BMW Human Resources Policy

BMW Human Resources Policy Organisations, Analysis and Policy REPORT To: Senior Management From: Group Accountant Date: 2 nd May 2005 Subject: BMW Organisational Analysis andHuman Resources Policies This report will provide a detailed analysis of BMW’scurrent corporate appraisal analysis. This will help to identify the company’scurrent strength, weaknesses, opportunities and threats. This will help thecompanies decision makers understand where the organisation is now. The reportwill also critically evaluate BMW’s human resources policy as a key area of theorganisation. We will highlight how BMW has strategically responded to thedrivers for change in terms of its structure, conduct and performance. Finally,offer recommendations for the future development and improvements in humanresource management, and how those will impact on its organisational structure,conduct and performance. Company Background The BMW Group is the only manufacturer of automobiles andmotorcycles worldwide that concen trates entirely on premium standards andoutstanding quality for all its brands and across all relevant segments. With the brands BMW, MINI andRolls-Royce Motor Cars, the BMW Group has been focussing on selected premiumsegments in the international automobile market since the year 2000. In thesucceeding years, the launch of the BMW 1 Series meant an expansion of themodel range in the premium segment of the lower middle class and the BMW 6Series did likewise in the segment of the large CoupÃÆ'Â ©s and Convertibles. TheMINI marque was launched and production began in the Oxford plant in 2001. In2003, the BMW Group assumed marque responsibility for Rolls-Royce Motor Cars.At the same time, the Worldwide Head Office and Manufacturing Plant inGoodwood, GB, was built. ( AnInternal and corporate analysis in terms of strength, weaknesses, opportunitiesand threats (SWOT) will assist in gaining an understanding of where BMW iscurrently in terms of strengths and where improvement is required w ithin thebusiness and what outside environmental threats it may face as well as what newopportunities are available to the company in the short and medium term. Figure 1:BMW SWOT Analysis STRENGTHS Diverse ranges of Products – BMW, MINI and Rolls-Royce Strong Cash Flow Position Increase turnover and trading profits Strong Balance Sheet World’s leading Premium Quality Automobile Manufacturer Brand Awareness Human resources Capabilities to turn resources into advantages OPPORTUNITIES New Products Market shift to globalisation Innovation & Alliances Customers demand change to more comfortable and relevantly cheap cars Diversification New Technologies in Automobiles WEAKNESSES Perception of High Prices Customer disinterest Environmental issues: Pollutions Buyer sophistication and knowledge Substitute products or technologies THREATS New & existing competition Volatility in Price of Fuel New legislations Consequences of the oil crisis September 11 th Economic recession Market shift to globalisation Takeover bids Far-East Automobile companies expansion Extremely high competition for customers and resources The Five Forces Model Figure2: Five Forces Model – ACCA Paper 3.5 (2001) Threats from Potential entrants Suppliers Bargaining power Competitive Rivalry Buyers Bargaining power Threats from Substitutes Porterexplains that there are five forces inherent in a market, which will jointlydetermine the intensity of competition and profitability of BMW and theautomobile industry. The first is the threat posed by new entrants, the highcapital expenditure and confidence of customers represent significant barriersto entry and the market is also sensitive to reputation. However, the emergentof low cost manufactures do pose a significant threat (as illustrated by figure2). There is an opportunity in the low price/ low economy (fast) sector. MaybeHyundai or Daewoo could consider introducing a low cost sport saloon. The second is the threats from substitutes, as thereare many make and model of other premium branded cars, hence, Jaguar, MercedesBenz, Audi etc. The third force is the threats from the bargaining power ofbuyers, is this strong for both BMW and the entire automobile industry with alarge number of alternative suppliers, hence, the aggressive pricing strategy.This results in a very strong competitive rivalry in the industry. This isintensified as a result of little or no differentiation in the basic productoffered. Finally the threats from the suppliers bargaining power, this isfairly low in the automobile industry, due to dual sourcing strategies, using arange of alternative sources of supply for parts.