The Challenges and Opportunities of BMW - Assignment Example

?The Challenges and Opportunities of BMW Executive Summary This research paper aims at identifying the challenges and opportunities of BMW AG. However, for conducting a systematic research and deriving results in a structured manner, a specific challenge of BMW AG has been choose. Like all the German carmakers, BMW AG is also facing serious issue of not being able to meet the EU emission norms for their new cars. The objective of this study would be to discuss the challenge with the help of available information, conduct a survey among customers and identifying opportunities for the company. After conducting a thorough review of the literature it has been established that in order to offer high speed, sporty and designer cars to customers the company is neglecting the EU emission norms. There has been several news of the company taking political support to escape penalties and norms immorally. However, strict legal framework is compelling them towards thinking about other opportunities. In this backdrop a qualitative research has been conducted to know about customers’ perception and buying interest after knowing about the challenge. Primary data has been collected through a questionnaire survey among a sample size of 20 respondents. It was found that though customers check size, style, brand name and colour first, when it comes to buying a car but they would not prefer to buy a vehicle which does not meet legal emission standards. Table of Contents Executive Summary 2 SECTION 1: INTRODUCTION 4 1.1 Background 4 1.2 Research Problem 4 1.3 Research Objectives 4 1.4 Research Questions 5 SECTION 2: LITERATURE REVIEW 5 SECTION 3: METHODOLOGY 6 3.1 Justification of Methodology 6 3.2 Data Collection Tool 6 3.2 Sampling 6 3.3 Ethical Consideration 6 SECTION 4: DISCUSSION OF FINDINGS 7 SECTION 5: CONCLUSION 10 Reference List 12 Appendix 13 SECTION 1: INTRODUCTION 1.1 Background This research paper will throw light on the challenges and the opportunities of Bayerische Motoren Werke (BMW) AG. BMW AG is an automobile company, headquartered in Bavaria, Germany. The company is into manufacture and sales of luxury cars and motorcycles. Like every automobile company, BMW AG is also facing various challenges in the present turbulent economic environment (McKinsey & Company, 2008; Reinhardt, 2000). However, BMW AG functioning in the luxury car segment has faced less heat than many well-known car manufacturers. In this paper, the discussion would be on a significant yet neglected issue that BMW is facing; that is about meeting emission standards. The objective of every car manufacturer is to offer speed, design and style in their cars. Environmental norms and regulations are being compromised with in the race of horsepower (CBS Money Watch, 2013). 1.2 Research Problem One of the major challenges that the German carmakers are facing is reconciling with the environmental standards that has been crafted for European Union (EU). BMW is also facing similar challenge because the company claims of owning some of the most powerful cars. However, the rate of carbon dioxide and other greenhouse gas emission level is what the company is yet unable to control. 1.3 Research Objectives The objective of this research paper would be firstly, to discuss the cause and effect of the challenge that has been considered in this paper, which is meeting the EU environmental and emission standards. Secondly, the study would identify opportunities for BMW AG, so that the company can eliminate the discussed challenge. 1.4 Research Questions The research questions have been drawn on the basis of the research problem and the pre-determined objectives; they are stated below: Q1: What is BMW AG’s perspective towards such challenge? Q2: What opportunities or risks the company (BMW Automobiles) can get to see, if the discussed challenges are eliminated? Q3: What is the customer’s perception for the companies and its offering after knowing about such challenges of BMW cars? SECTION 2: LITERATURE REVIEW When a board member of BMW AG announced about the new 340 horsepower sDrive35is, which is another version of BMW’s Z4 and claimed that it has similar gram per kilometre of carbon dioxide, the journalist present had less ideas what Ian Robertson was saying. They understood that the car has the capability to go from 0 to 62 mph in just 4.8 second. The European Union (EU) has strict norm related to carbon dioxide of 120 gm/km. According to the EU emission framework for automobile industry, around 65 percent of new cars manufactured, must abide by the emission standards by 2012. Similarly, 75 percent by 2013, 80 percent by 2014 and 100 of new cars manufactured, must abide by the emission standards by 2015 (BMW Group, 2012; CBS Money Watch, 2013). The German carmakers are firstly, facing an issue in case of manufacturing such cars which abide by the EU emission norms and secondly, it is becoming extremely difficult for them to convince the American customers to buy diesels. The American customers prefer environment friendly products and that is why support hybrids over diesel (King, 2013; Moore and Manring, 2009). The company is accepting the fact that they are severely facing the challenge to meet the EU emission standards that is proposed for 2020. The chairman of the company, Norbert Reithofer has communicated with the shareholders regarding the issue and proposed that in such case the company needs to intensify their production of plug-in-hybrid vehicles (Hassall, 2012; Faiz, Weaver and Walsh, 1996). It has been found that BMW AG has been availing various political tacks in order to escape the EU emission norms. They are even not reporting exact CO2 emission figures in the process and presenting false figures (Nawrocka, 2008). However, following the path of its competitors, such as Toyota, BMW AG is also moving towards manufacturing hybrid cars, which is an opportunity to diversify in a less explored segment of the automobile segment of the industry (CBS Money Watch, 2013; Newell, 2000). SECTION 3: METHODOLOGY 3.1 Justification of Methodology In this research study a major challenge of BMW AG has been discussed. In the present scenario not meeting emission standards is indeed a threat for the company producing cars. So a qualitative analysis would be done in order to inform customers regarding the challenge the company and its products are facing, their feedback regarding their purchase behaviour after knowing about this would be collected and options related to opportunities for the company would be explored through their feedback. 3.2 Data Collection Tool For this research study primary data would be collected with the help of a semi-structured survey questionnaire consisting of both open-ended and close-ended question. A structured observation would be conducted, through which all the events would be recorded systematically for collecting data. 3.2 Sampling A sample size of 20 has been ascertained for conducting the survey. The respondents have been selected randomly, irrespective of gender or age. However, the only criteria was that the respondent needed to either own a car or need to have experience of driving cars. 3.3 Ethical Consideration The research study includes primary data collection, so human subjects are involved in the study. However, attention has been paid to the fact that the personal information of the respondents or their feedback is kept confidential. SECTION 4: DISCUSSION OF FINDINGS This section of the research study would be evaluating the data collected from the respondents, who were selected on a random basis. The challenge of BMW AG has been already discussed in the research problem and the companies’ perspective to deal with the situation has been examined through a comprehensive review of the literature. However, it is important to capture the thought process of the customers too because they are at the receiving end. So a semi-structure questionnaire was prepared for a sample size of 20 respondents. The questionnaire was simply designed, so that the respondents do not face difficulty in filling them. Among 20 respondents, 11 were male and 9 were female, who are within the age group of 25-55 years. The questions in the questionnaire and their responses have been stated below: 1. What is you first criterion when you buy a car? Among 20 respondents, 9 of them said colour, space, size, etc, 6 said they would choose style, design and brand name, 4 respondents chose affordability and 1 of them said emission standard to be his/her first criterion. 2. Does meeting environmental standard or emission standard matter to you, especially in case of cars? 12 out of 20 respondents said yes because they would want a healthy society and would not support such products which cause pollution. 8 respondents said that they can buy such cars if it is affordable or of good brand because anyways every car emits fuel smoke. 3. What is the EU emission norm, do you know? 8 respondents said that they know that there are certain EU emission norms for new cars, but they do not know about the norms in detail. 9 of them have no idea about the EU emission norms for cars because they do not check those, when it comes to buying a car. 3 of them actually know about the EU norm and they said that for new cars, carbon dioxide of 130 gm/km is allowed. According to this norm, around 65 percent of new cars must abide by the norm by 2012, 75 percent by 2013, 80 percent by 2014 and 100 by 2015. 4. Even after knowing that the car which you are willing to buy is not meeting the EU emission standards, will you buy it? Although all the 20 respondents were in dilemma whether to say yes or no in this case, yet finally, it was found that around 9 respondents finally agreed that they would go for such cars. However, rest of the 11 respondents did not agree because they somehow realised that buying such vehicle would encourage these carmakers to break rules and pollute environment. 5. What are the suggestions that you can offer to such carmakers? In this case there were various different suggestions that came up from all the 20 respondents. However, it can be summarised in a few. Firstly, the obvious and common suggestion was to compromise speed and mileage for meeting emission norms of EU. Second, was to venture towards eco-friendly vehicles such as hybrid cars. Thirdly, identifying eco-friendly fuel or car design, which emit less greenhouse gas. The customers’ responses are clear from the findings of the questionnaire survey. The research problem of this paper was failure of BMW AG in meeting the EU emission standards. Keeping in mind this challenge of the company, certain objectives were considered for the research. Based on the objective the first question of the research was to identify the perspective of BMW AG towards meeting the challenge. This has been thoroughly discussed in the literature review. A comprehensive discussion on the wrong practices of the company, it future plans have been analysed and it has been found that the company is following its competitors to produce hybrid cars. The second research question was on the opportunities or risks that the company might face in the process of meeting EU emission standards. According to the literature review and the suggestions of the customers, it can be said that meeting emission standards through research and innovation for eco-friendly fuel, diversifying towards hybrid cars or simply compromising with cost and speed for meeting the standards are the probable opportunities that the company can explore. The third research question was related to customers’ perception towards buying such vehicle, which is not meeting EU emission standards, is absolutely negative. Majority of the customers will not venture in such asset which is not meeting legal environmental norms. SECTION 5: CONCLUSION This research paper was developed in order to explore the challenge and opportunities of BMW AG. In the era, when protection of environment from greenhouse gases and carbon footprint has become an important issue, countries are setting legal framework and compelling companies to follow them, so that risks can be controlled for a better future. BMW AG is among the luxury carmakers which are in the puddle of not meeting emission standard set by EU. In this paper the objective was to explore the literature to identify the challenge and opportunities of BMW AG and know about customers’ perception regarding such companies. The research questions were formulated in such a manner so that the challenge can be identified, customers’ feedback and suggestions can be gathered, so that through that future opportunities for BMW AG can be recognized. A qualitative research was conducted by collecting primary data from 20 respondents, through random sampling method. It was found that though the first criterion for majority of the customers is not the EU emission standards, when they go for buying a car. Many of them have no idea what EU emission norms are, but majority of the customers would not willingly buy such car, which does not meet emission standards because they are concern about their environment and society. According to the respondents, buying cars from companies, which are not meeting emission standards means encouraging them to disobey the EU emission norms that is not good for the society. Based on the opportunities discussed in the literature review and the information received from the respondents, certain recommendations can be suggested; they are stated below: Firstly, BMW AG should take an inclusive approach towards their product responsibility. They should focus on the development of fuel-efficient vehicles that are safe for the drivers. This step also involves eco-friendly development, resource efficient process and effective customer care. Secondly, Like Toyota BMW AG should pave their way towards hybrid technology and also work on new advances such as lithium-ion cell expertise. Furthermore, investment in efficient dynamic would also be helpful to deal with this issue because these emission norms are going to become even stricter in the near future. Thirdly, following the EU emission norms for manufacturing new BMW cars will make the vehicles safer. The buyers of BMW cars are affluent enough to pay a little higher price if they receive a safe car. Following EU norms ethically will increase the goodwill of the company among the customers. Reference List BMW Group, 2012. Product Responsibility. [online] Available at: [Accessed 7 November 2013]. CBS Money Watch, 2013. BMW Cites Challenges and Opportunities in 2010. [online] Available at: [Accessed 7 November 2013]. Faiz, A., Weaver, C. S. and Walsh, M. P., 1996. Air pollution from motor vehicles: Standards and technologies for controlling emissions. Washington D. C.: World Bank Publications. Hassall, D., 2012. Emissions Standards Present ‘Huge Challenge’. [online] Available at: [Accessed 7 November 2013]. King, D., 2013. BMW, Audi Lead the Pack on Misrepresenting CO2 Figures in Europe. [online] Available at: [Accessed 7 November 2013]. McKinsey & Company, 2008. How companies think about climate change: a McKinsey global survey. The McKinsey Quarterly, p. 18. Moore, S. and Manring, S., 2009. Strategy development in small and medium sized enterprises for sustainability and increased value creation. Journal of Cleaner Production, 17(2), pp. 276-82. Nawrocka, D., 2008. Environmental supply chain management, ISO 14001 and RoHS. How are small companies in the electronics sector managing? Corporate Social Responsibility and Environmental Management, 15(6), pp. 349-60. Newell, P., 2000. Climate for change: Non-state actors and the global politics of the greenhouse. Cambridge: Cambridge University Press. Reinhardt, F. L., 2000. Down to earth: Applying business principles to environmental management. Boston: Harvard Business School Press. Appendix Questionnaire Survey Aim: To investigate the purchase behaviour of customers for cars, especially companies like BMW, who are failing to meet emission standards and identify opportunities for improvement from customer feedback. Profile of the Respondent 1. Name of the Respondent:________________________________________________ 2. Age: ___________________________________________________________ 3. Country: ___________________________________________________________ 4. Tel: 5. E-mail: 6. Gender: BMW AG Accounting Framework: 7. What is you first criterion when you buy a car? Style, design and brand name Mileage Car meeting emission standards (eco-friendly) Affordability Colour, space, size, etc 8. Does meeting environmental standard or emission standard matter to you, especially in case of cars? Yes, why? ................................................................................................................................ No, why? ................................................................................................................................. 9. What is the EU emission norm, do you know? Yes, then what is it? No 10. Even after knowing that the car which you are willing to buy is not meeting the EU emission standards, will you buy it? Yes, why? No 11. What are the suggestions that you can offer to such carmakers? _____________________________________________________________________________ THANK YOU FOR YOUR CO-OPERATION! Read More