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A change can be developed to provide a hoped-for benefit for the organisation, either in the form of competitive advantage or to relieve some form of strategic stress. However, creating change in a controlled manner to meet some designated objective is not at all straightforward. A lot of care and a lot of good management is needed.
BMW management business model is based on differentiation market strategy. The German's prides itself on the leading-edge concepts of its designers and engineers. The stated goal is to build "ultimate driving machines".
To stay in its "success track", BMW has to invest in innovation, thus, it is necessary to ensure that it maintains the standard of its quality in all markets even when it moves production to different markets.
Following this thinking, BMW could formulate a business development strategy, which would comprise some or all of the following methods of development.
new product development
new market development
business organization, shape, structure and processes development
tools, equipment, plant, logistics and supply-chain development
people, management and communications development
strategic partnerships and supply routes development
acquisitions and disposals
The role of a management in the organization is to create the conditions to promote organizational readiness for change. If generating a shared sense of readiness sounds difficult, that is because it probably is. This might explain why many organizations fail to generate adequate organizational willingness and, consequently, experience problems or outright failure when implementing complex organizational change. Although organizational willingness for change is difficult to generate, motivation theory and social cognitive theory suggest several conditions or circumstances that might promote it.
According to the term paper, the automobile industry had an "alarming competitive gap with Japan and that unless drastic action was taken, this gap would continue to widen". To achieve the Japanese market demand, as productivity levels, the car industry had to implement radical policies.
The large-scale quality crisis was driven by "the lack of competitiveness of many suppliers in an extremely fragmented industry" and by changes in vehicle makers' policies.
The implementation of new strategic objectives in the car industry was needed. Many automakers now enjoy economies of scale and global distribution networks. The differentiation and cost leadership strategies hunt for competitive advantage in a broad range of market or industry segments.
The German's leading global brand, BMW, was facing a quality competition. the differentiation market strategy Was the strategy used by BMW . This strategy is about charging a premium price that more than covers the additional production costs, and about giving customers clear reasons to prefer the product over other, less differentiated products. Competitive advantages of a good system of production, a reputation for product quality and a brand that immediately identifies the aims and aspirations of its customers.
The cost leadership was the strategy used by Ford/Volkswagen. This strategy aims to exploit scale of production, producing highly standardized products, using high technology. In basic words, means the lowest cost of operation in the industry.
The automotive market in general already gives BMW a save market environment which is dominated by just few manufacturers (luxury segment). If BMW decided to use the same strategic approach as the one used by Ford/Volkswagen, they could face enormous resistance from the automobile market and threatened to destroy their carefully nurtured image. If they were to develop a cheaper range of cars to compete with Volkswagen/Ford and other mass market players, surely this would devalue the BMW brand. If they decide to use the same strategy as Ford with the Jaguar, they probably could lose this position and shut their doors down. Their quality and productivity strategies couldn't fit in the world of competitive cheaper prices and they could probably lose their car consumers. Following the Volkswagen/Ford strategy could lead in a dramatic and radical change in the market place.
Conclusion The automotive market in general already gives BMW a save market environment which is dominated by just few manufacturers. The most dangerous point in this market for BMW would be the competitive rivalry of being compared on the same marketplace as Ford/Volkswagen, because it could be allocated as a cheaper brand and losing their position at the luxury cars segmentation.
It is said that the competitive advantage can be created in the choice process by helping buyers to resolve their dilemma in their buying decisions. In order to build their knowledge capital in this area, if BMW was to carry out an exercise in Knowledge Management, identify the important steps in such an exercise. What kind of practical issues would you expect in the implementation of such an exercise?
Knowledge Management has been standard as a vital component of a proactively managed organization. The key concepts encompass converting data, organizational insight, experience and expertise into reusable and useful knowledge that is disseminated and mutual with the people who need it. Knowledge Management addresses business challenges and enhances customer responsiveness by creating and delivering innovative products or services; managing or enhancing relationships with existing and new consumers, partners and suppliers; and administering or improving more efficient and effective work practices and processes.
In order to build the BMW's knowledge, the company has to indentify the steps between knowledge and management, such as:
Identify the information/knowledge needs of the organization
Identify gaps in knowledge and latent or tacit knowledge
Create strategies and policies to deal with these
Strive to integrate processes and systems
Effective solutions are aligned with the organization's business strategy and result in enhanced individual and executive performance. Several factors that contribute to the importance of management knowledge are referenced below:
Competitive Advantage - Knowledge can be an organization's most competitive advantage. prosperity results when an organization uses its knowledge to generate customer value by addressing business problems.
Technology - Because of the tremendous advances in technology, vast amounts of information can be disseminated to people regardless of their geographic location or time zone. The speed of broadcast and frequency in which this information is established requires an adaptable, skilled and educated workforce.
Organizational Change - Due to organizational changes, restructure, mergers and acquisitions, companies have lost some of their valued history and cultural norms. An organization's aptitude to create, acquire, process, maintain and retain old and new knowledge in the face of complexity, doubt and rapid change is critical.
Enhanced Decision-Making - Learning from and applying past experiences can speed up the completion of future work and enhance the decision-making practice.
Workforce Demographics - An aging workforce, coupled with retiring baby boomers and the loss of intellectual capital or institutional memory are creating a new sense of importance for organizations. Although predicting employee separations is at times demanding, knowledge transfer is vital to sustaining critical business functions. While many employees may continue employment further than retirement eligibility, these employees will inevitably leave the workforce.
The process of transforming data and information into knowledge and then back into value-added information is a cycle that is natural and ongoing. In each case the methods of storing, processing and communication information are described and followed by a description of the progression through the steps bellow:
Despite the advantages of this tool, there are some practical issues to be considered. Coordinating the distribution of information in large companies is a challenge. It pays to think about fitting the information you have to an appropriate communication channel. There are many problems associated with identifying these knowledge assets and being able to use them and manage them in an efficient and cost-effective manner. Enterprises need:
to have an enterprise-wide vocabulary to ensure that the knowledge is correctly understood;
to be able to identify, model and explicitly represent their knowledge;
to share and re-use their knowledge among differing applications for various types of users; this implies being able to share existing knowledge sources and also future ones;
to create a culture that encourages knowledge sharing.
There are tools to support the capture, modelling, validation, verification and maintenance of the knowledge in these applications. However these tools do not extend to supporting the processes for managing knowledge at all levels within the organisation.
At the strategic level the organisation requirements to be able to analyse and plan its business in terms of the knowledge it currently has and the knowledge it requests for future business processes.
At the tactical level the organisation is concerned with identifying and formalising existing information, acquiring new knowledge for future use, archiving it in organisational reminiscences and creating systems that enable effective and efficient application of the knowledge within the organisation.
At the operational level knowledge is used in daily practice by professional personnel who need entrée to the right knowledge, at the right time, in the right location.
In conclusion, the knowledge of engineering methods and tools has come a long way towards addressing the use of a company's knowledge assets. They offer well-organized approaches to scheming and building knowledge-based applications.
Analyze the important processes within the supply chain management of BMW. In your opinion, what could go wrong in the supply chain management of BMW and how can these be minimized? What kind of IS help BMW adjust to the changes in the demand forecasts?
Analyzing the importance of supply chain, the BMW group can benefit further from some recommendations. The customer-focused internal supply and demand integration used by BMW provides customers with what they want as the result of improved supply activities. To adjust higher and lower rates of demand, BMW make the use of forecast to prepare suppliers for the changes in those rates.
Accurately planning for future demand is critical to reaching overall company goals. It is the starting point for supply side activities and directly affects product availability and company profitability. Despite the significance of forecasting, often, cross-functional processes have not been established to create a consensus demand plan based upon statistically based historical trends and current market conditions, sales knowledge and cross-functional and inter-company collaboration. Configured products further add to the challenges of creating an accurate forecast of future demand. Operations and supply chain managers in such companies must not only forecast product-level demand, but they must also forecast dependent accessory demand patterns and unique product configurations.
Some issues at the BMW's supply chain management needs to be considered, such as:
Customers Demand: customers have raised their expectations for value-added services and have heightened sensitivity. On-time performance is now unspecified and competitors are pressuring transportation service providers to differentiate themselves. Speed and consistency are becoming a new commodity.
Consolidation/Partnering: Transportation service providers are consolidating to be better located in the marketplace, causing an increase in partnering on many dimensions. Partnerships are occurring between modes, between warehouses, and between shippers and transport service providers. A rapid growth of intermodal shipping has created a need for cooperation and sharing of information between competitive transportation modes.
Globalization: A flexible set of service offerings and matching business practices are required to meet a varied and dynamic set of international customer and government requirements. Transportation facilities vary significantly by country and are growing at different rates. Competition is also targeting the international market as a key growth opportunity.
Technology: Technology is being used as a apparent value-added marketing tool. Many factors are playing into this new information age. The growth of international trade will necessitate greater automation capabilities as this global e-commerce age takes shape.
Government/Regulatory Agencies: New free-trade pacts, environmental policies, taxes and other government strategies are shifting the economics between different modes of transport. As information requirements boost, insurmountable pressure is on the government to create new standards in all arenas of transportation, ultimately delaying delivery and billing information.
A successful supply chain demands a number of complex, interweaved capabilities. In turn, these capabilities require know-how in a variety of disciplines, combined with conventional logistics processes such as distribution and transportation. Organizations faced with reengineering their supply chain must carefully strategize each segment, giving ample thought to technology, while ensuring they can integrate operational excellence. Customers now demand products at a high speed. Organizations that cannot deliver will lose their competitive advantage in the marketplace.
The BMW group should do the use a demand forecasting software as a information system tool. This type of system could provide an automated process of forecasting. Forecasting software enables operations and supply chain executives to create a statistically based forecast in conjunction with cross-functional judgment and buy-in to enable operations and supply chain managers to forecast the right product mix from dependent accessory and configurable products demand.
Improved forecast plan accuracy
Increased collaboration among functional teams
Increased order fill rates and on-time delivery
Reduced inventory carrying costs and excess and obsolete inventory write-offs
Improved product configuration management
Improved product margins
Carefully consider all the major functional areas in BMW, where innovation is possible and critically evaluate the benefits that would result from innovation in these areas. What would be the role of a manager in BMW leading an innovation project?
Any company, business or community group can be innovative. Knowledge and advanced skills are accepted as fundamental strategic resources for business development and innovation. Deep business model innovation is critical. Product, service and operational innovations remain important, but competitive pressures have pushed business model innovation much higher on the Mananger's innovation agenda. Companies that can substantially change how they add value to their own or other industries differentiate themselves and gain a competitive edge.
Although many compare BMW with other car companies, the innovative power that BMW utilizes is a competitive advantage that no other competing brand matches. Over and over, BMW reminds us that they are at the for front of constantly creating new, innovative products and introducing them to the marketplace.
With a track record on innovation and patents comparable to BMW effective innovation not only creates a unique competitive advantage against other car brands, it also develops the company's long-term value to customers, gaining customer loyalty.
BMW has a consistent reputation as a brand representing peak car performance/luxury, its innovation efforts with strategic. They developed a rich reputation as "ultimate driving machine", and strives to maintain its leading position in innovative products. With this solid reputation, BMW touts its competitive advantage and consumers are willing to pay premium prices for their products.
BMW continued commercial demand for its products. Innovation and market domination go to a well selected market, which demands for a high quality group of consumers. The company gained a strong brand reputation through product performance.
Innovation can be ignited by business and technology integration. Technology can enable and drive innovation. But to truly capitalize on technology's potential and unleash an organization's creative energy, technology know-how must be combined with its business and marketing insights. Manager's view consistent business and technology integration as crucial to innovation.
Analyzing the BMW group the management role is to integrate and implement the steps in innovation process, such as:
Create a strategic vision
Establish innovation as a priority
Create organizational structures that promote collaboration
Establish processes to convert ideas to innovations
Train workforce on creativity tools
Measure and communicate results
Recognize creative behavior
Reward innovative results
To conclude, BMW's innovation, technology advances, and competitive advantage are connected by complex and multidimensional relationships. Their innovation means more than creating just new products. It also means capturing new customers with new requirements, taking risks by developing and entering newer market segments.
Critically evaluate what information requirements (or Information Systems) would help reduce the alarming competitive gap between the automobile industry in the Western countries and that of Japan?
The gap between western countries and Japan towards to the Japanese productivity levels, apart from bringing about radical improvements in supply chain management, in dealing with component suppliers virtually, crucial to success was concentration of ownership. The process of consolidation was driven by "the lack of competitiveness of many suppliers in an extremely fragmented industry" and by changes in vehicle makers' policies.
It seems that the producers in Western European Japan, developed different characteristics regarding the size, power-train and fuel efficiency of their vehicles and some fundamental factors, such as the cost advantage, more competitively viable advantage in produce performance and quality.
It seems clear that production cost and product quality and that both may be analyzed as a competitive advantage. Comparison of the relative competitive position of Western countries and Japan is in essence a comparison of systems of production. The success of imports has underscored the oblivious point that a production system must be judge in terms of cost and the quality of its output.
Analyzing this point of view, some information requirements could help to reduce the gap between the automobile industry in the western countries and Japan. The utilization of an information system itch could give precise information of manufacturing and production could bring some major functions, such as: sscheduling, purchasing, shipping, receiving, engineering, operations and some major applications such as: materials resource planning systems, purchase order control systems, engineering systems, quality control systems. In this case, the type of information system that needs to use is the knowledge work systems.
The information can be used for various purposes, such as:
- strategic planning
- delivering increased productivity
- reducing service cycles
- reducing product development cycles
- reducing marketing life cycles
- increasing the understanding of customers' needs
- facilitating business and process re-engineering.
- support policy making
- meet regulatory and legislative requirements
- support research and development
- support consistent and rapid decision making
- enable effective and efficient utilization of resources
- provide evidence of business transactions
- identify and manage risks
- evaluate and document quality, performance and achievements.
The availability of information is fundamental to the decision making process. Decisions are made within the organization at the strategic, operational, programmes and activity level. The information needs and decision making activities of the various levels of management as:
Senior Management - Strategic business direction:
- information for strategically positioning the organization
- competitive analysis and performance evaluation,
- strategic planning and policy,
- external factors that influence the direction
Mid level management - Organizational and operational functions:
- information for coordination of work units
- information for delivery programmes
- evaluation of resources usage
- budget control
- problem solving
- operational planning
Mid level management - Programme management within units
- information for implementing programmes
- information for managing programmes
- management of resources usage
- project scheduling
- problem solving
- operational planning
Line management - Activity management
- information for routine decision making
- information for problem solving
- information for service delivery.
- information for implementing programmes
- information for managing programmes
- management of resources usage
- project scheduling
- problem solving
- operational planning
The management oriented support systems provide support to various levels of management. Executive information systems allow executives to see where a problem or opportunity exists. The decision support systems are used by mid-level management to support the solution of problems that require judgement by the problem solver. The line managers use management reporting systems for routine operational information.
To conclude, information systems can help to reduce the competitive gap between the western countries and Japan using fundamental factors, such as the cost advantage, more competitively viable advantage in produce performance and quality.
Explore all the possible ways in which BMW can use the Internet to enhance its relations with its customers and suppliers. You may include ideas like just-in-time inventory management.
In the age of internet, personal computers and wide availability of internet service providers, consumers have seen a drastic change in their relationships with suppliers. The use of internet which enables the direct connection of consumer to suppliers has certainly created a more effective method of eliminating the middle man as well as enabling the consumer to have a greater access to the ever growing list of service and goods providers.
Essentially, the internet has been more of an enabling tool in shopper's capabilities. It has enabled consumers to access a wide selection of suppliers, their reputation, prices as well as create an environment which comparison shopping has become substantially easier. Nevertheless the fundamentals have not changed. At BMW the consumer and supplier relationship is still a symbiotic in which both parties rely on each other's ability to satisfy their respective needs. Consumers need suppliers to satisfy their wants in terms of necessary products and services; suppliers need consumers to produce profits. The role of the internet, though not saddle, has not changed those fundamentals.
In today's highly competitive marketplace, it is more important than ever for growing businesses such as BMW to enhance customer service, maximize productivity, and control costs. Customers are demanding better service and lower prices, and competitors are continually raising the bar with new solutions to meet customer needs. Within the last two years, the Internet has emerged as a critical tool for growing businesses willing and able to leverage its immense capabilities to solve problems and boost their bottom lines.
The BMW can use the Internet to enhance its relations with its customers and suppliers making the use of some tools of supply chain.
The concept of just-in-time is to keep a company's inventory to an absolute minimum. Parts and raw materials are delivered by suppliers to manufacturers at the precise moment they're needed. In turn, BMW produce and deliver their products to their customers just-in-time to be sold. In this sense, just-in-time refers to just-in-time techniques, such as inventory control, supplier relationships, quality control, and the like.
Making the use of internet strategies for a businesses, the technology can lead on internal cost savings and improve operational effectiveness. The key issue is how to use the internet to position the company in the marketplace. The distribution choices, for example are:
internet becomes the one of several important channels
a secondary or minor channel
a vehicle for disseminating product information
With traditional distribution channel partners making all sales to end-users, come cconsidering different internet positioning options can be visually pointed, such as advantage of just operating a website that provides existing and potential customers with extensive information:
avoids channel conflict and angering longtime wholesale/retail dealers
important where strong support and goodwill of dealer networks is essential
Advantage of using online sales as a secondary or minor distribution channel:
helps a company gain online experience, and achieve incremental sales; and to do market research to respond more precisely to buyer preferences
unlikely to provoke much outcry from dealers
To conclude, the Internet enhance its relations with its customers and suppliers. And can bring competitive advantage in some ideas such as like just-in-time inventory management, leading to satisfaction in terms of suppliers need consumers to produce profits and customers necessity.
'BMW is strongly associated with performance' - how can BMW enhance its non price factor competitive advantages using the concepts you have learnt in your technology management course?
Some approaches define national competitiveness in terms of strong performance and sustained economic growth; BMw has the ability to increase their share of world markets, linked to competitiveness to superior national productivity performance. The approach emphasises the importance of "non-price factors" factors. Factors such as skilled human capital and technological, entrepreneurial and managerial capabilities in the state and private sectors are viewed as critical inputs into international productivity and thus BMw competitiveness.
Introducing the differentiation of non-price strategy, BMw is known by one of the first luxury carmaker. BMW is a powerful motor brand. It has customer value of proving reliable, high-performance, and luxurious vehicles beside its outstanding psychical attraction (design). It is one of the most successful and powerful automobile firms in Europe. BMW obviously combines these components effectively to create strong brand image among its target market, generating competitive asvantage. BMW, for xemple, conveyed the image of "Ëœultimate driving machine". The reason for this is to emphasise the message that every model raised a set of generated by the mother brand. As compared to other motor brand in the same market, BMW is one of the key player it prestige vehicle market. I the term of innovation, BMW is classed as being advanced and innovative.
The competitive advantage of BMW involves with effective brand management, promising to provide drivers reliable, luxurious, and well-built vehicle. This combination gave BMW competitive advantages of a good system of production, a reputation for product quality and a brand that immediately identifies the aims and aspirations of its customers. Furthermore, competitive advantage involves with its highly qualified workforce. These workers have skills that made BMW different from others. Such competitive advantage reflects in unique design vehicles, for instance. Based on our findings during the desk research we came up with following results: BMW Group belongs to the mainstream of successful companies based on to higher added value through non-price factors like design, quality and reliability.
In conclusion, some of the changing bases of BMw's competition non-price factors are: more customization, high quality powerful motors, better service, advanced design and frequent adaptation and changes to improve their models.