Sustainability in Global Business the German Car Industry BMW - Case Study Example

 Sustainability in Global Business the German Car Industry BMW Sustainability in the car industry Bayerische Motoren Werke (BMW) Company is a great entity in the Germany’s and global automobile industry. BMW is an automobile, engine, and motorcycle manufacturing company that has its headquarters in Munich, Bavaria. The company has a long history that spans for almost 100 years since its inception in 1916. BMW currently also owns the Rolls-Royce Motor Cars. The company is one of the premier Germany’s luxury automakers besides Mercedes Benz and Audi Companies. Due to its quality products, Forbes as one of the top 100’s most valuable brands names the company. The company enjoys a strong brand name as customers view their products as offering premier value. In spite of the company’s standing, it faces significant environmental and socio-political risks in the next 50 years. Analysis of the current and future environment Germany continues to enjoy a distinct position in the global automotive industry. For instance, German cars account for 17 percent of the world’s passenger car production. In the domestic Germany’s scenario, the car industry remains the most vital sector in the economy. The car industry, in this sense, serves both a functional and aesthetic purpose since it brands the country. The German cars, for instance, have manifested the country as capable of impeccable efficiency. Germany remains the Europe’s largest automobile producer with the highest concentration of OEM plants in the continent. This also reflects in the industry’s annual investment of EUR 19.6 billion towards research and development (Nooteboom 2006, p. 56). As a result, the country records 10 new auto patents in a day. Environment and the car industry In the contemporary business setting, industries have a role beyond the pursuit of profits. This happens as individuals realize that businesses create externalities to the environment. One of the externalities that businesses consistently create to the society is destruction of the environment. Pollution from industries emit substances in the environment that interferes with the sustainability of the ecosystem and, especially, threatens the future of human life. Environment is a key concern in the sustainability campaigns. It is essential to highlight that automobiles highly contribute to global emission levels. This occurs since petroleum fuels are the main source of energy for car movement. The EU offers an analysis and regulation measures that best defines the current state and targets. The EU reports that cars are responsible for about 12 percent of aggregate emissions of carbon dioxide, which is the major greenhouse gas. According to one of the studies by the EU on the outlook of carbon dioxide emissions across the various industries, the car industry is highly likely to remain stubborn in its emission levels. This occurs in spite of the fact that Europe would reduce their total emissions by over 60 percent in 2050 as regards different scenarios. By 2050, most speculative research believes the number of cars in world roads would have tripled (Gow 2009, p. 1). Europe is the largest market of cars as it buys 18 million cars each year. In turn, the transportation segment pose a worry to the world as it may increase its emission levels to 2 Mt CO2 e in 2050 from the current state of 1.6 Mt CO2 e (Cayuela 2013, p. 128). The car industry as compared to other segments will continue to emit substantive amounts of carbon dioxide in the atmosphere in spite of the regulations such as tire controls. It implies further regulations and more robust targets will be required to counter this threat. BMW exists in the context of the developed countries, which are highly blamed for the current state of the environment. The developed countries, since they began their industrialization earlier than the developed countries, receive notable blame for the current emission levels (ElMaraghy 2012, p. 90). Germany is a highly industrialized nation that began developing its industries from the coal-age period. Its robust automobile industry, therefore, possesses a huge stake in the environmental debate. In turn, the developed countries such as Germany will expect higher investment, in terms of resources and efforts, in reducing the current emission levels. Consequently, the higher amount of government resources in tackling climate change and environmental damage may necessitate that it passes the burden to large corporations such as BMW in terms of higher taxes. Besides taxes, the corporations will also have to commit their resources in improving the environment, as the society will look up to their influence as primary in enabling sustainability (Nieuwenhuis & Wells 2003, p. 68). Globalization and consumer knowledge Increasing globalization means that countries are increasingly becoming intimate. In spite of varying socio-economic development and political dispositions, some trends are converging. This means that people, such as consumers, will report similar behavior. This is attributed to three things. To begin with, the development of information technology, especially the internet, has enabled the visibility of almost every country in the world (Ijioui 2010, p. 110). This is unlike the former ages whereby individuals attained information from less effective methods such as telephone calls. In turn, individuals have more control over the data they consume. Consequently, people do not rely on governments and the television houses only for information. Unlike the previous ages, it is not easy for powerful entities such as corporations and governments to manipulate information for their own benefit. This makes the activities of a company such as BMW visible to the consumers and stakeholders. The company, therefore, has a great responsibility towards the marketplace. Convergence in trends is both an opportunity and a great challenge to producers. In this sense, consumers will prefer given kind of products to others. This is attributable to the power of marketing that help elevate certain brands over the other. Besides, the internet enables consumers to observe the exquisiteness of products and study trends thereby developing almost similar preferences. This poses a threat to the idea of diversification that encourages discrimination among consumers. In the end, consumers are highly likely to go for products that report the highest quality. Reports on growing income inequality in the developed countries have aroused a serous socio-political concern. Individuals have become wary of a society, which extends privileges to a certain group of few people at the expense of an increasingly impoverished part of the population. Reports by economic researchers such as Thomas Piketty highlight a burgeoned income inequality gap between the rich and poor in developed countries. Income inequality has been growing in spite of the belief that developed countries have developed sustainable ways of bridging the wage gap. OECD reports that inequality has grown from the mid 1980’s. The reports consistently note that large income gains among the top 10 earners contrast with the worsening conditions of the bottom 10 percent. Inequality is attributed to a variety of factors that directly affect the BMW Company. To begin with, it is crucial to note that BMW serves a luxury market that entail high disposable income. The company, therefore, makes use of high skilled workers who ensure quality service and products are offered to demanding customers. In the Piketty’s reports, a gap in skills widens income inequality. In this sense, highly skilled workers, with adequate technological know-how, are highly compensated at the expense of workers with lower skills. The continual advancement of the car industry will call for highly trained professionals who will demand significant compensation for their services. Companies will also exert such compensations in order to attract and retain the specialist workers. The recent recession shows that financial and economic mistakes from the developed countries spill over into the whole world. The financial crisis, for instance, set forth a chain of economic problems that led to general reduction in purchasing power of consumers. In turn, the luxury market, such as that of BMW vehicles, deteriorated because consumers diverted their relatively meager incomes to basic goods. The company, therefore, has a great duty to study the market and use statistics on forecasting demand in order to initiate mitigating measures against fall in demand and restrained borrowing. Business Plan for BMW idea in 2054 Current Marketing Condition RESOURCES 1. Human Resources The BMW Group provides numerous benefits to its workers elastic working hours and competitive wages. Moreover, higher-level administration is a well competent and experienced. 2. Financial Resources Based on the current annual report, the BMW Group has a financial strength to execute planned activities. The BMW Group accomplished record revenue of euro 60,477, which is 19.3% higher than the previous year. 3. Informational Resources BMW Group has the data required to comprehend its underlying customers and the marketplace. BMW Group spends a large amount of its marketing budget on product placement. SWOT ANALYSIS Strengths Weakness Opportunities Threats Well Known Brand Repair Costs Improved media thoughtfulness on Olympics Tariffs on shipping Status Symbol Alteration in currency Increased media attention on BMW Championships Austere economic downturn Quality price variation Internationally recognized brand Competitive Car Industry Higher add-on options Ecological and gas friendly Established brand Increasing fuel costs Marketing Strategy Sustainability mobility strategy is subdivided into three main phases. The first phase BMW Group is unceasingly advancing the fuel economy of its prevailing vehicles with the combination of exceedingly effective engines, optimized energy administration, ground breaking frivolous building and advanced aerodynamics. The second phase BMW Group is escalating fuel economy by a broad range of prevailing measures from electrification of the drive train through to hybrid solutions mainly applicable in the medium term whilst the final phase is the long-term strategy for the BMW Group. Recommendations BMW requires given strategies in order to respond to this scenario. This is essential since sustainability is key in determining the future of life on the Earth. Practicing sustainability measures serves two purposes. Sustainability has a functional ensuring that the current capacity for the Earth to tolerate its exploitation will extend into the future. In addition, it accords BMW a strong brand name in terms of corporate responsibility. Technical harmonization In this sense, BMW will ensure that it meets the technical requirements in vehicle making of countries that it sells its goods to the same (European Commission 2014, p. 1). Currently, the company has launched its operations in various countries such as Egypt, China, Mexico, South Africa, and Canada. In this view, the company can easily meet the environmental requirements in the technical make-up of a vehicle. In turn, different countries can synchronize their emission control efforts. Setting up subsidiary operations in other countries creates a sustainable and less costly supply chains since industries occur close to the markets. Besides, it allows for decentralized management that can make decisions to correspond with relevant socio-economic and political challenges in market countries. Environment and emission controls The BMW Company will also have to subscribe to relevant bodies that govern emission controls. The company, just as other similar entities, will commit towards preserving air quality. This integration is necessary as the government, the community, manufacturers, and businesses collaborate to tackle emissions. Emission limits are essential in steering research that leads to production of effective but fuel-efficient cars. BMW will have to build new types of engines that consume less fuel but harness considerable mechanical power. Strategies such as tire labelling will help in putting manufacturers on course since such measures help the relevant authorities keep track on emission levels (Wells 2010, p. 29) Eco-innovation There are various ways that the BMW could capture the market gap as regards eco-friendly innovations. Eco-friendly innovations are alternatives to petroleum-fuelled cars that cause considerable CO2 emission in the air (Beck 2014, p. 146). Unlike other sciences, the transportation technology progresses much slower. This phenomenon is attributable to the limits posed by the use of petroleum fuels in providing mechanical energy to vehicles. Radical changes, however, will revolutionize the industry. It is notable that in a world of considerable information, consumers are gaining awareness about the destruction of the environment. This has given rise to a class of green consumers who only utilize green products in achieving their daily convenience (Mikler 2009, p. 198). Companies, such as BMW, have a huge task in meeting the demands of such conscious consumers. For instance, the BMW Company could make electric cars. Electric cars use electricity as a source of energy rather than employ petroleum fuels. In this sense, the electricity will record limited emission as compared to the oil fuels. The concept of hybrid cars recognize that zero usage of petroleum fuels is a herculean task such that entail the combination of traditional combustion engines with electrical systems that help cut down on fuel use. Alternatively, BMW could invest in mechanical-powered cars that utilize raw energy in movement. There is significant research that can be built upon to improve the efficiency and effectiveness of mechanical powered cars. The mechanical powered cars may operate as mechanical watches since they do not involve investing in natural resources for energy. Furthermore, they will be the most effective in curbing emission. In close relation to this concept, the company may make cars that use bio-fuels. Bio-fuels are energy sources made from recycling waste from the environment. In this view, the corporations prevent endless mining of oil for energy purposes. In a world of increasing income levels and open economies, individuals are highly likely to buy more cars as transportation needs surge. This poses a critical sustainability scenario since it will eventually lead to an increase in emission levels. The car industry still remains a stubborn contributor to world emission levels. In this sense, BMW may make notable changes to counter the possible 2050 scenario. To begin with, it could invest in the production of electric and hybrid cars that possess low emission levels. It could also invest in producing cars that use biofuels, which are an alternative energy to petroleum fuels. BMW also faces a sociopolitical scenario of informed consumers and potential global economic meltdowns that will necessitate increased forecasting. References Cayuela, V. R., 2013. The future of the chemical industry by 2050, Weinheim: Wiley-VCH. Gow, D., 2009. Halve emissions from cars by 2050, auto industry told. (Online) (Updated November 25, 2014) Available at: http://www.theguardian.com/environment/2009/mar/04/auto-industry-emissions. (Accessed November 26, 2014). Beck, K., 2014. Every car on roads to be low carbon by 2050, says Transport Minister at LowCVP Annual Conference. (Online) (Updated July 25, 2014) Available at: http://fleetworld.co.uk/news/2014/Jul/Every-car-on-roads-to-be-low-carbon-by-2050-says-Transport-Minister-at-LowCVP-Annual-Conference/0434015610. (Accessed November 26, 2014). European Commission., 2014. Entreprise and Industry: technical harmonization. (Online) (Updated November 26, 2014) Available at: http://ec.europa.eu/enterprise/sectors/automotive/technical-harmonisation/index_en.htm. (Accessed November 26, 2014). Ijioui, R., 2010. Globalization 2.0: a roadmap to the future from leading minds, Heidelberg: Springer. Nooteboom, S., 2006. Adaptive networks: the governance for sustainable development, Delft: Eburon. ElMaraghy, H. A., 2012. Enabling manufacturing competitiveness and economic sustainability, Heidelberg: Springer-Verlag Berlin Heidelberg. Nieuwenhuis, P., & Wells, P., 2003. The automotive industry and the environment: A technical, business and social future. Cambridge: Woodhead Publ. Wells, P. E., 2010. The automotive industry in an era of eco-austerity: creating an industry as if the planet mattered. Cheltenham: Edward Elgar. Mikler, J., 2009. Greening the car industry: varieties of capitalism and climate change, Cheltenham: Edward Elgar. Read More