BMW

The Banking Academy INTERNATIONAL SCHOOL OF BUSINESS Student Name/ID Number: Linh Chi Tran - F13-250 Unit Number and Title: Unit 1: Business and Business Environment Academic Year: Semester 1, Academic year 2020 - 2021 Unit Assessor: Vu Thi Kim Chi Assignment Title: HRM2: Business Environmental Analysis (2 of 2) Issue Date: 12th October 2020 Submission Date: To Be Announced By Office Internal Verifier Name: Dr Doti Chee (Lead IV) and Le Thu Hanh ( IV) Date: 14th September 2020 TABLE OF CONTENT Introduction about BMW Group PESTLE Analysis 2.1 Political factors 2.2  Economic factors 2.3  Social factors 2.4  Technology factors 2.5  Legal factors 2.6  Environment factors SWOT Analysis 3.1 Strengths 3.2 Weaknesses 10 3.3 Opportunities 11 3.4 Threats 11 3.5 Interrelationship these have with the external factors 12 Justify and critical evaluate how PESTLE and SWOT analysis factors 13 influence the decision-making of BMW Group Conclusion 14 REFERENCES 15 Introduction about the BMW company a) Name Bayerische Motoren Werke is stand for BMW car industry company b) Foundation Leadership is promoted by BMW’s foundation and inspired for the leader in the world working towards a peaceful, equally and sustainable future It encourages leaders to require their social and political responsibility to subsequent level To that end, it inspires leaders, providing them with a platform for private and professional development, and connects them, across nations, regions and sectors, through the worldwide Responsible Leaders Network The third interdependent component of its work is to take a position in initiatives and organizations seeking to deal with humanity’s social, political and environmental challenges (BMW, 2020) c) History From the ashes of World War II to the leading luxury car company in the world Overcoming many crises from the ashes of World War II to the current sustainable development From an aircraft engine manufacturing company After more than decades, BMW truly becomes the world's leading luxury car company with famous German features Let's go back in time to see the glorious history of the BMW branding d) Industry Automotive industry e) Products and services Automotive, Motorcycles, Financial Services, Design Works f) Financial Performance Annual Revenue (2019) : $115.83 billion Net income (2019): $5.58 billion (BMW, 2020) Analysis of macro external environment 2.1 Political factors Vietnam has a political stability, it index reached 0.13 in 2019 (The World Bank, 2019) This figure is quite high, therefore it will promote the development of car industry in Vietnam So it will help the BMW increase ability to compete with imported car Moreover, the need of incentives to promote BMW expand produce activities, car assembly, industry development supporting car industry In addition, the Government also issued decree no.84/NQ-CP about the tasks, solutions to overcome the difficulties after the Covid-19 epidemic, in which, there was a decrease to 50% of registration fee before car domestic registration until the end of 2020 According to the assess of expect about the decrease of taxation, fee mentioned above, government have created a huge chance for the car domestic industry, indirectly helping BMW in particular and car business in general decrease fee and cost to compete each other Thence, the expectation will help revive the gloomy auto market As for BMW, since it is 100% imported car so it is not entitled to 50% discount on registration fee but it still offers discount on the majority of vehicles in its product portfolio, with high discount applicable to all dealers (Nhandan.com) From that, BMW is not only create a fair compete environment between car manufactures to increase rapidly in the number of revenue of BMW but also will be the first choice for the customers in the end of this year Beside the benefit aspects, BMW have to face with a huge problem which related to the index of perceptions of corruption in Vietnam According to towardstransparency.vn, Vietnam scored 37/100 point in the corruption perception index (CPI) in 2019, up by point compared to 2018, ranking 96/180 on the global index This is considered that is a positive change in the fight against corruption in Vietnam in the past year but compared to other countries, this index still quite high and it also shown this corruption in the public sector remains a serious problem in Vietnam Therefore, for a famous foreign company like BMW, this will be a negative impact and huge challenge for this company looking for the way to continue its growth in the Vietnamese market 2.2 Economic factors Business of automobile brands had a direct influenced by the global economic environment General economic environment of the world and the performance of local economies affect the overall business performance of BMW (Pratap, 2019) (Statista.com, 2020) There are an interrelated between political and economy In 2019, despite of the impact of Covid-19, the report in October 7, 2020, the global economy is climbing out from the depth to which it had plummeted during the Great Lockdown in April (World Economic Outook Report, 2020) The demand for BMW automobile still developed strong in previous years As can seen from the chart, the total revenue of BMW in 2019 is 104 billion euro in 2019 Besides, the sales of BMW in 2019 was 1.2% (PressClub Global, 2019), BMW reached a high record although approximately just above 0.1% compared to 2018 (Bekker, 2018) BMW still maintained a large number of car sales in recent years The BMW performance impacted by several factors Source: Trading Economic, 2020 The economy growth in Vietnam show a fundamental strength and resilience because of the robust domestic demand and export-oriented manufacturing was supported for this growth economy The figure show the proportion of people who were unemployed in July 2020 was 2.73%, which was 0.51% higher compared to January 2020 This is a high percentage in Vietnam but compared with other countries such as the US was 4% (Pratap, 2020) and China was 5.2% (Investing.com), the figure of Vietnam was still lower than other countries Real GDP increased estimated 7% in 2019 (The World Bank, 2020), compared with other countries such as the U.S was 2.9%, in the U.K was 1.9% and Japan economic growth was 6.6% higher than the proportion in the economic gowth in China (Pratap, 2020) These figures was shown Asia business of BMW continued to experience climb in 2019, strong demand for BMW cars in 2019 was a result of overall balanced economic situation globally Overall, the economy in Vietnam helping BMW has a great impact on their revenue Vietnam is one of the most important markets donating of the BMW Group in this region Therefore, BMW have further affirmed its position in the market by continuously developing BWM sales and service networks to meet current and future needs Continuously looking for the chance for business and growth potential, BMW understand the rapid development of the car market in Vietnam and hold the opportunities of this market 2.3 Social Factors Nowadays, for customer tastes, they are more interested in a car which bring them friendly, safe, convenient, affordable or not, rather than seeing the car as an asset (Mr Pham Thuy - member of Management Board Lady and Cars club) Same the point of view, currently, the needs and understanding of Vietnamese consumers are similar to and catch up with the general trend of the world - which is towards safer, smarter, environmentally friendly products, saving fuel (Mr Pham Van Dung - General director of Ford Vietnam cum Vice President of VAMA) This is a big strength in the BMW group In recent years, BMW has always aimed for vehicle that can satisfy all the tastes of customers mentioned above According to the Japanese concept of “green image” products, people want to buy green goods more tha demerit goods The BMW Group embraced this challenge and developed a technology that represents the future engine fuel BMW CleanEnergy uses the most basic of all natural cycles: the water cycle This cycle is a key concept of BMW Clean-Energy Liquid hydrogen is made up of energy and water In BMW’s hydrogen engines, hydrogen burns oxygen and returns to water BMW Clean-Energy simply follows natural principles The trend of consumers is changing to using luxury cars is which is the reason for brands “landing” in the Vietnamese market to lead the market According to the World Bank report has shown that Vietnam has a significant increase in the middle class, the group of people with living standards above 15 USD/day As mentioned above, real GDP is increasing in recent years, which means that people’s living standards will also increase As a result, about the million people join the middle class in Vietnam each year However, the true wealth of the Vietnamese people not only looks absolutely material, but also needs to ass the maximum enjoyment of cultural and spiritual values Looking at the measure that Vietnamese people were able to buy billion-dollar cars, luxury products to see if they are rich or not enough Moreover, nowadays, the wealth is only a small fraction of the benefits of economic growth (Economic expert, Tran Thanh Hai) 2.4 Technological factors Thanks to Vietnam strong measures and people’s awareness against the Covid-19 pandemic, Vietnam controlled the pandemic rapidly in over the world Therefore, Vietnam’s economy has been recovering quickly to improve the business environment and promote digital technology It can be said that, nowadays, digital technology is the trends not only in Vietnam but also in many other countries from Asia to Europe and the Americas, society has undergone a major change in a decade It help business increases market competitiveness and enhancing transparency and efficiency in the corporate governance system It also raised people’s awareness and their lifestyle in Vietnam in particular and people’s international in general about this new improvement The relationship between society and businesses is changing and businesses are focusing on building strong relationships with their customers and employees Digital technology is changing every industry but it is also changing people’s lives (Pratap, 2020) Almost products in BMW using digital technology which is bringing their customers a superior experience The demand and desires of customers are changing so BMW also applied available marketing strategies to appropriate with the needs and expectations of its employee Nowadays, people want to look for a car with lower emission and can bring feeling of safeness Therefore, BMW is investing a lot of cars which can respond all the demand of customers, besides this strategies can help BMW increase their revenue quickly Along with the development rapidly of 4.0 technology and demand of customers about many kind of cars can bring the safeness for them have lower emission, BMW group is making its cars superior in terms of efficiency for the customers BMW introduced and launched several new models of electrical cars to satisfy the growing demand of the market in the world Researching and developing play a central role in the successful development of BMW market Ability to move by electrical, digital and autonomous driving are the most crucial in the field researching and innovation for the producer of luxury cars BMW has established a large research and innovation network has a great expand in 16 locations in five countries (Pratap, 2020) In recent years, the proportion of money from BMW’s revenue spent on R&D expense from 2017 to 2019 approximately 5.5%-6% (Taylor, 2017), around 10 billion euros in 2019, compared with the figure only just above billion euros in 2018 (Pratap, 2020) BMW group won several prizes for innovation excellence in 2019 Research and innovation and technological excellence were the highlights in the focus on BMW group 2.5 Legal factors There are very few reason which is very important for legal validity in a business environment There are many reasons for companies to make quality products under the law: lie to the price, not advertise impact, try to get attention and not care about the satisfaction of customers, interested in making profit However, the BMW group concerned about protecting customers and society from all unfair advertising and business practices and practices In addition, the company plays a large role in wealth operations, helping non-developed countries to deal with the problem of wealth and trying to develop their knowledge The BMW complies with a variety of copyright laws relating to its vehicles, as well as technologies incorporated, including wifi and bluetooth This is more complicated because the group has to comply with the regulations in each country regarding the vehicles produced and sold Any change to these laws may suspend or completely suspend BMW’s performance and creation of new technology 2.6 Environment factors Environment and sustainability have become direct key factors affecting the popular of automibile brands In the car industry, nowadays, there is more focus on managing environmental impact and the carbon footprint The leading car firms as BMW are investing in managing their environmental hallmark with an effective and sustainable strategies On the one hand, BMW is concentrate on electrical car models, on the other hand, their firm also leading in the sustainable field of car industrial There are many benefits of investing on the sustainability and environmental Government also commend and reward businesses have the lowest carbon footprint Another advantage of sustainability is reducing delivery cost Focusing on sustainability leading to the higher popularity and growth in sales In the year 2018 and 2019 are the difficult period with car industry but BMW still maintain the high in sales and revenue This is the result of planned investment in sustainability Returned to 1973, this is one of the leading firms appointed an environmental officer ti track and manage environmental influence BMW still committed sustainability and the result was really effective on their activities and sustainable revenue BMW has an environmental who setting their strategies direction of its sustainability planning, setting goal and tracking progress Protecting natural resources is an crucial concentrate point in sustainability planning of BMW BMW value chain from suppliers to logistics, produce, sales and services has been taken by the group with a holistic approach to sustainability Preserving resources is a central concentrate of the new plan of BMW namely “Number One -> Next” In all the value of BMW, sustainability about the ecological and sociable are the central focus Some of the key components in strategies of BMW is reducing carbon footprint, saving working environment, sustainable supply chain, employee orientation and social committing In 15 year’s time, BMW have reduced more 42% carbon footprint from the new kind of cars model in Europe market In 2020, the BMW group of Germany is setting the goal reduce approximately 20% carbon footprint in the Europe market in this year (Vietnam new agency, 2020) These steps have helped the BMW group manage the carbon emission, their resources growth and reduce wastage of resources in its value chain SWOT Analysis 3.1 Strength BMW is one of the most valuable automotive brands in the world BMW company ranked as the third most valuable brand in the world, worth $39.7 million according to Interbrand and $25.9 billion according to Forbes To compete with BMW company only a brand from Japan with known as Toyota and another well-known automotive in Germany was Mercedes-Benz in both lists Brand value is closely related to their positive reputation and its brand recognition, so BMW is one of the most popular automotive brand which is easy to recognizable BMW always design unique cars model for their brand, which bring to Vietnam market in particular and international in general a futuristic appearance because of its pretty and delicate like BMW i8 with functions such as smooth steering, excellent soundproofing and great sound Therefore, BMW conquered millions of hearts in the world Besides, BWM company has high quality products because of its safeness, durability, performance and high-end luxury To the demand of people, nowadays, they always want to have a automotive can bring the safeness for them when they choose any brands Therefore, BMW understand the needs of customers, so they have an extremely good safety system to bring their customers the best and safest on all driving paths As for luxury, BMW X5 is considered a symbol of luxury Entering the new version 2020, the BMW X5 is more comprehensive and desirable car for car enthusiasts It is designed with standards, outstanding comfort, efficient and fuel-efficient operation and is a perfect choice The highlight of this model is that it is able to reconcile all good needs from design, style, equipment, operation, safety to satisfy almost every customers need for a luxury SUV It is no coincidence that BMW X5 becomes a standard in this segment not only in Vietnam but also globally In addition, BMW also contributes their efforts to environmental protection At the BMW Group we have a consistent approach across the company: we deliver on our promises The same applies to the topic of sustainability.” (BMW, 2020) The main focus of BMW’s sustainability strategy is reducing carbon dioxide emissions From 1990 to 2019, the company reduced its emissions approximate 40%, this number increased by 20% in 2020, representing about two thirds of the reduction in emissions Now, BMW will go further and always set itself goals to tackle new challenges To BMW, this is how protecting the environment and climate can have an impact on the company and on society as a whole And the last, BMW has a system active in global operation They have more than 30 industries and assembly facilities spread across 140 countries which BMW owned to serve for business and sales network This can help BMW increase their revenue rapidly along with make their company more proactive, flexible and creative in integration Therefore, they will promote their comparative advantages in international economic relations 3.2 Weakness The BMW group always produces luxury products so that means that the price of a car with the BMW brand will be pretty high Therefore, this is one of the weaknesses of this company In the difficulty and instability times of economic due to the effects of the Covid-19, the cost of luxury cars together with the production cost of a car in BMW group will have a negative impact on its revenue and profits According to Bnew.vn, luxury car producer BMW recently said its net profit fell off 29% to 1.48 billion euros (1.63 billion euros) in the second quarter compared to the same period last years Not mention to the investments in technology, in the cost of training and managing staff BMW hires only the best talent However, the focus on quality in all fields often make increase the cost Another weakness of this brand is its low reliability From 2007 until now, the prestigious US magazine consumer reports has always given the reliability of BMW cars score below average In 2012, even the BMW series convertible assessed the list of cars with the lowest reliability Another study by consumers report also found that BMW cars, after being used for about 4-8 years, tend to fail more than cars of other brands, of which the Series is the worst line Although there is a slight increase in recent years about the score about the reliability, the repair rate is still pretty high Therefore, the consumers report said that BMW places performance was the first, so reliability of the car is not really focused Besides, the maintenance of BMW is quite expensive and time-consuming The cost of spare parts and the price of maintenance to repair a luxury car always correspond to the amount of buying a car of customers Specialized service for BMW vehicles must be performed at a BMW dealership or workshops with specially trained mechanics In both cases, the service price is quite expensive And the last, BMW have a small portfolio in their company While competitors like Volkswagen owed many other several top brands, BMW’s portfolio lacks the diversity in their products and only consist of BMW, MINI and Rolls-Royce And their revenue only depend on their luxury BMW cars’ sales 3.3 Opportunities There are many opportunities for BMW group can develop their company to grow their brand as well as their revenue and profits Firstly, nowadays, the demand of people about the safeness and eco-friendly car is more increase in the modern technology Therefore, this is a great opportunities for BMW developing itself As one of the leading companies in the electric vehicle market, BMW is ready to exploit this demand BMW vehicles are known to be environmentally friendly, which is a big plus The demand for such vehicles around the world is growing The government also encourages eco-friendly models through subsidies Secondly, BMW is able to expand its product portfolio It will increase the variety of products available under its brand name which is help their company better respond to their customer needs and address a larger number of customers Thirdly, besides the demand for safeness and eco-friendly, the needs for self-vehicle also growing According to boomberg, the market demand for autonomous vehicles will grow to 4,2 million units by 2030 The automotive industry is very dynamic as it is undergoing changes with advancement in technology As one of the big companies, BMW can hasten the process to lead the technology age and can lay the foundation to exploit future demand Finally, BMW can reduce the time and frequent of new model Car companies’ market share is significantly affected by the timing and frequency of new models being published Historically, new models have tended to be made major update every four or five years with only minor modifications in the middle However, due to increasing consumer expectations regarding in car technology and the competitive nature of industry, there is many reasons to publish upgraded models more frequently BMW is well positioned to this 3.4 Threats Along with the opportunities that BMW is hold very steady, it means that it will make the competition more and more intense for them In Asia market, Toyota and Mercedes are two of the most competitors which BMW must be wary of As the luxury auto market matures in Western market, it means the competition will be more intensified Government regulations in the auto industry are increasing so it could increase costs Many governments around the world are committed to reducing greenhouse gas emissions and are encouraging fuel-saving initiatives There is always the risk that such environmental initiatives could increase production costs for automakers and these costs would not be offset in a highly competitive and sensitive market feel for such price In recent years, the cost of materials in technology industry is soaring, but for BMW it has already at a high level And with the influence of the covid-19 translation, this can be a big threat for BMW group when the cost of materials is increasing, its revenue and profits are falling dramatically Legal pressures in the automobile industry increase each year With industry increasing regulation, compliance costs are also rising Even minor violations can result in heavy fines and fines can make up a large portion of a brand's sales Volkswagen, one of the leading firms, had to cough billions of dong for trying to evade the emissions laws BMW remains careful about compliance in all of the regions of the world where it operates and has not faced any major legal troubles in recent years To combat any legal issues and prevent their occurrence, BMW has established a compliance management system and compliance rules Its associates are equipped with tools to help them deal with legal risks Interrelationship these have with the external factors S-O: As one of the fastest growing brands in the car manufacturing industry, the relationship between strengths and opportunities helps BMW maximize its strengths and hold the new opportunities Nowadays, as mentioned above, the demand of customers is to own cars that keep up with the trends of the new era, high safety, eco-friendly and self-driving is more developed BMW has embraced all the demand of customers and they always create the new opportunities and challenges to bring them into the company’s strengths BMW has adopted the Japanese concept known as “green image” to create eco-friendly cars Besides, they also have a global sales system and when combined with minimizing time and regularly releasing new models quickly, not only the company can increase their sales and profits, but also can meet all the needs of customers in all countries and can build themselves large markets in other countries Therefore, the relationship between strengths and opportunities helps us to see that BMW is a world-class car brand and has an understanding clearly about the customer’s need to develop cooperate brand W-T: But when BMW has such advantages, it also means that the company will have to compete with many other competitors like Toyota or Mercedes - these are two of the car brands that BMW have to compete very hard in the field of car industry Besides, BMW's biggest weakness is that the price of a car is quite expensive compared to a developing country like Vietnam that brings a lot of risks to BMW Although the poor population has been declining dramatically, the elite in two big cities such as Hanoi and Ho Chi Minh City are only nearly half the population of Vietnam This means that it will likely cause BMW to reduce the company's total revenue and will not afford to pay for the materials or services served for their product to provide to customer’s demand Therefore, the relationship between weaknesses and threats clarifies the negative aspects that directly affect the company when BMW develops in the Vietnamese market in particular and abroad in general Justify and critical evaluate how PESTLE and SWOT analysis factors influence the decision-making of BMW Group Every business encounters factors both internally and externally that can create a positive or negative impact on it On the one hand, these factors promote the growth of the company, on the other hand, a number of factors can put the company in a lot of trouble Therefore, based on PESTLE and SWOT analysis will help BMW understand clearly and evaluate all the external factors that affect BMW Group With the insight it provide, BMW can create many smart and careful choice for their company and in the future Analyse PESTLE factors will help BMW identifying and finding SWOT factors for the business For example, listed all the factors about political, economic, social, technological, legal and environmental factors that may affect BMW will help BMW identify opportunities and threats to BMW is quite easy Therefore, PESTLE analysis can be useful in creating a more comprehensive SWOT analysis When analyse PESTLE can also be incorporated into a SWOT analysis, together both analyzes will help you get a complete picture of your situation, potential and direction of BMW group Therefore, both types of analysis will keep BMW aware of all the elements of their company and will help the company develop all its strengths and eliminate weaknesses that still exist in the company based on the policies, finances and economics of the company Moreover, when the company has identified all the above factors, the company will easily make all the decisions in the company to avoid mistakes while working and growing, bringing the company up first top in the Vietnam market Conclusion In conclusion, as an assistant of T&C consulting, hope that we can assess BMW group in the positive side.I think BMW is one of the companies that we can invest in and help them in overcoming existing weaknesses, but at the same time continue to develop strengths so that BMW can become automotive brands market leader in Vietnam REFERENCE TheGlobalEconomy.com 2020 Vietnam Political Stability - Data, Chart | Theglobaleconomy.Com.[online]Available at: [Accessed 20 December 2020] Pratap, A., 2020 PESTEL ANALYSIS OF BMW MOTORS [online] notesmatic Available at: [Accessed 20 December 2020] Bekker, H., 2020 2018 Global: BMW, Mini & Rolls Royce Worldwide Sales - Car Sales Statistics [online] Car Sales Statistics Available at: [Accessed 21 December 2020] Press.bmwgroup.com 2020 New All-Time High For BMW Group Deliveries In 2019 Confirms Position As World’S Leading Premium Car Company [online] Available at: [Accessed 21 December 2020] IMF 2020 World Economic Outlook [online] Available [Accessed 21 December 2020] at: 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[online] Available at: [Accessed January 2021] Pratap, A., 2021 BMW SWOT ANALYSIS 2019 [online] notesmatic Available at: [Accessed January 2021]  ... of BMW Group Conclusion 14 REFERENCES 15 Introduction about the BMW company a) Name Bayerische Motoren Werke is stand for BMW car industry company b) Foundation Leadership is promoted by BMW? ??s... Hub 2021 BMW SWOT Analysis | Business Strategy Hub [online] Available at: [Accessed January 2021] Bmwgroup.com 2021 Sustainability At The BMW Group... Global, 2019), BMW reached a high record although approximately just above 0.1% compared to 2018 (Bekker, 2018) BMW still maintained a large number of car sales in recent years The BMW performance