Bmw establish a manufacturing operation in china: an analysis of bmw corporate culture - Essay Example

?BMW ESTABLISH A MANUFACTURING OPERATION IN CHINA: AN ANALYSIS OF BMW CORPORATE CULTURE Introduction Corporate culture also known as organisational culture is a collective human behaviour that defines activities in an organisation (Cateora, Philip, Galley, Mary, Graham, John 2011, p. 27). Corporate culture incorporates: the organisational values, habits, beliefs, symbols, norms, and visions. Therefore, different organisations have distinctive organizational norms and values that define their daily operations and activities. Corporate culture as well explains the manner in which employees in an organization interact with each other as well as interaction between the employees and stakeholders. The interface between the organisation’s employees and the clients in the market is as well defined by the company’s set values and norms (Lawrence, Anne & Weber, 2011, p. 90). As a result, the BMW means of operation in global markets are to a great extent influence by its organisational values and beliefs. The BMW company organisational culture revolves around producing quality products that are aimed at meeting the cultural needs of the targeted group. In order to successfully compete in global market, multi-national corporations should consider and understand numerous emerging critical cultural, economic, political, and social factors. The sudden shifts in global market have significantly affected the operation of many global multinational entities. The automobile market is experiencing monumental shift due to the significant growth of Chinese automobile market. The expanding China market has as a result forced numerous large automobile entities in the world to have the desire and motivation of investing in China market. In most cases, the success of an organisation in global market is to a great extent brought about by the company’s ability to maintain a well-built brand image and reputation, ability to access its global customers at different cultural backgrounds, capability of meeting the distributions and manufacturing logistical challenges, as well as ability to keep up with advanced rapid pace of technological innovation and development (Smith 2010, p. 47). BMW is a good example of a global company which is in a promising position of conducting global business in different cultural settings. Despite the increased global competition and complexity, BMW has been increasing its sales, making high profit, and producing high quality products without compromising its fundamental values and brand image (BMW, 2012). The essay below intend to analyse the BMW cooperate culture and its effectiveness in establishing a manufacturing operation in China BMW Background BMW was established in 1926 in Munich, Germany as an art craft-engine factory. The company build its first motorcycle in 1923. In 1928, the BMW Company bought a car factory at Eisenach in Thuringia. The new factory was licensed to build small cars, Dixie. The BMW manufactured its first BMW car in 1933. As from 1933 to the second world, the company showed significant growth in its three major branches, Motorcycles, Aero Engine, and Automobile. However, the company’s biggest expansion was in 1973 when it created subsidiaries in North America and France. This expansion was successful due to the company effective corporate culture. The company’s first digital engine electronic was designed in 1979 (BMW, 2012). In 1989, BMW was the first automobile company in Germany to produce over half million cars. In 1990, the company had succeeded in making a turnover of DM 20,000 millions. At the same time, BMW Company had as well acquired a Kontron GmbH. At present, the BMW Company is one of the most developed automobile companies in the world with more than 94,000 employees worldwide and a sale of over one million vehicles per year. Additionally, BMW has several manufacturing plants and subsidiaries in many parts of the world including Thailand, Vietnam, Philippines, United Kingdom, United States of America, Brazil Mexico, South Africa and Malaysia (Smith 2010, p. 47). At present, BMW Company is planning to to expand its market and open several subsidiaries in China. To consistently succeed in global market, the company has as well broken down its operation into different segments, Financial Services, BMW Motorcycle, Rover Automobiles, and BMW Automobiles (BMW, 2012). The main contributors to the company’s profit are Rover Automobiles and BMW Automobiles which capitalises on selling spare parts and accessories as well as in manufacturing, assembling, and selling of automobiles. BMW Cooperate Culture The German-based multinational company has labelled itself as one of the leading automobile manufacturers in the world. It main focus is to produce high quality automobile brand that meets the social, economic, and social interest of its customers. The company also believes in the significant of respecting the culture practices of all its customers’ in local and global market. This has as a result significantly helped the company to prosper in different cultural backgrounds in the world including China. To appreciate its customers, the company has as well embarked on different projects that are intended at aiding in community and society empowerment. The company’s belief on the need to effectively fulfil the needs of its customers has as well enabled the company to develop a instantly recognizable global presence. In promoting its brand in global market, the company has as well established over 100,000 links to spread the BMW brand message in global markets (Smith 2010, p. 47). The company’s effective and productive promotion mechanism has as well enabled the company to successfully sell its products to over 140 countries in five continents. The company automobiles are as well intended at denoting a convinced social class and lifestyle. At present, the BMW company’s brands are subdivided into two common brand, two motorcycle brand (Husqvarna motorcycle and BMW Motorcade), and BMW Rolls-Royce and MINI. Despite prospering in global market, the company has as well succeeded in local market. In 2010, 17.1% of its sales were from Germany local markets. However, due to the quality and nature of BMW brand, the company’s main markets are in developed countries such as United States of America, Japan, and United Kingdom. The company is as well known for its unwillingness to comprise the quality, reliability, functionality, and class of its brands to meet the market changes. As a result, BMW brands are considered to be quality car and top of the line products. The company has as well established itself as company that produces premium brand. As a result, the company’s image and reputation attracts affluent professionals with an intension of displaying a sense of sophistication and wealth. Due to its high quality, the company main customers are professionals who have the will and capability of paying huge amount of money to acquire a high quality and a prominent status symbol automobile. The BMW Company has as well maintained a reasonably globalised style of marketing by targeting specific section of wealth people in the society. In general therefore, the BMW cooperate culture revolves around producing high quality and standard products in local and in global markets (Smith 2010, p. 47). Establishing a Manufacturing Operation in China The Chinese market provides immense business opportunities to a considerable number of local and international entrepreneurs. This is due to the fact that, China economy is growing at a rapid rate. The Chinese market is as well proffered by a good number of global investors due to its effective technology. Technological development in China plays an essential role in facilitating quick and effective transportation, immediate communication and feedback as well as in creating effective promotion mechanisms. The Chinese population is relatively high to offer adequate market to both local and global investors. At present, China is rated one the countries with the highest number of population with approximately 1.29 billion people (Lawrence, Anne & Weber, 2011, p. 90). Despite its accommodative nature, the Chinese market has several challenges ranging from cultural differences, difficulty in searching for an effective partner, inadequate access to entry channels, inappropriate entry strategy as well as insufficient market data. Therefore, to prosper in China market, the interested organisation should undertake intensive researches to understand the main challenges and benefits of Chinese market (Lawrence, Anne & Weber, 2011, p. 90). The main challenge faced by many companies in global market is to identify the most effective means of appealing and reaching their target consumers in different cultural backgrounds. In order to succeed in global market, emerging company in new market ought to carry out an exhaustive research and analysis on different facets that interferes with global market including: nature of competition, technological environment, cultural factor, sociological impacts, economic development of the targeted population as well as the targeted market demographic structure. After identifying and analysing the factors that affect global markets, the company is thereafter expected to develop a reasonable plan that can theoretical necessitate the success of the company in the global market. In the plan, the company should match the cultural needs with its products to necessitate continuous prosper in global market (Wang & Chen 2012, p. 67). Through its accommodating corporate culture, BMW strategy in Europe and North America has proved to be successful. In this market, the company has capitalised on “ultimate driving machine” message to reach all its customers who were interested in faultlessly made automobiles that demonstrated high quality, high social status, and high social class. However, contrary to other countries, China is a hierarchical society that emphasises more on status, rank, and inequality. Therefore, the BMW global brand image which demonstrated high status can translate well in the market. The Chinese citizens highly value success and achievement. Based on Geert Hofstadter’s cultural Dimension statistics, China scored 66 on the femininity and masculinity index. This therefore means that, China has a masculine culture which put more value on personal achievement. The Chinese are also known for sacrificing some aspects of their life activities in order to work. As a result, BMW used different and cultural based styles to enter into China market compared to less complicated models that was employed in North America and European continent market (Lawrence, Anne & Weber, 2011, p. 90). Therefore, to flourish in China market, MBW localised its market strategy in China market. This was due to the fact that, China is at present emerging as one of the most developing country in the world in terms of automobile technology. As a result, for BMW to prosper in China market, the company launched a compelled worldwide “Joy of Driving” campaign strategy in 2010. The strategy was however accompanied by the” ultimate driving machine” which was popular in United Kingdom market and in North America (Wang & Chen 2012, p. 67). Customer satisfaction in Chinese culture is directly associated with the overall optimism, life satisfaction, positive feeling, and self-esteem. As a result, if the BMW Company succeed in appealing Chinese market and impress customers to buy its high quality and precious automobiles, then the company could acquire lifelong customers in China market. However, to thrive in Chinese market, the company ought to communicate to its customers a message that would satisfy their needs and wants. According to the available data on the Chinese market culture, a product that satisfies the Chinese population facilitates the overall perceptions of happiness and life (Lawrence, Anne & Weber, 2011, p. 90. Therefore, the prosperity of BMW in Chinese market is highly dependent on the quality of its products and its impacts to customers’ driving experiences. BMW started its plan to localise its market strategies in Chinese market few years ago. At present, the plan has shown significant prosperity. To attract the Chinese attention, the company launched the “Pleasure of BMW campaigns” in 2010 to inform the members of the public on the benefits of its products to Chinese population. To effectively enter in the market, the company also partnered with Chinese Olympic Committee (Wang & Chen 2012, p. 67). The plan was intended at promoting its products by directly relating the company’s products to Chinese culture. The involvement of China Olympic Committee has in the last few years played an essential role in promoting the BMW products in Chinese market. Despite necessitating effective promotion, the partnership between BMW and Olympic Committee has as well advanced the BMW brand in Chinese market. In spite of its successful partnership with Olympic, BMW Company has as well relied on mass media and social media to advertise its products. The use of printed media and mass media has as a result helped the company to effectively position itself in Chinese market not only as an ultimate driving machine but also as an automobile that guarantees joyous experiences (Wang & Chen 2012, p. 67). Apart from facilitating effective communication, mass media has also portrayed the BMW brand as modern and fun automobiles that present emotional and enjoyable drive. According to the Chinese media, the specification and feature of the automobile are not as importance as the overall driving experiences (Wang & Chen 2012, p. 67). However, despite the already experienced success of the strategy, the company is in addition planning to advance its promotion plans to entirely meet the market demands. The BMW Entry Process in the Chinese Market 1. Cultural survey and analyses As per the BMW corporate culture, before entering into a new market, the company undertakes an intensive survey and analyses to understand the nature and demands of the new market. Therefore, the first stage in the entry to China market was to develop a strategy that was intended at searching, investigating, and conducting comparative analyses of the market demands and needs. The survey entailed the observation and analyses of the differences and similarities between the Chinese culture and the culture of other countries such as United States of America and United Kingdom (Lawrence, Anne & Weber, 2011, p. 90). The second core aim of the plan was to examine the opportunities, risks, and possibility of cultural conflicts. To obtain accurate information, the company relied on annual reports from various automobile companies, government documents, articles for business magazines, and different opinions from various business professionals. However, the information that was collected at this stage was presumed to be assumptions that required assessment and evaluation. 2. The Evaluation Analyses of the Findings This stage involved an intensive analysis of the market and cultural needs, determination of the brand market position, recognition of the most appropriate prices, identification of potential customers as well as the assessment of the most effective mean of entering into the Chinese market. The cultural differences and similarities in different markets were also analysed at this stage. The core aim of this stage was to identify the most effective strategy of entering into the market with limited cultural barriers. At this stage, the involved players in the process engaged in intensive and extensive communication and consultation with other players in Chinese market including the government and other business partners. The stage was as well significantly helpful in identifying some of the most effective promotion mechanisms that would accommodate the culture expectations of the targeted population (Wilken & Sinclair 2011, p. 67). 3. Cultural Integration This stage entailed the incorporation of the organisation culture, business objectives, and organisation structure in the Chinese culture. This was the most challenging and demanding stage in the plan. This was due to the fact that, China has a very complicated culture which requires intensive analyses and evaluation. However, BMW was committed towards minimising all factors that would have interfered with the plan to invest in Chinese market. The BMW Global Product Manufacturing For the company to effective compete in a modern multifaceted Chinese market, BMW was forced to institute various manufacturing process in the country. Initially, BMW company main processing unit was in Din-golfing in Munich. The plant is currently the company’s head quarter and is one of the largest production centres in the world. The plant is generally known for producing over 340,000 vehicles per year (Lawrence, Anne & Weber, 2011, p. 90). The main characteristic of this plant is that, the plant assembles all its products in one line. This plant has so far earned reputation for producing high quality products. However, to prosper in global market, the company has also instituted various plants in different parts of the world and especially in Europe continents. Due to the dynamic and cultural oriented nature in Chinese market, the company has as well embarked on building several plants in the country in order to efficiently to control the market. In China, the company has constructed a plant in Changchun. Currently, the plant is manufacturing over 100,000 vehicles per year. The company is as well planning to build more plants in Chinese market (Wilken & Sinclair 2011, p. 67). Competitive Analyses in China Automobile Market BMW has over years faced infinite challenges from big global companies such as Lexus, Mercedes Benzes, and Audi. In 1997, the company almost lost its long-leading market dominance in the world due to its ineffective promotion strategy. However, the BMW come out very strongly to re-market its products in its global market. Due to the 1997 experience, the company has developed very strong measures to ensure it robustly dominate the Chinese market. At present, the BMW main competitors have embarked on advertising campaigns to counter the strengths of BMW brand in Chinese market. The following is therefore an analysis of some of the BMW main competitors in Chinese market (Wilken & Sinclair 2011, p. 67) Mercedes Benze Brand Mercedes products have in the last few years turned out to be the main competitors of BMW in Chinese market. In 2010, Mercedes Benzes sold over 1000 vehicles in China market. The main strengths of Mercedes Benzes are its technological leadership, variety of its high quality products as well as the popularity of its brand amongst the high social class population. Mercedes Benz’s campaigns strategies in China are passive and of low key. On the other hand, the company allocates more than 15% of its annual marketing budget in innovative internet strategy as opposed to BMW which uses less than 5% of its budget allocation in technological development. The company also has very precious brands such as MSN, Mercedes C classic which are big threats to BMW brand in China market (Wilken & Sinclair 2011, p. 67). Lexus Since 1983, Lexus has turned out to be the main competitors of BMW in global market. Lexus is a division of Toyota motors sales in United States of America. Toyota Company relies on Chinese technology to advance their products. In 2007, Lexus was ranked as one of the most preferred vehicle in China market. As opposed to BMW which targets old and middle class people in China, Lexus main target are the young people who are between the ages of 35 to 40 years. Moreover, compared to BMW which relies on mass media and printed media in its promotion, Toyota Company uses online services to promote its brand in China market. To dominate in Chinese market, the Toyota Company has as well opened several plants to aid in the production of high quality and timely products (Wilken & Sinclair 2011, p. 67) Audi Audi is popularly known for producing high-quality cars in global market. The company annual earning is approximated to be over $ 39 million in one year. The Audi group has slowly been encroaching BMW market in China. The company has in the last few years focused on extensive promotion of its brand in global market and most specifically in China. In 2010, the company embarked on a mega project of advertising its brand using online means to counter the BMW dominance in Chinese market. To ensure total control of China market, the company has as well opened several production plants in different parts of the country. Additionally, the company has been undertaking systematic market analyses to understand the market changes in China market (Wilken & Sinclair 2011, p. 67). Conclusion In the light of the above analysis, it is clear that, corporate culture plays an essential role in facilitating the success of an organisation in local and global market. Corporate culture as well determines the type of leadership in an organisation. The prosperity of BMW Company in a highly competitive global market is to a great extent brought about by the adoption of an effective and accommodative corporate culture.BMW is therefore a clear example of a successful brand in global market. The company started in a very humble background and through the adoption of effective corporate culture, the company eventually developed into a global strong competitor in automotive market. Despite facing endless challenges from its local and global competitors, BMW is currently the leaders in Chinese market. However, the ultimate goal of BMW is to become a world leading producer of luxurious automobile products. Adequate evaluation of the target population’s cultural background is also exceptionally essential in developing the company’s marketing strategies. In China, BMW success is to a great extent determined by its effective market survey to understand the customers’ needs and demands. For a company to dominate in global market, it ought to adopt modern promotion and productions technologies. BMW hesitant to adopt modern technology faced severe challenges from some of big global competitors. The adoption of the most effective promotion mechanism as well as adequate understanding of the culture needs of the targets customers are some of the most effective means of prospering in global market. On the other hand, it is the responsibility of organisations administrators to ensure that the laid down corporate culture is fully complied with an intensive consideration of the prevailing technological changes. References BMW, 2012, “2011 Annual Report.” Retrieved November 27th, 2012.From:http://www.bmwgroup.com/bmwgroup_prod/e/0_0_www_bmwgroup_com/investor_relations/corporate_events/hauptversammlung/2012/BMW-Annual-Report-2011.pdf Cateora, Philip R., Gilly, Mary C.; Graham, John L 2011, “International Marketing”, New York, NY: McGraw-Hill/Irwin. Lawrence, A. & Weber, J 2011, “Business and Society: Stakeholders, Ethics, Public Policy” (13th). New York, NY: McGraw-Hill/Irwin. Smith, S 2010, “Measuring success at BMW, Opel and beyond” ‘Automotive Manufacturing Solutions, 12(4), 44-47. Wang, Xia & Chen, Yung-Hsin, 2012, “Buying an Automobile in China: How Customer Satisfaction is linked to Perceived Subjective Well-Being.” Social Behaviours & Personality, 40(1), 147-156. Wilken, R. & Sinclair, J 2011, “Global Marketing Communications and Strategic Regionalism” Globalizations, 8(1), 1-15. Appendix Personal reflection From my personal experience, working in a multicultural team is an encouraging experience and at the same time a challenging experience. One the positive aspect in a multi-cultural organisation and teamwork is the diverse contribution and ideas that leads to global economic development. This is due to the fact that, our multi-cultural teamwork encouraged adequate exchange of ideas and suggestions which were very essential for a health prosperity and development of the group. On the other hand, through a formidable multi-cultural team, members learnt and execute the most effective and profitable means of integrating people from different cultural backgrounds in their daily operation. Through working in multicultural team, I was in a position to understand and appreciate the significant and impacts of different views and ideas in group prosperity. On the other hand, through interacting with people from different cultural background, I was in position to strengthen my knowledge on how to operate in a multicultural group. My multicultural group encouraged adequate incorporation of different ideas and perceptions thus leading to broadening of knowledge and understanding. In any multicultural settings, every member has unique strengths and talent which is essential for the group’s development regardless of the rank or title. Therefore, by understand the common principle in multi-cultural group; I was in a position to incorporate knowledge from different cultural background to achieve the group intended objective. On the other hand, to facilitate effective communication in the group, group members were forced to study and understand more than one language. Pressure to learn the second language was therefore very essential in enhancing personal development. However, despite of its encouraging advantages, working in multicultural group encountered several pitfalls which hindered quick and efficient achievement of its goals. For a starter, not everyone in the group enjoyed working with people from different cultural background. From my experience, I noted that, many people prefer working with people who understands their culture, challenges, and values. I as well noted that, group members who came from the same background used similar language in their interaction a thing which significantly hampered with the achievement of the group’s mission. However, to facilitate the group’s prosperity, I ensured that, the group’s members understand and appreciate people from different cultural background. Although it was a challenging experience, I to some extent succeed in my plan. Our multicultural group also experienced some difficulties in identifying different cultural work habit. People from different background held different perceptions and ideas in meeting deadline. For instance, based on my own experience, I noted that, Japanese and people from Caribbean Island held very different ideas on deadline. The Japanese were very relaxed on the set deadlines while people from Caribbean Island faced endless problem in meeting the set deadlines. On the other hand, some group members took very long time taking lunch while other took very little time. Confusion on the time required in taking lunch resulted to severe wastage of time therefore creating more conflict and frustration. However, to facilitate harmonious working, group members adapted a harmonious timetable which incorporated the needs and interest of all members. Secondly, our group encountered endless misconception and false impression of people from different cultural background. The existing misconception significantly interfered with the groups operation activities. On the other hand, stereotyping which was based on personal experience and learning almost creation confusion and conflict in the group. To counter, the impact of negative perception and stereotype, groups’ members were subjected into intensive diversity training. The training was intended at helping group members to regard the existing differences as opportunities to appreciate and learn other cultures. Read More