I haven't had much time to post to this blog because of school. I've been doing plenty of writing for school though. Below is a research paper I wrote for my International Business class. I bought a Mini Cooper back in June and I thought this would be a good excuse for doing some research. I know it's not formated like a traditional blog post but I think the information is quite interesting. Please enjoy and let me know what you think.
Analysis of the BMW Group Manufacturing in
the UK
1. Executive Summary
By all accounts, the United Kingdom is far
from an industrial powerhouse. With less than 20% of it’s labor force dedicated
to manufacturing the success of the BMW Group acquisition of the MINI brand and
continued investment in the UK manufacturing plants are no short of miraculous.
My analysis of the BMW Group’s strategy
for investing in MINI plants in the UK is focused on innovative manufacturing processes,
sustainability and the revitalization of an iconic brand that keeps on
motoring.
2. Company Background
Based in Munich Germany, the BMW Group is the
manufacturer of the premium automotive and motorcycle brands of BMW, Rolls
Royce and MINI. The BMW Group's global
operation consists of more than 25 production and assembly plants in 14
countries. While all the production
plants are run directly by the BMW Group many of the assembly plants are
operated together with external partners. Central to The BMW Group operations is
their “Strategy Number ONE” initiative that focuses on 2 targets: profitability
and enhance long-term value in times of change. The key pillars of this strategy are growth,
shaping the future, profitability and access to technology and customers. This is all summed up in the BMW Group’s
mission statement: “the BMW Group is the world’s leading provider of premium
products and premium services for individual mobility. (BMW
Group SVP, 2012)
3. Country Background
The United Kingdom’s main industries include
banking, steel, transport equipment, oil and gas, and tourism. The majority of the UK labor force can be
attributed to services, which accounts for 80.4% leaving industry with about
18.2% and agriculture at 1.4%. From 1992
until 2008 the UK’s economy enjoyed a period of unbroken growth. In 2008 the
global fiscal crisis hit the UK as it did in many other countries. It resulted in consumers cutting their
spending to pay off debt which resulted in lowering demand, slowing production,
massive job loss and a prolonged and steep dip in GDP. UK manufacturing continues to
slow according to The Guardian’s Phillip Inman who reports that PMI fell from
48.1 to 4.75 in September 2012. (Inman,
2012)
4. Entry Strategy
In the early 1990’s The BMW Group made a push
towards being a global auto-manufacturing leader in part by acquiring the UK
based Rover Group The Rover Group acquisition in 1994, which brought Land
Rover, Rover, MG, Triumph and Mini brands, almost completely fell apart by 2000
when the BMW Group sold off everything
except Mini. (BMW Group website,
n.d.)
The United Kingdom is the original birthplace
of the Mini brand of automobiles originally built by the British Motor
Corporation, a production run that spanned for 41 years before ceasing
production in 2000. After the
sale of the Rover Group BMW held on to Oxford based factory that was meant to
build Rover’s and retrofitted the facility to produce the redesigned MINI.
(Paternie, 2002) A significant
investment was made to modernize and automate the plant to ensure a high level
of quality and efficiency. Since 2001
The BMW Group has been producing MINI’s as their premium small-car segment in
modernized Oxford and Swindon plants. (BMW Group website, n.d.) The
initial forecasting for the plant was to produce 100,000 vehicles a year but by
August of 2011 the plant had already produced 2 million MINIs.
Through acquiring such a beloved brand,
keeping the production in the country that founded the original Mini and with
significant investment into tooling and training the BMW Group demonstrated an
effective entry and sustainment strategy.
5. Marketing and R&D Strategies
The MINI is marketed as a hip fun to drive
vehicle that is fun for all ages and classes. The MINI’s unique attributes are
constantly played up in their ads and marketing materials. It is a vehicle that
is small but premium. Not aerodynamic but quick. With thousands of
customization options no two MINI’s are the same, which speaks to the
individual. While MINI owners like to have their cars different from everyone
else there is also a strong community by the brand itself. Many communities of
MINI owners get together for rally races and MINI also sponsors large events
that attract thousands of owners together and celebrate the car they love.
With a sport mode, performance suspension,
dynamic stability control, dynamic traction control and 37mpg highway BMW has
developed MINI to be the best of both worlds. Furthermore, the design of the
vehicle itself and the process to produce it is a team effort between Munich
and the UK BMW/MINI divisions. They have painstakingly put everything into the car
while maintaining a very high level of quality. The MINI plants adhere to lean
manufacturing principles ensuring on-time delivery and keeps stocks of
components to the minimum. (Paternie,
2012)
The BMW Group’s global production strategies
are focused on sustainability. These activities and the progress to meet these
standards are surprisingly transparent. They focus on
the sustainability of environmental factors and that of their
workforce. The Oxford Production plant is operated under Lean principles that
focuses on just in time standard just in time manufacturing. There focus
is on reducing waste while maintaining a high level of quality. The BMW Group's
domestic and international strategy is highly focused on sustainability. It is
a commitment in ensuring sustainable manufacturing globally while also ensuring
the humane treatment of workers and reducing any negative impacts on the
environment. Central to this commitment, the BMW Group has signed the Global
Compact of the United Nations and is committed to implementing its ten
principles at all locations including those in the UK. In the BMW Group's
Sustainability Value Report (SVR) they list the UN ten principles and openly
reports their progress towards meeting them. The Principles are:
1. Support and respect the protection of
internationally proclaimed human rights.
2. Make sure there is no complicity in human rights
abuses
3. Uphold the freedom of associated and recognition to
collective bargaining.
4. Elimination of all forms of forced and compulsory
labor
5. Effective abolition of child labor
6. Elimination of discrimination in respect of
employment and occupation
7. Support a precautionary approach to environmental
challenges
8. Undertake initiatives to promote greater
environmental responsibility
9. Development and diffusion of environmentally
friendly technologies
10. Work against corruption in all its forms,
including exertion and bribery
(BMW Group SVP, 2012, p. 115)
Based on the UN principles listed above, the BMW
Group's strategy for entering countries is focused on sustainability and
adherence to the pact. BMW enters countries and/or into alliances with
countries that they believe can reach their humanitarian and environmental
responsibilities. BMW's alliance with the UN provides them with access to UN
member states that are focused on the same sustainable goals. It's clear that
BMW's strategy rests on happy workers, reduction of waste and the maximization
of resources.
6. Opportunities and Challenges
There
initial expansion strategy hit a speed bump when the Rover Group full brand
offerings didn’t come to fruition but the BMW Group’s decision to keep MINI has
paid off. The BMW Group just recently committed to investing another $387
million into the manufacturing operations in the UK. ("BMW Investment in
UK MINI," 2012) This
commitment to supporting these plants and the 5,500 UK associates that work
there present an incredible opportunity to help bolster UK manufacturing. The
investment will allow the BMW Group and the MINI plant invest in bringing newer
generations the vehicle lineup to market.
The MINI does face some new challenges in the
form of competition in some key markets. In particular, the Fiat 500’s
introduction to the US market is also going for market of people that want a
fun yet fuel efficient vehicle for which MINI has been the top brand.
7.
Evaluation and Conclusion
The success and the
continued demand for the MINI has paid off well for the BMW Group and the
plants in the UK are a major part of that. The associates working in these
plants have a tremendous amount of national pride for the MINI. The BMW Group
supports this pride by still offering MINI accessories with the UK’s Union
Jack. The plants’ are equipment with state of the art robots, measuring
equipment and quality policies that are a staple of BMW manufacturing
expertise. Even with a great marketing strategy the MINI has a cult following
in which the brand sells itself. The BMW Groups investments into the MINI UK
plans have been and will continue to be a lucrative strategy for expanding on
an iconic brand.
References:
BMW Group Sustainbable Value Report 2011
[Annual Report]. (2012). Retrieved from BMW Group Website:
http://www.bmwgroup.com/bmwgroup_prod/e/0_0_www_bmwgroup_com/verantwortung/svr_2010/ziele_kennzahlen2011.html
BMW
Group to invest £250 million in UK for MINI manufacturing operations. (2012,
July 09). RushLane. Retrieved from
http://www.rushlane.com/latest/auto-news/mini-news
BMW
Group website. (n.d.).
http://www.bmwgroup.com/bmwgroup_prod/e/nav/index.html?http://www.bmwgroup.com/bmwgroup_prod/e/0_0_www_bmwgroup_com/home/home.html
Economy
Tracker: GDP. (2012, October 25). BBC
News Business. Retrieved from http://www.bbc.co.uk/news/10613201
Inman,
P. (2012, November 1). UK manufacturing slowdown continues. The Guardian. Retrieved from
http://www.guardian.co.uk/business/2012/nov/01/uk-manufacturing-slowdown-continues-gdp
Paternie,
P. C. (2002). MINI. [Google Books].
Retrieved from GOOGLE ebookstore
Please leave comments below and thanks for reading,
-Joe
