An Analysis Of The Powerful BMW Group Company Using OIL Framework (Coursework Sample)
Analysis of BMW using OIL Frameworksource..
ANALYSIS OF BMW GROUP
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Analysis of BMW Group
BMW is one of the best automobiles companies in the world and is famous for its car manufacturing and selling. Bavarian Motor Works (BMW) was founded in 1916 with its headquarters located in Munich, Germany (Lewin 2016, p. 3). The business has a manufacturing plant, which produces products, such as aircraft engines, motorcycles, Mini cars and Roll-Royce motorcars. The company also currently dominates the limousine market, which has attracted the attention of many buyers. The most productive year for the company was in 2010, when the group manufactured over 1,481,253 automobiles, which made its brand more popular (Jun & Park 2016, p. 12). In addition, this production rate ranked the company among the top German automobile companies. The group currently has over 30 production and assembly facilities in 14 countries (Falloon 2015, p. 5). Moreover, Falloon (2015, p. 5) outlines that among these countries are China, Egypt, South Africa, and Germany. The company operates its subsidiaries using joint ventures. In this case, the group partners with different firms, who assist in marketing, production, and distribution of its products. BMW is currently famous all over the world, since it is offering unique services, as compared to its competitors.
Analysis of the Company using OIL Framework
Ownership is when a firm owns the assets that generate value for the company. In this case, the business often gains marginal returns that are worth a multinational production (Cantwell 2015, p. 17). Currently, BMW has ownership of various processes. The first ownership retains the BMW production. The company has various manufacturing plants that produce the BMW cars which are currently dominating the market. This means that the company has ownership of the BMW brand, and it has used in gaining an international recognition. Besides that, the firm also owns other brands, such as Mini and Roll Royce. The company also has ownership for reputation based on quality. This is the respect that arises from the products, which a business is producing and marketing. BMW claims ownership of this respect, since they are the people providing the products. For instance, BMW owns a manufacturing company in South Carolina, which has always received a good reputation due to the quality of X-series SUVs that it is producing (Lewin 2016, p. 7). The fact that the respect belongs to its manufacturing plant in the United States makes the company also take ownership of the appreciation, since it is a product that is within the business management. In addition, the enterprise also takes ownership of the brand equity, which is the commercial value that is arising from then consumer's perception on a given service or product within the control of BMW.
Internalization entails a process, where a company is able to gain from specific assets that it has invested in an international platform. However, this situation requires that a firm is able to produce its own products, rather than give another firm a contract to deliver the products and services (Cantwell 2015, p. 20). BMW has a positive attitude toward the practice of internalization. The business believes that its expansion to more than 14 countries is determined by the process of internalization. The company has more than 30 production and assembly plants in 14 countries that it has expanded to (Lewin 2016, p. 5). This means that the business takes internalization seriously and this has enabled it to own several assets in the world. BMW does not give licenses to other companies to produce its goods and services but the business creates new plants in the new regions to ensure that it is operating and having a full control of the processes happening within the business. Internalization at the group has played a role in ensuring that the company is able to monitor production and quality of products. In this case, the company has always ensured that its production plants manufacture products that meet the consumers' tastes and preferences. This advantage could have been limited if the business awarded contracts to other firms to produce its products.
A multinational firm will at all times consider the location advantages before deciding on opening new plants in a chosen area. These benefits could include reduced transportation and production costs. The BMW is a company that believes in internalization and has often been forced to locate its areas by considering various issues (Lewin 2016, p. 10). This market characteristic entails the availability of raw materials, access of the markets, reduced production costs and the consumers' preferences. Availability of raw materials entails the existence of suppliers who will be providing materials to be used in the manufacturing processes of the plant. BMW often took automobile parts from other firms within the chosen country and used them in its production processes. Access to markets involves the cost of transportation of company products to the consumers. BMW considered this aspect in that any reduced cost will mean that the business will have a high chance of gaining marginal returns. For instance, BMWs Spartanburg plant in South Carolina was created after a close consideration of the market accessibility in the region. Reduced production cost involves a situation, where the chosen area does not need the company to invest more in the production cost, since the cost of labor and raw materials is within an affordable value. The BMW group also considered the consumers' tastes and preferences in deciding locations in that some of the countries have customers who prefer certain types of automobiles. This location advantages in a high way played a role in the decision that made the business choose its plants to be opened in countries, like the United Kingdom, China, the United States and South Africa.
How BMW Constructs its Value Chain
A value chain is often the process by which organizational activities end up creating value and competitive advantage in the business environment (Presutti & Mawhinney 2013, p. 40). BMW construct its value chain by concentrating on its primary activities, as depicted in the value chain framework. The framework depicts all aspects that create a value chain which includes inbound logistics, operations, outbound logistics, marketing and sales, and service.
BMW creates value for its inbound logistics by concentrating on ensuring that the costs of transportation and acquiring raw materials are reduced. In this case, BMW currently has 13000 suppliers in the global level ...
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