International Business Final Project
By: Aaron Prescott
Kris Miner Micah Edmond Travis Harrant
B M W G R O U P Page. 1
Table of Contents INTRODUCTION ...... 2 Aaron Prescott ...... 3 Products and Services...... 3 Product Development & Government Policy ...... 4 BMW Global Production, Outsourcing, and Logistics ...... 5 Vertical Integration...... 7 Foreign Direct Investment ...... 9 Greenfield Strategy ...... 9 BMWǯs Operation Segments ...... 11 Works Cited (Aaron) ...... 12 Kris Miner ...... 14 Culture ...... 14 Works Cited (Kris) ...... 21 Micah Edmond ...... 23 Marketing ...... 23 Acquisitions ...... 23 The Four Pǯs ...... 26 Push and Pull Strategy ...... 29 Works Cited (Micah) ...... 31 Travis Harrant ...... 32 Financial Analysis ...... 32 Works Cited (Travis)...... 37 Herbert Bowen ...... 38 Current Challenges and Solutions ...... 38 Mergers ...... 39 Globalization Strategy ...... 41 Strategic Alliance ...... 42 Works Cited (Herb) ...... 45
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INTRODUCTION
BMW Group Company is powerful MultinationalEnterprise, 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. They are one of the most successful multi-brand premium car manufactures in the automobile industry. They are the only manufacturer of automobiles and motorcycles worldwide that concentrates on the premium standards and outstanding quality for every one of their models.
Being one of the few automobile manufactures that concentrate exclusively in the premium market of automobiles, they offer an array of products. The BMW and Rolls-Royce brands of the company serve the premium and ultra premium segments in the automobile market. They also serve the premium small car segments with their Mini brand. BMW models include, Sedans, Coupes, Touring,
Compacts, SUVs, etc. BMW has been making cars for almost one hundred years. They began as an aircraft company and then used the meticulous engineering to design top of the line cars. BMW is synonymous with high quality and performance, which is reinforced by strong brand recognition and customer loyalty.
Introduction by, Aaron Prescott
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aron Prescott Products and Services
BMW provides its customers with premium luxury and sports model automobiles and motorcycles. For almost a century BMW has maintained a reputation of excellence ever since the first motor was built. The First BMW engine that was produced was the, DzM2 B15 ǮVictoriaǯ motorcycledz(bmwdrives.com). BMW began to move away from the aircraft industry because of the armistice agreement
Germany signed at the end of World War II, which prohibited the Germans from making aircrafts. In 1922 BMW, constructed the R32 motorcycle that was BMWǯs biggest seller, selling 3,100 bikes till 1926. The R32 showed a strong impression at its world premier at the Berlin Automobile Show. With the great success of the R32
BMW began to move into vehicle construction even before automobiles were invented. This movement is the point at which BMW established their trademark boxer engine design and continue until present day.
1928 was the year BMW presented their first automobile for sale called the
Dixi 3/15. BMW purchased a car factory in Eisenach, Germany and with it a license to begin building the small vehicle. Since then BMW has been producing top of the line automobiles available all over the world.
The current models BMW produces today are, the 1-series, 3-series, 5-series,
6-series, 7-series, Z-series, X-series, M-series, Xm-series. BMW uses a unique numbering system to identify their models. Usually the lower the number the
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smaller and less expensive the car. The two digits following the series number
indicates the engine size and the, i or d specify fuel injection or diesel. In some cases after the engine size numbers certain models will have a c or x, which indicates
coupe or all wheel drive. The Z-series is BMWǯs sports convertible model and x-
series is BMWǯs SUV models. BMWǯs M series is a unique model; it comes with high
performance and always a higher cost. The M models are offered in all the series
BMW produces and includes high performance engines and aftermarket parts to
enhance the driving experience.
Product Development &Government Policy
Since 2004 BMW has spent millions of dollars in R&D to advance the BMW
name in the alternative energy movement. BMW was the worldǯs first car
manufacture to prepare medium a long-term development of its vehicles in
alignment with a hydrogen-based operation. The move too hybrid vehicles over the
globe has become a growing concern for many automobile companies. In the
U.S,recently President Obama announced new fuel efficiency standards to increase
automakers research and design teams to produce newer technology that will
return higher fuel efficiency. BMW calls their alternative energy approach, BMW
CleanEnergy, and their focus is to, Dzeradicate emissions and to utilize regenerative
sources of energydz(Just-auto). Along with the hydrogen engine BMW announced
that the companies first mass-produced electric car would be released in 2013. The
Mini E, under BMWǯs Mini Cooper brand will be a fully powered battery-operated
Page. 5 automobile. Although BMW and the other European automobile makers are late arrivers in the electric hybrid sector, BMW plans to surpass other current hybrid vehicles on the road. The Mini E, will be lighter, stronger, faster, and safer than any other current electric car. Its light weight and stronger aspects will come from a high tech carbon fiber that will allow the Mini E to have a 160 mile range on a single charge. DzBMW Group is currently the only company that will be launching a volume- production vehicle on the market that features carbon fiber-reinforced material
(GAS 2.0). BMW has a strong share invested in the U.S market and has government regulations become stricter, BMW has to find ways to alter their strategies and remain competitive in foreign marketsdz BMW will effectively transition into the hybrid sector and maintain the same line of excellence and instill their reputation of
Dz The Ultimate Driving Machinedz.
BMW Global Production, Outsourcing, and Logistics
BMW manufactures products in thirteen countries on four continents. BMWǮs worldwide subsidiaries and manufacturing plants are located in, Germany, Austria, the UK, the USA, Mexico, Brazil, South Africa, Egypt, Thailand, Malaysia, Indonesia, the Philippines and Vietnam. BMW automobiles are produced at twenty-four different locations. BMW also owns the MINI and Rolls-Royce brands, which are produced in Great Britain. Their motorcycles are manufactured in Berlin and the
Husquvarna brand in Italy.
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To Ensure customer satisfaction all around the world BMW maintains the
same Dzstandards of quality, safety and processes at all of their locations around the
world to guarantee worldwide premium products.dz (BMWgroup.com). BMWǯs
integration of production and logistics systems within the twenty-four
manufacturing sites around the world offers many advantages for its customers.
DzFirst and foremost, greater efficiency in the supply of production materials helps to
speed up the delivery of cars and motorcycles to customers, each plant making its
own contribution to the smooth operation of the production
networkdz(bmwusfactory.com). BMW maintains premium automobiles throughout
the world; recently in 2009 BMWǯs manufacturing plant in South Carolina
celebrated fifteen years of vehicle manufacturing producing 1.5 million vehicles.
BMW has had a presence in the United States since 1975 as BMW of North
America LLC. In recent years BMW of North America has grown to include
marketing, sales, and financial service organizations all throughout the US. BMW has over three hundred automobile sales centers, Dz335 BMW Sports Activity Vehicle centers, 142 BMW motorcycle retailers, 90 mini passenger car dealers, and 31 Rolls-
Royce motor car dealersdz(bmwusa.com). BMWǯs group sales for North America is located in Woodcliff Lake, New Jersey. BMW only has one manufacturing plant located in North America and its located in South Carolina.
In the United States BMWǯs major manufacturing plant, located in
Spartanburg, South Carolina, is a subsidiary of BMW GROUP in Munich, Germany.
The Spartanburg plant is a Limited Liability company and is a subsidiary of BMW
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Groupǯs global manufacturing network. The plant manufactures all of the BMW X5
and X6 sports utility vehicles for distribution around the world.
Interview from a BMW Representative (at their New Jersey Headquarters)
Mid way through the semester I spoke with a representative from BMW, Mrs
Wright from their New Jersey headquarters. I explained to her I was conducting an international business project and had a list of questions I was wondering if I could get answered. She was very helpful, I emailed her my list of questions and she forwarded them someone who could answer them. About a week later I received an email from a generic email account with my questions answered, but I never received a name or title of the representative who answered them. I called Mrs.
Wright back and she assured me they were from a reliable employee but could not remember who she gave them too. Of the various questions I asked, one in particular gave an in-depth response (Does BMW use more of a vertical or horizontal integration strategy around various locations in the world?) Based on the response I believe the representative may be involved in managing BMW parts for various assembly plants around the world.
Vertical Integration
Recently BMW has started Dzpreferring the make Dzoverdz the Dzbuydz option in
some countries in an attempt to cut costdz(Interview Questions). BMW began relying
on more vertical integration compared to past years in order to strengthen the
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capabilities of their OEM car parts. Dz In 2007 BMW started the expansion of the
stamping plants in Leipzig and Regensburg with a total investment of ̀200
milliondz(Interview Questions). BMW justified the upper level decision with the
rising high logistical cost of pressed parts. The shift to produce more in-sourced
parts came when, DzGerman automakers factories were running at significant high
utilization rates, 97% in 2005.
Many suppliers operating in such sectors of the component supply industry
fear BMW might re-in source all of the pressed parts activities thus undermining
their businessesdz(Interview Questions). BMW sees the move towards a higher level
of vertical integration in some specific sectors in various countries, such as
Germany, will be beneficial to increase productivity.
Where available BMW employs a DzJust In Timedz supply strategy. BMW parts
are shipped directly to the assembly areas, and free up in housing of resources. To
maintain smooth and efficient flow of production materials to plants around the
world, BMW established the Integrated Logistics Centre (ILC). Each plant has a large
warehouse, Dzconnected directly to the assembly area by two tunnels through which
electric tow trains feed the production linesdz(Autointell.com). The ILC provides two
functions, act as a receiving and sequencing facility, and provide space for the Just In
Time suppliers to carry out their work as close as possible to production.
The move towards Just In Time supplying and using a more vertical integrated decision making system is BMWǯs Six Sigma philosophy, Dzto reduce
Page. 9 defects, boost productivity, eliminate waste and cut costs throughout the companydz(Hill).
Foreign Direct Investment
BMW Group is very successful in global production. As a global players
BMWǯs Dz flexible network of 24 production plants in 13 countries ensures that customers receive exactly the car they have ordered, tailored specifically to their wishes and preferencesdz(made by the BMW group). BMW realizes the importance of creating opportunities of local production in foreign countries and they capitalize
Dzon opportunities to penetrate and develop markets with long-term growth potentialdz(made by the BMW group). By establishing a local production plant, BMW is able to enhance local acceptance in the market and become a local player.
BMWǯs Foreign Direct Investment in the United States has had provided thousands of jobs for U.S citizens. In 2008 BMW announced that they were investing
1 billion dollars in their Woodcliff Lake headquarters, in New Jersey. The expansion provided 1,00 jobs, to U.S citizens. This investment Dz is the largest BMW has mad in
America aside form its manufacturing facility in South Carolinadz(Ofii.org).
Greenfield Strategy
By investing in Greenfield production plants in various countries, BMW can reduce high import costs of importing fully assembled automobiles to specific
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countries. BMW calls these local production plants, Dz completely knocked down,
(CKD), they can also be used in such cases to offer products in emerging market at competitive pricesdz(made by the BMW group). In the CKD process BMW assembles
cars locally from imported parts and supplemented by parts produced locally and
essentially fulfilling the local content requirements imposed by different countries government regulations. One of BMWǯs current Greenfields investments is located in
Shenyang China, and BMW is planning to expand the production plant beginning in
2010. BMWǯs Greenfield expansion has the potential to make Dz total production capacity to increase to more than 100,000 units in the 1st stepǥ the capacity can be gradually increased up to 300,000 units/year in line with growing market demand in the long term.
BMW has also taken not of potential emerging markets for production.
DzRussia, India, Egypt, and ASEAN (Malaysia, Vietnam, Thailand, Indonesia) countries will double their share of production compared to 2009dz(Bmwgroup.com). In 2013 these companies are only forcasted to account for 1.7% altoghether in the premium market. The plants that BMW has in these countries do not feature full-fledged car production buy Dz only assembly of CKDǯs kits shipped from elsewhere to sidestep import tariffs which are strongly enforced in these countriesdz(autointell.com).
BMW is able to make use of these local Greenfield production plants for natural hedging. BMW explains the benefits of natural hedging, Dz A high level of purchase volume in key sales regions with differing currencies serves to balance out
Page. 11 the flow of merchandise as well as make up of currency fluctuations and the associated trading risksdz(made by the BMW group).
BMW plans to reduce dependence on foreign exchange rates by utilizing the natural hedging it has implemented over various countries. Exchange rates have become a burden for the BMW GROUP in recent years. By increasing the CKD assembly plants world wide BMW plans to cut down significantly on foreign exchange rates. DzIn light of its successful retail trend in the USA, the BMW Group wants to expand its natural hedging sustainably over the medium term and thus significantly reduce its dependence on volatile foreign exchange ratesdz(bmwgroup.com). BMW plans to expand the production capacity at
Spartanburg Plant located in the USA from 150,00 to 240,00 units by 2012. This will allow BMW to decrease its foreign exchange rates to the US and decrease transportation cost. DzOne aspect is the local content of the vehicles manufactured in the USA. In recent years, it was increased from about 30% to more than 60%.
Another aspect is purchasing in the NAFTA region for production in Europe and other regions. In 2006, the NAFTA region accounted for some 9% of BMWǯs global purchasingdz(bmwgroup.com).
BMW͛s Operation Segments
BMW is divided into three operation segments, they are, Automobiles,
Motorcycles, and Financial services. The BMW automobile segment includes
Page. 12 research and design, manufacturing, and assembly. The segment also focuses on selling cars and SUVǯs under one of the three BMW brands, BMW, Mini, and Rolls-
Royce. . DzThis segment sells its cars and off-road vehicles through authorized dealers and independent import companiesdz(Businessweek). The motorcycle segment focuses on manufacturing, assembly, and selling of the BMW motorcycles. Both the automobile and motorcycle segments offer spare parts and accessories for purchase.
The last segment of BMWǯs operating segments is financial services. The main concentration is mostly on leasing. The leasing aspect deals with retail customers and dealer financing to ensure the leasing opportunities are available to all customers and remain equal to all possible leases. The financial segments also handles Fleets business, customer deposit business, and insurance ventures.
Works Cited (Aaron)
"gas2.org." Auto UK, 22. 04. 2010. Web. 1 May 2010.
megacity-is-coming-in-2013/>. "BmwFactory.com." The BMW Group Production Network. Auto UK, 2010. Web. 1 May 2010. "BmwUSA.com." BMW Group in North America . N.p., 2010. Web. 1 May 2010. Page. 13 n/BMWGroupinNA.aspx> "OFii.org." The Impact on the U.S. Economy of Greenfield Projects by U.S. Subsidiaries of Foreign Companies . N.p., 2010. Web. 1 May 2010. eenfield"+investments&hl>. "bmwgroup.com." Strategies. N.p., 2010. Web. 1 May 2010. http://www.bmwgroup.com/bmwgroup_prod/e/0_0_www_bmwgr oup_com/unternehmen/unternehmensprofil/strategie/strategie.ht ml>. "Businessweek.com." Bmw Stock Research. N.p., 2010. Web. 1 May 2010. pshot.asp?privcapId=704634>. "Autointell.com." BMW Logistics. N.p., 2009. Web. 1 May 2010. ord-plant/bmw-oxford-plant-07-logistics.htm>. Hill, Charles W. L. International Business Competing in the Global Marketplace. 7th ed. Boston [u.a.: McGraw-Hill/Irwin, 2009. Print. Page. 14 ris Miner Culture Culture is a word that does not have one solid definition. One of the most popular definitions is that by Edward Taylor which he defines culture as, Dzthat complex whole which includes knowledge, belief, art, morals, law, custom, and other capabilities acquired by man as a member of societydz (Hill 89). The same can be applied to a corporation instead of a man, in this case Bavarian Motor Works (BMW). BMW is a multinational corporation, based in Munich Germany, which covers more than one hundred and fifty countries. They have seventeen production facilities, which are located in six different countries. These six countries are Austria, Great Britain, South Africa, China, the United States, and Germany. BMW also outsources to six other countries and has research and development in over thirty countries. Many of these countries have very different cultures. BMW not only has to look at how its German culture affects these countries, but also how each countries culture is different and how these individual countries need to interact with each other. BMW, as a corporation and as a multinational enterprise, builds its corporate culture through its management style and its employees. With over one hundred thousand employees, BMW has managed to create a high efficiency culture with Page. 15 their goal being, Dzto constantly incite each other to become even better, to offer even better productsdz. BMW employees are considered part of a team. In order for this team to succeed, they need to have a high team spirit. It is this team that gives BMW the reputation associated with them. DzThe following principles of the BMW Group form the basis of this long-term and target-oriented action. These twelve basic principles are customer orientation, high efficiency, responsibility, effectiveness, adaptability, disagreement, respect trust and fairness, employees, exemplary function, sustainability, society, and independencedz (bmwgroup.com). While the employees of BMW can be considered a society, these are the societyǯs values. The vision of BMW is Dzto become the worldǯs leading provider of premium products and premium services for individual mobilitydz (bmwgroup.com). The first principle is customer orientation. Like all other companies who provide a product, it is the customers who determine the success of the company. This is why BMW builds their company around their customers. A second principle is peak performance. It is a norm for everyone in the company to work to their best potential. With this mindset from the employees, BMW is able to be highly efficient. Another principle is responsibility. Each employee is part of the organization. If one employee slacks off then it affects the entire company. Thatǯs why each employee has a personal responsibility to make the company successful. Next comes effectiveness. BMW looks for effective results and production. If something is not working as effective as possible management will look to improve it. Adaptability is Page. 16 also very important to BMW. With recent breakthroughs in technology, companies have to be able to adapt. BMW takes this as a chance to create and then implement their new technologies into production vehicles. A company that is able to adapt to change, or stay ahead of change, like BMW will be a successful company. BMW also allows and looks to resolve dissent once it is brought up. An argument in any company is never a good thing. Like any argument, the longer they drag out the worse they get. This is why BMW wants its employees to be upfront and bring any disagreements to management who can hopefully resolve the argument and send the workers back to work. With dissent, BMW also has a strong belief in respect, trust, and fairness. Every employee is expected to treat each other fairly and with respect. If this is done, then fairness should follow. This belief in respect, trust, and fairness allows for employees to work with confidence and to their full potential to create the best product possible. Like the BMW website says, a company is only as good as its employees are. Thatǯs why the employees hold such a high responsibility to succeed. Each employee is expected to lead by example. This belief ranges from the CEO to the employees on the assembly lines. The company also strives for sustainability. In this case they want the company to be successful economically. If a company is economically successful, then it must be making a strong product that is desired by consumers. BMW does this by making vehicles that are considered some of the best in the world. Page. 17 The final two basic principles of BMW are Society and Independence. BWM is committed to focus on its social responsibility. This social responsibility is for BMWǯs employees, consumers, and everyone else that is affected by the decisions of BMW. Independence is something that is very important to BMW. The way that BMW stays independent is through sustainable and profitable growth. BMW not only survives, it grows. BMW is the company who buys other companies instead of being bought out. These twelve basic principles are the guidelines, which BMW functions under. These guidelines create a culture that is highly efficient and very successful. This corporate and employee culture are not just for one location. Instead, they are followed internationally wherever the company is located. Whether it is in Germany, America, or South Africa, these basic principles are uniform and being enforced to make sure that BMW continues to succeed. While the different countries that BMW enters for business have different cultures, the employees voluntarily accept the BMW culture. It is a culture pushes the employees to exceed and respects them as well. BMW continues to fill a large part of the vehicle segment worldwide. It does this in all different types of political systems. While BMW is a company that has had great success in democracies, which support individualism, it can also succeed in totalitarian countries where socialism and collectivism are practiced. The high efficient culture that BMW has created allows BMWs to be found in all different types of economies. In market and mixed economies, BMW has had a steady Page. 18 following and made profit in most of these countries. The company is really starting to make pushes in countries with command economies like China. China has a market for large sedans. The fact that they are built in the country at the Shenyang plant is a plus for the Chinese. This plant specializes in production of the 3 and 5 series for the local Chinese market. These two sedans alone make up for over fifty five percent of the BMWs sold in China. When the 7 series sedan is added to this number, about seventy three percent of all BMWs sold in china are sedans. This is different compared to Europe where narrow streets and high gas taxes cause a larger demand for small more fuel-efficient vehicles (www.bmwgroup.com). While some companies often look at product safety laws as an inconvenience, BMW often passes these with flying colors. According to the Insurance Institute for Highway Safety (IIHS), all BMWs received a rating of good. Also according to the IIHS, crash test ratings are a big reason why Chinese vehicles are not allowed in America, as well as many other countries. They are simply not safe enough and do not pass these product safety laws. This adds to the BMW reputation where they build vehicles, which surpass the expectation being legal, and build something special. Quality of work like this can be related back to the twelve principles that are the guidelines BMW employees follow. An important factor in understanding any corporation is SWOT analysis. First are the strengths of the company. First off is its highly efficient culture, which was already talked about. Next is the fact that BMW is owned by itself. As an independent corporation, it is in control of its own destiny and able to make its own Page. 19 decisions (Dharmesh). While BMW controls itself, it also controls other companies such as MINI and Rolls-Royce. These are two companies which are somewhat specialized yet still profitable. Another strength is that it has a strong brand loyalty. There are many people and families that are enthusiast and will only purchase BMWs. BMW is also found in every corner of the populated globe. This large market makes BMW a known competitor to everyone. Finally, since BMW is found all over the world, it specializes production to best fit the culture of a certain area. For instance, in Europe, less powerful yet more fuel-efficient engines are offered while in America the engines are more powerful and less fuel-efficient. This is slowly changing though as oil prices steadily increase. While BMW has lots of strengths, like many other companies it also has some weaknesses. While BMW controls itself, Mini, and Rolls-Royce, these cars are all relatively expensive; especially in the American market. Only the base Mini Cooper is available fewer than twenty thousand dollars. While the Rolls-Royce brand reaches well above a couple hundred thousand dollars. Another problem is the repair price. If something goes wrong with a vehicle, parts are not cheap. BMW only puts the best parts in their vehicle so it is a tradeoff that owners have to accept. While strength of BMW is loyalty, a weakness is customer dissatisfaction. If a customer has a bad experience with a vehicle or an employee, it is very possible that that customer will go to a competitor. BMW has many opportunities ahead of itself. With the new trend of globalization, BWM has the possibility to further spread its brand. Shipping cost are Page. 20 going down and allowing more BMWs to be in more places. They have an opportunity to continue to influence China Also, new alternative energies are coming out and BMW is not going to let any of these pass them by. BMW has pretty much perfected their diesel engine, they have developed a functional hydrogen fuel cell, and well be coming out with it soon, setting the standard for new hybrid engines. All of these are opportunities for BMW to expand and grow. Threats occur in all companies and the way in which companies handle these threats determines their success. One threat BMW faces is competition. The market, which BMW is in, is very competitive with competitors such as Mercedes- Benz and Audi. These competitors are, like BMW, doing a lot of research in order to stay on top of emerging technology. Oil is also another threat to BMW. With more concerns about the possibility of an oil shortage, prices of crude oil and gasoline are both on the rise. This causes people to drive less and buy more eco friendly vehicles and BMW has yet to releases they hybrid models. With oil prices on the rise, many countries are developing new standard such as Americaǯs new Corporate Average Fuel Economy, or CAFÉ standards. These CAFÉ standards require fleets of cars to achieve an average pre determined fuel economy (NHSTA.com). If these threats are not taken seriously and constantly watched, BMW could fall behind the trend. BMW is a multinational corporation that spans all around the world. While every country has a different culture, BMW has a culture of its own which it brings with it wherever it goes. While BMW does have to adapt to different laws and regulations in different countries, it brings an internal culture with it that people are Page. 21 willing to adapt to. BMW and its internal culture follow twelve basic principles, or norms, which make it highly efficient and very successful wherever it goes. It is very rare to see an international business have such a uniform culture in different locations. As BMW says itself, DzToday we are active in more than 140 markets worldwide. However, we can only tap into the full potential of international business if we understand different customer groups, cultures and requirements. Ideally, this task is handled by employees who have a deep understanding of this diversity thanks to their own biographies, life situations, experiences and interestsdz (bmwgroup.com) Works Cited (Kris) "BMW Group." BMW Group. BMW, 04/23/1989. Web. 29 Apr 2010. group_com/home/home.html&source=overview>. "CAFE overview." NHSTA.gov. NHSTA, 2005. Web. 29 Apr 2010. "BMW Company AG: 2005 Company Profile." Just-auto.com. Aroq ltd., April 2005. Web. 29 Apr 2010. auto.com/store/samples/aroq_bmw_profile_2005ed1.pdf>. "BMW in China, Joys of BMW." google docs. Web. 29 Apr 2010. Page. 22 w.scientificaward.com/e/0_0_www_bmwgroup_com/investor_rela tions/ir_services/BMW_in_CHINA.pdf+bmw+plant+%22greenfield %22&hl=en&gl=us&pid=bl&srcid=ADGEEShRAHeXpINj0A_QTsxMB KSWV6pUxW7xrbNm4mMh313RSuw_ntfgxfmy5gN4JWLKxe6W_1k Yb_GZXvTrXpjxLUMgNtTalJuZKOal5- pGR2Yajy0KTbmuq8LZ0Z83KSB2mCsFOnql&sig=AHIEtbThZV- YYlFfR9Pjc63J8jzIDDZVqg>. Dharmesh, . "Marketing Strategies BMW." Slide Share. N.p., 08/02/2007. Web. 29 Apr 2010. w-assignment>. Page. 23 Micah Edmond Marketing "With the three brands, BMW, MINI and Rolls-Royce Motor Cars, the BMW Group has its sights set firmly on the premium sector of the international automobile market. To achieve its aims, the company knows how to deploy its strengths with an efficiency that is unmatched in the automotive industry. From research and development to sales and marketing, BMW Group is committed to the very highest in quality for all its products and services. The company's success to date is proof of this strategy's correctness." (www.bmwgroup.com) Acquisitions BMW bought the British Rover Group in 1994, which consisted of Rover, Land Rover, and MG brands. For years BMW held a small market to which they sold cars, which needed to be changed. They needed to spread out across the market and expand upon their product base. BMW had to be extremely careful when doing this because they could easily destroy their very successful image. They had to make the right decision on how to expand their product line but carefully, if they created a more inexpensive line of cars, which would compete with Ford, Honda, Toyota, Page. 24 Volkswagen and Fiat it would unquestionably decrease the value of the BMW brand. Many car companies in the past have failed miserably trying to connect the extremely large gap between small budget vehicles and premium luxury vehicles. When Fiat created the Croma they focused it as an executive car but it did not do very well on the market, at the same time Fiat released their budget Dzsuperminidz car the Uno, which did extremely well. The only times when large car companies were able to be successful in multiple market areas was when they used multiple brands, with a lower end going up to a higher end. The Volkswagen group was able to achieve this going from their lower end brand Skoda, to their middle class that consisted of Volkswagen up to their higher class Audi, topping it off with their exclusive brand Bentley. BMW held a spot at the premium level and the exclusive level with Rolls Royce. There were only two options for BMW to expand; this was to either purchase an already existing brand or to completely create a new brand. BMW looked into developing a new brand, which could have been profitable for the company. Brands such as Toyota and Nissan were successful with their additions of their luxury creations Lexus and Infiniti. While BMW were researching and planning their possible routes for expansion into the market an option took place where they were able to look at Rover. Rover was planning their next addition the now extremely popular Range Rover, when they came to BMW searching for a supplier that could produce diesel engines. At the time British Aerospace owned the Rover Group and were also searching for an exit from the company due to differing interests with the Page. 25 companies focus on airplane design and manufacturing as well as defense. BMW was not the only company that had its eye on Rover; a competitor of theirs, Volkswagen, was very interested in the company. This made it important for BMW to seize the company before Volkswagen was able to. DzRover fit BMWǯs premium image and outstanding quality like the missing piece to a puzzle.dz The possibilities of overlap between the two manufacturers were little to none. The one problem among the transaction was Hondaǯs partnership, owning 20% of the company. On the other hand Rover owned 20% of Hondaǯs United Kingdom manufacturing facilities. DzHonda was not comfortable being partners with their competitor BMW, resulting in a trade of ownerships.dz (www.aronline.co.uk) BMWǯs choice to purchase the Rover Group was an exceedingly smart move that benefited the company in the long run. Rover could have become Britainǯs go- to brand for a premium vehicle, which would have helped Honda enter this market. With BMW breaking the tie Dzbetween Honda and Rover, they were able to delay the possible competitor from having a big influence on the European market.dz After five years of BMW owning Rover they only released one new car, the Rover 75. BMW closed the majority of Roverǯs dealerships as well. BMWǯs tactics at the international helped them setback a possible competitor from entering a market in another country. (www.aronline.co.uk) BMW soon sold the Rover Group to Ford but was very smart in their moves along the way. While BMW owned Rover they only invested in certain areas of which they retained after the deal was done. BMW retained the Rover, Triumph, Page. 26 Riley, and MINI brands. BMW though did not sell the rights to the 4x4 to Ford, which they kept and later used on their X5 model. BMW invested into multiple of the Rover plants, Longbridge and Hamms Hall, and facilities, Cowley and Swindon, during ownership of which they retained when they sold the company. The Four P͛s The four Pǯs have a huge impact on how BMW makes their marketing decisions internationally. These four controllable categories are product, promotion, price and place. The first of the four Pǯs is product, which is the physical product that is being sold. BMW offers three levels of premium vehicles; they offer Rolls-Royce at their exclusive level, BMW at their mid sized premium level and MINI as their smaller car premium level. Rolls-Royce is currently producing two lines, the Ghost and the Phantom. Both of these lines targeted towards exceptionally wealthy families and people who are looking to be "highly individualistic." (www.rolls- roycemotorcars.com) BMW currently has nine series of cars which include the; 1, 3, 5, 6, 7, X, Z4, M, and Hybrid. The 1 series is geared towards the middle class and is BMWǯs new less expensive model. The 3 series is BMWǯs compact executive car, which is pushed toward individuals who want a premium car but do not need a large sedan. The 5 series is BMWǯs mid-size executive car that is for businessperson who also has a family or wants more space. The Z4, M and 6 series is geared toward a businessperson who is looking for incredible BMW performancedz as well as Page. 27 Dzmodern style.dz The 7 series is BMWǯs full size luxury car that is focused towards people looking for Dzeffortless luxury and tremendous power,dz generally focused toward a wealthy businessperson. BMWǯs X series is focused towards wealthy families, directly mothers who are "socially conscious." (www.bmwgroup.com) BMW also offers multiple lines of Hybrids, which is focused towards more environmentally savvy individuals. MINI currently entails; Cooper, Cooper S, Cooper Clubman and the John Cooper Works. MINI is more of a city car that is geared to people who do not need space but are family oriented and active. MINI is for individuals that looking for a premium level vehicle but fell that BMW is too expensive. In Europe MINI is very popular because of small streets and the car is easy to drive on these streets. Each of the companies has cars that are focused to certain target markets, which vary internationally. Along with their multiple brands and product lines, they provide premium customer service. (www.bmwusa.com) The price section of the four P's of marketing is different depending on which country you live in. In the United States, the product line of Rolls Royce ranges from $245,000 to $450,000. BMWǯs product line ranges from $27,000 to $137,000 dollars. The MINI product line ranges from $17,000 to $34,000. There are many factors that affect BMW Groupǯs decision with choosing the price of a vehicle. Sports versions of their vehicles that contain performance enhanced specifications and different sized engines also influence prices. The third P is Placement, which is based on how BMW makes their vehicles available to the targeted customers. BMW only distribute their first-class vehicles Page. 28 through premium dealerships with BMW and MINI. Making the vehicles exclusive gives their company an advantage in preserving their premium status throughout the world. The last of the 4 Pǯs of marketing is promotion. Promotion is one of the most important factors when dealing with a business internationally. BMW has to use different advertisements for selling their premium cars in different countries throughout the entire world. One advertisement would not meet the needs of the different cultures of different countries. In our textbook DzInternational Business: Competing in the Global Marketspacedz by Charles W.L. Hill, he explains that Dzcultural differences between nations are such that a message that works in one nation can fail miserably in another. Cultural diversity makes it extremely difficult to develop a single advertising theme that is effective worldwide.dz (p. 607) For example an advertisement created by BMW could possibly work with the German culture but be insignificant to people in the United States. BMWǯs slogan though works equally well throughout the world, which is DzThe Ultimate Driving Machinedz that was created thirty-five years ago. DzThe Ultimate Driving Machinedz is straightforward and can relate to any customer throughout the world that is looking for a premium car with exceptional quality. (www.bmwblog.com) When visiting the BMW websites for both Germany and United States the home pages are similar yet they way they present the information is different. When visiting both websites the navigation section are the same as they are at the bottom of the page. What is different about the two websites is the central Page. 29 advertisement in the middle of the page, the main attraction. On the German BMW website there are four pictures that you can scroll through. Each of these four pictures give a statement about their new ad campaign "Joy Isǥ" The website describes their new BMW 3 series Cabrio as "Joy is Always in Season," and their new hybrids as "Joy is Efficiency of Movement, Joy is BMW Active Hybrid." When you arrive at the United States BMW website you are greeted with a short movie clip and music. The website then explains the same ad campaign as in Germany but more flashy. After the site automatically moves onto the next section it presents their campaign "Build Your Own." This attracts the United States populationǯs ongoing obsession for everything to be customizable. It explains how each of their cars has "hundreds of millions of possibilities" as to how to customize a BMW to make it your own. These high tech and gaudy advertisements work well with their target market in the United States. The only way to catch the eye of a potential customer is to have an ad campaign that will draw them in to see what you have to provide. Which is exactly what BMW does with this new campaign they are able to draw in Americans to make a car of their own, and no one else in the world will have the exact same car. The German site is more straightforward and geared towards giving the consumer an exceptionally premium car with guaranteed quality. Push and Pull Strategy BMW Films was BMWǯs form of Dzadvertainmentdz which is a mesh of advertising and entertainment. Through these short ten-minute film series named, Page. 30 The Hire, BMW was able to promote their premium cars. In these films actor Clive Owen is DzThe Driverdz who is Dzhired by various people to be a sort of transport for their vital needs,dz though the real stars were the premium BMW vehicles. (http://www.bmwusa.com/Standard/Content/Uniquely/TVAndNewMedia/BMWFi lms.aspx) These short films highlight performance aspects of multiple BMW cars. BMW was able to connect these films with multiple cultures throughout the world by using various filmmakers from throughout the world. The nationalities of the directors featured American, Taiwanese, Chinese, Mexican, and British. This diverse group of directors allows BMW to connect with different cultures throughout the world. "The main decision with regard to communications strategy is the choose between a push strategy and a pull strategy. A push strategy emphasizes personal selling rather than mass media advertising in the promotional mixdz While "a pull strategy depends more on mass media advertising to communicate the marketing message to potential customers." (p. 604, Charles Hill) When BMW created their short film series The Hire it was a distinct move in the way of a pull strategy. The films demonstrated the high level of performance and the premium quality that their vehicles contain. Individuals who watch would become potential customers who would be attracted to BMW's cars, which were featured in each of the films. Page. 31 Works Cited (Micah) Austin Rover Online. Web. 01 May 2010. BMW BLOG | BMW News, BMW Reviews, . Web. 02 May 2010. "BMW Films." BMW North America. Web. 02 May 2010. BMW Group. Web. 02 May 2010. BMW North America. Web. 02 May 2010. Hill, Charles W. L. International Business: Competing In The Global Marketplace. 7th ed. Boston: McGraw-Hill/Irwin, 2009. 606-07. Print. Rolls-Royce Motor Cars. Web. 02 May 2010. Page. 32 Travis Harrant Financial Analysis The Bayerische Motoren WerkeAktiengesellschaft (BMW) Company uses both International Financial Reporting Standards (IFRS) and the German Commercial Code (HGB) for accounting policies and procedures. Both accounting procedures are valid under the International Accounting Standards (IAS). In this financial analysis I will be using the third quarterly report and the annual report 2009 for the BMW Company. The BMW Group uses consolidated financial statements to report the companyǯs financial position and its subsidiaries. They enable the overall group of companyǯs outlook as opposed to one companyǯs stand alone position. DzA consolidated financial statement combines the separate financial statements of two or more companies to yield a single set of financial statements as if the individual companies were really onedz (Hill 661). BMW Group uses the current rate method to determine the exchange rate. DzUnder the current rate method, the exchange rate at the balance sheet date is used to translate the financial statements of a foreign subsidiary into the home currency of the multinational firmdz (Hill 664). The third-quarter reported a net profit of euro 78 million for BMW Group. This was euro 220 million (73.8%) lower than the 2008 third-quarter report. The earnings for BMW Group are broken down into three categories- automobiles, motorcycles, and financial services. The automotive segment is the companyǯs Page. 33 largest revenue maker. The financial services place second; with the motorcycle segment making the least amount of revenue. The automotive segment, based on the third quarter, decreased from 66.2 million units in 2008 to 62.5 million units in 2009. Because of the economic crisis worldwide, BMW suffered losses from all regions. The USA suffered about a three percent loss; even with the bonus program, Dzcash for clunkersdz(Annual Report). The bonus program in France helped boost sales eleven percent. In the European Union the demand decreased around two percent. Spain and Russia suffered the most from the economic crisis. Both countries contracted by almost one-half. In Brazil, the car market was not affected by the economic crisis. It grew by 9% because of the tax reduction for small cars. India had the biggest increase, 18%, within the whole company. The motorcycle and financial markets were also hurt from the worldwide economic crisis. The motorcycle segment was reduced by one third from the 2008 year. In the USA, the largest market for motorcycles, sales dropped 40.9%. The financial services were also hurting because of the international financial crisis. Governments started to reduce interest rates to help compensate the recession. DzIn particular, they ensured the supply of liquidity to international money and capital markets, which was also beneficial to the financial services sectordz (16 Quarterly Report). This helped the BMW financial services sector with a profit of euro 94 million. Page. 34 Capital budgeting for BMW Group decreased from euro 4.2 million to euro 3.7 million. The main focus for BMW was product investment on new model set-ups and infrastructure investments. In 2009, BMW invested euro 2.3 million in property, plant and equipment and other intangible assets. This was decreased euro 5.8 million from the previous year. The development costs rose 1.7 percent from 2008. Cash flows are classified into operating, investing, and financing activities. Cash flows are the Dzbasis for dividends to stockholders, investments elsewhere in the world, repayment of worldwide corporate debt, and so ondz (Hill 678). In 2009, BMW generated a positive cash flow of euro 10.2 million, a 5.5 percent decrease from 2008. The overall cash outflow decreased from the previous year. The operating cash outflow, automotive segment, slightly decreased. Investing activities fell euro 7.3 million from 2008. Financing activities also decreased from the previous year, euro 2.1 million. Investing activities, for cash inflows, increased euro 1.3 million from the 2008 year. The total cash inflow also dictates the stockholders dividend payment. For 2009, the dividend payment totaled euro 197 million. BMW uses the Germany stock index, the DAX. The 2009 third quarter closed at 5,675.16 points on the last trading day for the quarter. This was 18% higher than the previous quarter. The automotive segment only increased by 3.9% for the quarter. DzThe index has gained 8.3% in value since the beginning of the yeardz (14 3rd QTR Report). The common stock for BMW, at the end of the 3rd quarter, was Page. 35 euro 32.95, increased 22.8% from last quarter numbers. The preferred stock increased 32.6% for the quarter. At the end of the quarter, the value of preferred stock was euro 22.73. Because of the USA growing deficit, the US Reserve Bank had lowered the interest policy causing the US dollar to lose value. In the beginning of the year the US dollar was valued at 1.25 to the euro. At the end of the 3rd quarter, it was valued at US dollar 1.46 to the euro. The US dollar has lost 4.1% of its value since the previous quarter. This caused a 4.5% decrease for the closing rate. In 2009, BMW was the industry leader in the Dow Jones Sustainability Index. DzThis means that the BMW Group has been the most sustainable car manufacturer in the world for the fifth time in successiondz (04 Annual Report). The BMW Group joined the Carbon Disclosure Leadership Index in September 2009. This index applied to companies in the Global 500 index that make a contribution to the climate protection. The current stock information, as of 4/27/10, has increased from the third quarter report. The last trade value was euro 37.40. This was down euro .42 from the previous day. The opening bid was euro 37.85. The bidding price was at euro 37.38. The asking price was euro 37.40. The dayǯs range was euro 37.08- 37.96. The 52 week range was euro 28.28-37.85. The volume value was euro 2,164,814. The market value cap was euro 22.53 billion. At the closing time, the dividend increased euro .30 and yielded a .79 percent increase. (http://uk.finance.yahoo.com/q?s=BMW.DE) Page. 36 Foreign exchange market is, Dza market for converting the currency of one country into that of another countrydz (Hill 324). The exchange rate is defined as, Dzthe rate at which one currency is converted into anotherdz (Hill 324). Because the currencies of different countries have different values compared to each other, the overall value can be worth more or less than each other. The differences in the countryǯs currencies value can let the company lose operating activities. The reason behind this is because the company manufactures in one country and then sells in another country. As noted above, the exchange rate does not affect the BMW Groupǯs financial worksheets. The BMW Group uses the euro for reporting financial statements. The USA market has to use the exchange rate to compute the earnings in the euro. Because the exchange rate is always changing, the results differ from the previously reported amount. In some cases this makes it hard for the company to compare the actual amount from quarter to quarter. The BMW Group automotive segment sales volume is broken down into eight markets- Germany, USA, United Kingdom, China, Italy, France, Spain, and Other. The Germany market was the largest sales volume at 20.8 percent. The USA market came in second at 18.8 percent. Spain came in last with 3.2 percent. In the automotive market, the net sales volume decreased across the whole company. In the USA, the units of volume fell 242,053, -20.3 percent. Canada, compared to USA, surpassed their previous yearǯs sales volume by 2.9 percent. The European market was hit hard by the global recession crisis. Sale volume was down 11.9% from the Page. 37 previous year. The European market only sold 761,887 units. The Germany market, largest in the company, reported a volume of 267,539 units. This was down 4.8 percent from 2008 financial year. Spain sold 40,718 units, causing a 31.7 percent decrease. Although the overall market sales volume was decreasing, the Asia and Chinese markets increased. Asia reported a 10.5 percent increase. The Chinese markets reported an overall increase of 31.1 percent. The total number of automotives delivered by region, in 1,000 units, was 1,286.3 units. The European market totaled, in 1,000 units, was 357.3 units. The Germany market, the largest in the company, came in third with 267.5 units. The United Kingdom was the smallest market with only 137.1 units. Works Cited (Travis) http://uk.finance.yahoo.com/q?s=BMW.DE) Annual Report Hill, Charles W. L. International Business Competing in the Global Marketplace. 7th ed. Boston [u.a.: McGraw-Hill/Irwin, 2009. Print. Page. 38 Herbert Bowen Current Challenges and Solutions A strategy can be defined as the actions a manager takes to attain the goals of the firm. Since, the pertinent aspect is the firm; a firm must maximize the value for the firm, its owners and shareholders. Managers and firms alike must seek strategies that increase profitability of the enterprise and rate of profit growth over time. What exactly do I mean by this? BMW, Dzengages in industry-level strategizing, it analyzes global trends in the automobile industry and then positions itself in relation to its competitiondz (1). At the industry level, Dza global company progresses to the stage of formulating and implementing strategies at the international leveldz (1). Now you must adapt and mutate the company strategy, in order to adhere to the guidelines of the foreign company at hand. To view some of these goals and missions that BMW has letǯs take a look at Dr. Norbert Reithofer comments, Dz2009 was unequivocally a year of challenge for the entire automotive segment, and BMW has emerged leaner from the experience with a focus on cost reduction, design and ecological innovations... and, of course, a keen eye on the growth markets of tomorrow. That the company has emerged leaner is a result of a reduction of about 4% of its workforce - significant when you consider that the group employs close to 100,000 employees. Then the company slashed capital expenditure by almost 800 million Euros and maximized on its financial services segmentdz (2). Page. 39 In his comments, one can derive four components that appear to be the focus of BMW, cost reduction, design, ecological innovations, and preparing for growth markets of tomorrow. Through cost reductions BMW has become leaner by reducing 4% of its workforce, which employs 100,000 employees, where cuts of .04%*100,000 equals 4,000 employees being laid off. In addition, they slashed capital expenditure by 800 million, all ways to cope with and war against the tumultuous economy. Moreover, BMW was able to become leaner due to learning effects and economies of scale. Learning effects refer to the cost savings that come from learning by doing. For example, labor, over time, gains efficiency and effectiveness, as they are ameliorated, due to the managers and firms learning new and efficient ways to increase revenue and cut down on operation. Thus, they are producing a better, revamped economy of scale, for instance, the alliance between BMW and Fiat. This entry for BMW into the mini brand of cars would be Dza vehicle that is cute, but not a luxuriousdz (2). Mergers The merger was a signed agreement to build cars and share components, (engines, know-how, especially when it comes to small cars). Board member Friedrich Eichner, DzWe are examining with the Fiat Group possibilities of joint use of components and systems in Mini and Alfa Romeo vehicles, in order to achieve economies of scale and thus cost reductionsdz (2). (In fact, MiniǮs are produced at the Page. 40 BMW in Cowley, Oxford.) Examining further economies of scale refers to the lowering of a firmǯs unit costs and the increases in its profitability. DzFixed costs are the costs required to set up a production facility, develop a new product, and the likedz (Hill, 430). Therefore, BMW and Siemenǯs Energy and Automation aligned together, as Siemenǯs delivered turn-key automated conveyor and end-of-line testing systems for BMWǯs new assembly North Facility in Spartanburg, S.C. (11). DzBMWǯs history of production and factory innovations has been a good match with Siemensǯ technologies and services. We are pleased to begin these latest projects and look forward to growing along with the Spartanburg facility,dz said Raj Batra, vice president, Automation and Motion Division, Siemens Energy & Automation (11). What is illustrated are two companies combining resources to propel BMW to new heights and eventually industry leader. But what plagued them in the past, two years ago in 2008 was the economic slowdown, or in other words the international financial crisis. BMW had to cut 40,000 of additional units in 2008, as third quarter sales fell by 8.6 percent to ̀12.6 billion, while net profit plunged by 63 percent to ̀298 million. Along with the financial crisis, BMW had additional setbacks, such as parsimonious consumers in main markets, lagging used car markets affecting leasing operations, and rising financing costs. The group sold 349,098 of its BMW, MINI and Rolls-Royce cars between July and September, a fall of 4.2 percent. Compared to 2007 BMW reached sales of 1,276,793 vehicles, beating the previous Page. 41 year's level of (1,185,088) by 7.7%. MINI in comparison with the previous year of (188,077), increased by 18.5% to 222,875 units sold to customers. Rolls-Royce Motor Cars increased by 25.5%, as 2006 sales of 805, rose to 1010 cars, placing annual sales into the four-digit range for the first time. Over time Rolls Royce has seen figures rise four times in a row, asserting Rolls-Royce as tops in the super luxury car market (10). Those figures are presented to display why BMW finds it necessary to administer and acquire outside sources like Siemenǯs to further their technologies and find ways to cut costs, perhaps in operations. Siemens has implemented a technique called PROFINET, the international open industrial Ethernet standard for automation. Another technique thought by Siemens is the TIA platform (Totally Integrated Automation), Dzbased on a three-fold integration of uniform engineering, high-performance communications and consistent data management. This enables users to easily expand existing operations or build new lines without having to overhaul the entire automation systemdz (11). Globalization Strategy Thus, BMWǯs actions and goals perfectly align with the globalization strategy, where focus is on increasing profitability and growth, while reducing costs from economies of scale, learning effects, and location economies. Advantages of alliances dictate four aspects: strategic alliances to proliferate into a foreign market, hence easy entry. Next, would be sharing the fixed costs through R&D. Third, skills difficult Page. 42 to develop by one firm should be complementary to the other. Finally, an alliance should push technological innovation to leap ahead of competition, in this case Mercedes, Toyota, and Honda. Strategic Alliance The alliance not only aids BMW, but Fiat the largest Italian automaker. Fiat CEO Sergio Marchionne, DzThe proposed cooperation with BMW is a significant cornerstone of our strategy of alliances. We are delighted to work with such an esteemed and respected partner in the automotive industry with the clear objective of improving the competitive position of both partiesdz (3). With this strategy, BMW wants to put a standardized image, one that will be noticed worldwide, but also garner more profits. For about four decades BMW has made itself known to have Dzefficient dynamics, sustainable mobility, providing a name coupled with high-class, and quality performancedz (6). To uphold this moniker one must transmute with the times, and in the modern era focusing on ecological innovation is where governments and automakers alike are investing their dollars. BMW wants to lower emissions of carbon per kilometer travelled. Along with ecological standards BMW has formed with SGL, a company based in Seattle Washington, parts and technology will be put into the Megacity vehicle, which is a BMW sub-brand. Once again, economies of scale are kept in mind to produce Dzcarbon fiber reinforced plastics at volumes and prices realistic for mass productiondz (5). The US has invested $100 million with 80 local Page. 43 jobs that would be created, now the Megacity Vehicle powered by electricity has a base in the USA. With dedication to ecological standards, a plant located in Moses Lake Dzuses carbon fibers for large scale production in the automotive industry,dz said Robert Koehler, CEO SGL Group. DzIt will be the worldǯs most cost efficient carbon fiber plant using state-of-the-art technologiesdz (7). Additionally, the Mini Eǯs body will be fabricated in the Moses Lake plant. But its most notable feature is the creation of energy by hydropower, friendlier for the environment. So, BMW not only is becoming more eco-friendly, but innovative with the new technology in carbon fiber, to make light weight cars. In addition, the Moses Lake plant hopes to recycle all the carbon material, to remain eco-friendly. This effort is by works of their Efficient Dynamics strategy, to foster lightweight cars reducing CO2 emissions and ameliorate fuel storage. The fourth component speaks towards the growth of future markets. If we look at BMWǯs recent advancements in China, we see investments of a billion dollars to increase production. For example, BMWǯs operations went from 40,000 to 100,000 units. Why? In China there are more drivers who are starting to drive, and desire a luxury car. For 2010, China is becoming a hotbed for competition. The new rich have made China an integral asset for the market of luxury goods makers in the U.S., European, and Japanese makers of high-end automobiles. China is boasting staggering sales and manufacturers are creating enticing bells and whistle for Chinese buyers. Page. 44 Currently, the Audi A6L is favored by government officials, and was up 14 percent. But, in the super luxury end Rolls Royceǯs revenue has increased significantly as they have had to hire more workers in producing the vehicle to meet Chinese demand. DzI see China will even overtake the U.K., our home market, this year and that we will see the Chinese market as the second-most-important market after the U.S.," CEO Torsten Mueller-Oetvoes (8). In fact Rolls Royce has set up dealerships in Chengdu, a mountainous southwest city that holds private gatherings for buyers who want to share their enthusiasm for cars. "The growth in China doesn't come for free. You have to invest and it will come" (8). This quote speaks to BMWǯs intent, as they plan to deliver 120,000 BMW, Mini, and Rolls-Royce vehicles in China in 2010, a 33 percent increase from last year and 20 percent more than a previous projection, he said at the Beijing auto show. Moreover, DzThe BMW X1 could be one of the first products for our new plant in Tiexi in the Shenyang region. We are currently exploring this possibility together with the authorities here in Chinadz, Reithofer continued (7). The X1 is manufactured exclusively in Leipzig at present. Tiexi would increase production capacity in China to 100,000 vehicles a year from 2012 on. In addition, thought and construction of two plants with combined potential for as many as 300,000 vehicles a year would depend on market trends, but may be needed in long term. In essence, BMW alliances focus on ecological concerns, new innovation in design and operation systems, prescience into future markets, and improving economies of scale, propounding BMWǯs name across the globe. Their goals of cost Page. 45 reduction are realized through the skimming of jobs in the United State sector, but with demand rising steadily in China, BMW can transport jobs. Economies of scale are paramount as the alliances between Fiat, Siemens, and the SGL GROUP all allow BMW to lower their fixed cost and increase profitability. Modern times and regulations call for more miles to the gallon, and cleaner emissions. We see this from the Megacity Vehicle powered by electricity, also, the carbon from the Moses Lake plant that will be recycled after use, to maintain the pulchritude of the Earthǯs landscape. Finally, the source of all the luxury car activity is China. With the boom of opulent persons in China, BMW, Mercedes, Audi, Toyota all are competing to become top seller in China. However, due to Rolls Royce and the success of the brand, BMW is emerging as the industry leader. Works Cited (Herb) 1. "Corporate Strategy and Intercultural Management - Project Management." Super Business - Project Management. Web. 21 Apr. 2010. 2. Lull, Pavan. "BMW's 2010 Strategy... - BloombergUTV.com." BloombergUTV: Latest Business News, India Business News, Stock Market News, Live Stock Quotes, Latest India News, Financial News and World Business News. 19 Mar. 2010. Web. 21 Apr. 2010. news/automobile-industry-india/47499/bmw-s-2010-strategy.html>. Page. 46 3. "Fiat/ BMW Alliance." PistonHeads.com :: Speed Matters. 9 July 2008. Web. 21 Apr. 2010. 4. "BBC NEWS | Business | BMW and Fiat Mull Parts Alliance." BBC NEWS | News Front Page. 8 July 2010. Web. 21 Apr. 2010. 5. Ireson, Nelson. "BMW Joins Forces With Carbon Fiber Manufacturer For Megacity Vehicle - MotorAuthority." Car News, Car Reviews, Spy Shots and Videos - MotorAuthority. Web. 21 Apr. 2010. carbon-fiber-manufacturer-for-megacity-vehicle>. 6. "HTC | Electronics Brands | Brandchannel.com | Brandchannel.com." Brandchannel.com | Always Branding. Always On. Web. 21 Apr. 2010. 7. BMW Group. Web. 21 Apr. 2010. m/e/0_0_www_bmwgroup_com/investor_relations/corporate_news/news/ 2010/Carbonfaserwerk_April_2010.html>. 8. Chang, Anita. "The Associated Press: Rich Chinese Driving Growth of Luxury Auto Market." Google. Web. 21 Apr. 2010. TijACbBn-51YdAD9FBSD600>. Page. 47 9. "BMW Posts Hefty Quarterly Loss - The Local." The Local - Germany's News in English. Web. 21 Apr. 2010. 15309.html>. 10. Krause, Stefan. "BMW Group Increases 2007 Sales by 9.2 Percent | HULIQ." HULIQ | Citizen News Review. Web. 21 May 2010. percent>. 11. "Siemens to Deliver Conveyor System for BMW Facility in South Carolina - Today's Automation News Headlines from Automation.com." Automation.com - Industrial Automation, Factory & Process Automation, Motion Control, Instrumentation Resources. Web. 21 Apr. 2010. systems-and-end-of-line-testing-for-bmw-facility-in-south-carolina>. Hill, Charles W. L. International Business Competing in the Global Marketplace. 7th ed. Boston [u.a.: McGraw-Hill/Irwin, 2009. Print.