We chose the BMW group as our company since they are an example of a multinational enterprise. Headquartered in Munich, Germany, BMW produces premium cars and has expanded into over 150 countries and is one of the large global players in the automobile industry. They compete globally thus having a lot of external pressures (e.g. competition, government regulations etc.) as well as internal ones (e.g. lower cost, focus on innovation).
2. Why is BMW Group a multinational company?
To be qualified as a multinational company (MNC), two criterions need to be fulfilled. Firstly, it needs to have substantial direct investments in foreign countries. Secondly, these international operations need to be actively managed (Bartlett, Beamish, 2014). Since
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Through the increased competition of Japanese and Korean carmakers, which sold and produced at much lower cost, BMW had to take advantage of economies of scale of scope and reduce factor costs. This was done by producing in developing countries where inputs and labor were cheaper. Consequentially BMW expanded to South Africa and later on to other emerging countries (BMW, 2015b) in order to remain competitive.
Furthermore, when expanding abroad, an MNE should: “sense, respond (…) and exploit” (Bartlett & Beamish, 2014) environmental differences between countries. When expanding to China, BMW targeted a completely different market with another currency and import taxes. Previously, China had higher import taxes in order to hedge smaller national companies from big global players. Since summer 2015 when China’s economy slowed they have lowered the import taxes in order to boost growth and investments. This might boost exports from Germany and pose an opportunity for BMW (BBC,
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The company’s history illustrates the fact that BMW made progress in its corporate strategy on an incremental basis. After the foundation in 1916, BMW Group acquired its first factory outside of its national boundaries in South Africa in 1972. The following years were characterized by gradually taking charge of sales and distribution activities in crucial foreign markets through subsidiaries. Moreover, factories were set up in the United States as well as China which evolved to an amount of 30 plants in 14 countries (BMW, 2015a). This courses of action fit into a global strategy that is determined by exploiting global efficiency. Thus, BMW set value on cost savings through economies of scale and scope, enabled by foreign factories and integrated sales and distribution operations. In this context, Berry (2009) argues that this global strategy is in accordance with the “internalization theory logic of a firm that has proprietary assets that are exploited in a standardized and integrated way across multiple country locations” and exemplifies BMW group as it “fits with this
Global competition in recent years has had a great effect on the American automotive industry. More efficient cars being developed overseas posed a threat to local companies’ market shares (Investopedia, 2015). Market shares of largely well-known companies such as General Motors, Ford, and Chrysler all suffered losing between three and ten percent of their previously held market shares between 2000-2014 to foreign competitors (Investopedia, 2015). For decades, the United States had the best technological advances in the industry and it was very difficult for competition to survive. In response to this, companies overseas invested significant amounts of money into researching new innovations and ways to produce better automobiles than the United States (Investopedia, 2015). Also, because of the difference between currency values, the cost of labor in other countries is lower than here. This allows foreign companies to be able to sell their products at lower costs and attract customers through undercutting their competitors’
The presence of Ford Motor cars is very strong in terms of global aspect, because it operates in six continents. So they are present all over the world.
In September 2008, optimistic about BYD’s application of new energy, Warren Buffett acquired 225 million (10%) of its shares at HK$ 8 per share.
Organizations that strive to be a leader in an industry must look beyond their domestic boundaries and expand into international markets. The Ford Motor Company remains the second largest automotive manufacturer in the United States and fifth largest automotive manufacturer in the world with Toyota leading the way. This essay will address the Ford Motor Company’s strategic approach to compete internationally and identify which resources and capabilities make it attractive to compete internationally. Additionally, the Ford Motor Company’s diversification strategy options will be described. Lastly, we will identify how chosen diversification strategy options would lead to a strategic fit for the Ford
The Multinational Corporation (MNC) manager must have a broader set of skills than a manager of a smaller business. The MNC manager should be extremely flexible, able to speak another language, and be culturally
Agility and economy are the most important premises in the BMW Group's worldwide production network. The group manufactures its products at 25 sites in over 13 countries on five continents: BMW automobiles are produced at 14 locations. BMW motorcycles are manufactured in Berlin, while MINI and Rolls-Royce production come from Great Britain.
1. To qualify as a multinational corporation, a firm must meet all of the following criteria except:
In order to identify BMW Group’s internal strengths and weakness, here applied strategic capability which combined three keys of resource: tangible resources, intangible resources, and competences. All of these resources enable a company to attain a sustainable competitive advantage (Dess et al, 2010).
Increased globalization is the direction that all major multinational corporations are moving towards. Ford had made a good attempt at making a world car that proved to be partially successful in the beginning of sales. The company has learned that locational specialization is an extremely important aspect to selling globally because of the differing personal preferences and legal demands.
The auto industry adopted new globalization trends that could steer the restructuring of global manufacturing in order to meet the challenges of global economies. There was the need to improve on efficiency and maintain a competitive level in the automobile industry. Automotive manufacturers from Asia, Europe, and the US adopted global trends such as integrating low- income countries into the global division of labor. The aim of the automobile industry in adopting globalization was to enable it shift from the economies of scale to the economies of scope. The industry started focusing more on manufacturing capabilities that could enable it meet the increasing marketing demands. The rapid changes in technology-forced automakers
The brand-globalization goes on rapidly, an increasing numbers of organization invested their brand track to overseas markets. New markets have new consumers, chances, and profits and extend brands existence. The international expansion of BMW and IKEA has led them to achieve huge success. In this essay, will explore what lead each brand to move away from their traditional market and investigating how the two brands developed successful international expansion, and what has made them global household names.
The main driving force behind the decision of BMW to turn to globalization was competition from global companies in Germany, the United States and Japan who are major competitors in the luxury segment. The automobile industry is highly globalised with many major manufactures operating all over the world. Automobiles built in one region are sold, with necessary changes, around the world. The main force for global convergence was the virtual disappearance of the national manufactures being squeezed out by the international giants and the standardization of markets across international boundaries. Forced by international regulatory bodies at regional level and fuelled by ever more intensive global communication.
The objective of MNC to operate in other countries is to gain competitive advantage through several ways. Firstly, MNC is able to take advantage of difference in country-specific circumstances. For example, MNC may choose to locate its productions in less developed country like Vietnam to gain cheap labor cost. Secondly,
This case study presents how BMW, a German automobile, motorcycle and engine manufacturing company, is trying
For any company going out for the foreign market is because of any one out of globalization, reducing tariff all over the world, to increase the market share, saturation of the local market, for getting the economies of scale of production, to use their excess capacity and use the resources where it is available at law cost.