Bmw weakness cost inefficiency in 2019 bmw reported a

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BMW Weakness Cost inefficiency In 2019 BMW reported a drop in its cost efficiency, which weakened its operational effectiveness. This drop-in cost-efficiency increased their operating cost as a percentage of their sales, which, according to Global Data, it stood at 92.2% compared to 90.8% in 2018 (Global Data, 2020). Their operating margin decreased due to increased administrative expenses, cost of sales, and other operating expenses. Therefore BMW recorded a decrease in their active income of EUR 7,411 million, which grew 17% YoY (Global Data, 2020). Product Recalls The operational cost can increase due to product recalls, and it can affect its image. According to Global Data, “BMW India recalled 1,065 vehicles of its cars and two-wheeler models in 2019,” which involved various BMW models and MINI Coopers (Global Data, 2020). BMW recalled 50 model years 2018-2020 in the US due to improper manufacture of instrument panel assembly (OEMDTC, 2020). Product recalls can negatively affect a company's reputation, which can cause a decline in sales. BMW Opportunities Government policies
10 Favorable policies by the Government of China could benefit BMW’s operations. According to the Center for Strategic and International Studies, the Chinese government has set a goal to increase the market share of new energy vehicles (NEVs) to 70% by 2020 and 80% by 2025, and to 80% of electric car batteries and engines by 2020 (Li, 2019). China plans to produce 2 million NEV by 2020 could benefit BMW operations and sales as they develop NEV to capitalized on this potential opportunity. BMW Threats Competitors The manufacturing of an automobile is a growing and competitive industry. Failure to compete successfully could hinder BMW's revenues and sustainability. BMW is known for its premium and reliable vehicles. BMW and its competitors strive to provide unmatched innovated features, safe and efficient cars that provide customers satisfaction to create brand loyalty. BMW competes with various automobile manufactures that also sell premium automobiles with multiple product lines such as Mercedes Benz, Jaguar, and Tesla. Their financial resources and successful years in the industry make them fierce competitors. Price of Raw Materials Unstable and unpredictable global markets have severe implications for manufacturing companies. Rising energy costs and unanticipated variations in raw material price levels can disrupt supply chains and make it problematic for manufacturers. These fluctuations could potentially increase BMW operational expenses hindering their profits. According to Global Data, “BMW uses steel, copper, lead, aluminum, resins, and platinum group metals as raw materials” (Global Data, 2020). BMW also uses plastic, glass, and fuel for the manufacturing of
11 their products. BMW industrial facilities depend on electricity, natural gas, and other energy sources to operate their facility.

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