Corporate Culture Case Study: BMW

Introduction

In the mind of every person, emotions, thoughts and possible actions form a pattern which has developed during his or her childhood. Once rooted in the mind, these patterns must be forgotten before anything new can be taught. A common name for these patterns is culture. Culture is important. It is what founds confidence. The concept of culture is broad and abstract but still a crucial part of everyone’s environment and something that can be found anywhere. It takes form in symbols, heroes, rituals and customs. The core, the essence of culture is values. Our basic values are founded in the beginning of our lives, while as we grow older we tend to focus on consciously learning new customs. The choices we make during this process determine our self-image how we look upon the others.

There are countless definitions of the word culture, each one claiming to be unique. But in fact this only goes to show that the concept is far too abstract to be clearly defined, Bang states that it signifies what we at every specific moment want it to signify. We see this as the strength of the subject; it is what makes it so interesting to study. You can end up anywhere, and there is no right or wrong. Many connect culture with art and theater, but the concept is nowadays far more widespread and can be applied to many more areas, corporations being one of them. A popular and simple definition of the expression corporate culture is made by Deal and Kennedy:

“Culture is the way in which we perform something here at ours” [2] 

The term “culture” originally comes from social anthropology. Late nineteenth- and early twentieth-century studies of “primitive” societies-Eskimo, South Sea, African, Native American-revealed ways of life that were not only different from the more technologically advanced parts of America and Europe but were often very different among themselves. The concept of culture was thus coined to represent, in a very broad and holistic sense, the qualities of any specific human group that are passed from one generation to the next. The American Heritage Dictionary defines “culture”, more formally, as “the totally of socially transmitted behavior patterns, arts, beliefs, institutions, and all other products of human work and thought characteristics of a community or population” [3] 

It is helpful to think that corporate culture has two levels, which differ in terms of their visibility and their resistance to change. At the deeper and less visible level, culture refers to values that are shared by the people in a group and that tend to persist over time even when group membership changes. Those notions about what is important in life can vary greatly in different companies; in some settings people care deeply about money, in other about technological innovation or employee well-being. At this level culture can be extremely difficult to change, in part because group members are often unaware of many of the values that bind them together.

At the more visible level, culture represents the behavior patterns or style of an organization that new employees are automatically encouraged to follow by their fellow employees. We can say, for example, that people in one group have for years been “hard workers”, those in another are “very friendly” to strangers, and those in a third always wear very conservative clothes. Culture in this sense, is still tough to change, but not nearly as difficult as the level of basic values.

Each level of culture has a natural tendency to influence the other. This is perhaps most obvious in terms of shared values influencing a group’s behavior-a commitment to customers, for example, influencing how quickly individuals tend to respond to customers complaints. But causality can flow in the other direction too-behavior and practices can influence values.

So, How Do We Define Culture?

Culture is a pattern of shared tacit assumptions that was learned by a group as it solved its problems of external adaptation and internal integration, that has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think, and feeling relation to those problems. [4] 

What really drives daily behavior is the learned, shared, tacit assumptions on which people base their view of reality – as it is and as it should be. It results in what is popularly thought of as “the way we do things around here”, but even the employees in the organization cannot, without help, reconstruct the underlying assumptions on which their daily behavior rests. They know only that this is the way, and they count on it. Life becomes predictable and meaningful. If you understand those assumptions, it is easy to see how they lead to the kind of behavioral.

Three Levels of Culture

The biggest danger in trying to understand culture is to oversimplify it. It is tempting to say that culture is just ” the way we do things around here”,” the rites and rituals of our company”,” the company climate”,” the reward system”,” our basic values” and so on. These are all manifestations of the culture, but none is the culture at the level where culture matters. A better way to think about culture is to realize that it exists at several ” levels” and that we must understand and manage the deeper levels. The levels of culture go from the very visible to the very tacit and invisible. [5] 

Artifacts

Visible organizational structures (hard to decipher)

Espoused

Values

Strategies, goals, philosophies (espoused justifications)

Underlying Assumptions Unconscious, taken for granted beliefs, perceptions, thoughts and feeling (ultimate source of values and action)

Classifying Corporate Culture

G.Hofstede

Hofstede demostrated that there are national and regional cultural groupings that affect the behaviour of organizations.

Hofstede identified four characteristics of culture in his study of national influences:

Power Distance – The degree to which a society expects there to be differences in the levels of power. A high score suggests that there is an expectation that some individuals wield larger amounts of power than others. A low score reflects the view that all people should have equal rights.

Uncertainty Avoidance reflects the extent to which a society accepts uncertainty and risk.

individualism vs collectivism – individualism is contrasted with collectivism’, and refers to the extent to which people are expected to stand up for themselves, or alternatively act predominantly as a member of the group or organisation.

masculinity vs femininity – refers to the value placed on traditionally male or female values. Male values for example include competitiveness, assertiveness, ambition, and the accumulation of wealth and material possessions.

Long vs short term orientation

Deal and Kennedy

Deal and Kennedy defined corporate culture as the way things get done around here. They measured organisations in respect of:

Feedback – quick feedback means an instant response. This could be in monetary terms, but could also be seen in other ways, such as the impact of a great save in a soccer match.

Risk – represents the degree of uncertainty in the organisation’s activities.

Using these parameters, they were able to suggest four classifications of organisational culture:

The Tough Guy Macho Culture. Feedback is quick and the rewards are high. This often applies to fast moving financial activities such as brokerage, but could also apply to policemen or women, or athletes competing in team sports. This can be a very stressful culture in which to operate.

The Work Hard/Play Hard Culture is characterised by few risks being taken, all with rapid feedback. This is typical in large organisations which strive for high quality customer service. They are often characterised by team meetings, jargon and buzzwords.

The Bet your Company Culture, where big stakes decisions are taken, but it may be years before the results are known. Typically, these might involve development or exploration projects, which take years to come to fruition, such as could be expected with oil exploration or aviation.

The Process Culture occurs in organisations where there is little or no feedback. People become bogged down with how things are done not with what is to be achieved. This is often associated with bureaucracies. Whilst it is easy to criticise these cultures for being over cautious or bogged down in red tape, they do produce consistent results, which is ideal in, for example, public services.

Charles Handy

Handy (1985) popularised a method of looking at culture which some scholars have used to link organizational structure to Organizational Culture. He descibes:

a Power Culture which concentrates power in a few pairs of hands. Control radiates from the centre like a web. Power Cultures have few rules and little bureaucracy; swift decisions can ensue.

In a Role Culture, people have clearly delegated authorities within a highly defined structure. Typically, these organisations form hierarchical bureaucracies. Power derives from a person’s position and little scope exists for expert power.

By contrast, in a Task Culture, teams form to solve particular problems. Power derives from expertise so long as a team requires expertise. These cultures often feature the multiple reporting lines of a matrix structure.

A Person Culture exists where all individuals believe themselves superior to the organisation. Survival can become difficult for such organisations, since the concept of an organisation suggests that a group of like-minded individuals pursue the organisational goals. Some professional partnerships can operate as person cultures, because each partner brings a peculiar expertise and clientele to the firm.

Elements of the corporate culture:

The Paradigm: What the organization is about; what it does; its mission; its values.

Control Systems: The processes in place to monitor what is going on. Role cultures would have vast rule books. There would be more reliance on individualism in a power culture.

Organizational Structures: Reporting lines, hierarchies, and the way that work flows through the business.

Power Structures: Who makes the decisions, how widely spread is power, and on what is power based?

Symbols: These include the logos and designs, but would extend to symbols of power, such as car parking spaces and executive washrooms!

Rituals and Routines: Management meetings, board reports and so on may become more habitual than necessary.

Stories and Myths: build up about people and events, and convey a message about what is valued within the organization.

These elements may overlap. Power structures may depend on control systems, which may exploit the very rituals that generate stories.

Selecting a Company

I decided to focus my research on the BMW Group ,because it is a one of the world’s top automobile manufacturers with long history of successful technological achievements and thousands of employees and I believe ,it will be a great example for a successful corporate culture. The company produces motorcycles and engines, as well and it also own and produces the Mini brand and is the parent company of Rolls-Royce Motor Cars. As one of the great car manufacturers with subsidiaries on each continent and since the automobile industry has been strongly influenced by the social environment, I believe that studying the BMW Group corporate culture is an effective means for understanding the corporate cultures of European companies. To present the BMW group corporate culture ,I will analyze how the BMW corporate culture works and what are its core values.

BMW Group Overview

BMW History

BMW is an acronym for Bayerische Motoren Werke AG- or, in English, Bavarian Motor Works [6] . Whatever you call it, the German-based company is one of the world’s most respected automakers, renowned for crafting luxury cars and SUVs that offer superior levels of driving enjoyment. Founded in Munich, the company began in the early 1910s as an aircraft manufacturer. BMW’s current logo, designed to represent white propeller blades against a blue sky, reflects these origins; its blue-and-white color scheme also references Bavaria’s blue-and-white checkered flag.

It wasn’t until 1928 that production began on the first BMW automobile, the Dixi. The car proved tremendously popular, and its success helped the manufacturer weather the Depression. BMW’s best-known pre-World War II vehicle was the Type 328 roadster, a supple two-seater that racked up over 120 victories on the motorsport circuit between 1936 and 1940. Postwar BMW cars maintained this tradition, winning several racing, rallying and hill climb victories.

The early 1950s saw the launch of the BMW 501, a roomy, voluptuous sedan that was resplendent with all of the hopefulness of that era. It was soon followed by the 502 which was powered by the world’s first light-alloy V8, foreshadowing BMW’s ongoing commitment to developing new technology. The best-selling BMW of that decade was the Isetta, a petite two-seat “microcar” typically powered by a 12- or 13-horsepower engine. The mid-’50s also saw the debut of the limited production and breathtakingly beautiful 507 sports car which had an alloy body and used the 502’s V8 for propulsion. In the 1960s, BMW sales strengthened significantly, thanks in part to the immense popularity of the 1500, a sporty family sedan.  [7] 

By the 1970s, BMW was establishing itself as a full-fledged car company. It was a pioneer for many emerging technologies, including turbocharging and advanced vehicle electronics. BMW of North America was established at this time, and consumers who coveted both sports and luxury cars became loyal “Bimmer” owners. The ’70s also saw the birth of BMW’s three-tier sport sedan range consisting of the compact 3 Series, midsize 5 Series and large 7 Series cars and the creation of its performance M division. Though the 3 Series could be had with four-cylinder power, it was the company’s inline-6 engines that developed BMW’s reputation for spirited, yet highly refined performance. At decade’s end, the limited-production, short-lived M1 supercar debuted.

Throughout the 1980s, BMW became the unofficial poster car of yuppies, as the brand ostensibly signified one’s financial success as well as a passion for driving. The elegant 6 Series coupe debuted and the latter part of the decade saw the high-performance M division working its magic on various production models.

The early 1990s saw BMW replace the 6 Series with the powerful (V12-powered at first) but heavy 8 Series grand touring coupe while later that decade the Z3 roadster bowed. The company also opened its first U.S. manufacturing plant in the latter half of the 1990s.

The 2000s brought a midsize SUV (the X5) as well as a compact SUV (the X3) as BMW joined the hot-selling segment. Since then, BMW has replaced the Z3 with the Z4, introduced the compact 1 Series, produced hybrid versions of a few models and debuted the X6 fastback crossover. The company has also expanded its empire to include Mini and Rolls-Royce and continues to build motorcycles, something it has done since the 1920s.

The automaker’s famous advertising slogan describes each of its vehicles as “the ultimate driving machine,” and it’s not mere hyperbole. Over the past couple of decades, BMWs have become the standard for performance and luxury in most of the “over $30,000” segments. With family-friendly wagons, crisp sedans, distinctive coupes, nimble sports cars and spacious SUVs offered, BMW’s model roster is diverse. But its luxury vehicles all share a common characteristic: the ability to make drivers feel gloriously connected to the road. [8] 

The automobile industry in Europe [9] 

The auto sector is often credited as the engine room of Europe. The European Union is the homeland to a competitive and innovative automotive industry that generates activity throughout the economy from materials and parts supply, to R&D and manufacturing, to sales and after-sales services. Manufacturers have trained and developed a highly-skilled workforce, producing quality products for home and international markets. Vehicle manufacturing supports over 2 million European jobs with an additional 10 million citizens employed in associated industries. Exports are valued at over £70 billion annually. The automotive industry has also established itself as a partner in sustainability.

Technological advances have brought real solutions, driving down harmful emissions from industry products and production sites. Manufacturers have spearheaded significant improvements in vehicle safety and embraced social responsibility goals. Annually, the industry invests £20 billion in R&D, more than any other private sector. Its drive towards sustainable mobility remains an ongoing commitment.

BMW’S Group Corporate Culture

The BMW Group is one of the world’s leading car and motorcycle manufacturers with more than 100,000 employees in over 100 countries.

With the brands BMW, MINI and Rolls Royce,BMW operate very successfully in the premium segment of the automobile and motorcycle industry.

In order to consistently maintain the quality standards, BMW seek employees who possess team spirit and personal initiative, as well as an uncompromising desire to constantly further their knowledge. Because they are convinced that those who cease to improve have already ceased to be be good.

High-efficiency culture.

It is not only the technical know-how that makes BMW stand out considerably from other companies. In keeping with the quality standards of products, BMW corporate culture is a consistent high-efficiency culture.

BMW constantly incite each other employee to become even better, to offer even better products. This is only possible through a pronounced team spirit. Critical reflection and self-critical advancement are only possible within a well-functioning team.

Because they approach each other with respect and esteem, the employees have a strong team spirit – the decisive prerequisite for success within a team. Satisfied and motivated employees are an invaluable competitive advantage to our company.  [10] 

Basic principles:

During the next decade BMW aim to secure a position as the world’s leading manufacturer of premium automobiles. For this reason all of company’s strategies – including the corporate culture – are conceived on a long-term basis and are constantly target-oriented.

BMW wish to utilise new chances and achieve a new level of efficiency,they aspire to create an atmosphere of optimism from which to draw the energy for necessary changes.

The following principles of the BMW Group form the basis of this long-term and target-oriented action [11] :

Customer orientation.

Our customers decide whether or not our company is successful. Our customers are at the centre of all of our actions and the results of our actions must be judged from a perspective of their benefit to the customer.

High efficiency.

We aim to be the best. Each of us has to rise to this challenge, meaning that each employee must be prepared to achieve a high degree of efficiency. We aspire to belong to an elite, but without being arrogant, because it is the company and its products that count the most – and nothing else.

Responsibility.

Each BMW Group employee bears personal responsibility for the success of the company. This also applies within a team, where each individual must be aware of his or her responsibility. In this respect we are fully aware that we all work together in achieving corporate goals. For this reason we also work together in the interests of the company.

Effectiveness.

Only sustainable and effective results are of benefit to the company. When assessing management, it is only the effect of performance on results that counts.

Adaptability.

In order to achieve continuous success we must adapt quickly and flexibly to new demands. Therefore, we regard change as a chance and the ability to adapt as the prerequisite for making use of this chance.

Disagreement.

In the search for the best solution everyone has the duty to bring to light any disagreement. The solutions found are then resolutely implemented by all involved.

Respect, trust, fairness.

We treat one another with respect. Management is based on mutual trust, trust is based on calculability and fairness.

Employees.

Business enterprises are made by people. Employees are our strongest factor of success. Consequently, personnel decisions belong to the most crucial decisions.

Exemplary function.

Every executive has an exemplary function.

Sustainability.

We regard sustainability as a lasting and positive contribution towards the economic success of the company. This is the basis of our ecological and social responsibility.

Society.

We consider awareness of social responsibility an inseparable part of our corporate self-conception.

Independence.

We secure the BMW Group’s entrepreneurial independence through sustainable and profitable growth.

Equality of opportunity

BMW Group employees work in different countries on different continents. They are as diverse as is usually the case in our globalized world. It goes without saying that all of our employees are treated equally according to their qualifications and granted equal opportunities. So diversity is perfectly normal in our working lives.

Diversity

The diversity of the BMW’s employees is one of their special strengths. It enhances the company’s innovative capability and helps to gain ground in new markets. It broadens the pool of BMW’s talents and competencies. Human diversity is therefore a key to the sustainable success of the BMW Group. Hence “diversity” is an important issue of the future.

Human diversity also influences the cultural horizon within the company. As a result it becomes constantly broader, providing BMW with new aspects and perspectives.

This enables to perceive new needs and trends far earlier and above all to understand them – and to live with diversity.

Sustainability management

We have set ourselves the goal of integrating sustainability throughout the entire value chain and its underlying processes – creating an added value for the company, the environment and society. Key elements of BMW Group’s sustainability management include an “environmental radar” that is regularly extended to cover additional ecological and social aspects; ongoing dialogue with stakeholders; the inclusion of sustainability criteria in all decision-making processes; and a holistic approach to the entire value chain.

The BMW Group’s basic principles form the foundation of the company’s long-term alignment. They establish, among other things, that being a good corporate citizen is an integral part of how the BMW Group defines itself as a company. Furthermore, sustainability is regarded as making a positive contribution to the company’s economic success.

According to the Dow Jones Sustainability Indexes, the BMW Group is currently the world’s most sustainable carmaker. The company was named industry leader in these important global sustainability indices for the fifth consecutive year in 2009. Numerous other ratings and awards also confirm the company’s lead role in the field of sustainability. But for the BMW Group this is only the beginning. It is obvious that sustainability is set to play an even bigger role in defining premium mobility of the future – from environmentally-friendly drive trains and resource-friendly production processes to new, sustainable services in the field of individual mobility. In the future, “premium” will inevitably comprise the concept of sustainability. The manufacturer with the more efficient and resource-friendly production, who offers the most visionary solutions for eco-friendly individual mobility, will have the competitive edge.

BMW position

At the BMW Group, sustainability is not just the responsibility of one particular department. All employees are called upon to implement elements of corporate sustainability in their area of responsibility. Here the members of the Board of Management of BMW AG discuss how their individual divisions define corporate sustainability.

The BMW Group and its BMW, MINI and Rolls-Royce brands epitomise joy, passion and success. The aim is to actively shape the future. To achieve this, we are making sustainability an increasingly integral part of our value chain. Sustainability should be the defining principle of how we design our processes and procedures. Our company has been changing its approach over recent years. The revision of the BMW Group’s sustainability strategy was the next logical step and an important milestone. But there is still some way to go.

Economics [12] 

The BMW’s corporate Strategy Number ONE is creating the best conditions for long-term value creation and sustainability. Our vision is to be the world’s leading provider of premium products and premium services in the automotive industry. As we see it, this also means being a leader in the field of sustainability. From an economic point of view, issues such as compliance, anti-corruption and risk management form the backbone of corporate responsibility.

In late 2007, the BMW Group presented its new corporate Strategy Number ONE. The vision: To be the leading provider of premium products and premium services for individual mobility. To reach this goal, the company needs to focus consistently on growth and profitability; to constantly develop new technologies; to guarantee access to relevant customer groups; and, most importantly, to actively shape the future. These key fields of action are the four pillars of Strategy Number ONE.

Everything BMW do is based on the twelve basic principles the Board of Management defined in Strategy Number ONE:

• Customer orientation – The customer and benefit for the customer are at the heart of everything the company does.
• Peak performance -The company and all its employees aim to be the best.
• Responsibility – Every employee shares the responsibility for the company’s success.
• Effectiveness – Only results which have a lasting effect count.
• Adaptability – Flexibility as a crucial prerequisite for success.
• Dissent – As we strive to find the best solution, we are frank with each other.
• Respect, trust, fairness – The basis of successful cooperation.
• Employees – The strongest factor in a company’s success.
• Leading by example – Every manager has to be aware that he / she is a role model and should act accordingly.
• Sustainability – Acting sustainably is an element of our corporate responsibility and a contribution to value creation.
• Society – Social responsibility is an integral part of our corporate self-image.
• Independence – Sustained profitable growth secures the corporate independence of the BMW Group.

Based on these principles, the BMW Group has established a focused approach to master the current crisis. Priorities are to secure the company’s sound financial footing and its liquidity as well as to develop attractive, trendsetting products. Over the past five years, the company has invested a total of over 21 billion euros in its future, an amount that also reflects the BMW Group’s technological expertise and the pace at which innovations are developed.

With its corporate Strategy Number ONE, the BMW Group is setting the course for tomorrow’s dynamic growth. For more detailed information on the financial year and our latest figures please refer to the current Annual Report.

Employees-Basic principles

During the next decade we aim to secure our position as the world’s leading manufacturer of premium automobiles. For this reason all of our strategies – including our corporate culture – are conceived on a long-term basis and are constantly target-oriented.

We established this prerequisite when we launched our Strategy Number ONE. The Vision: to become the world’s leading provider of premium products and premium services for individual mobility. To this end, the BMW Group concentrates on profitability and sustained value creation. The company’s four strategic pillars also include growth, shaping the future and access to technologies and customers.

The following principles of the BMW Group form the basis of this long-term and target-oriented action: [13] 

Customer orientation

Our customers decide whether or not our company is successful. Our customers are at the centre of all of our actions and the results of our actions must be judged from a perspective of their benefit to the customer.

Peak performance

We aim to be the best. Each of us has to rise to this challenge, meaning that each employee must be prepared to achieve a high degree of efficiency. We aspire to belong to an elite, but without being arrogant, because it is the company and its products that count the most – and nothing else.

Responsibility

Each BMW Group employee bears personal responsibility for the success of the company. This also applies within a team, where each individual must be aware of his or her responsibility. In this respect we are fully aware that we all work together in achieving corporate goals. For this reason we also work together in the interests of the company.

Effectiveness

Only sustainable and effective results are of benefit to the company. When assessing management, it is only the effect of performance on results that counts.

Adaptability

In order to achieve continuous success we must adapt quickly and flexibly to new demands. Therefore, we regard change as a chance and the ability to adapt as the prerequisite for making use of this chance.

Dissent

In the search for the best solution everyone has the duty to bring to light any disagreement. The solutions found are then resolutely implemented by all involved.

 

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