Introduction
Considering the options before BMW, it can be stated that the only pattern of change can be seen through increasing the effectiveness of the production and distribution. The latter can be seen through creating a responsive network of supply that will conform to the demands of the customer. The key aspect for the change is not to shift the main vision of the BMW brand, and in that regard, as platform differentiation and favouring costs over quality are rejected, it can be seen that the suitable changes can be seen through reducing costs through increasing effectiveness. The latter can be seen through the example of the lean system implemented in Toyota, which goal was “to eliminate waste from the production system through cycle time reduction and pull system, implementation” (Li, 2007, p.164).
Another element of change can be seen through the implementation of an information technology (IT), which can be utilized in increasing the effectiveness of company’s operations and in turn reduce the costs. Although it can be assumed that IT is already implemented in the company’s business processes, an area of change can be suggested through implementing IT in managing suppliers, an approach which was implemented by Ford through their Covisint Project, “automotive online supply chain network”, which increased the efficiency of information exchange (Anonymous, 2002, Compuware Corporation, 2010).
Translating the latter into numbers, it was estimated that the participation of Ford in such project saved the company around $350 million (Anonymous, 2002). The aforementioned changes utilised in BMW, neither will lead to a compromise to the quality of their cars, nor they will change the brand perception of their customers, and at the same time will keep the company on its success track.
The role of managers in such changes is related to changes in general, rather to this specific case and includes the following competencies:
- Decision-making
- Coalition-building
- Achieving action
- Maintaining momentum and effort (Burnes, 2009, p.370)
Adjusting the latter toward the proposed changes, it can be stated that the role of managers is in handling the transitional periods, through the normal operational mode of the organization should be maintained.
Assuming that the company was to follow the strategic approach of Ford/Volkswagen, i.e. using the same platform to differentiate platform, the main resistance will be from both consumers and the company. The company aspect can be seen specifically through the departments that will be laid off due to such strategy, e.g. R&D department. The resistance for the customers can be seen through the disruptio0n of the brand integrity of the brand.
They will no longer have a unique product with a unique brand, and thus, their resistance can be characterized as conscious emotional, which is often associated with a perceived loss of status (Clutterbuck et al., 2003, p.96). Employees’ resistance, on the other hand, can be classified as conscious intellectual resistance, in which the reasons for change will be understandable, and thus, there would be an opportunity for a discussion on how to accommodate the needs of the disadvantaged party (Clutterbuck et al., 2003, p.95).
Main text
The main aspect that should considered prior to conducting a knowledge management initiative is acknowledging the fact that knowledge management is not simply a technological exercise, where there is much more than simply establishing an informational system with the purpose of managing knowledge (Anonymous, 2006). Thus, the steps that can be considered in such exercise might involve the following:
- Defining the business goals of the knowledge management- in this case the business case adding to the knowledge capital of the consumer to help them solve the buyers’ dilemma (Call, 2005).
- Knowledge audit -an identification of the needs to close knowledge gaps. Knowledge maps can be suggested as a tool for the identification of such knowledge gaps, which is a high-level description of the organization’s knowledge base (Maier, 2007). This case involves identifying the information that the company has, but does not utilize, and accordingly, identifying what knowledge consumers have and what they should know.
- Conducting knowledge taxonomy – establishing the connections between various knowledge resources (Call, 2005).
- Building or developing the tools for the capturing, analyzing, categorizing and distributing knowledge (Call, 2005, p.23). It can be stated that in this case, the knowledge management exercise will be concern mostly with categorizing and distributing knowledge, with the tools being associated with IT. A good example in this case can be seen through the development of corporate portal, extended form the company’s intranet.
- Periodical assessment of the system for adjustments.
With BMW already using knowledge management processes to both “increase customer service as well as market share” (Khosrowpour, 2000, p.905), it can be stated that the tools of implementing the knowledge management are available, including the communication networks. In that regard, with knowledge warehouse already available, the main practical task can be seen in identifying the information that should be made available to the customers, and what would be the best form for its representation.
The integration of the information system in knowledge management to include consumers will enable the company, not only to increase the knowledge capital of consumers, but also adapt and adjust to respond to their feedback more quickly. In such way, the company can create a competitive advantage utilising their knowledge management.
The practical issues that might arise during such exercise can be seen through providing an effective share of the knowledge between geographically dispersed locations. In that regard, a study conducted for investigating knowledge transfer between several regional E&E units of BMW found that the effectiveness of knowledge transfer can be seen influenced by such factors as “social network ties, absorptive capacity, learning adaptiveness, and communication channels”, with the search for and transfer of knowledge being generally dependable on context-specific knowledge (Schleimer and Riege, 2009, p.27).
In such way the company should consider those factors, where the relevancy of the information exchanged, applicable in a particular case and not relevant in others, should be considered in the knowledge management exercise (Schleimer and Riege, 2009, p.27).
The current supply chain strategy of BMW involves several important processes, mostly related to the volume allocation decisions (Shah, 2009, p.140). The importance of such processes can be seen through he challenges it posed for the company, and which consequently led to the development of a strategic planning model, which aid the company to make optimal investment decisions in different departments. With details being individually moving through the supply chain, it can be stated that the main problem that might arise are related to coordination. On the one hand, the company wants to increase the responsiveness to customers’ demands, and thus, reducing the manufacturing and delivery cycles. On the other hand, the company does not order any parts in advance, before the production, so as to keep in the warehouses (Technology News, 2008).
In that regard, the latter can be seen as the primary goal of supply chain management, which reducing transaction uncertainty in the chain (de Treville et al., 2004, p.613). Such situation might lead to cases where the manufacturing process will be hindered by a delay in the delivery of one particular component, due to the lack of coordination.
The improvement of coordination between suppliers can be seen through increasing the effectiveness of information exchange between various links within the supply chain, where different suppliers will be able to determine the needs and provide an instant feedback on the dates of delivery. An important factor in such information exchange is that it should be shared between different departments, suppliers, and retailers, so as to eliminate collisions and conflicts between simultaneous delivery orders.
A supply chain management system (SCM) can seen as the appropriate IS solution for the adjustment of forecast demands in particular and managing the supply chain in general (Oz, 2009, p.18). A key element of such IS should be its accessibility from any part of the world and the ability of recording and showing the statuses and schedules in real time.
In that regard, it can be stated that in case a change in forecast demand has occurred, the most influenced aspects are changes in quantities of raw materials and subcomponents demand. Thus, an essential component of the IS that will timely respond to the change sin forecast demand and directly operate with such data is Material Requirements Planning and Purchasing (MRP). Demand forecasts are entered into MRP software which calculates future demand (Oz, 2009, p.86).
Using long-range forecasts, such software will put long-lead material on order, where other important functions of such IS can in calculating Economic Order Quantity (EOQ) – an optimal quantity that minimizes overstocking and under stocking and save costs. In that regard, the integration of MRP into SCM, will allow the IS to timely respond to changes in the forecast demand in real-time, while at the same providing access for manufacturers and suppliers to share information and monitor the statuses of different orders. Accordingly, it should be noted that the company’s IS might include other components, corresponding to different processes, including designing and manufacturing, where different parties will have different levels of access to each of the IS component.
The first and the most important functional area in BMW can be seen in the management of supply chain. With contemporary manufacturing relying mostly on the collaboration of details manufactured by different suppliers, it was stated that the competition today is “no longer between firms, it is between the supply chins of those firms” (Monczka, 2009, p.6). Accordingly, looking on one of the leaders of the automotive industry and the industry’s top seller – Toyota Motor Corporation, their emphasis on supply chain can be understandable, where it is argued that 60 percent of Toyota’s innovation comes from the supply chain (Harvard Business School. Press., 2006, p.78).
Another functional area with possible innovations can be seen through the process of manufacturing. The innovation in such process was clearly identified by the company as being “tool to clearly stand out from the competition in an increasingly competitive premium market” (BMW Group, 2010). The focus in innovation in the manufacturing process can be distinguished between technological and managerial, both of which have their implication in the company’ competitive advantage.
In terms of the supply chain, the benefits of innovation can be seen from the perspective of increasing the overall effectiveness of the company, which in turn will lead to the reduction in costs. From another perspective, the innovation in supply chain management can be viewed as a simple management of different companies, the success of which is reflected on the quality of the finished product. Accordingly, the innovations might include finding new means of communication, increasing the speed of transactions, improve coordination and etc. On the long-term, innovations in the area of supply management might improve the decisions of the company in terms of the allocation of investment to various departments in the company.
In terms of manufacturing, the benefits from innovation from a managerial perspective can be seen from the example of the training provided by experts in BMW’s team-working at their Oxford plant. The introduction of team-working in the factory allowed the company to reduce absenteeism and costs per car, which in turn were reflected d in increasing the output of the factory by 40 percent (Executives Online, 2010).
From a technological perspective, the innovations in manufacturing can be seen through improving the efficiency of the process as well as introducing new ideas in cars. Both of the aforementioned can be reflected in financial terms, where the improvement in the manufacturing process allows reducing time and costs, while innovations in the product provides “recognizable customer benefits” (BMW Group, 2010), which in turn provides the company with a competitive advantage in the market.
The role of innovative project managers can be seen through coordination, planning and controlling the project processes. With the main strategic vision of innovations being established by the company’s board, project managers’ functions can be summarised through the following:
- Setting the projects’ direction
- Defining the objectives and explaining them for the participants
- Creating the framework for the project
- Control the activities of the participants (Webb, 2000, p.74)
- Reporting projects’ milestones and results
Due to the globalization of the world and the increase of the information technology use, the competition on the world markets increased. Furthermore, the unbalanced opportunities led to the increase of the alarming gap on the competition market in automobile industry of the Western countries and Japan. There are great many of different factors that may help in reducing this gap. Though, the information system is one of the main agents that may influence the competition and reduce the gap.
One of the examples of the effective positive influence of information systems on automotive business may be considered by the example of Japan which opened its frontiers to the West in 1868. The flow of information that followed allowed Japan to become a modern industrialized country. The use of the information about the achievements and methods of the West allowed Japan reached high results rapidly. The information systems allowed using the network in the direction and in the volume that is required (Wibbelink & Heng, 2000).
There are three main factors that influence the productivity of the automotive industry, namely knowledge of car manufacturing and consumers, the opportunities of the technologies and the awareness of the business requirements (Wibbelink & Heng, 2000).
The influence of those factors is impossible without the implementation of information systems, such as the internet. Communication is the core element of the business relations and to reduce the gap in the competitive automobile market, the companies should use information technologies. The use of the electronic mailing should be supported by the structure of the network. It is crucial to use it as it helps “improve efficiency, effectiveness, and speed of communication” (Wibbelink & Heng, 2000, p. 11). Moreover, the use of the “virtual wind models” (Wibbelink & Heng, 2000, p. 11) is the part of the informational system; it may improve the effectiveness of the work on new models.
Information is one of the most important items that make the business competitive. The gap increases when one side possesses more information than the other. The competitive environment supports the companies’ intentions in using information technologies and helps implementing the innovations and information systems in the industry (Sarkar, 2009). Equal information systems use in the automobile industry may help reduce the competition. Still, it will not be eliminated as the competition is one of the factors that make the industry effective.
Thus, it may be concluded that the information systems, such as Internet and network are one of the main factors that may both stimulate the competition and lead to its reduction. The use of different communicative facilities offered by the Internet, such as electronic mail and other kinds of contact make it possible to disconnect the organizational departments and use the advantages of different countries in the different departments of the manufacturing, just using the information system for collaboration.
Furthermore, the Internet gives the informational opportunity. The companies may have the access to different databases that contain necessary information. The competition may be reduced via balancing the level of manufacturing and marketing strategies implementation of different automotive companies in the West and in Japan.
The customers in the modern world are more acknowledged and demanding about the quality and configuration of the automotive products. The accessibility of the information allows the customers search for additional information about the company and the products it offers before the deal. It seems that the customers do the homework before going to buy the car. The advertising on the Internet should be conducted by the BMW Company to increase the customers’, awareness of the company products. To increase the sales, the BMW Company should improve the work of the dealerships on the internet. The customers should turn to dealers for help, not conduct the research personally. Such services may increase the sales of the companies as customers like when their desires are met.
The BMW Company may adopt the practices of other companies in VIP experience, which main idea is “not make shoppers feel they are entering a retail nightmare zone,” but to tell them “I’m setting an hour of my time solely for you and your needs, and I’m setting up cars you are interested in driving” (Finlay, 2010, p. 43). Such method may help the company enhance its relations with the customers. The awareness of the customers of the product they want to buy, even being strictly sure in the model they want to possess, does not relieve dealers of responsibility for giving customers a piece of advice., as according to the statistics, “Two-thirds of people who contact the dealership by phone or email end up buying something different from what they originally intended” (Finlay, 2010, p. 43).
The use of the Internet may increase the productivity and increase costs. The possibility to improve the effectiveness of work with the suppliers via the Internet is fascinating. The BMW Company may conduct the electronic commerce by means of electronic data interchange. Modern opportunities may protect the network security and assess. The main advantage of the work with suppliers through this electronic data interchange is time and cost save (Defendis, 1997).
The customers are free to use the BMW Company Website. The Website contains the information about the company and the products it offers. The company may implement the technologies that allow locate the position of the visitor’s computer and offer him/her the facilities situated in his/her region. The BMW Company should remember that information on the website should be fresh and easily available. The more information the site offers the better, namely the sales information, products description, services available and others. Still, the company should not forget that the great amount of information should be properly structured for easier reach (Defendis, 1997).
The BMW Company should not forget about the online advertising. Advertising is the engine of commerce and it is impossible to reject it. The more customers know about the company, the more information about it is available online, the higher results will be seen in future. Information is one of the main factors that push people for actions and decisions, whether to buy this or that product.
Non price competition is the one that “tries to distinguish its product or service from competing products on the basis of attributes like design and workmanship” (McConnell-Brue, 2002, p. 437-438). In other words, non price competition is the type of competition which does not involve the lowering of price, but the rivalry is conducted on the other level. The BMW Company should understand that non price competition is more effective form the price one and should use it.
There are a number of different types of non price competition which BMW Company uses for now, namely advertising, additional services, promotion, new product development and other marketing strategies (Anon, 2004). The use of the advertising as the type of the non price competition is crucial. The companies give the customers the information about the product and the company. Still, the main purpose of the advertising is to persuade the customer to buy this very product.
The promotion is the other way of non price competition. The company should choose such sales promotion techniques which are going to be interesting and profitable for both the company and the customer. The BMW Company may use the coupons, free-standing insert, rebates, contest game or any other promotional; strategy. All the techniques enumerated above way be costly, still it deserves the attempt.
The BMW Company, providing such promotional strategies, will receive the reputation of the customer care company that is extremely important. In the world of high completion, there are great many of different companies that offer the same products. The automotive market is full of suppliers and the non price methods for competition may give the opportunities for the companies which are unable to run the price competition. Furthermore, using non price competition the BMW Company should not be afraid of price war.
Besides the advertising and promotional techniques, the BMW Company may implement some new services for the customers. The warranty repair term may be extended as well as the support manning. It is a good idea to make the support manning on the BMW product unlimited. The increase of the product quality is the other techniques the company may use. It is essential to offer the customers the products of the highest quality. The development of the innovative technologies makes it possible to improve the products’ quality for time to time. The BMW Company should use it and should not forget about informing the customers about the innovative technologies implementation. It is also crucial to mention the advantages the customers will be able to possess while using the products of this brand.
The creation of positive image of the company is also crucial. The BMW Company should remember that the positive image of the company is the non price competition as well. It is impossible to argue the fact that the customer would better buy the more expensive product by the famous trade mark than the cheaper product by the new company which has not establish a reputation as a trust deserving one.
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