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An Analysis Of The Powerful BMW Group Company Using OIL Framework (Coursework Sample)


Analysis of BMW using OIL Framework

ANALYSIS OF BMW GROUP by Student’s Name Code + course name Professor’s Name University’s Name City, State Date Analysis of BMW Group Introduction 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 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 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. Location 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. Inbound Logistics 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 who are ensuring that they are providing raw materials for a cheap price (Dudovskiy 2016). Currently, the business has identified Germany and Eastern Europe to be the main areas that it purchases most of its raw materials from. Those regions sell the materials for cheaper prices, as compared to other potential suppliers. Besides that, BMW believes that suppliers from these regions are trusted suppliers, who can deliver raw materials at any time. Operations BMW is operating up to 30 manufacturing plants in 14 countries, which depict that the business is currently operating in a complex network (Dudovskiy 2016). The company adds value to its operations activities by employing technologies, such as robotics. In this case, the robots tend to help the workforce within the area in executing the certain tasks. For instance, the robots can be used in ensuring that cars are well sealed from sounds and water. The company is also engaged in testing the automation drives that aim at reducing the cost by 5% if they will be successful (Dudovskiy 2016). This strategy of adding value is important in that the cost of adding this value is at a manageable level within the operation sector. Unbound Logistics BMW group develops extensive distribution networks to ensure that the products it is producing are available to the consumers. For instance, the firm has 3310 BMW dealerships and 1550 MINI dealerships in different countries (Dudovskiy 2016). The company adds value to its outbound logistics by ensuring that it is getting trusted dealers who can market all of its products in the potential markets. As for now, BMW has identified over 950 dealership and agency locations who always take part in ensuring that the company's products are available to the customers (Lewin 2016, p. 20). Besides, BMW Company engages itself in other patterns of vehicle distribution to improve on its value chain. These channels include selling directly to the customers, selling through dealers and selling through distributors. The firm chose to use this distribution patterns to ensure that all of its products reach the consumer at the right time and in the process of adding its value chain. Marketing and sales BMW employed print and media advertising in its marketing mix to ensure that its products reach the consumers at the right time. However, the business has been improving its marketing value by engaging itself in social media marketing, which is cost effective and a platform through which a larger number of consumers can be accessed (Dudovskiy 2016). The change of marketing strategy has been the main channel through which the company gets more marginal returns in that the consumers are able to buy the firm’s products. Service The quality of service provided by a business often provides a competitive advantage to a business. The BMW group has ensured that they provide quality services to the consumers by ensuring that the services given to the consumers are of the right quality and meet their preferences (Dudovskiy 2016). The BMW group always conducts innovations and improvements on its automobiles to ensure that the consumers will get services that are within their standard...
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