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as well as to improve existing products. In FY2018, R&D expenditure of the company was EUR6,108 million. In line with this, the company has launched new products in the past year. Therefore, the company's strong emphasis on R&D enables it to deliver new and innovative products that help in generating higher revenues and profitability (Marketline, 2019).Regarding BMW’s weaknesses, limited liquidity position and unfunded pension obligations are the area of concern. In terms of liquidity position, the limited liquidity position puts the company at a disadvantage when funding any potential opportunities in the market. The company’s current ratio was 1 in FY2018. This was lower than its competitors, Ford Motor and Yamaha with respective current ratios of 1.2 and 1.7 in FY2018. This suggests that the company is less able to meet its short-term obligations than some of its peers. At the end of the review year, the company had total current liabilities worth EUR69,047 million, as compared to EUR67,989 million in FY2017. Concerning the unfunded pension obligations, BMW has significant unfunded pension obligations. The company provides retirement benefits for most of its employees, either directly or by contributing to independently administered funds. In FY2018,the company's fair value of planned pension assets stood at EUR19,477 million as compared to defined benefit obligations of EUR22,710 million, resulting into an unfunded status of EUR3,252 million. Going ahead, the volatility in financial markets (equity and debt) could lead
BMW CASE STUDY12to decline in pension fund asset values. Thus, unfunded pension obligation would force the company to make regular cash contributions to bridge the gap between pension assets and liabilities, which in turn could pressurize the liquidity position of the company (Marketline, 2019). Regarding BMW’s opportunities, strategic collaborations and positive outlook of global automotive manufacturing industry provide growth opportunities to the company. In terms of strategic collaborations, that help improve the company’s product and service offerings. In March 2018, the company entered into an agreement with Daimler AG to merge their mobility services business units. As per this agreement, these two companies planned to expand and combine their existing on-demand mobility offering in the areas of Parking, Charging, CarSharing, Multimodality and Ride-Hailing. This merger allows the company to create a digital ecosystem by combining the mobility services. In February 2018, BMW announced to create a joint venture for MINI electric vehicles in China. In compliance with this, the company signed a letter of intent with the Chinese manufacturer Great Wall Motor. This will help the company for continued strategic development of its brand for the production of battery-electric MINI vehicles in the world’s largest market for electromobility. In terms of the positive outlook of global automotive manufacturing industry, that has produced relatively consistent levels of growth over the past few years. The industry is expected to continue to grow positively till 2021. According to MarketLine, the global automotive manufacturing industry generated total revenues of US$1,378.9 billion in 2016. Furthermore, the industry is expected to grow at a compound annualgrowth rate (CAGR) of 3.2% during the 2016–21 period to reach a value of approximately