BMW Entrepreneurial Structure - Case Study Example

BMW Entrepreneurial Structure Outline your of the organisational culture of BMW The organizational culture at BMW is that of an entrepreneurial organizational. The corporate culture at the company is such that it focuses on the business principles of transparency, trust, as well as responsibility. As a result the company has undertaken many projects for social development in their regions of operations to improve the living standards of the people as well as provide returns to the communities where the operate in the form of support and infrastructural development and innovation. People "at BMW have the freedom to get things done. No one is limited by excessive bureaucracy. Department managers have the ability to decide without a committee. They have the ability to move fast. It's a competitive advantage. This has become increasingly pronounced at BMW" (O'Connell, 2003) The BMW Company can attribute most of its success to the strategy and the culture of the company and its orientation towards investing in new innovations. The company is largely based in Germany where a more beauracratic corporate culture is more dominant, but the BMW Company adopts a rare and interesting philosophy for the corporate culture which revolves around entrepreneurship. The company is ready to invest in research and development projects which focus on management as well as physical innovations to support its products and its image in the market. "BMW's 106,000 employees have become a nimble network of true believers with few hierarchical barriers to hinder innovation. From the moment they set foot inside the company, workers are inculcated with a sense of place, history, and mission. Individuals from all strata of the corporation work elbow to elbow, creating informal networks where they can hatch even the most unorthodox ideas for making better Bimmers or boosting profits." (Edmondson, 2006) Moreover the people at the BMW Company do not have all the answers to the questions, and neither do they claim to do so. Instead they are pound to mention that they work towards determining all the correct questions so that the best possible solutions can be accurately determined. In interview with Laura Mazur, the CEO of BMW Helmut Panke mentioned that "'the most important role of senior management, not just the chief executive, is to understand that the brand isn't just a label that you can put on and take off. A brand is something that has to be authentic and has to be tied into the corporate culture of an organisation,' he explained. Panke discussed the company's unremitting focus on its premium brand approach, and why nothing is allowed to dilute it. He was adamant that success derives from three points: a strong brand, products that live up to what the brand stands for, and a corporate culture that fits into both of them." (Mazur, 2003) 2. Describe the challenges that BMW face in their organisational environment. The challenges that are faced by the BMW Company in their organizational environment pertain to the establishment of the corporate culture in the different regions of operations for the company and training the new recruits and employees to develop as per the corporate culture of the company. BMW has taken significant pointers and strategies from Japanese automobile manufacturers when it comes to managing the company and establishing a kaizen and entrepreneurship based culture and business procedures at the company. The company has been successful in implementing the corporate culture highlighting innovation and entrepreneurship in Germany, but the operations of the company in the UK at oxford and in the US face discrepancies. The US automobile industry is more oriented towards bureaucracy as the beauracratic and classical theories of management derived from the industry as apparent form Henry Fayol and Ford. In such an environment operating with an entrepreneurial and innovation based culture has been a problem for the BMW operations in the US as well as on the UK. Other challenges that the company has been facing pertain to recruiting people who are suitable for the corporate culture n the orientation of the BMW operations in US, and Europe. The company has had to invest significantly in training its workers and employees in the principles of entrepreneurship and the corporate strategy adopted by the company for its operations. "One of the biggest challenges is, where is the next generation of technicians coming from There are fewer people coming in that business, and when they do come in, they may not stay. I was a technician when I started out, and one of the reasons I left was that I got tired of the snow and ice dripping down on me. I remember seeing the shop foreman, he's got to be 40 years old that used to seem old to me, back then and I'm thinking, "I don't want to be that old, and up under a car, with the snow and ice dripping on me." We offer training sometimes in Southern California. We run training using all different types of technology, like interactive training via personal computer, where students can log in from home, or broadcast. We offer physical training off-site, like where we rent a track, or a hotel, for a new-product launch. You have to recognize that there are different levels of training, depending on your tenure with BMW, or somewhere else in the industry. Some people are freshmen, so to speak, who are new to the business. You can't create the same training environment for them as you would a senior or a graduate student." ('Grooming new technicians is key part of BMW growth', 2002) The challenges that are faced in the external environment of the company include challenges pertaining to increasing metal prices, the changing emission standards and the new ELV directive. The main raw material used by the company is Steel and aluminium, and the prices for these have been increasing in the past few years resulting in higher operating costs for the company. These high costs and the fluctuating prices of steel and aluminium tend to affect the margins of the Company and its operations by reducing them. Aside from this the main markets for BMW in the US, European Union and China are adopting new regulations for more controlled and regulated emission policies. These affect the car design and require additional parts to be adjusted in the automobiles to cater and comply with the changing regulations in the different markets. The ELV directive implemented by the European Union enforces the car manufacturers in the region to employ wastage management strategies to minimize waste caused due to production and operations and to manufacture automobiles which are 95 percent recyclable. This directive also significantly effect the operations of the BMW company in a negative manner as it tends to reduce margins by increasing costs. 3. Provide an analysis of whether you regard a flat flexible organisational structure to be the appropriate organisational structure for a global car company There exist two main forms of organizational structures, the tall organizational structure and the short or flat organizational structure. The tall organizational structure has the is one with formalized hierarchies and many links between the different levels of management. It is the most common form of the organizational structure that is being employed by the companies around the world. Most multinational companies as well as most of then local EU based companies apply this form of an organizational structure. However there are significant disadvantages that come about from the use of this structure for the management. These pertain to an inflexible chain of command, dictatorship style of management, bureaucracy and time delays in decision making as well as lack of innovation in the company. In order to avoid such disadvantages an organization can make use of the small or the short/ flat organizational structure. This organizational structure is in reality very 'flat' with a multiple connections and interactions amongst the management and a reduced hierarchical structure of the company. In this type of an organization structure the senior management of the company tends to involve other employees in the decision making process and the strategy development of the company. (Daft, 2003) The choice of the organizational structure that is to be adopted by a global car manufacturing company like the BMW Company is largely dependent on the nature and orientation of the company. A large and bureaucratic company cannot successfully implement and run on a flat organizational structure, however an entrepreneurial and innovative company which does operate in a large geographic region but is oriented towards innovations and flexibility can successfully operate on a flat organizational structure. The advantages that can be attained by the use of the flat organizational structure pertain to more and increased communication between the management and the workers at the company; Development of strategic and tactical teams in the organizational which employ specialized people from multiple fields to complete the job in an efficient manner; Increased motivation and team spirit amongst the workers and the employees of the company (Hannagan, 2005). A reduction in the bureaucracy in the company which facilitates faster, speedier and more efficient decision making as well as reduced umber of management levels which aid the company in reducing their costs, and being more cost efficient. However, there are some significant disadvantages as well when it comes to flat organizational structures. These include the facts that a worker might have more than one manager, supervisor or a boss which can create confusion amongst the workers and the employees when it comes to reporting to the managers. This can cause limitations as well as obstacles in the growth of the company as the smaller organizational structure is not able to manage very large and complex business operations which are spread over a wide geographic region. Typically the flat organizational structure is usually limited to those organizations which are small, privately owned and have a small scale of operation. Additionally the functions and responsibilities of the different department depicted in the small/ flat organizational structure can be vague and merged with the functions and responsibilities of other departments. A flat organizational structure which is based on a matrix orientation is an appropriate organizational structure for the BMW Company. The BMW Company can work according to the kaizen and Japanese management philosophies, while still retaining the local organizational culture of the company through an adoption of entrepreneurial management style. The company already has significantly implemented strategies which enable it to be flexible, dynamic and respond to the changes taking place in the markets. As a result the use of a flatter organizational structure by the BMW Group will enable the company to incorporate entrepreneurial skills amongst its lower management and workers as well to make them self sufficient for operations. 4. Provide recommendations outlining what further measures BMW can take to encourage greater entrepreneurship. In order to encourage entrepreneurship in the company, the BMW Group can invest in training, workshops and activity based learning programs which emphasize the entrepreneurial skills of its employees. The company can schedule routine, monthly programs which bring together the employees of the company and provide them with the required entrepreneurship developmental skills. Time management programs and independent decision making sessions can also be launched whereby the employees of the company can be taught to work making their own decisions which are in correlation and accordance with strategies, goals and objectives of the company as well as its organizational structure. The company can seek to hire entrepreneurial minded people into the organization in order to increase the entrepreneurship talent in the company and enforce the entrepreneurial and innovation based approach and culture of the company. Aside from this the company can make its orientation program for the recruits more exhaustive so that they are taught about the company, its orientation and the management style at the company. It was mentioned earlier that the company is having problems retaining the technical staff that are entrepreneurially skilled. In order to retain such crucial employees, the company can launch motivational strategies which invoke the employees to stay and grow with the company instead of launching their own independent businesses or going over to the competitors. The team based flat organization structure can be employed to increase the authority and the responsibility that is provided to the technical staff at BMW in order to motivate them to work with the company while achieving personal growth as well. Better working conditions and increased monetary, intrinsic as well as extrinsic compensation can be provided to the technical staffing order to retain them. Additionally an apprenticeship program can also be launched, according to which the current technical staff can develop a junior team of technical staff which can provide for a steady supply of technical employees for the company. References (2002), Grooming new technicians is key part of BMW growth, Automotive News, Vol. 77 Issue 6000, p18, 1/3p, 1 color, retrieved October 8, 2008 from http://web.ebscohost.com/bsi/detailvid=1&hid=12&sid=9c7dcf69-3118-4f31-bc27-3cad4fe965c8%40SRCSM2&bdata=JnNpdGU9YnNpLWxpdmU%3d#db=buh&AN=7376128 Daft, R. L., (2003), Management (6th ed), Pub: Dryden Press. Edmondson, G., (2006), BMW's Dream Factory, Business Week, retrieved October 8, 2008 from http://www.businessweek.com/magazine/content/06_42/b4005072.htmchan=innovation_auto+design_auto+design Hannagan, T., (2005), Management - Concepts and Practices (4th ed), Pub: Pitman Publishing. Luthans, F., (2005), Organisational Behaviour (10th ed), Pub: McGraw Hill Irwin, New York. Mazur, L., (2003), Brand success is founded on a simple formula, retrieved October 8, Marketing, p16-16, 1/3p, 1 color, retrieved October 8, 2008 from http://web.ebscohost.com/bsi/detailvid=1&hid=4&sid=ec2118fd-0c20-4f73-9281-7dc1d8eae11c%40sessionmgr9&bdata=JnNpdGU9YnNpLWxpdmU%3d#db=buh&AN=11700284 Nelson, D. L., and Quick, J. C., (2000), Organisational Behaviour - Foundations, Realities and Challenges (3rd ed). Pub: South Western College Publishing O'Connell, P., (2003), BMW's Shifting Strategy CEO Helmut Panke says a slew of new models is meant to meet "the market's demand." The challenge: Doing so while keeping margins rich, Business Week, retrieved October 8, 2008 from http://www.businessweek.com/bwdaily/dnflash/jun2003/nf2003069_6720_db053.htm Robbins, S. P., and Decenzo, D. A., (2001), Fundamentals of Management (3rd ed). Pub: Prentice Hall. Read More