-crash revenue and the earning before interest and tax (EBIT) by 2010.

As in achievement, in 2018, the BMW Group has achieved its eighth consecutive annual sales record with a total of 2,490,664 (+1.1%) BMW, MINI and Rolls-Royce delivered around the world in 2018. Best-ever figures were achieved by both BMW and Rolls-Royce, while the company’s portfolio of electrified BMW and MINI vehicles grew sales by 38.4% compared with the previous year. This sales result reconfirms the BMW Group’s position as the world’s number one premium automotive manufacturer. BMW can look back on a highly successful 2018 yielding an impressive haul of awards and accolades. Over the course of the past year, vehicles from BMW have managed to win over not just automotive journalists and experts from around the world, but also the readers of motoring magazines, market researchers and IT insiders. What’s more interesting is the the award winners distinguished themselves in areas ranging from product quality and design to technical innovation, intelligent connectivity and sustainability.

With a century of production to their name, the future of automotive design holds interesting prospects for BMW. Customers have shown interests and demanding in electric mobility and other sustainable technologies is creating a complex new chapter in the company’s history. Focus these days is on increased efficiency and decreased carbon footprint in the product lifecycle, including recycled materials, lightweight construction, and the continued development of bivalent hydrogen/gasoline engines. From the innovative IV aircraft engine to the hydrogen-based car of the future, things have certainly come a long way.

2.0 External Environment of BMW

A business organization contains of a group of people or individuals who are targeted towards some common commercial goals. The business organizations operate in an external environment, therefore, the external environmental factors impact on the operations of the business organizations. However, these external factors cannot be controlled by the business organizations. They need to adapt themselves according to the external environment. In addition to it, when beginning a new business venture in a different location, the organization needs to identify the external factors and its impact on the business operations. If the external factors do not align with the goals or the vision of the organization, the business venture can remain unfruitful (Thompson & Martin, 2010). External environment analysis is a strategic tool which assists the organization in forming strategies to curb the market competition. In this regard, the current report will examine the external environment of BMW.

2.1 Mega Environment

The term ‘mega environment’ refers to the external environment that reflects conditions and trends in the society that an organisation operates within. There are five major elements to the mega environment which is technological, economic, legal-political, sociocultural, environmental and international. These elements are often external to the span of control of the organisation and as such are often unable to be influenced directly (Bartol et al, 2003). In this report, 2 out of the 5 major elements will be discussed, that is the environmental and sociocultural factor.

2.2 Environmental Factor

With increasing awareness of global phenomenon, consumers worry about the health of the planet and two major impactful problems are the CO2 emissions and fuel-usage by cars. This affects the change in demand for a different product line and new direction of products. In BMW’s existing markets, environmental concern plays an important role of living up to emission standards. BMW observed the changing trend of consumer’s choice and support for “green” products, and therefore responded by increasing its focus on manufacturing more fuel-efficient automobiles. According to Walsh (2012), BMW achieved its lead on the Dow Jones sustainability index and is working hard to stay ahead of sustainability in creating innovative solutions.

How environmental factor influences the decision making and operations of BMW? BMW decides to lower the emissions from vehicle use with efficiency technologies and solutions for pollutant reduction. In their conventional drive vehicles, they currently achieve the most effective impact on lowering CO2 and pollutant emissions through their efficiency technologies and through specific solutions for pollutant reduction. A reduction in local emissions of nitrogen oxide (NOx) in particular is needed to improve urban air quality. All diesel models of the BMW Group have been fitted with a highly effective combination of a NOx storage catalytic converter (NSC) and a SCR system (SCR, Selective Catalytic Reduction) with urea injection (AdBlue) since mid-2018 (except for MINI 3-door cars, 5-door cars and convertible models). The larger MINI diesel models also use these technologies. In terms of climate protection, reducing global CO2 emissions is imperative. Since 2007, their Efficient Dynamics projects have helped them integrate efficiency technologies in their vehicles, in accordance with the specific requirements of individual models, engines and the respective markets.

Moreover, BMW has attached into the development and distribution of hybrid car models. These cars use less fuel than the non-hybrid models. On top of this, the BMW Group is also introducing more hybrid and electric model options to the audiences. From the very beginning of the BMW I series project, they have pursued the goal of reducing the emissions of CO2 and other pollutants throughout the entire life cycle of our electrified vehicles. To this end, they rely on light construction, renewable resources and particularly resource-efficient and environmentally friendly production processes.

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2.3 Sociocultural Factor

The sociocultural element focuses on the attitudes, norms, values, beliefs and behaviours of the demographic region in which an organisation operates (Bartol et al, 2003). The culture in which the countries they operate can impact on the business operations of the company. The culture of the geographical location affects the preference and the choice of the consumers. The culture of the country also impacts on the attitude towards working, education, training and ethics of the people (Thompson & Martin, 2010). All countries have culture that are unique to the country.

This means BMW Group must adjust products and marketing to fit the people it sells to. This requires adaptation to each market, using a one-size fit all approach won’t yield any results. BMW has manufacturing companies all over the world including United States of America, China, India, and Austria. The company chooses the location based on the heavy research and development. This requires not only understanding who the consumers are and why they buy, but also the point of view from political and economic landscape.

How BMW manages the changes lead by this sociocultural factor? BMW Group decided they need a platform to understand the cultural difference of the world and that platform is through social media.BMW has social media pages on most of the major platforms. On Facebook it has over 13 million followers and posts daily updates and entertaining images to provoke interest from followers. Twitter is where the company often responds to customer inquiries, suggestion, and complaints. Although it doesn’t seem to have a dedicated customer service section to help people on a consistent time, but someone do respond to followers when necessary. BMW needed to attract their customers by showing more of their dazzling pictures of their products and this is where Instagram comes in.Instagram is an easy choice for BMW since Instagram is none other than a photo and video sharing social networking. BMW boasts nearly 20 million followers and a feed of bright photos of their cars in various luxury locations. It’s a simple way to showcase BMW’s grand lifestyle to the younger audiences that frequent Instagram. However, due to the cultural difference, BMW will now be able to understand the preference and choice of the customers through social media.

3.0 Task Environment Factors

Task environment of an organization is the environment which directly affects the organization from reaching business goals. For example of task environment are suppliers, distributors, customers, stock markets and competitors which are directly affecting the organization from achieving its goals.

3.1 Competitors

There are many competitors in the automobile industry that are competing with BMW. For example, Audi, Mercedes Benz, Volkswagen and more. Competitions between BMW and the other companies are very fierce which will cause a lot of problems in terms of customers raiding. This factor could dictate their organizations strategies as it is very hard to maintain their customers from other companies, and this has caused them cutting the prices for their products. BMW once has cut prices for approximately 4,500 spare parts used in BMW by 10 to 30 percent. BMW has also been making efforts to increase efficiency and slash turnover costs like purchasing more locally made spare parts and expanding its logistics network to cut prices of the vehicles. This is also to ensure that the car owners do not need to pay a very costly maintenance fees and feels that they are benefiting from it.

These changes can bring some advantages for BMW group. One of the major advantages is relevance to market. They have maintained to be a brand that is hard to match through effective designing and modeling of the vehicles. They have also ensured that their vehicles have a diversified portfolio including luxury Sedans, Sport cars and SUVs. The manner in which the likes of BMW 3 series, BMW 5 series, BMW 7 series, BMW X3, BMW X5 and BMW X6 have been availed in the market, has always ensured that the consumers are challenged to advance with each model. This way, BMW has maintained its relevance in the market.

The other advantage is their ability to satisfy elite. In the perception of people in the market, BMW are very expensive and only belongs to rich and affluent owners. Most of the people believed or viewed that owning a BMW car is an achievement or a social status. This way though, those who can afford the cars will have a demand for every BMW model was released to the market because they will be thinking that buying a new released BMW model is like having a higher status over people who cannot afford it. And those who cannot afford it will have to work hard until they can.

3.2 Suppliers

Suppliers is one of the most important factors in a company’s success. There were many suppliers that had made partner with BMW like Brembo which supplies brake calipers, Peiker Acustic GmbH & Co who supply high speed mobile internet for cars which also made BMW to became the first ever automaker vehicles and other more industry that supply important parts that made BMW. BMW industry is very stable in their stock supplying as they always strengthen their relationship with their suppliers. The main part of having suppliers is because suppliers provide services and maintenance agreement on the item or parts they provide. Suppliers also providing something that the industry does not or cannot process in house like printed marketing material.

By having a strong relationship with suppliers can bring some advantages to the industry. The first advantage is cost reduced, usually when setting up deals with new suppliers will be very costly for the item the industry request. But with a long term of stable mutual beneficial relationship with the suppliers BMW industry can get better offers from the suppliers which able to reduce the cost on vehicles making. That’s not all, having a strong relationship with suppliers also reduced the availability problems and quality issues for the item suppliers were providing which will also give a better product for the customers.

As the relationship with the suppliers develops, the communication between BMW industry with the suppliers will be improved as well. The second advantage is the increase in efficiency. When the suppliers get more understanding on which industry that they are doing business with, they can make a better schedule on item delivery. This will make BMW industry to get their needs more effectively and reduce in supply delaying. This will allow the flow of operations in BMW industry to improve greatly and able to deliver the product to customers efficiently.

4.0 Conclusion

The external environmental analysis can let company understanding the sources of competitive pressure and the impact of these pressures. BMW industry becomes one of the best industries in the world by solving difficulties and decision making. BMW Group always focuses on the future and develops innovative ideas and solution, so they create a project which is ‘THE NEXT 100 YEARS’. BMW aims to make this fascinating driving experience even more intense in the future. The driver is in constant communication with the vehicle in an intuitive and natural way. BMW Group is developing more intelligent cars such as intelligent personal assistant, it can be controlled by voice command and supports you wherever you go.

5.0 References

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