Operations Management of BMW
Introduction to the Study
Bavarian Motor Works, commonly known as BMW, is a large automobile company headquartered in Munich, Germany. This company majors in manufacturing of automobile and motorcycle engines used to make BMW cars that compete with other two big brands such as Audi and Mercedes-Benz. Its cars make it included in the list of the best-selling luxury cars in the world. The BMW Company produces three main brands that are BMW, MINI, and Rolls-Royce. The BMW group is also strongly positioned in financial services sector and the motorcycle field.
The company targets generating high profits through focusing on premium segments within the international automobile market. In 1994, BMW Group established production facilities outside Germany. Today, BMW exports approximately 50,000 cars yearly to its outlets across the world (Dempsey, 2014). Its family-friendly wagons, sports cars, and spacious SUVs have dominated the automobile market in the United Arabs Emirates for a long time. Success of the BMW brands in the UAE is associated with the company’s commitment to establishing a sustainable value chain.
Generally, the BMW Group in the Middle East recorded the best annual sales in 2013. The UAE remains the largest market for the BMW brands in the Middle East due to the company’s effective customer-focused strategy (Warren, 2014). The company has recently introduced new cars with new customer services that have contributed to high customer satisfaction, which creates a great demand for the BMW brands.
The BMW Group in the UAE has streamlined its sustainable operations, leading to the long-lasting success. The operations management department is committed to overseeing, designing, and controlling the manufacturing process of the BMW automobile brands. The company has designed quality business operations that ensure efficient use of available resources through innovative production of cars (Warren, 2014). The UAE market is also growing due to good performance of the operations management department, which ensures the company’s operations meet customers’ requirements.
Strategy of the Company
The BMW Group in the UAE has developed one of the best corporate strategies in the automobile industry around the world. Its key strategy is the sustainability strategy, which ensures that the company adopts the best sustainable operations. Through this strategy, the BMW Group pursues the mission of becoming the best producer of quality products and services to customers in the UAE as well as around the globe (Dempsey, 2014). In order to attain its mission, it is working on developing and establishing sustainable business practices in its entire value chain. The company is advancing its environmental monitoring system to establish the best way to attain corporate development.
Under the corporate sustainability strategy, the company is committed to ensuring long-term growth, creation of access to new customer segments, attainment of greater profits, as well as ensuring continuous access to future technologies. These four pillars make the foundation of this strategy (Dempsey, 2014). Full implementation of the four pillars has been associated with the increased market share of the company in the UAE, considering efficiency and sustainability of operations. The company has participated in the World Business Council for Sustainable Development with the aim of trying to establish principles required for sustainable development in business.
Responsible risk management and efficient utilization of available opportunities are some of the other business strategies adopted by the BMW Group. Due to high competition and complexity of the today’s market trends, the company has an established risk management system that ensures any risk that arises is dealt with as soon as possible. Some of the risks that pose huge threat to the company are political, economic, and social risks, climate risks, and critical supply chain risks (Slack, Chambers, & Johnston, 2010). The other main strategy of the company is corporate governance, which ensures that the principles of good corporate governance are geared towards long-term value creation.
The BMW Group in the UAE has various operational areas that ensure the company’s strategy is achieved. Some operational areas are marketing and sales, customer services, research and development, as well as production operations. The company has designed a mass customization model that enables customer services and the marketing and sales department to be able to satisfy specific needs and wants of every individual customer in the market. Through online ordering and call center, customers are able to specify their requirements for efficient order processing and delivery.
Premium products and services create a huge impact on customers. The BMW Group ensures that superior quality of its automobiles is maintained in the production operations. The company has recruited many employees who ensure that quality demands of customers are met and timely deliveries are achieved (Brown, 2013). In the UAE, the company works through customer-oriented sales and production process, meaning that all customers can order automobiles with specific requirements and still get the product in time.
The BMW Group’s marketing strategy targets people aged 25 to 45 years belonging to the upper middle class. The marketing operations of the company are more focused on the market niche in the UAE and try to integrate core values of its operations in the system. The main values considered in the marketing survey are technology, quality, performance, and exclusivity of products and services. The company’s marketing team majors on four characteristics of the company’s products and services to increase the market share, which raises the sales volume in the UAE.
The BMW Group conducts forecasting to project sales of its automobiles in the UAE. In addition, forecasting is used to project trends in the customer response to new models of cars introduced into the market. In 2005, the company recorded a 25 percent increase in its sales. Despite high exchange rates of the euro currency, the retail sales had grown tremendously with more sales recorded for the BMW 7 Series, X5 and 3 Series, which were new brands in the market at that time (Brown, 2013).
By 2019, BMW forecasts to sell 1 million units of new small car as it endeavors the vision of becoming the world’s biggest carmaker producing and selling premium automobiles. The company is expected to record an increase of 24 percent of car sales in 2014 (Warren, 2014). In the company’s forecasted statistics, the sales are expected to increase in the future due to seasonal promotions conducted by the marketing team (Brown, 2013). From the forecast of the economic activity across the entire UAE, the GDP is expected to grow by 3.9 percent by the end of 2014.
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The GDP is expected to grow even further to 4.0 percent in the coming year. The main reason for the rapid growth of the GDP of the UAE is the passing of the crisis of huge debt funding that has oppressed the economy. Therefore, the growth of the GDP is expected to boost the sales of the BMW Group even further, considering that the company is undertaking an aggressive marketing campaign for its new efficient and affordable automobiles. The rising demand for premium cars in the UAE has led the management to diverge its resources to produce such cars. The management has invested heavily in research and development in order to ensure that the company produces cars that match consumer changing tastes in the future.
Product and Service Design
The BMW Group Company has introduced three new designs of cars in the UAE market, which tend to have more demand. The stunning BMW M235i, the alluring BMW M3, and the BMW i8 models have recently been introduced in the market. The BMW i8 is commonly known as the i8 Sophisto Grey named after its grey paint finish among four main color finishes (Brown, 2013). Many customers in the UAE admire the model because of this particular shade, which resembles Batman i8.
The model has many blue details that blend with the grey color to produce an appealing color similar to that of hybrid sports cars. The new model is a clear personification of a hybrid sports car that has for long dominated the UAE market (Brown, 2013). The Sophisto Grey i8 has many modifications that make it look even more appealing to customers. It has a rear-view camera, speed limit recorder, collision warning upon pedestrian recognition, and many more other specifications that contribute to its high performance.
A new modification of the BMW M5 that has been in the market for more than 30 years has been introduced in the UAE market. The modification is focused on producing a high performance vehicle suitable for discerning customers in the entire Middle East, including the United Arabs Emirates. Under the bonnet of the new model, there is a 4.4 litre V8 engine with an M Twin Power Turbo technology that is more powerful than the old model.
The Abu Dhabi Motors, which is the exclusive importer of BMW in the UAE, has discovered a BMW ADM iPhone Application that helps users to explore the fun of using BMW products and services. The application enables a customer to view products and services offered by BMW by just tapping a button. The application is offering a unique service in the automobile industry, thus raising the demand for BMW products and services in the UAE.
Strategic capacity planning is important for every organization undertaking the production process of goods and services. The main objective of managing capacity is the need to reach an optimal level of production whereby available resources are utilized to completely meet the demand of customers (Slack et al., 2010). The BMW Group practices effective capacity design, which explains how it is able to satisfy the the large market in the UAE. The company’s effective capacity has enabled it to reduce the cost of availing its products and services to customers.
BMW has well-designed facilities in the UAE that are large enough and suitable for expansion when production needs to be increased. The layout of workshops is designed along the same standards as those in the headquarters in Munich (Warren, 2014). Greater capacity is achieved through production of uniform products and services across all markets in the world. Standardization has ensured that the BMW car models remain trusted by customers because its performance is guaranteed for every car sold.
Capacity of BMW operations is guaranteed by the supply chain management, which ensures that supply of products and services cannot be hindered by a failure of its supply chain. The increased demand for the BMW car models has been satisfied by the supply chain system designed during introduction of the car into the market. Human factors are well-managed through continuous training offered to workers to equip them with current innovations (Dempsey, 2014). Through the competitive recruitment process, BMW has acquired qualified workers with enough skills and experience to offer quality products and services demanded by customers.
Every company must apply at least one of location planning techniques of its facilities in order to ensure efficient service delivery to customers. The BMW Group has been expanding its existing facilities as well as establishing new locations in the United Arabs Emirates to cater for a rapidly growing market of the BMW products and services (Dempsey, 2014). Most showrooms are located in the city of Abu Dhabi, which is one of the largest markets in the world.
The analysis of the best location for the BMW Group facilities in the UAE is based on cost-volume-profit analysis. The analysis considers location that yields more profits compared to the cost incurred in operations (Dempsey, 2014). The BMW Group has opened its largest showroom in the world in Abu Dhabi in the United Arabs Emirates, showing commitment of the company to developing adequate facilities to cater for the rising demand. Abu Dhabi Motors has built the facility covering over 35,000 square metres with its wide area being able to accommodate 172 car parks for customers and 120 work bays for the three brands that are BMW, MINI, and Rolls-Royce vehicles.
The art of the facility has been designed to allow displaying 80 new cars and 10 motorcycles. It is also constructed to provide recreational facilities for customers such as cinema theatre, cafes, children play area, as well as waiting rooms for men and women. The showroom has been well-designed to attract automobile customers who need extra service for their money. Sales and Marketing Chairperson Ian Robertson claims that the location of the biggest showroom for BMW in the UAE is strategic. In addition to the country being one of the largest markets of the premium car models, the potential future growth of the UAE is evident from the rapidly rising GDP.
Process Selection and Facility Layout
Operations management is a strategic coordination of production processes and workers to maximize output of the company while minimizing cost of production (Slack et al., 2010). Process selection in BMW involves strategically selecting the best processes that can produce quality product when introduced in the production process. Facility layout of work bays used to assemble automobiles is designed to ensure all equipment, machinery, and workers are well-positioned to enhance efficient production.
The big showroom constructed in the UAE by the BMW Group has been well-partitioned to make a presentable layout that distinguishes position of every process (Dempsey, 2014). The building holds a lot ot equipment that is used in the production process. However, machineries are closely linked to ensure that holding time from one station to another is greatly minimized. The facility layout of the showroom has been well-designed to make it suitable for increased production in the future. Therefore, despite the sales growth reported after its construction, the company has an ambition of utilizing the building more efficiently to achieve greater results. Its layout accommodates more than 450 workers who are well-positioned to ensure full utilization of available facilities.
The process selection for the company has also been crucial because it identifies the most efficient way to perform processes in order to increase the level of output. The management has installed automated systems to ensure that designing, production, and assembling of automobiles is made efficient and cost effective. The big showroom provides a reserved space whereby testing of cars is done to ensure that quality is assured before they are displayed in the showrooms.
Quality is the ability of a product or service to meet or go beyond the customers’ expectations. Different customers from distinct regions will have different expectations for the same product. The quality of a product is determined by product design, process design, delivery of the service, and the after-sales services (Slack et al., 2010). The BMW Group has continuously emphasized the quality of their automobile products in order for them to be viewed by customers as premium models.
The BMW Group has mainly dominated the automobile market in the UAE due to the production of vehicle models with special features that attract customers. Engines of different models have high performance and speed that suits many customers. Despite many cars sold in the UAE being used cars, their performance is exemplary good, meaning that they are of high quality (Warren, 2014). Other models tend to look aggressive with redesigned bumpers especially for sports cars. With attractive designs, strong engines, and generally high quality, many customers prefer them despite their high prices. The BMW Group has realized that many of their customers in the UAE like quality products and have very little worries about price provided quality is guaranteed.
To conclude, every single aspect discussed in the management paper is crucial in operations management of BMW. Operation management entirely involves provision of quality products and services to customers whenever they need it. The quality of automobile products produced by BMW in the UAE is guaranteed. This is because customers have expressed their satisfaction by buying more BMW car models than any other car brands in the market. Therefore, the company needs to maintain the quality of products or even offer cars of more quality than customers expect through conducting aggressive research and development for successful innovation.