Introduction Use of Cross-functional PRESENTATION OUTLINE Teams Role of Speed in the Structure Influence of Electronics on the Organization Strengths & Weaknesses of the Approach Role of Outsourcing BMW as Ambidextrous Organization Sheer Driving Pleasure Bayerische Motoren Werke AG found in 1916. German automobile manufacturer that focuses on the worldwide automobile & motorcycle markets. Owns 3 brands: BMW MINI Rolls-Royce Initially an aircraft engine supplier due to World War I at that time in Germany. International ventures began in 1972 when it set up a production plant in South Africa. In 1983, BMW built its first diesel engine.
In 1994, it purchased the Rover Group, with the brands Rover, Land Rover, MINI & MG. In 1998, it purchased Rolls-Royce. In 2000, it sold Rover, Land Rover & MG, but retained MINI. Helmut Panke become CEO in 2001 as the company was recovering from the failed 1994 acquisition of Rover. Focused on innovation, technology & marketing, & enforced the culture of strong cost controls. The company is driven by cost targets even in the early stage of developing the car. Developed ambidextrous style, which is an informal, open & non-hierarchical way to work, where employees are able to work with other departments without much rotocol & chain of command. Results in innovative ideas and enabled them to solve problems more efficiently and effectively. SWOT Analysis Strengths Weaknesses Opportunities Threats Sheer Driving Pleasure Strength Diverse ranges of Products BMW, MINI and Rolls-Royce Strong Cash Flow Position Increase turnover and trading profits Strong Balance Sheet World’s leading Premium Quality Automobile Manufacturer Brand Awareness Strong Human resources. Capabilities to turn resources into advantages innovatively Corporate reputation for the technological leadership and product engineering.
Weaknesses The limited target segment only luxury car segments. Expensive Germanbased Plant Perception of High Prices Environmental issues: Pollutions Buyer sophistication and knowledge Substitute products or technologies Opportunities New Products Market shift to globalisation Innovation & Alliances Diversification New Technologies in Automobiles Threats New & existing competition Volatility in Price of Fuel Economic recession Takeover bids Environmental issues: Pollutions Extremely high competition for customers and resources Customers demand change to more relatively cheap cars Sheer Driving Pleasure
Teams comprise of staff from engineering, marketing, R, & operations. Workable on divisional levels Strategic goals set by top management. Less formal, less hierarchical, less stamp approval needed, & more open. Can deal with complex dynamic nature of production system because knowledge & information sits in the brains of tens of thousands of employees. How? By building a network or web of personal ties to speed problem-solving & innovation. Work by helping them to create informal networks where they hatch ideas & resolve disagreements quickly. Everyone is encouraged to speak up. Sheer Driving Pleasure
Major source of competitive advantage to provide current product, accelerating new product development or improvement, & making decision quickly. Complex customized production system is easier to manage if workers feel empowered to drive change. Less structured & hierarchical organization enhance fast growing technological development. More structured & hierarchical organization might hamper technological improvement & product innovation. Speed can lessen rivalry since competitors & new entrants find themselves trying to keep up with rapid changes rather than introducing them. Sheer Driving Pleasure
BMW estimates 90% of innovations in its new models are electronics- driven. To stay ahead of the game, automakers must constantly pulse new innovations to the market. Speed & organisational agility is vital to be able to adapt to lightning pace of innovation & change. BMW shifted its day-to-day operations management to human networks. It speeds knowledge faster across the company laterally. In network structure, ideas are richer, can be implemented more effectively, & less resistance to change. Bottom-up ideas help keep BMW’s new models fresh & edgy year after year. Sheer Driving Pleasure
STRENGTHS: Quick & effective at solving problems. Fast at creating, gaining, accessing, & transferring of knowledge. Less resistance to change. Less bureaucratic. Ideas are richer & can be implemented more effectively. STRENGTHS: Allows company to shift & adjust as circumstances in market change. Employees will be exposed to diverse information that allows them to see a new angle or a better way to frame ideas. WEAKNESSES: Structure may look messy & inefficient. Lack of organisational clarity & nebulous structure. Possibility of abuse of power. Loss of discipline in the company may lead to chaos.
Sheer Driving Pleasure The transfer of an internal function of a company to an external entity. BMW considers outsourcing as a tool to: Stay competitive. Add latest innovations in its value chain. Focus on what it does best and what is strategically critical. Example: Engines, Mechanics. Other aspects of value chain that can be done better by specialized companies are outsourced. The strategy is to stay innovative and ahead of competition. By 2005, 65% of value chain was outsourced. (E. g. : electronics, active-steering system) By forging partnerships with OEMs. E. g. : the alliance with PSA Peugeot
Citroen to develop a new line of engines for use in future Mini vehicles. By becoming more partner-focused in its processes. Established a new department taking direct responsibility for partner network purchasing activities. It obtains the most relevant technologies to help BMW build on its business plan to be “to market first” with breakthrough technologies. Sheer Driving Pleasure Ambidextrous organization is a firm that knocks down structural barriers, in order to emphasize: the value and importance of informal relationships, interaction over formal systems, coordination over control, and allows flexibility.
The focus is one knowledge and getting it to the right place quickly. BMW is one of few companies that has implemented ambidextrous organization structure: Staff discuss ideas and projects at break times. Staff are encouraged to build ties across divisions to speed change. A Challenge: To balance between hierarchy and discipline on one hand, and free-wheeling networks that can veer toward near-chaos. To manage discipline with creativity BMW employs an approach where their staffs are encouraged from their first day on the job to build a network or web of personal ties to speed problem-solving and innovation.
These ties run across divisions and up and down the chain of command. This makes the employees feel empowered, and they learn quickly that pushing fresh ideas is paramount. The philosophies are : It’s easier to ask forgiveness for breaking the rules than to seek permission. Discipline and creativity are not a paradox, there is a borderline case of selfcontrolling systems. Where you break rules you have to be very disciplined. Richer ideas, and easier to share them. The empowerment made it easier to manage the complex customized production system at BMW, because: workers feel empowered to drive change.
This allows BMW to achieve one of its features, which is: to configure its cars to customers’ orders, so each auto moving down the production line is different. However: Such empowerment requires savvy workers who continually suggest how to optimize processes. Example of the application empowerment: The 2001 advertising scheme by marketing department, where film directors were given BMW cars, to use them to make short films. Was viewed by over 21 million, and with three more films added in 2002, it rocketed to 100 million, sparking a Harvard Business School case study. Sheer Driving Pleasure