BMW Case Analysis
The primary goal of a business undertaking such as the production and sale of luxury motor vehicles by Bayerische Motoren Werke AG (BMW) Company exists in profit maximization and guaranteed survival. Over the years, BMW has continued to produce luxury cars that meet the needs of their clientele; thus, the company made profits that allowed for global expansion. However, the administration of firms experience challenges in management and operationalization that interfere with the potential for realizing the identified goals. For example, the management may encounter stiff competition, high production costs, and limited financial support to operate in an increasingly technological world. The management develops administrative and budget control measures to ensure that the company does not collapse in the face of challenges. The process of effective intervention involves the analysis of the problem to enable the management to determine and recommend alternative perspectives for guaranteed growth and survival of the firm.
Situational Analysis
Increasing globalization necessitated the need for BMW to consider tapping in the global market to broaden the market served; thus, increase sales. Globalization exposed the firm to interact with a new set of socio-economic, political, and technological worlds based on the need to survive in a highly competitive market (Chan et al., 2017). The management realized the need for financial boosting to allow for economic investment in advanced and new technology to enable high production to meet the needs of the global client base attracted by the firm. (Chan et al., 2017)The management of the BMW Company opted to extend the production process globally to increase sales by attracting more customers.
The balancing of internal and external factors of the environment guarantees the growth and survival of a firm in an increasingly competitive market. The process of balancing requires the management to identify the strength, weaknesses, opportunities, and threats that exist in the market and employ effective mechanisms for enabling smooth operations and production of goods (Chan et al., 2017). The management of BMW identified the unique production of luxury vehicles as the strength of the firm; thus, they focused on exploiting the market opportunity to serve the needs of the customers. However, poor management and poor pricing strategies interfered with the potential for profitability and growth (Chan et al., 2017). The growth and survival of a firm lie in the ability of the management to balance internal and external environmental factors.
Problem
Securing and maintaining advancement technology remains a challenge to the management of BMW Company since it requires the high overhead cost to maintain pace with the constantly improving and changing technological world. The need for high-quality machines for the production of the luxury vehicles interferes with budgeting and pricing since it forces the management to choose between spending on technology and securing raw materials for production (Un-Noor et al., 2017). Again, the need for research into the new technology not only consumes time but also exposes the firm to danger where the study does not reveal needed data on the use of the machine (Un-Noor et al., 2017). BMW Company spends heavily on securing and maintaining new technology to facilitate high-quality production.
The high cost of producing BMW luxury vehicles and related high pricing interferes with sales because it limits purchasing power. Therefore, the company suffers from access to the quality market based on high pricing that locks a significant potential clientele base from purchasing and owning the luxury vehicles (Pasandideh et al., 2015). Studies show that many people have expressed their preference the BMW luxury vehicles. The studies also reveal that the dream to own a BMW car remains only a desire because many people cannot afford to buy and maintain the luxury vehicle (Pasandideh et al., 2015). The sale of BMW luxury vehicles remains low because of high pricing to cater to the high cost of production.
Alternatives
The management of the BMW Company should consider the implementation of diversification in production and pricing since it endeavors to attract more sales and increase profitability. Diversification ensures that the firm provides alternative cars for the members of society who may not afford the high priced luxury cars produced by the firm (Pasandideh et al., 2015). Again, the process of diversification should ensure that the firm accesses new markets that the management may have neglected based on the assumption that it could not accommodate the pricing of the BMW luxury vehicles (Pasandideh et al., 2015). Diversification in the production and pricing process ensures that the firm caters to the needs of a larger proportion of members of society to increase sales and profitability.
The management of the BMW Company should incorporate strict budgeting measures to ensure that it not only caters for the technological needs for the production process but also limit overspending in the purchase and maintenance of new technology. Strict budgeting ensures that the management does not engage in impulse spending to accommodate trends in the constantly innovative world (Pasandideh et al., 2015). Again, the management should insist on the protection and maintenance of the existing technology owned by the firm to limit write-offs and the need for more expenses on replacement and repairs (Pasandideh et al., 2015). Strict budgeting serves as a reminder to effectively use resources to avoid waste and the need for spending to secure new machines.
Recommendation
The management should secure the services of a trained and qualified team of personnel since it promises to ensure the production of quality goods and limits the potential for interfering with machines through mishandling. While the process of securing trained and qualified personnel requires heavy spending during recruitment, it saves the firm from future spending in repairing machines due to neglect and failure to observe caution in using the machines (Zhong et al., 2017). The company management should urge junior employees to focus on the production of quality goods to guarantee the satisfaction of clients; thus, increasing the potential for creating a long-term transactional relationship. The approach ensures that the management saves on spending and focus on developing an accommodative pricing strategy to ensure that the luxury vehicles receive maximum attention from potential buyers. It guarantees quality production by securing the services of qualified staff; thus, it promises increased sales and profitability (Zhong et al., 2017). Qualified personnel effectively use company resources to produce goods that meet client needs.
The management of firms actively intervenes in problems by studying the issue to facilitate the identification and recommendation of substitute views to guarantee growth and survival. BMW Company continues to produce luxury vehicles that meet the needs of the clientele of the firm. However, the globalization process and the resultant introduction of new players in the market that offer alternative and cheaper goods threaten the growth and survival of the firm. Therefore, it becomes the role of the management to identify problem areas and recommend practical measures that promise to guarantee the growth and survival of the firm in a highly competitive market. While securing new and advanced technology remains an effective survival approach in the competitive market, the management should employ qualified staff to facilitate lowering the cost of production and the need for repairs of machines. Knowledge of the internal and external factors enables the management to develop and implement effective administrative measures that focus on using strength to take advantage of opportunities in the market.
References
Chan, H. L., Shen, B., & Cai, Y. (2018). Quick response strategy with cleaner technology in a supply chain: coordination and win-win situation analysis. International Journal of Production Research, 56(10), 3397-3408.
Pasandideh, S. H. R., Niaki, S. T. A., & Gharaei, A. (2015). Optimization of a multiproduct economic production quantity problem with stochastic constraints using sequential quadratic programming. Knowledge-Based Systems, 84, 98-107.
Un-Noor, F., Padmanaban, S., Mihet-Popa, L., Mollah, M. N., & Hossain, E. (2017). A comprehensive study of key electric vehicle (EV) components, technologies, challenges, impacts, and future direction of development. Energies, 10(8), 1217.
Zhong, R. Y., Xu, X., Klotz, E., & Newman, S. T. (2017). Intelligent manufacturing in the context of industry 4.0: a review. Engineering, 3(5), 616-630.