Introduction
BMW is a German manufacturer of automobiles, motorcycles, engines, and bicycles. The company was founded by Carl Friedrich Rapp in October 1913, initially as a producer of aircraft engines (Moellers et al., 2019). BMW is considered by right to be the most reputable, famous vehicle brand; the headquarters of BMW is located in Munich, Germany. The history of the company has evolved to the fact that all the cars produced by the company to this day, and manufactured now, are a symbol of a satisfactory quality automobile for the wealthy individuals. The factories for production are located in different cities in this country and abroad (Moellers et al., 2019). Thus, it is essential to provide a general description of the firm and its primary strategies.
The Business Strategy and Market Dynamics
The Strategies
The concern has established for itself a reputation as a highly innovative company. The firm has been developing hydrogen-powered cars for more than ten years and was one of the first to produce a trial batch of all-electric vehicles (BMW, n.d.). The business strategy adapts its production to environmental regulations before they are introduced and sets innovative guidelines for the entire industry. This enables the company to stay on top of trends, adhere to and stay ahead of changing customer needs. In recent years, BMW has focused on its technological capabilities and created an even stronger connection between humans, automobiles, and various services (Moellers et al., 2019). The corporate emphasis is on technical development; it aims to become a pioneer and a strategic agent of innovation. This is due to the BMW i sub-brand, which has already been implemented in more than 50,000 cars, and the latest flagship sedan, the BMW 7 Series (Moellers et al., 2019, p. 392). The BMW i will personalize the mobility and use of the car through revolutionary engineering.
This BMW iNEXT product innovation has already provided the impetus for developing new kinds of autobotics and a unified digital network in a generation of cars, creating an innovative sensation in the world. BMW’s leading electric and hybrid models are already equipped with BMW iPerformance evolution, enabling them to become the technological leader in the market. In addition, the BMW Group continues to advance the field of hydrogen technology, and the current test cars have achieved a range capacity of 700 kilometers (Moellers et al., 2019, p. 394). The firm is devoted to the philosophy that multiple powertrain types will coexist on a par with each other in the future.
The next stage of the strategy is introducing hybrid technology, the potential of which is revealed first in cars with the highest power output and the highest class. The BMW X6 Active Hybrid concept and the developments of BMW Vision Efficient Dynamics confirm the advantages of the BMW Group’s hybrid models. They have more efficient driving dynamics than previous hybrid vehicles and a parallel 20% gain in efficiency in all driving conditions (Moellers et al., 2019, p. 389). This is a comparison with similar cars without hybrid drive.
The Customers
BMW mainly specializes in the premium segment, which is divided into three subgroups. The first is a comparatively accessible automobile, targeted especially at young couples with a high -income or middle-income households who want to have an expensive car. This includes the entire range of MINI models and BMW 1 and 3-series (Guo & Wu, 2018). The second class is cars for financially secure families, businessmen who tend to drive themselves, and average entrepreneur who values convenience; this comprises all the other BMW brands. The third segment is the Rolls-Royce range, the so-called premium class (Guo & Wu, 2018). Such vehicles are purchased more often by representatives of high society, who do not spend time behind the wheel on their own and value not only amenities but also premium vehicles.
The Competitors
In today’s world, the struggle with competitors has shifted to a new level; now, the primary tool is marketing. Audi, BMW, and Mercedes have been rivals in this field for many years, and the fight is producing results. For example, in 2016, Mercedes surpassed BMW in sales in the business segment for the first time in a dozen years. The count of Mercedes cars sold crossed the million mark, while BMW’s figure was 980,000, with Audi in the third position with 950,000 (Guo & Wu, 2018, p. 3555). These brands have established a permanent lead and hold it steadily, despite the significant number of other labels in the premium class. These three manufacturers consider their model the standard and a breakthrough in technical capabilities. In order to differentiate oneself from the rivals, the accent is on the brand’s own magnetism. Audi, BMW, and Mercedes do not belong to the budget economy class (Guo & Wu, 2018). That is why automobiles of these producers are bought by those who have enough money for such purchases.
At the same time, the trendy car company Volvo offers customers an alternative to the BMW car from its model range. For instance, the Volvo V40 model, with its coupe-like body shape and excellent practicality, is characteristic of all Volvo brand models (Guo & Wu, 2018). The economic model Volvo V40 is a suitable choice as an alternative to the BMW. In addition, the primary competitors for BMW are the Porsche Cayenne and Range Rover. For example, the Cayenne’s engine range contains no diesel offerings, and the Porsche remains sportier in operation (Guo & Wu, 2018). Furthermore, the Range Rover is inferior to the BMW in terms of dynamic performance, but it is not perceptible because of the higher seating position. Hence, despite the constant rivalry, BMW remains one of the leaders in the automobile market.
The Operational Competitive Objectives
The Explanation of Operational Competitive Objectives
It is essential to mention that operational management’s five main characteristics translate into strategic settings. There are two separate categories in operational management: product quality and process quality. The process performance determines the reliability level of the output. This is mainly concerned with the presence or absence of defects in the product, which completely determines the quality of configuring the processes of production, delivery, and storage of the merchandise. The objective capability characteristic of speed includes the time it requires to fulfill orders and respond to changes in demand. The reliability characteristic consists of two types: product and supply strength reliability (Brown et al., 2018). The reliability of products is usually considered only a feature of the commodity, embedded in the product as it was developed.
Supply dependability relates to the company’s ability to deliver products or services exactly on or before the announced deadline. The flexibility feature determines the company’s ability to propose a wide range of relevant and appropriate merchandise to its customers. Price is based on the concept of production and logistics costs (Brown et al., 2018). In a competitive environment, the sales volume depends on the company producing and supplying goods, which traditionally implies low production costs.
The Operational Competitive Objectives of BMW
It is significant to mention that the considerable demand and large market share encourage BMW to reinforce and verify the quality of their vehicles constantly. BMW has product quality specialists monitoring the production of their cars. This contributes to the company adhering to strict product quality and safety requirements (Nawaz & Koç, 2019). After the best materials are selected for the production of the automobiles and the manufacturing is controlled, the specialists inspect the output of the products. At the same time, the quality of the vehicles is confirmed by examining the brakes, clutch, and transmission for mechanics and tightness (Nawaz & Koç, 2019). Only after the inspections and elimination of defects are the products launched on the market, as evidenced by the company’s impeccable reputation.
Considering that BMW production facilities are located in different states and cities, it enables the manufactured products to be quickly delivered to regional markets. In Germany, for example, BMW has operations in Dingolfing, Regensburg, and Munich (Nawaz & Koç, 2019). At the same time, in the U.S., BMW production facilities are located in Spartanburg and South Carolina. In the U.K., Mini’s are made in Oxford, motors in Hams Hall, and Swindon has stamped parts. To accommodate fast response in the Asian market, BMW has capacities in China, which permits it to fill orders promptly and react to challenges (Nawaz & Koç, 2019). If demand changes in a particular region, the specific factory adapts to it quickly, ensuring a quick response to external shifts. Thus, through quality control and speed of production of vehicles, BMW can be characterized as a reliable company, which has a positive impact on its competitive operational objectives. The validity of the corporation is evident in the quality and carelessness of its outcomes (Nawaz & Koç, 2019). However, the speed of fulfillment of orders and delivery of vehicles confirms the impeccable reputation of the corporate.
The company’s market position can be described as rather flexible. It is always more complicated for large companies to adapt to the market at the right speed. Nevertheless, the BMW Group constantly monitors and analyzes the market, particularly the economic, environmental, and social conditions and infrastructures (Nawaz & Koç, 2019). In order to correspond to the current demand and plan a potential strategy for the future. In this way, BMW develops new products quickly, allowing it to adapt quickly to market conditions. BMW is a well-known brand, famous for its quality and performance, which is why the price of the vehicles is high (BMW, n.d.). BMW and its competitors are manufacturers of premium cars. Analyzing the above mentioned, we can conclude that BMW uses a premium pricing strategy. In recent years the prices have increased due to raw materials and oil costs, which lead to the growth of production expenses for the manufacturers (Nawaz & Koç, 2019). Thus, despite the high costs, the brand receives a stable profit at the expense of the premium customers.
The Type of Manufacturing System and Configuration
A production system is a collection of functions involving processes that result in creating goods and services. The production system consists of manufacturing units, which are workers and equipment. Moreover, industrial sections performed the same assignment, including production units, such as a shop section (Sellitto & Mancio, 2019). The auto industry, which contains BMW, belongs to the type of mass production. It is worth noting that the concern manufactures premium vehicles that are incredibly high quality and have a recognizable design. The production of cars according to such parameters requires a lot of logical costs and complex configuration (Sellitto & Mancio, 2019). Thus, the company chooses the best materials and orders them individually. Car production begins with ordering steel and aluminum coils, after which they are cut and extracted using the most modern machines and machines. As a consequence, the concern obtains vehicle hoods, lids, and doors from these components.
Notably, the received parts are further transferred to the workshops responsible for assembling the individual vehicle component. For instance, the body assembly department uses the new, most precise methods of laser welding, soldering, and gluing many parts in order to create one complete detail for the functioning of the cars (Kukkamalla et al., 2020). The next production stage is the automation of processes; previously manufactured components are transferred to another facility. The vehicle body is cleaned and then coated with a layer of phosphate to prevent future corrosion (Kukkamalla et al., 2020). The following step is the application of four coats of paint, which should provide protection from the environment and provide a signature shine to the automobiles.
Furthermore, after each stage of manufacturing, specialists verify the quality of the already produced elements. For example, the painting of the vehicle is examined by creating conditions that are standard in nature and testing the resistance of the paint to these influences (Kukkamalla et al., 2020). Since firms offer custom fabrication of cars to satisfy each customer, non-standard actions can be performed in the process. For instance, change the color of the parts or design a special interior inside the vehicles. A further production phase is the final assembly of all the manufactured parts together. For example, the exhaust system and engine drive are attached to the main body (Kukkamalla et al., 2020). Once all the components are installed, and the vehicle is complete, the automobile is driven for performance testing and capacity evaluation.
In addition, it is essential to specify that all of BMW’s key production facilities are located in Germany. Only in Germany, the automobile concern has six plants, some of which produce cars directly, while others design and assemble motorcycles (Kukkamalla et al., 2020). In the factory Alpina Burkard Bovensiepen GmbH, the main technological facilities for constructing sports cars are concentrated. Furthermore, BMW has several headquarters and factories around the world. The corporation has offices in Mexico, the U.S., New Zealand, Brazil, Egypt, China, Malaysia, and other states. In this way, the configuration at BMW is based on the cell (Kukkamalla et al., 2020). The leading manufacturing country, Germany, determines the default assembly quality. In order to maintain the rate of the original equipment, the cars in the BMW subsidiaries are assembled from prefabricated units supplied directly from the German factories. Constant quality control of the assembly quality, skills of the operating staff from the center, and regular advanced training of branch employees occurs (Kukkamalla et al., 2020). This enables the production and configuration of vehicles to be of the highest standard.
The Supply Network Configuration
It is significant to emphasize that the supply chain is essential to BMW’s operations in order to respond to customer demands. The company uses a system that permits individual customer orders and mass production of vehicle lines. This is performed in such a way that the client submits a request, which is forwarded to the central office and reviewed. At the same time, BMW has a large and well-established network of suppliers, with over twelve thousand suppliers in seventy countries (Eiriz & Carreiras, 2018). The principal function of purchasing and supply is to accumulate spare parts for cars and meet demand. The data indicates that “Eastern Europe accounts for 22.4% of the company’s total supplier network, Western Europe for 17% and North America for 14.9%. Meanwhile, Germany has the largest percentage of BMW’s raw material supply, at around 43 %” (Eiriz & Carreiras, 2018, p. 923). The company’s purchasing departments, which influence the value creation in the supply chain, are responsible for the quality, amount, evaluation, and verification of products and services.
Consequently, employees of the concern are educated to provide the company with the best possible components for its end products. The head office, which deals with supply setting and configuration, is located in Munich (Eiriz & Carreiras, 2018). It is essential to highlight that BMW focuses on two core areas in the supply chain and procurement, specifically minimizing hazards in the chain and continuous optimization and searching for the most suitable counterparties.
The BMW Group is expanding its purchases to provide a new level of electric mobility and establish new sustainability standards. The expansion of the field of electric mobility creates the requirement for proper supply chain support, both in terms of CO2 emissions and concerning the sources of critical raw materials used to produce battery cells (Eiriz & Carreiras, 2018). High flexibility meets the growing demand for e-mobility; the growing demand for electromobility enhances the need for components used in the production of these vehicles. Specifically, the BMW Group is adopting several methods to safeguard a consistent delivery of battery cells (Eiriz & Carreiras, 2018). The corporation obtains its current fifth-generation battery parts from four suppliers, decreasing its dependence on individual sources of supply.
The BMW Group is a giant innovator in comprehensive due diligence of the company’s network of suppliers. Already in 2008, the firm embarked on this effort and consequently pressed for holistic environmental and welfare performance standards when presenting the BMW i3 electric vehicle. In 2014, the BMW Group’s direct suppliers were obligated to observe human rights, adhere to advanced ecological and social responsibility standards, and introduce control structures to promote workplace safety and environmental care (Dolgui & Ivanov, 2021). These expectations should be transferred to subcontractors under the contract. Compliance with the established sustainability criteria is a prerequisite for the award of the agreement. For the duration of the contract, external associates collaborate with internally based assessors to monitor sustainability compliance by conducting questionnaires and assessments. If disagreements arise at one of these stages, the BMW Group agrees on appropriate arrangements with the suppliers (Dolgui & Ivanov, 2021). In this way, the BMW Group’s procurement department monitors thousands of locations each year.
At the same time, even though BMW has a well-developed supply and procurement chain, the company is in a competitive environment. Thus, BMW develops all strategic objectives in its business plan to ensure the development and improvement of its supply chain. One of this corporate’s strategies in supply chain and logistics management is the Efficient Dynamics concept (Dolgui & Ivanov, 2021). The primary benefit of this strategy is that it is designed to enable supply chain mobility and minimize risk. For instance, vehicle models such as the BMW ActiveE demonstrate the benefits of using this strategy. In general, the performance and success of this concept can be measured not only through the final output but also through the fine-tuning of logistics throughout the supply chain (Dolgui & Ivanov, 2021). The performance strategy aims to engage customers and counterparties interested in the long-term goal of adding value to the chain of operations. Hence, the process is constantly evolving and transforming through the market environment.
The Capacity Strategy and Configuration of the Production Network
The Number and Location of Sites
BMW is a German manufacturer of modern and efficient vehicles. They are not only presentable in their appearance but also have the most modern technical characteristics, which explains why they are popular and in demand. The company’s central administration is located in Germany; the production forces are based in Germany. Among the significant manufacturing, cities are Regensburg, Leipzig, Munich, and Dingolfing (CsĂki et al., 2019). The cars are assembled in factories located in Thailand, India, Malaysia, Egypt, South Africa, Vietnam, and the United States (Spartanburg). The manufacturing network of BMW Group consists of 30 production and assembly facilities in 14 countries. The business has an international deals network in more than 140 countries (CsĂki et al., 2019). The BMW Group continues to expand its electric drive production facilities in Germany. BMW has recently planned to promote the brand worldwide, opening branches in other countries to enter new markets. BMW has now opened a demonstration facility in Kenya, Nairobi. After they relocated to Kenya, they noticed that the roads were not suitable enough for sedans and intended for all 4×4 vehicles. It was successful, and they planned to stay and expand into neighboring African countries.
The Allocation of Objectives and the Role of Sites
The company’s strategy and policy concentrate on the fact that the production and assembly of vehicles occur in different parts of the world. The BMW X1 is assembled in Russia, China, India, Thailand, and Mexico. The main facility is located in Leipzig, Germany; the first vehicle in the series was produced in 2009 (BMW, n.d.). The first generation of BMW X3 crossover was created in Graz, Austria, in 2003. The second-generation car was released from the assembly line in 2010, and its production was established in South Carolina (CsĂki et al., 2019). Since 2012, the assembly of the X3 has been produced in Munich (Germany) and Kaliningrad (Russia). The BMW X5 model is assembled at plants in Spartanburg, South Carolina, United States, and Kaliningrad (Koren et al., 2018). Since the beginning of production, these crossovers were only supplied to the U.S. markets, but they began exporting to European countries a year later.
At the same time, the X6 is the most “international” model of BMW. It is assembled in the U.S., Egypt, India, Malaysia, and Thailand. In addition, there is an established production of BMW X6 in Kaliningrad; assembly of X7 SUVs is made in Spartanburg. The full-size luxury crossover was on sale in March 2019. The BMW 3 Series has been produced at the Munich plant since 2012 (BMW, n.d.). This sedan is the sales record holder among all models of the German brand.
Recently, there has been an expansion of production facilities abroad. The flagship executive sedan BMW 7 Series was produced until 2012 only at German plants. After another upgrade in 2015, some modifications were manufactured at the “Avtotor” plant in Kaliningrad (Koren et al., 2018). The latest generation BMW 7 series in the G11/G12 body is assembled at the plant based in Dingolfing, Bavaria. The BMW and series i3 and i8 are formed in Leipzig, Germany. Thus, the manufacture of vehicles is primarily focused abroad (Koren et al., 2018). Due to this, each car has all the required technical characteristics and many other significant advantages. For example, the assembly of specific vehicle models near the production facilities reduces transport costs and delivery time. Moreover, a considerable role in the production of cars in different cities and states, especially in Russia, Kenya, Thailand, and Egypt, understands the opportunity to decrease costs and workforce (Koren et al., 2018). Consequently, vehicles from BMW are becoming increasingly suitable for all requirements of customers.
The Technological Strategy
It is essential to mention that BMW uses a technological strategy that affects processes and performance. The company has introduced the ConnectedDrive next-generation system. The driver will be allowed to navigate the Internet without exiting the car, dictating messages, or listening to online music. The BMW ConnectedDrive system of the new generation is the software, which by the end of 2013, will provide the majority of new BMW automobiles from the factory (Cusumano, 2020). Technically, the BMW ConnectedDrive system is composed of three levels. The first of these is the equipment level: a SIM card integrated into the vehicle, which provides access to the fundamental functions of BMW ConnectedDrive TeleServices and the Intelligent Emergency Call system.
The second pillar is the operating system that provides access to the BMW ConnectedDrive services. This includes several independent services: BMW Online, which combines various functions, including online search and mobile office (BMW, n.d.). Meanwhile, the My Info/Send-to-Car function enables the address to be uploaded to the navigation system from the BMW ConnectedDrive portal. The third level is the special BMW ConnectedDrive applications available with the BMW ConnectedDrive “Level 2” operating mode (BMW, n.d.). The customers who order this option gain access to online traffic information, remote driving, and the BMW ConnectedDrive concierge service. In this way, the corporation is adopting new technology for the convenience of vehicle driving.
The Intelligent Emergency Call feature automatically contacts BMW Customer Service when even one airbag has been deployed in a car. Besides the vehicle’s exact location and direction of movement, the Service receives information from all of the sensors involved, enabling its staff to reach a preliminary conclusion about the nature of the accident. BMW TeleService auto-call service eliminates the need for the customer to think about when, where, and when to have their car serviced (BMW, n.d.). A BMW vehicle equipped with the BMW TeleServices system independently diagnoses the operation of critical systems and transmits data via an encrypted protocol to BMW (BMW, n.d.). It determines the need for service work and then sends the information to BMW Customer Support. The BMW TeleService battery management system continuously monitors the vehicle’s battery level. If it drops below a certain level, the system independently notifies the owner via SMS or e-mail and reports BMW Customer Support (BMW, n.d.). Thus, BMW employs a technological strategy that ensures coordinated processes and productivity.
Conclusion
Thus, the corporate is one of the leading car manufacturers in the world. The fundamental core value for BMW clients is reliability, durability, and style. The primary category of customers mounts business segment customers, and the major competitors of BMW are Audi, Mercedes, Volvo, and Range Rover. BMW is distinguished from many of its rivals by the quality of its manufactured products. They understand that consumers will express their preference for products whose qualities and properties are constantly advanced. Meanwhile, BMW is functioning to enhance its operational competitor advantage and remain the market leader. The company adopts a mass-production type and process flow configuration. BMW has more than twelve thousand suppliers and works on a contract basis. In order to increase mobility and minimize risks, the company is using an effective strategy. It is essential to emphasize that BMW uses the ConnectedDrive next-generation system in terms of technology. In this way, the company attempts to satisfy buyers’ basic needs and constantly develop. BMW preserves its powerful brand and manufactures environmentally responsible vehicles.
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