Assessment Of Bmw
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BIMO Assessment: BMW Car Manufacturer
1. BMW, an abbreviation for Bavarian Motor Works, is a multi-national company that produces high quality cars and motorcycles. BMW was founded in Germany, and has expanded into new markets worldwide in a number of countries such as South Korea, the USA and the UK.
2. There has been an important strategic decision recently undertaken by BMW. This is to produce two new cars; an off-road vehicle and a versatile crossover vehicle.
This is considered to be a strategic decision because:
It is very unstructured – meaning that it is not a routine decision to make e.g. ordering a new batch of stock. Decisions like this are made infrequently.
Chief executives and chairmen of the company make these kinds of decisions. BMW chairman Helmut Panke, described the two new cars as “Totally different to anything BMW has offered in the past”1. This quote shows that the decision is risky, as it is something different to what is usually offered, and shows that it can either have a large positive or negative effect on the company, depending on the success of the two cars.
Tactical decisions are medium-term goals set by a business. Examples include setting a budget to which funds on development of the two new cars should be spent on. This demonstrates that tactical decisions combine and form stages, which lead to the accomplishment of the organisations strategic objectives. 2
Operational decisions are day-to-day activities carried out by a business. A number of these decisions make up the tactical decisions within a business. An example of an operational decision is setting up a daily or weekly production schedule to be carried out 2, such as producing the actual cars or researching the market the new cars will be entering. A small decision like this is operational because:
It is not extremely important and does not have a large effect on a business – If BMW were to undergo a production schedule that they found to be ineffective, it could easily be reversed and changed into one that is more productive and motivating for employees.
It is highly structured and a number of these decisions will be made, e.g. a number of weekly production schedules could be made over a number of years, with the schedules possibly being the same or similar.
3. For the operational decision of producing a weekly production schedule, not much information is needed. This is because it is only a small and routine decision to make; it is very structured so the information is already available to the company. For example, weekly production schedules will have been set in the past, and the ones in the present are likely to be very similar to those, so no information is needed for this decision.
A reasonable amount of information should be gathered to help achieve the tactical decision of creating a budget to which funds on development of the two new cars should be spent on. It would be advisable to benchmark against competitors budgets, as well as looking at previous budgets that have been successful when similar projects have been carried out in the past.
For the strategic decision, it is essential that the information is of the highest possible quality. There are a number of business areas that need to be researched, such as the competition and if they are located close to where BMW will be producing, the exchange and interest rates within the country they will be operating in, taxation rates and legislation.
Decisions, especially for the strategic and operational decisions, must be of good quality. There are a number of characteristics of information quality:
The information should be accurate: this sounds obvious, but it is a very important characteristic. Information must be as accurate as possible, such as for the strategic decision, researching competitors must be done as detailed as possible. However, there is no such thing as absolute accuracy, so therefore great amounts of time should not be spent on this, so that BMW does not suffer in other departments.
The information should be complete: for example, when researching funds when determining the size of the budget, it is important to identify all BMWs incomes and outcomes, so that a too small or too large budget is not set.
4. Competitive Intelligence can be beneficial to a company such as BMW where the market is intense:
Using competitive intelligence, BMW can be decision-ready and respond early and effectively to events and opportunities. As a result of this, they will be able to plan and make strong moves that address both strategic and tactical goals and become the market leader. 3
Competitive intelligence involves using benchmarking. By doing this, BMW can measure the progress of their own research projects against those of competitors such as Porsche, and can quickly divert research investments from unproductive projects to research that is more efficient to gain a competitive advantage.
It can also benefit a company as it closely monitors competitor operations, in order to gain more market share. This will allow BMW to spot any faults in their own operations and then make the changes to stem the loss of market share and become competitive again.
It is important to remember that although there are a number of benefits of competitive intelligence, there are a number of disadvantages. Everything BMW could do using competitive intelligence, so could competitors. So all the points listed above could be reversed and used against BMW.
5. BMW as a company overall operates with a divisional structure. A divisional structure is where the company is split up into a number of business