Group Assignment 2 Report on BMW.. scored HD; Turn it in 0% PDF

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Group Assignment 2 Report on BMW.. scored HD; Turn it in 0%...

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3.0 Executive summary

BMW (Bayerische Motoren Werke AG) founded in 1916 is one of the world’s renowned automakers that produce luxury cars which deliver superior performance. Besides cars, BMW also produces engines and trucks. It is also the parent company to two other brands: MINI and Rolls Royce. Along with Audi and Mercedes Benz, BMW is one of the companies in the German Big 3 automakers. At present BMW has 23 manufacturing and assembly plants operating in 13 countries and 5 Research and Development facilities around the world (Slideshare, 2010).

4.0 Problem identification and analysis According to BMW Group (2013) BMW’s vision is to be the top supplier of premium products and finest 1 | Page

services for individual mobility and its mission is to be “most profitable and to enhance long-term value in times of change”(BMW Group, 2012) . Forbes (2013) has declared BMW being the top in the German automakers for all seven dimensions on a global level, earning the title of world’s most reputable company for 2013. BMW has strived to be efficient, by operating at full capacity and has successfully achieved the economies of scale. Besides that, BMW is known as for having the most stylish automobile designs, with hi-end technology. Recently the BMW i series has been a major technological breakthrough which is a combination of luxury, sustainability and environmentally friendlier than other hybrid cars. In the 4 building blocks of competitive advantage BMW has excelled and to maintain its reputation in terms of efficiency and innovation. However, BMW is facing the issue on the welfare of its employees and the issue on quality assurance. 4.1 Welfare of the employees BMW itself was known internationally for their effort to adapt to the current changes in the society, such as responding to the current trend of customers supporting environmental friendly products. However, BMW is advised to concentrate more on the well-being of its employees, while expanding further its business. According to Carroll (1991), corporate social responsibility has four aspects: legal, economical, ethical and philanthropic. It is also pointed out that within the ethical responsibilities, company should always acknowledge the contributions of employees, who is one of the stakeholders (Carroll, 1991). Unfortunately, the strikes happened in recent years have proven that BMW needs to improve at maintaining the welfare of its employees. In 2008, a great numbers of mechanics and service writers at BMW of Mountain View, United States, have gone on strike after they are told that their pay-checks will entirely depend on the commissions rather than the salaries that they are given till then (DeBolt, 2008a). Eventually, the strike is resolved in a harsh manner, whereby compromise is forced to be made by the striking employees for BMW has started to call in replacement workers to take over the roles of those on strike (DeBolt, 2008b). In 2010, another strike has arose at the BMW South African plants. This strike has signaled to the world that employees at the plants are indeed mistreated for they are not paid adequately (Boeriu, 2010). This strike has ended a week later with the agreement that the employees will be receiving 10 percent increment for the year and 9 percent for the following two years, rather than the initial proposed deal of 7 percent increment for the first year and an increment for the subsequent two years that equate to the consumer price inflation (Boeriu, 2010). Another strike has also happened in MINI's Oxford plant in United Kingdom for the workers are to conditionally accept the extra 30 working hours prior to salary increment (Ruddick, 2012). The worst strike ever would be the recent strike in 2013 in South Africa. The strike has not only caused a great loss to BMW and other players in the industry like Toyota, but it is also a great sign to all the car manufacturers of the need to maintain the welfare of their employees (Vollgraaff, 2013). The outcry of these unsatisfied employees, however, is deemed not to have really draw the immediate response by the authority, even though the agreement of 10 percent increment for the first year and 8 percent in subsequent years is made later (England, 2013). Zibi (2013) saw the reluctance from the automobile industry's senior management as the cause to this one month's long strike. Although all these series of strikes, especially this recent strike, have eventually drew the attention of BMW towards the topic of responsible corporate citizen, it was pointed out by the BMW spokesperson that collective collaborative by the players within the industry are crucial (Gernetzky, 2013). Deputy 2 | Page

general secretary of National Union of Metalworkers of South Africa (Numsa) in response to the decision of BMW, that the country is removed from the list of consideration for the production of a new model BMW, commented that BMW is to apologize to the union as the union steps in on the basis of facts rather than a mere emotional drive for a strike to cause the economic losses incurred by BMW (Gernetzky, 2013). Besides, He also emphasized on the great contributions that are made by the fellow African employees towards the BMW's profit (Gernetzky, 2013). 4.2 Quality Assurance The BMW quality management system of production plants are certified with EN ISO 9000 f and has been attested several times for delivering first class quality products by the US American market research institute J.D. Power & Associates. Despite of this, there have been problems with the quality of the cars and there were situations when BMW had to recall their cars. According to the Consumer Affairs (2007), BMW has refused to be accountable for the escalating number of failures which caused the owners of their products to spend a handsome amount of money to repair transmission problems. This issue would lead to no reverse to the troubled cars. Autoblog (2008) has also reported that BMW recalled 200,000 units of the 3 series, 5 series and the X3 SUVs to fix possibly malformed air bag sensors. Another report regarding the recall says that the National Highway Traffic Safety Association (NHTSA) has warned that in some of the recalled BMW SUVs the airbags might not deploy in cases of serious accidents. BMW has recalled the cars for repairing, and it has planned to extend the warranty of the airbags to 10 years without any mileage limit. BMW, once again, recalled all the cars of the models 5 series and 6 series which were produced between the years 2003 and 2010 due to incorrect assembly of the battery cable cover inside the boot. This type of defect could result in electric malfunctioning which would bring the car to a standstill or in some cases cause to charring too (Wall Street Journal, 2012). The worst recall in the recent years happen in 2013, whereby BMW recalled 11.3 million units of cars again for the potential problems of the battery cover (Bubblenews, 2013). This is because the problems with the VANOS (variable camshaft timing system) would cause the engines to be damaged if the symptoms, that are identified and led to the cars to be recalled, are ignored (sgCarMart.com, 2014). Although the recall rates by the automakers have risen up by 4% and the auto sales has declined by 10% as compared to the last decade (Chicago Tribune, 2014). Still it does not give BMW the advantage to recall from time to time. BMW company shares in Frankfurt fell by 1.47% as stated in BBC News (2014). Enormous markets like China and the USA are affected tremendously due to problems and actions taken by BMW too. It is, therefore, evident that BMW should acknowledge this sign of poor total quality management which leads to poor customer defined quality. Total quality management is defined as “combined attempt to ameliorate quality performance at each stage of the organization” (Charantimath, 2011). According to Keiningham & Aksoy, (n.d.) it is wrong to assume the mantra that, customers purchase products, instead customers purchase solutions to their problems. Therefore, if the products do not meet the perceived expectations of the customers and they are dissatisfy with them, then the products will be construed as poor quality. The recalls show that BMW is trying hard for the past several years to fix the faults in their products to ensure safety of the customers, but on the other side there are plenty of customers who are still dissatisfied with their purchases due to the constant visibility of faults. Therefore, some of their clients have also declared BMW cars as not being fit for purpose (Honestjohn, n.d.). Harvey & Green (1993) defined fitness for purpose as the quality that gratifying customer’s 3 | Page

necessities, needs or wants.

5.0 Statement of major problems

There are two major issues that are faced by BMW currently. Firstly, BMW would need to reconsider their way of maintaining their stakeholders, especially their employees. They have witnessed the worst strike ever in 2013. The amount of losses included are not just the evident drop of car production, but also includes the losses that are incurred by all the employees who are deprived of their benefits (equal pay) till the day of strike. Even though salaries incremental agreement is made nonetheless to end the strikes, BMW has not really address the need of them to protect the welfare of the employees who have generated a great deal of profit for them. These employees are ranging from those working in the plants to those at the front line, those who provide customer services for the car repairs, for instance. Secondly, BMW would need to have a proper quality control mechanism, in order to avoid further disappointments from the loyal customers or even the first time BMW buyers. BMW has 4 | Page

recalled several thousands of units of cars every year to check and repair technical and electrical failures to ensure safety of their customers. The major problems with their cars that compelled BMW to recall their cars are: airbag deployment issues, battery was mounted incorrectly, loose electrical bolts, hydraulic brakes, transmission, and VANOS problems, which might even lead to engine failures. BMW has marketed itself as the premium car manufacturer and this would also mean that customers will expect the quality of the cars purchased are that of high quality. However, the continuous disappointments, such as delays in repairing and the common practice of BMW by giving replacement or refunds for those troubled drivers who face constant difficulties with their cars, would potentially jeopardize BMW future growth. This is because customers would pass on the word of mouth that BMW does not do a good job in keeping their promises instead they make the customers pay more in the names of replacements and repairs.

6.0 Generation and evaluation of alternative solutions

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BMW should that this approach AUSFUR (IM) thingy the first one?

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References BMW Group (2014, April 9). BMW Group sales top 200,000 for first time in single month | Pressemitteilung BMW Group. Retrieved May 11, 2014, from http://www.presseportal.de/pm/28255/2709142/bmw-group-sales-top-200-000-for-first-time-insingle-month Boeriu , H. (2010, August 22). Strike over at BMW South African plant. Retrieved May 11, 2014, from http://www.bmwblog.com/2010/08/22/strike-over-at-bmw-south-african-plant/ Carroll, A. B. (1991). The pyramid of corporate social responsibility: Toward the moral management of organizational stakeholders. Business Horizons, 34(4), 39-48. doi:10.1016/0007-6813(91)90005-G DeBolt, D. (2008a, July 28). Replacement workers force end to BMW strike | News | Mountain View Online |. Retrieved May 11, 2014, from http://www.mvvoice.com/news/2008/07/28/replacement-workers-force-end-to-bmw-strike DeBolt, D. (2008b, June 6). Workers go on strike at BMW dealership | June 6, 2008 | Mountain View Voice | Mountain View Online |. Retrieved May 11, 2014, from http://www.mvvoice.com/print/story/2008/06/06/workers-go-on-strike-at-bmw-dealership England, A. (2013, October 6). South African auto employees end strike. Retrieved May 11, 2014, from http://www.ft.com/cms/s/0/b611b88e-2d0c-11e3-8281-00144feab7de.html#axzz31Pc0MPop Gernetzky, K. (2013, October 11). BMW confirms new model lost to SA through strike | Business | BDlive. Retrieved May 11, 2013, from http://www.bdlive.co.za/business/2013/10/11/bmwconfirms-new-model-lost-to-sa-through-strike Ruddick, G. (2012, April 11). Mini's Oxford plant facing first strike in 30 years over pay - Telegraph. Retrieved May 11, 2014, from http://www.telegraph.co.uk/finance/newsbysector/transport/9198420/Minis-Oxford-plant-facingfirst-strike-in-30-years-over-pay.html Vollgraaff, R. (2013, October 14). BMW’s Investment Embargo Threatens South African Economy Bloomberg. Retrieved May 11, 2014, from http://www.bloomberg.com/news/2013-10-13/bmw-sinvestment-strike-threatens-south-african-economy.html Zibi, S. (2013, October 11). Missing the point by a mile. Retrieved May 11, 2014, from www.financialmail.co.za/opinion/fromthefront/2013/10/10/missing-the-point-by-a-mile %20%20%20%20capitalist,%20don%20really%20care%20for%20the%20welfare%20of%20the %20people Autoblog (2008, August 13). BMW recalls 200,000 vehicles over issue with front passenger air bag Autoblog. Retrieved May 10, 2014, from http://www.autoblog.com/2008/08/13/bmw-recalls-200000-vehicles-over-issue-with-front-passenger-air/ BBC News (2014, April 11). BBC News - BMW recalls 156,000 vehicles in US after bolt defect. Retrieved May 11, 2014, from http://www.bbc.com/news/business-26991354 BMW Group (2013). Check against delivery. Retrieved from http://www.bmwgroup.com/e/0_0_www_bmwgroup_com/investor_relations/corporate_events/_ 7 | Page

pdf/2013/BMW_Group_AIC_201 3-0320_Statement_Dr_Eichiner.pdf BMW Group (2012, April 10). BMW Group : Company : Company portrait : Strategy. Retrieved May 9, 2014, from http://www.bmwgroup.com/e/0_0_www_bmwgroup_com/unternehmen/unternehmensprofil/stra tegie/strategie.html Bubblenews (2013, March 26). BMW Recalling 1.3 Million Cars To Fix Electrical Flaw - News - Bubblews. Retrieved May 11, 2014, from http://www.bubblews.com/news/347387-bmw-recalling-13-millioncars-to-fix-electrical-flaw Chicago Tribune (2014, April 4). Automotive recalls on pace for record high - chicagotribune.com [Web log post]. Retrieved from http://www.chicagotribune.com/classified/automotive/chi-total-recallwhy-so-many-automakers-are-recalling-so-many-vehicles-20140404,0,390863.story Consumer Affairs (2007, November 1). Transmission Failures Plague BMW Owners. Retrieved May 10, 2014, from http://www.consumeraffairs.com/news04/2007/01/bmw_transmission.html Forbes (2013, September 4). The World's Most Reputable Companies - Forbes. Retrieved May 9, 2014, from http://www.forbes.com/sites/jacquelynsmith/2013/04/09/the-worlds-most-reputablecompanies-2/2/ Harvey & Green (n.d.). Analytic Quality Glossary. Retrieved May 11, 2014, from http://www.qualityresearchinternational.com/glossary/fitnessforpurpose.htm Honestjohn (n.d.). Rejecting a car as not fit for purpose | Ask Honest John | Honest John. Retrieved from http://www.honestjohn.co.uk/askhj/answer/38726/rejecting-a-car-as-not-fit-for-purpose SgCarMart.com (2014, April 12). BMW recalls half a million cars worldwide due to defective engine part. Retrieved May 11, 2014, from http://www.sgcarmart.com/news/article.php?AID=10146 Slideshare (2010, November 23). Retrieved May 9, 2014, from http://www.slideshare.net/lorenzilling/bmw-market-analysis-5879711 Wall Street Journal (2012, March 26). BMW Recalling 1.3 Million Cars To Fix Electrical Flaw - Driver's Seat - WSJ. Retrieved May 10, 2014, from http://blogs.wsj.com/drivers-seat/2012/03/26/bmwrecalling-1-3-million-cars-to-fix-electrical-flaw/ Charantimath, P. M. (2011). Total Quality Management (2nd ed.). Noida, UP, India: Dorling Kindersly (India) Pvt. Ltd. Keiningham, T., & Aksoy, L. (n.d.). The Customer Defines Quality. Retrieved May 12, 2014, from http://www.whyloyaltymatters.com/media/Customer_Defines_Quality.pdf

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if you refer to unit guide the assessment part u will find that we somehow have all these as our hints for this assignment. I guess we have to somehow put them in this assignment, at least to show that we have all these: Overview of the automobile industry + current position (the maturity of the market) + pressures (how competitive); Current position of BMW in the industry ; Factors contributes to the survival and prosperity of BMW; major problem faced + symptoms + problem origin =========== **Also for section 7, IDENTIFY range of Solutions to be implemented for each problemm + EVALUATE the pros and cons of the suggested practical solutions + Should the soultinos recommended be combined ? ** Stection 8, JUSTIFY + HOW recommendations can be implemented, additinoal actions to be taken, who would be responsible and when and in what sequence these actions should be taken. ***REMEMBER for all these two sections try to see how all these solutions could enhance the competitive advantage of BMW.

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