7439745__R__BMW_Strategic_Audit

7439745__R__BMW_Strategic_Audit - Strategic Audit: BMW 1...

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Unformatted text preview: Strategic Audit: BMW 1 Running head: STRATEGIC AUDIT: BMW Strategic Audit: BMW [Authors Name] [Institutions Name] Strategic Audit: BMW 2 Table of Contents Strategic Audit: BMW 3 Strategic Audit: BMW CURRENT SITUATION Current Performance Strategic audit of any company and organization is a systematic activity that requires much concentration, focus towards the prime goal and a continuous critical evaluation free from external and internal pressures. Current performance of BMW is second to none as compared its previous fiscal and annual years. But last year the overall growth in all over the world is outstanding. Now at BMW, the growing glossary of organizational general and financial performance is full of such phrases as organizational activity-based costing, accountability, value-based management, boardroom performance, strategic audit, results-oriented performance management systems, and economic value added. For fiscal 2005 (ended 31 December 2005), BMW registered sales of EUR46,656m, up 5.2% over the previous fiscal year. This has been a new high for the group, which recorded a strong sales volume growth during 2005. However, currency exchange rate fluctuations had partially offset the group's sales for 2005. The group's profit before tax for fiscal 2005 stood at EUR3,287m, decreasing by 9.1% over the previous fiscal year. The group's higher car sales during 2005 and its efficiency improvement measures were offset by currency fluctuations, raw material price increases and also by the increased competition in the international car markets. The group recorded a net profit of EUR2,239m during the year, a marginal decline of 0.1% from fiscal 2005. (Fred David 2005) In the past, making large numbers of a few models was the way to thrive. Now it is all about making a few copies of a lot of derivatives. Look at the dozens of model categories in today's Mercedes and BMW ranges--a few years ago they had just three each. Yet total sales of each brand are still only around 1m. Creating niches from common platforms is the new way to Strategic Audit: BMW 4 compete. BMW now sees strong competitive advantage in maintaining differences between all the cars it sells. It is investing in infrastructure so that customers can change the specification of their car as late as 100 hours before it is built. That encourages customers to spend more on optional equipment. For the carmaker it also means that every assembly plant has to be surrounded by its own suppliers. An engine cannot be shipped across continents within 100 hours of a request. Separate factories allow for more variation, but at the price of fewer economies of scale. However, the greater the specification by consumers, the higher the premium price the carmaker can command. In addition, there are more cost savings available from cutting warranty and recall costs than from maintaining a large degree of commonality among various models. And for many of the big groups--especially the Japanese--there are massive savings to models....
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This note was uploaded on 11/29/2010 for the course MANAGEMENT EM-14793 taught by Professor Lindaryaan during the Spring '08 term at Windsor.

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7439745__R__BMW_Strategic_Audit - Strategic Audit: BMW 1...

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