BMW Essay ⋆ Business Essay Examples ⋆ EssayEmpire

The Bayerische Motoren Werke (BMW Group), a German manufacturer of motorcycles, aircraft engines, and automobiles, producing the three premium products BMW, MINI, and Rolls-Royce, has 23 production plants in 12 countries and representation in more than 140. The BMW Group offers customized luxury cars to an international audience.

BMW is among the world’s leading premium manufacturers. In 2007 the net profit of the company for the first time exceeded the €3 billion figure, with more than 1,276,000 BMW brand cars, 222,875 MINI units, and 1,010 Rolls-Royce cars sold. BMW AG, which has more than 107,000 employees (2007), is one of the pillars of the well-known German automobile industry.

Despite its planned downsizing by 8,000 jobs in 2008, BMW remains among the top five companies on the Corporate Trust Index (CTI) of DAX-listed German companies. Despite losing the number one position it had held for several years, BMW remains on this index ahead of fellow German car makers Daimler and Volkswagen.

In a study undertaken of the Sustainable Value of 16 automobile manufacturers, conducted by the Berlin Institute for Futures Studies and Technology Assessment and the Queen’s University Management School in Belfast and funded by BMW, BMW ranked second. The study examined the fact that enterprises use not only capital but also ecological and social resources such as water and labor in their production processes. If these resources are employed more efficiently than the market, it is a positive sustainable value. With the provision for ecological and social resources, the study links the value of sustainability with investment decision-making processes.

Following a strategy of local production, this German global player is committing itself to a long-term market penetration strategy while at the same time evading high import duties on importing foreign produced cars. Another sales and production strategy used by BMW is the completely knocked down (CKD) process in which car parts and components are imported from overseas and locally assembled also using locally produced parts.

Historical Milestones

The aircraft-engine producing company Rapp Motorenwerke was renamed Bayerische Motoren Werke GmbH on July 21, 1917. Shortly before the end of World War I, on August 13, 1918, the Bayerische Motoren Werke GmbH became a stock corporation. As the Treaty of Versailles forbade German companies to manufacture aircraft engines, in the postwar years the new company specialized in the production of rail vehicle brakes and built-in engines. In 1922

Bayerische Flugzeug-Werke (BFW) purchased the engine production operations and the name BMW. Up to this day, the BFW founding date of March 7, 1916, is considered by BMW as the formation date of the Bayerische Motoren Werke.

In the 1930s, boosted by increasing state subsidies, BMW increased its production of aircraft engines. In 1934 the Aircraft Engines Division was merged with BMW Flugmotorenbau GmbH and later with a joint company of BMW AG and BMW Flugmotorenbau GmbH. This was followed by a period of cooperation with the Brandenburgische Motorenwerke GmbH (Bramo) and the later takeover of Bramo by BMW. The production of aircraft engines rose significantly during the war years.

While BMW’s Munich plant was heavily battered by air raids during the last years of World War II, the plant in Allach got off relatively lightly. Production slowly resumed in mid-1945 when BMW was allowed to repair U.S. Army vehicles and to manufacture spare parts, agricultural equipment, and bicycles. However, as the U.S. military government transitionally expropriated BMW from its plants, and in the course of Germany’s reparation payments, the company lost control over both assets and machinery.

The slow recovery of the company in the post-war years rendered it vulnerable to takeover bids. In 1959 Daimler-Benz made an offer to BMW, expressing its interest in restructuring the company. BMW rejected the offer and soon afterward restructured itself. Over the next two decades the company, under Board of Management chairman Eberhard von Kuenheim, expanded from a domestic and European brand to an international brand featuring one of the world’s most recognized commercial logos.

The expansion strategy included the acquisition of the British Rover Group in 1994 with its brands Rover, Land Rover, MINI, and MG. In 1998 BMW purchased the name Rolls-Royce for cars (with usage not before 2003) that were still being built by the German Volkswagen Group at the time. In 2000

BMW decided to sell Rover, MG, and Land Rover for a very low price as it could no longer cope with high restructuring costs and low profits. Since 2000, BMW has positioned its cars in the premium segment of the international automobile market.

Bibliography:

BMW Group, Corporate News. BMW Group Heading Yowards a Successful Year in 2008 (Bayerische Motoren Werke AG, 2008);
BMW Group, The Fascination of Production (Bayerische Motoren Werke AG, 2007);
“BMW Roundel Celebrates 90 Years,” www.Motorcycle. com (cited March 2009);
Lars Mende, “Vertrauensranking. Stellenabbau—na und?” [Ranking of Confidence. Reduction of Jobs—So What?], www.manager-magazin.de (cited March 2009);
Mark C. Schneider, “Nachhaltigkeit. Toyota macht das Rennen” [Sustainability. Toyota Comes Out First], Wirtschaftswoche, www.wiwo.de (cited March 2009).

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