Bayerische Motoren Werke - Description and Analysis of Options - Research Proposal Example

? ANALYTICAL REPORT - BMW goes here] [Your goes here] [Due the paper] Table of Contents Contents Page Executive Summary1 Introduction: Synopsis of the Issue 2 Company Background 3 Description and Analysis of Options 4 Signing Contracts with a Cooperated Technology Company 4 Hire Some Designing and Programming Specialist 4 Set a Competition among Programmers and Designers 6 Conclusion and Recommendations 6 Conclusion 6 Recommendations 7 Executive Summary Mainly known for manufacturing of automobiles, BMW is one the top automaker companies of the present world. However, the company needs to maintain its market share by adapting to the use of new technologies and features that customers usually look for in luxury cars. Therefore, it has become a need of today for the company to change some key features related to cars’ designing and functions not only to maintain customer loyalty but also to maintain competitive edge over many other automobile brands. The purpose of this analytical report was to identify some areas where BMW needs to bring changes in order to maintain its market share. The areas of improvement identified in the report included design of cars and technologies included in cars. The report also included some recommendations aimed towards improving the business of the company and increasing its customer base. Three recommendations were given in this regard which included signing contracts with a cooperated technology company to provide more technologies to customers, hiring some designing and programming specialist to improve the design of cars, and setting competition among programmers and designers to come up with new ideas related to design and technology to be use to build cars. Introduction: Synopsis of the Issue In today’s competitive world, it is the dream of almost every company to achieve competitive advantage in market. If we talk about automobile companies, we can say that competition in this industry is even more intense because automobiles have become a common need for every individual. In such circumstances, automakers are putting every effort to design such cars which can meet the needs and expectations of their customers. Retaining existing customers and attracting more customers is the goal of every automobile company and to achieve this goal, continuous improvement is the only option. However, BMW is not being able to meet the pace of technological change by adapting to the concept of continuous improvement. BMW is one of such companies which must focus on changing its designs and technological features in order to remain competitive. BMW is losing its market share to Lexus and Audi in America (Anonymous, 2013). To overcome the challenge of adapting to technological changes and decreasing market share, the company needs to design customer-focused products by considering the demands of the customers. A company can only maintain its image and position in market if the customers are satisfied with its products. BMW can do this by improving its business strategy and shifting focus towards changing the interior and exterior design of cars at least every two years. This purpose of this analytical report for BMW is to provide an overview of potential challenges or problems for the company in order to find proper solutions well before the time those problems start affecting the business of the company. The report will include some key recommendations that the company can consider and work on as solutions for the potential upcoming problems. Company Background Bayerische Motoren Werke (BMW) is a German automobile manufacturing company which was founded in 1916 by Franz Josef Popp. The company is known for its innovative car designs, luxurious features, and comfort that it provides to its customers. The company is considered one of the top automobiles brands because of its huge customer base all over the world. It is due to effective business strategies of the company that it has been able to acquire some very famous automobile companies, such as, Rolls Royce. Today, the engines of Rolls Royce are designed and manufactured by BMW which is a proof of technological excellence of the company. However, some other brands, such as, Mercedes and Audi are outnumbering the sales of BMW because of the technologies and luxury they provide to customers (Fe Bureau, 2013). These brands do comprehensive customer needs analysis before going to on to make any new product. If we talk about Mercedes, it is one of the most desired car brands among businesspersons. The reason is the luxury that this car provides to its customers. The goal of all of these top brands is to increase their customer base, as well as annual revenue graph. To achieve the goal of high growth level, companies focus on the interests and requirements of their customers because when the level of customer satisfaction rises, more customers are attracted to the brand as a result which results in increasing the level of profit for the companies (Akao, 1988). On the other hand, BMW moves with a little less speed in case of adding new features to the cars and changing the exterior designs. The company is putting less attention to improve the accessories and assembly of the cars. For example, plastic front fenders, complex mechanical work in case some fault occurs, and more costly repairs once the car gets older are some of such points that make this car a number three or number four choice instead of being at the top positions. Similarly, the car requires its owners to change its shocks, as well as rebuild the suspension system after every 80k to 90k which makes this car quite expensive to maintain properly. Moreover, there are less luxuries equipments, such as, no computers in the car, lack of built-in revolving rims, and almost same exterior designs in all models. Considering these issues, the need to bring some interior style and design changes in the cars seems necessary for the company in order to maintain its strong hold on the automobile industry for a long time. Let us now discuss some of the key options that the company can use to overcome these issues and increase the market share. Description and Analysis of Options BMW needs to consider the severity of the issues in the long run and must take some effective steps to get rid of the issues of reduced customer base and decreased annual revenue. Here are some options that the company can consider to resolve the above-mentioned issues. We will discuss them in some detail so that the officials can gain an in-depth understanding of how these options can be beneficial for the company. Signing Contracts with a Cooperated Technology Company The first option for BMW to resolve the in-frame problems of decreased customer base and market share is to sign contracts with a cooperated technology company which can provide the company with computer systems which can be placed on the back of the front seats. The expected price is a single payment of nearly 100 million dollars for the period of three years contract. The project will take around two and a half to three months time and will prove very beneficial for the company. Today, use of technology in every aspect of life has become essential. In case of automobile industry, use of latest technology seems even more essential in order for the companies to remain ahead in the race of competition. As Afuah (2001) states, “firms that are integrated vertically into the new technology will perform better than those that are not” (p. 1211). Considering this importance of technology, BMW should make a contract with a technology providing company which can manufacture computer systems specifically to meet the needs of the company and that can be easily installed as a luxury in new cars of the company. Customers will definitely like this concept because added luxury is always an attractive feature which draws the attention of a large number of customers. Audi and Volkswagen are overshadowing the market share of BMW in many parts of the world because of their luxurious interior, cost, and technology (Tongia, 2012). People like to buy the cars of world’s renowned brands and if BMW adds some more luxury to its new product line, it can do miracles for the company in terms of increased customer base and high market share. Hire Some Designing and Programming Specialist Another option that BMW should consider to achieve long lasting market domination is to hire the services of s team of designing and programming specialists who can provide the company with new designs both interior and exterior of the cars. The option will cost the company development expenses and the salaries of the employees besides all of which will cost the company around ten million dollar in six months. The specialists should be hired based on their educational certificates, professional working experience, and skills in the development of new designs. The company should come up with such designs that should attract the customers. This can happen only when the company takes the input of some new and fresh employees from the fields of information technology and computer science. This option will definitely help the company in including some new technical and technological features in the new product line. Set a Competition among Programmers and Designers The last option for the company that should be considered to ensure the success in today’s world of competition is to set up a competition among programmers and designers in order to come up with new and innovative ideas regarding design, fuel efficiency, and technical and mechanical features for the products of the company. The competition should be set up in order to get such ideas from programming and designing experts which should not only be different from the competitors but should also be able to draw the attention of a large number of customers. With nearly nine months time for this project and the cost of 15 million dollars, this project will reap some key benefits for the company some of which include collection of new ideas from professionals, inclusion of creative developers and programmers in the employee base, and promotion of the company’s image as world’s most innovative and creative automobile company. Conclusion and Recommendations Conclusion Summing it up, BMW has been one of the leading automobile companies for many years. The company has maintained a good image not only in the market but also among the customers due to its high quality and luxury cars. With the rapid technological progress going on, some other automobile companies have already started to come up with new ideas and designs to increase their sales in different parts of the world. This shift can affect the market share of BMW if the company does not incorporate the use of latest technology in design and manufacturing of new products. Therefore, the company needs to pay attention towards bringing necessary changes in designing, as well as in technical and mechanical areas in order to remain competitive in the field of automobile manufacturing for a longtime. Recommendations The three recommendations for BMW discussed in this report for tackling with the problems of decreased revenue growth and customer base include: First option discussed earlier was to sign contracts with a cooperated technology company to bring major changes in the interior designing of the cars, such as, installation of computer systems and electronic head massage using seat headers. Inclusion of such systems in cars will definitely play a key role in drawing the attention of customers towards this brand. The company also needs to hire the services of some designing and programming experts to improve the functioning and designing of the cars in such a way that customers feel more comfort, luxury, and enjoyment while driving the car. Third option was to set up competition among designers and programmers in order to get new ideas regarding design and manufacturing of cars. Employee involvement always leads to enhanced performance (Konrad, 2006). A company must have new ideas in place in order to keep the business growing in today’s world of intense competition. In this regard, unique ideas from experienced and skilled professionals will help the company maintain its competitive position in the automobile industry. References Afuah, A. (2011). Dynamic Boundaries of the Firm: Are Firms Better Off Being Vertically Integrated in the Face of a Technological Change?. Academy of Management, 44(6), 1211-1228. Akao, Y. (1988). Quality Function Deployment: Integrating Customer Requirements into product Design. New York: Productivity Press. Anonymous. (2013). BMW Losing US Luxury Car Market to Lexus End-Of-May Sales Indicate. Retrieved from http://www.raycatenafreehold.com/news_and_events/BMW-Losing-US-Luxury-Car-Market-to-Lexus-End-of-May-Sales-Indicate.aspx Fe Bureau. (2013). BMW not worried over losing luxury car market lead to Audi, Mercedes. The Financial Express. Retrieved from http://www.financialexpress.com/news/bmw-not-worried-over-losing-luxury-car-market-lead-to-audi-mercedes/1182604 Konrad, A. (2006). Engaging Employees through High-Involvement Work Practices. Retrieved from http://iveybusinessjournal.com/topics/the-workplace/engaging-employees-through-high-involvement-work-practices Tongia, B. (2012). BMW and Mercedes losing market share to Audi in India. The Economic Times. Retrieved from http://articles.economictimes.indiatimes.com/2012-08-16/news/33232958_1_market-share-bmw-and-mercedes-audi-sales Read More