History And Strategic Management Of BMW

Topics: Automotive industry, BMW, Automobile Pages: 14 (4994 words) Published: January 9, 2015
History and strategic management of BMW
Bayerische Motoren Werke AG (BMW) is a German manufacturer of passenger cars, motorcycles and engines, as well as a provider of financial services. The company was founded in 1916 under the name of Bayerische Flugzeugwerke AG (BFW) with the purpose of manufacturing airplanes, but later changed its business focus towards car production. BMW’s stock is listed on the Frankfurt Stock Exchange and has been included in the German blue chip stock market index DAX since its first composition in 1988. Today, BMW counts 96,230 employees worldwide. While its revenues amounted to EUR 50.68 billion in 2009, its net income reached EUR 210 million. Appendices 1 and 2 provide further details about the company’s financial situation. BMW is one of the ten biggest car manufacturers on global scale. Its brands BMW, Mini and Rolls Royce are found among the strongest premium brands in the automotive industry. Car models range from small-sized cars up to high-end luxurious limousines. In 2009, BMW sold more than one million passenger cars worldwide. In total, 16 manufacturing plants have been established in Germany, Austria, United Kingdom, South Africa, USA and China. These are rounded up by assembling plants in Russia, Egypt, India, Thailand and Indonesia. Only 47% of automobile sales can be attributed to Europe, USA and Japan, demonstrating BMW’s worldwide strong presence. This essay is an example of a student's work

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Company History
Until 19451, [4] 
Soon after the end of World War I in 1919, certain regulations of the Versailles Armistice Treaty forced BMW to bring its aircraft and aircraft engine production to a halt. As a consequence, BMW started motorcycle production in 1923, seconded by production of cars in 1928. As soon as Germany began rearmament in the 1930s, manufacturing of aircraft engines was once again started. This led to significant expansion of the company’s size and a revenue proportion of 90% of its aircraft and aircraft engine businesses. However, the company experienced substantial asset losses during World War II. More than 5,000 employees were drafted by the German military, which led to a sensitive loss in production knowledge. Additionally, several production sites were destroyed by air strikes of the allied forces. 1945 to 1958 [5] , [6] 

Due to the annexation of BMW’s only automobile production site in the Soviet zone of occupation in East Germany and destruction of the Munich production site, BMW needed several years to ramp-up its manufacturing activities again. In 1948, production of the first post-war motorcycle started, followed by the first post-war passenger car in 1952 – the high-end limousine BMW 501. However, BMW incurred losses of about DEM 4,000 for every car manufactured due to the underlying complex production processes. Unfortunately, even production under license of an Italian small car named BMW Isetta could not avoid BMW running into increasing financial turmoil. 1959 to 19695,6

After facing high financial losses during the years 1958 and 1959, main shareholders proposed selling the company to Daimler-Benz AG, a rivaling German car manufacturer. However, other share- and stakeholders successfully fought off this proposal by appealing against BMW’s inaccurate financial statement. As a result, the company remained independent, but was still in need of new investors in order to obtain the necessary financial funds to develop a new medium-sized car model. Salvation was found in Herbert Quandt, a well-known German industrialist. A significant capital increase and the sell-off of one aircraft engine plant provided the company with enough financial strength to...

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