BMW COMPANY

EXECUTIVE SUMMARY

1.In 2001 the Border, Midland and Western Regional Assembly, as one of two NUTS II Regional Assemblies established in Ireland under the National Development Plan 2000- 2006 set out on a very ambitious, challenging yet exciting mission. The mission was to frame a credible and substantive Regional Innovative Actions Programme proposal which would address the main prevailing innovation challenges & technological deficiencies throughout the region’s economy and involving all of the key regional stakeholders. Being recognised throughout the EU as a competent authority to manage and deliver a Regional Programme of Innovative Actions represented an extension to the Assembly’s core management and monitoring responsibilities under the National Development Plan. More importantly the Assembly had a unique opportunity to establish itself as a proactive authority striving for the increased economic development of the region through new and innovative approaches to the delivery of collaborative initiatives. Following an extensive consultation process with the key agencies, a two year programme involving a process of Innovation auditing, pilot actioning (embracing novel approaches to ICT delivery, education outreach delivery, company innovation & policy assessment) and a strategic planning process was approved by the European Commission. The approved actions under each of the strategic themes were as follows:

1 Contents

History of BMW………………………………………………………………. Milestones of success………………………………………………………….. BMW innovations…………………………………………………………….... Current situation at the company………………………………………………. Competitors……………………………………………………………………. Future of the company…………………………………………………………. Personal attitude to the company……………………………………………….

BMW GROUP

Introduction

Nowadays BMW Group Company is powerful international company represented all over the world with more than 94.000 employees and over one million vehicles sold every year. Importers in 120 countries represent the BMW and worldwide sales organization comprised 24 sales subsidiaries. BMW has worldwide subsidiaries and manufacturing plants in Germany, Austria, the UK, the USA, Mexico, Brazil, South Africa, Egypt, Thailand, Malaysia, Indonesia, the Philippines and Vietnam. The activities of the business fields of the BMW Group are broken down into the segments BMW automobiles, Rover Automobiles, BMW motorcycles and Financial Services.1 BMW automobiles and Rover automobiles account for the larger part of activities within Group. These business fields manufacture, assemble and sell automobiles, spare parts and accessories. The BMW Motorcycles segment develops, manufactures, and sells motorcycles as well as spare parts and accessories. The Financial Segment focuses on the leasing of automobiles and financing credit for customers and dealers. Miscellaneous and consolidated companies segment include Aero Engines business, Software and other intra-segment activities.

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Background

. BMW was founded in 1916 as an aircraft-engine factory in Munich. In 1923 BMW builds first motorcycle. In 1928 BMW bought the factory at Eisenach, Thuringia with the license to build a small car called the Dixie. This first BMW car was developed in Munich, like all other BMW products. In 1932 BMW 3/20 was developed in Munich, in 1933 - 6 cylinder's BMW 303. Until Second World War BMW showed active growth in all three branches: automobile, aero engine and motorcycles industries. o In 1973 the first BMW subsidiaries were created in France and North America. In 1979 BMW developed first digital engine electronics and began R&D on hydrogen engines. In 1984 the first European models with catalytic converters appear. Computers and robots revolutionize work in planning and production. In 1989 in the year the Iron Curtain fell, BMW has another first by producing half a million . The company also has a turnover of DM 20.000 million, and acquires Kontron GmbH, a specialist in process engineering. o The BMW Group is the most successful premium manufacturer in the automotive industry. One of the fundamental prerequisites for this success was and is ongoing leadership and innovation in the construction of cars perceived and acknowledged as leaders by the customer. Innovation upgrades the product in its substance, and only attractive product substance can secure the long-term success of a company in sales. . A further point is that innovation is the right tool to clearly stand out from the competition in an increasingly competitive premium market. Modern premium cars today have reached a comparably high level of technology in many respects, the customer taking features such as passive safety and quality for granted right from the start. . A few examples: o - Jet-guided High Precision Injection direct gasoline injection technology significantly reduces fuel consumption and increases engine output at the same time. o - Runflat tyres save space and weight by omitting the spare wheel and at the same time offer a significant enhancement of safety. o - Active Steering offers the driver supremacy on the road on fast straight-ahead stretches, outstanding agility in a rapid succession of bends, and comfortable steering behaviour when parking.

. In addition, the BMW Group will successively introduce the Auto Start/Stop Function feature to their range of models, starting with the BMW 1 Series. This innovation automatically switches off the engine as soon as the vehicle stops moving and starts it again extremely quickly as soon as the driver wishes to continue the journey. This technology can help to save a great deal of fuel, especially in urban stop-and-go driving conditions.

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BMW GROWTH POLICY  The fundamental objective of the BMW Group is to continue the process of profitable growth by concentrating on high-profit market segments. Precisely, this is why the BMW group will use the potential of the BMW brand to an even greater success in a future.  In the first half of the year 2000 BMW has already achieved best sales results ever in the history of the company. Worldwide deliveries have increased by almost 9% to 421 000 units; the turnover was approximately 15% above the corresponding figure in the first half of previous year.  The production of BMW Group is developed to satisfy different customer’s needs, providing a variety of models for luxury, middle and low segments of market. Company constantly works out new technological decisions and improvements and nowadays sets new standards in production.  BMW has already achieved in individual requests fulfilling. Now it’s ambiguous objective is to provide every customer with his individual, personalized car on a defined date agreed in advance. Moreover, BMW Group is setting a new benchmark to process the time required for a new car in distribution and production to 10 days.  BMW Company continues to develop the concept of hydrogen engine automobile which according specialists’ estimations will dominate in the future automotive market because of the limited natural resources. First experimental cars with hydrogen engines already exist.  In the future BMW heavily relies on the big E-commerce project, which supposed to increase the number of employees and customers five times within the next three years.  BMW Group will bundle its e-business activities in a new company named nexolab. With nexolab, BMW Group creates a platform that will support the entire process chain - from the buying to the sales process for the manufacturing industry.  Company has well-defined personnel policy. BMW treats people who works for the company not like corporate funds, but rather the key to its’ success. This concept leads to lower cost and economic growth.  Nevertheless, the commonwealth of big multinational company strongly depends on successful performance of all its’ segments and divisions.

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History of BMW company

Bayerische Motoren Werke AG (BMW), (English: Bavarian Motor Works) is an independent German automobile manufacturer founded in 1916. BMW is a worldwide manufacturer of high-performance and premium automobiles and motorcycles, and is the current parent company of both the MINI and Rolls-Royce car brands.

 1916 – Founding of Bayerische Flugzeug-Werke. The new company incorporated Otto- Werke. BMW acquired the BFW site in 1922, but Bayerische Motoren Werke continues to regard BFW’s establishment as its date of founding.  1917 – Rapp-Motoren Werke was renamed Bayerische Motoren Werke GmbH. The company constructed a large plant and built engines for military aircraft there till 1918.  1918 – Bayerische Motoren Werke GmbH was converted into a stock corporation with a share capital of 12 million Reich marks. BMW GmbH becomes BMW AG.  After World War I, BMW (and Germany) were forced to cease aircraft (engine) production by the terms of the Versailles Armistice Treaty. The company consequently shifted to motorcycle production in 1923 once the restrictions of the treaty started to be lifted, followed by automobiles in 1928.  The circular blue and white BMW logo or roundel is often alleged to portray the movement of an airplane propeller, an interpretation that BMW adopted for convenience in 1929, which was actually twelve years after the roundel was created. In fact, the emblem evolved from the circular Rapp Motorenwerke company logo, from which the BMW Company grew. The Rapp logo was combined with the blue and white colors of the flag of Bavaria to produce the BMW roundel so familiar today.  By 1959 the automotive division of BMW was in financial difficulties and a shareholders meeting was held to decide whether to go into liquidation or find a way of carrying on. It was decided to carry on and to try to cash in on the current economy car boom enjoyed so successfully by some of Germany's ex-aircraft manufacturers such as Messerschmitt and Heinkel. Therefore the rights to manufacture the tiny Italian Iso "Isetta" were bought using a modified form of BMW's own motorcycle engine. This was moderately successful and helped the company get back on its feet. The dominating shareholder of the BMW Aktiengesellschaft since 1959 is the Quandt family. Stefan Quandt, Johanna Quandt and 5 Susanne Klatten (born Quandt) together own about 46% of the stocks. The rest is in public float.  BMW AG purchased the British Rover Group (which at the time consisted of the Rover, Land Rover, MINI and MG brands as well as the rights to defunct brands including Austin and Morris) in 1994 and owned it for six years. By 2000, Rover was making huge losses and BMW decided to sell the combine. The MG and Rover brands were sold to the Phoenix Consortium to form MG Rover, while Land Rover was taken over by Ford. BMW, meanwhile, retained the rights to build the new MINI, which was launched in 2001.

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BMW innovations

1. BMW's reputation for innovation can be traced to its equally innovative lateral management techniques. "At lunch and breaks everyone is discussing ideas and projects all the time. It's somewhat manic. But it makes things move faster," says BMW chief designer Adrian van Hooydonk. Companies such as BMW that leverage workers' tacit knowledge through networks (cross-functional teams) "are widely ahead of their competitors. BMW is one of a handful of global companies including Nokia (NOK ) and Raytheon (RTN ) that have turned to networks to manage day-to-day operations, superseding classic hierarchies.

2. Lightning-Fast Changes BMW figures some 90% of the innovations in its new models are electronics-driven.

3. Mobile-Phone Messages To reach a younger crowd of potential buyers for its new 1 Series launch in 2004, BMW used mobile-phone messages as the main source of buzz, directing interested people to signups on BMW's Web site for pre-launch test drives in August that year—something unheard of in the industry at the time. The experimental tactic worked: BMW sparked responses from 150,000 potential customers—and sales of the 1 Series took off when it was launched in September, 2004.

4. Ideas First Workers at the Bavarian automaker are encouraged from their first day on the job to build a network or web of personal ties to speed problem-solving and innovation, be it in R&D, design, production, or marketing. Those ties run across divisions and up and down the chain of command. BMW's complex customized production system, the polar opposite of Toyota's (TM ) standardized lines, is easier to manage if workers feel empowered to drive change. Like Dell Computer (DELL ), BMW configures its cars to customers' orders, so each auto moving down the production line is different.

7 Current situation at the company

 BMW brand - has stood for one thing: sheer driving pleasure. Sporting and dynamic performance combine with peerless design and exclusive quality, resulting in the unique appeal of BMW automobiles. o The MINI brand wins hearts and turns heads. MINI is refreshingly different: extroverted, spontaneous and in every respect something out of the ordinary. Ideal for a society, the MINI Classic became a cult vehicle in the sixties and seventies. MINI is part of a lifestyle that is cosmopolitan and confident, ready for everything. o Rolls-Royce is one of the most fascinating and well-known brands in the world, the luxury motor car par excellence. For over 100 years, motor cars of the Rolls-Royce brand have stood for truly outstanding engineering, quality and reliability. o Premium is the key word for BMW Group motorcycles as well. BMW group sets standards with regard to technology, environmental protection and safety, and provides outstanding customer service in the pre- and after-sales phases.  Financial services are a key factor for success in today's mobile world. They have established an extensive product portfolio which supplies expert information and advice for situations and questions relating to the finance sector. They provide the following services: financing and leasing, asset management, dealer financing and company car pools.

 German luxury car group BMW said its third quarter results 2008 were hit by the global financial crisis despite a rise in sales.

 "The financial crisis worsened and the consumption climate grew dark again." o In October 2008 the sales volume of one of the biggest producer of premium-class automobiles fell on 8.3% in comparison with October 2007 till 113005 cars. o It is connected with the decrease of demand on developed markets. The sales in Western Europe fell on 12%, in the USA – on 5%, in Japan – on 29%. Sales in developing countries have risen: in India – on 10%, in China – on 36%, in Russia – on 40%.

 The performance of the BMW Group in the third quarter 2008 was perceptibly influenced by the economic downswing in the wake of the financial crisis. Ongoing consumer reticence in the main sales markets, the weak state of the used car markets as well as increasing refinancing costs had a substantial negative impact on the earnings of the BMW Group.  Earnings for the nine-month period reflect the ongoing effect of the various adverse external factors described above. In the third quarter 2008, the BMW Group increased the cumulative amount of expense recognised for additional risk provision for residual value and bad debt risks to a total of euro 1,037 million. On top of this, expenditure in conjunction with previously announced measures to reduce the workforce reduced nine-month earnings by euro 258 million.

 The BMW Group continues to aim to achieve a return on sales of at least 6 % in 2010. The corresponding EBIT margin in the Automobiles segment would then be just under 6 % or better. This does, however, depend on the markets recovering

8 Competitors

The current situation in the market is a growing and heavily competitive one. It has blossomed into a full-scale war between mostly the up-scale automobile manufacturers. BMW competitive landscape includes:

 Daimler

 Toyota

 Volkswagen

DAIMLER Daimler AG with its businesses Mercedes-Benz Cars, Daimler Trucks, Daimler Financial Services, Mercedes-Benz Vans and Daimler Buses, is a globally leading producer of premium passenger cars and the largest manufacturer of commercial vehicles in the world. The Daimler Financial Services division has a broad offering of financial services, including vehicle financing, leasing, insurance and fleet management. Daimler sells its products in nearly all the countries of the world and has production facilities on five continents. The current brand portfolio includes the world’s most valuable automobile brand, Mercedes-Benz, as well as smart, Maybach, Freightliner, Sterling, Western Star, Mitsubishi Fuso, Setra, Orion and Thomas Built Buses.

TOYOTA COMPANY

Toyota Motor Corporation, Japan's №1 carmaker. The company makes a hybrid- powered (gas and electric) -- the Prius -- that is being snapped up in US and European markets. Its gas-powered cars, pickups, minivans, and SUVs (Sport Utility Vehicle) include such models as Camry, Corolla, Runner, Land Cruiser, Sienna, the luxury Lexus line, the Scion brand, and a full-sized pickup truck, the V-8 Tundra. Toyota also makes forklifts and manufactured housing, and offers consumer financial services. Once a dark horse in the global automotive game, Toyota has already passed Chrysler and Ford and is closing in on General Motors.

9 THE VOLKSWAGEN GROUP

Volkswagen (VW) is one of the world’s leading automobile manufacturers and the largest car producer in Europe. In 2007, the Group increased the number of vehicles delivered to customers to 5.734 million, corresponding to a 9.7 percent share of the world passenger car market. In Western Europe, the largest car market in the world, nearly every fifth new car (19.9 percent) comes from the Volkswagen Group. The Group consists of eight brands: middle class – Volkswagen; luxury class – Audi, Bentley, Bugatti, Lamborghini; family cars SEAT (Spain), Skoda (the Czech Republic). It also holds 68% of the voting rights in Swedish truck maker Scania and about 30% of MAN AG. The product range extends from low- consumption small cars to luxury class vehicles. The Group operates 44 manufacturing facilities in 12 countries in Europe and in a further six countries in America, Asia and Africa. VW also offers consumer financing.

Company Goods Services BMW Premium class cars (MINI) Financing and leasing, asset Luxury class automobiles management, dealer (BMW, Rolls-Royce) financing and company car Motorcycles pools Daimler AG Luxury cars (Mercedes-Benz Daimler Financial Services: Cars), vehicle financing, leasing, Trucks (Daimler Trucks), insurance and fleet Vans (Mercedes-Benz Vans), management. Buses (Daimler Buses) Toyota Motor Corporation Luxury cars (Lexus, Scion) Consumer financial services: Premium cars (Camry, auto loans and leases and a Corolla, Sienna) full lineup of factory-backed Pickups insurance services and Minivans (Runner, Land products Cruiser, RAV) Truck (V-8 Tundra)

Volkswagen Group Low-consumption small, Consumer financing services: family cars (Volkswagen, vehicle financing, direct bank SEAT, Skoda); business, insurance products, Premium cars (Audi, leasing, fleet management Volkswagen); Luxury class automobiles (Bentley, Bugatti, Lamborghini) Trucks (Scania, Man)

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