Last Updated 11 May 2020

Management Environment

Words 608 (2 pages)

Established in 1916, Bayerische Motoren Werke's hereafter called BMW with its headquarters in Munich, Germany, begun by producing aeroplane engines, shifted to auto-mobile production in the late 1920s. Over the last decade, BMW has gone through a major period of change. From being a very local firm, traditionally an exporter of luxury cars from Germany, BMW now has production sites in the USA, South Africa and the UK. In addition to its BMW models it also builds the re-launched Mini as well as Rolls-Royce. Altogether BMW currently delivers around 1,300,000 vehicles per year to customers with more than 96,000 employees across the world.

A PESTE analysis is merely a framework that categorizes environmental influences as political, economic, social and technological forces and environmental factors. The analysis examines the impact of each of these factors (and their interplay with each other) on the business. The results can then be used to take advantage of opportunities and to make contingency plans for threats when preparing business and strategic plans (Byars, 1991; Cooper, 2000). Politics can have an influence on companies in an industry (Cheverton 2004). One example is the German VAT increase from 16 to 19%.

Additionally, reforms put further burdens (e. g. increased health service contributions) on customers. This may reduce demand and could have an effect on the automobile industry (FTD online 2006d). After the liberalisation of the automobile market through the EU, a VW-dealer is also allowed to sell BMW. This strengthens the position of dealers in relation to the manufacturers. The tax changes proposed by the German and British governments, in particular the tax treatment of company cars, could have a negative impact on car sales of the BMW Group in both countries.

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A business needs to look at the Interest rates, the level of inflation, income growth, debt ; saving levels (which impact available money) and consumer ; business confidence. Economic fluctuations represent risk factors for future development. The BMW Group anticipates these risks by monitoring the market in detail, particularly global key data such as the development of currency parities and financial markets and using early warning indicators. Risk is spread due to the worldwide activities of the BMW Group.

An escalation in the global political tensions could have a negative impact on the oil price and the economic situation as a whole, which, in turn, would have a negative impact on the business development of the BMW Group as a whole. Also, the increased petrol prices lead to a reduced car demand (Bernhardt and Kinnear 1994, BMW Group 2006). Social factors influence people's choices and include the beliefs, values and attitudes of society. Understanding changes in this area can be crucial as such factors as changes can impact purchasing behaviour consumer attitudes to your product & industry.

An on average older population in European countries forces car manufacturers to develop new strategies in relation to their target groups (Cheverton 2004, FTD online 2006b). This is also required in view of the fact that increasingly higher numbers of commuters and the demand of lower consumption cars show an attitude change regarding transportation, potentially causing image problems for companies producing higher-consumption cars. A generally lower average income may lead to lower demand for BMW cars, especially in the luxury segment (Innovations Report 2006).

Advances in technology can have a major impact on business success as technology is vital for competitive advantage. The BMW Group undertakes various information technology measures relating to employees, organisational procedures, applications, systems and networks in order to protect itself from unauthorised access or misuse of data. The company's overriding objective is to develop transport concepts and technologies that maintain mobility without diminishing the quality of life. (bmweducation 2005)

Management Environment essay

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