Missy Walmer

Dr. Chris Dolan

Magnitudes and Dimensions of Globalization
25 September 2015
Transnational Corporation: BMW

Walmer 1

BMW, BayerischeMotorenWerk,isgloballyknownforsellingdifferentmakesand
modelsofmotorvehicles.ItwasaGermanautomobilecompanyfoundedin1916byKarlRapp
andGustavOtto.Thecompanydidntstartoutmakingmotorvehiclesbutinsteadenginesfor
planeswiththeirmainheadquarterslocatedatMunichsOberwiesenfeldairfield.In1923,the
firstBMWmotorcyclewasmanufactured,theR32.Fiveyearslater,in1928,iswhenBMW
beginstobecomemorelikethewellknowncompanythatistoday.Theypurchasedan
automobilecompanycalledFahrzeugfabrikEisenach.BMWsaeroenginemanufacturing
businessbegantoflourishin1934.DuringWorldWarII,thedemandformilitaryequipmentwas
high,andsoBMWtargetedtheirresourcestowardsbuildingmoreandmoreaircraftengines.It
wasntuntil1948thatBMWhasreleasedanothervehicle,anothermotorcycle,theR24.And
finally,in1951theBMW501isreleased.Thiswastheirfirstpostwarautomobile.Itwasa
luxuriousitem,seatinguptosixpeoplewithasixcylinderengine.Thisitemrestoredtheirimage
asahighqualitycompanyproducingexcitingcars.(BMWGroup:Milestones)
Thisluxuriousmotorcompanyfinallybecameaglobalplayerin1989whenBMW
decidedtobuildaproductionfacilityintheUSspecificallyinSpartanburg,SouthCarolina.The
facilitywastobespecializedtoproducetheVMWZ3Roadster.Thesehotitemswereexported
fromSpartanburgtoallovertheworld.Fromtheyear2000,BMWbecamefocusedinthe
internationalautomobilemarketwithBMWandMINIvehicles.
BMWisverymarketableandappealing.TheirGermancompetitorsincludeAudiand
Mercedesbrands,butBMWhasoneadvantage.AudiandMercedesaretiedtoothercompanies
suchasVWandMitsubishiandChryslerandoftentimesmustgetpartsfromothertypesof

Missy Walmer
Dr. Chris Dolan
Magnitudes and Dimensions of Globalization
25 September 2015
factories.BMWisalmostfreeinthatitcandesignitspartsforBMWandcanuseexactlythe

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rightpartfortherightjob.Thecompanysreputationisalmostenhancedinthisway;itcangive
consumersasenseofindividuality.TheBMWissinglehandedlyaBMWandnoother.Thecaris
individuallyluxurious,unique,andmanufacturedinawaythatmakesthepublicwillingtopaya
bitmoreforthehighquality.Theirimageisalwayschanging.Withineachseriesnewproducts
arereleasedinatimelymannersothatnoproductisintheirmaturityordeclinestage
(Dougherty,BMWBrandStudy).Thisway,theirbrandimageisneverdowngradedorinthe
processofdeclining.Eachproductonlyhasalifecycleofaboutsevenyears.BMWstrategically
advertisesandcampaignstheirproductsinafashionableway,suchastheJamesBondpromotion
andvariousmoveplacements.Peoplewantbiggerandbetter.Theywantexclusivity,thehigher
pricesofBMWmakethesecarsnotnecessarilyavailableforthemasses.Sothecommercialsand
highqualitycaradsaskstheviewertoapplythishigherthinkingtotheirproducts(Marketing
MixofBMW).Anotherwaythisluxuriouscarcompanymakestheirproductsglobally
understoodistheirnaming.ABMW328simplymeansitsathreeseriesandhasa2.8liters
sizedengine.Thismakestheirmodelsabletobegloballyunderstood.Theirwebsitealsoallows
possiblecustomerstoreadaboutthedifferenttypesofmodels,emailpossiblequestions,andset
uptestdrivesatalocalBMWdealership.Throughtheirindividuality,releasingofupdated
products,andavailabilitytheymarketforthecustomer.Theycreatesomewhatofaneaseof
accessandknowledgethatmakescustomersfeelwelcome,welcometopurchaseabrandnew
vehicle(Dougherty,BMWBrandStudy).
As for their reasoning to globalize, its most likely to reach a bigger market size. Their
product lines have a large diversity and ability to customize. They have models including a

Missy Walmer
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Dr. Chris Dolan
Magnitudes and Dimensions of Globalization
25 September 2015
sedan, coupe, convertible, station wagon, sport hatchback, z models, and x models. The variety
and ability to offer them to a bigger fan base gives more options. Their numbers of consumers
become bigger with bigger selections.
Foreign direct investments for BMW include areas such as India, China, and Russia.
BMW wants to expand relations with the Asian market through China and India due to their
rapid growing economies and strong demand for European luxury cars. Even though the
economy has slowed, American demand for BMWs did not decline despite recession. In 2008,
we can expect to see expansion. A plant located in Chennai bought more land and equipment and
has views of doubling the amount of dealerships to invest in the Indian market with hopes of
moving into the Asian production line. China is a similar deal. New business men and women in
these countries was the status of wealthy Europeans, so what goes along with that? A European
car. Once they opened up their plants in Da Dong and Tiexi, they sold more than 74,000 cars in
the first four months, similar to a trend in Kallinigrad, Russia and their sales. A common theme is
that the wealthy people in these uprising economies want to exert this high fashion symbol for
their newfound wealth. (Johnson, Information on BMW Foreign Direct Investment)
As for mergers and acquisitions, BMW did have on that went wrong. Rover was a car
business that included Rover, Morris, Austin Healey, Wolseley, Riley, Land Rover, and MG.
Rover is comprised of multiple mergers with a goal of being large enough to impact the car
market. It got sold to BMW in 1994, while BMW in itself wanted to increase its volume with
possible new purchases, purchases that they were attracted to included MINI and Rover. But
apparently, there were three major problems. BMW didnt do enough researching before the
business order took place within ten days. As a downside, they didnt see that Rover had
inaccurate sales data. A cultural clash was a second issue. BMW and Rover had different

Missy Walmer
Dr. Chris Dolan
Magnitudes and Dimensions of Globalization
25 September 2015
approaches on how to build and manufacture vehicles due to different upbringing. And lastly,

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poor leadership negatively affected the company. The board members of BMW started to
question whether or not they shouldve signed with Rover and caused some to leave. From this
ownership of Rover, BMW suffered a loss of two million euros a day from 1994 to 2000. BMW
saw their decline and quickly sold Rover to Ford. They then kept the Cowley Plant which
received major attention to produce the MINI. (Whiteley, Takeovers and Mergers)
Sales in China stand out to car companies like BMW. China is the second largest market
to buy luxurious cars in the world. China is said to surpass the US and become the largest by the
year 2020. Because China has such a high demand for luxurious cars, BMW definitely wants to
be apart of this. BMWs expansion into China with a partner Brilliance China Automotive
Holdings Ltd. Within this partnership BMW plans to launch the third-generation Mini in China
hopefully to skyrocket sales. One thing they have realized is that the Chinese have an appeal
towards long wheel-based cars. So based on this, this drove BMW to make the 7 series targeted
towards the Chinese. (Olivier, BMW Strategy Analysis in China)
Norbert Reithofer, CEO of BMW, made $1,991,239 as a salary, $6,996,416 as a bonus,
$3,7750,166 in stock and option awards, and $200,451 categorized as other in the year 2013.
This compared to the median household income in the US is astonishing. The average American
makes $43,585 a year. For one CEO of BMW, he made the same amount as 280 Americans. The
average pay for an automotive engineer is roughly $103,000, BMWs CEO would be able to pay
91 of them. Entry-level hourly employees at manufacturing facilities make about $16 per hour.
Based on this, assuming the workers have a 50 work weeks of 40 hours each, the BMW CEO
could pay for 292 factory workers. Putting it into perspective, the CEO makes a substantial
amount of money compared to other employees. (Preston, Money Makers)

Missy Walmer
Dr. Chris Dolan
Magnitudes and Dimensions of Globalization
25 September 2015

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In general, women make up 21.5% of the occupation of motor vehicle manufacturing in

the US. The BMW Group is not just a multinational, but also a multicultural company is their
claim. Talented female employees contribute their expertise, commitment, and skills that help the
teams unity. BMW offers coaching programs for leadership positions, training or mentoring, and
the support in their ingenuity.

The above graph and table display equity and stock prices from the early 2000s. For
both, we see a significant drop in the year 2008 due to a recession in the US.

Missy Walmer
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Dr. Chris Dolan
Magnitudes and Dimensions of Globalization
25 September 2015
One deal between BMW and the government occurred in Australia. BMW won the right
to give nine armored 7 Series limousines, at about $500,000 each, and will be owned by the
attorney-generals colleagues and operated by the Australian Federal Police (Bradshaw,
Australian Manufacturing Forum). The vehicles will then also be able to be serviced in
Australia even with such high vehicle standards. In another instance, BMW actually paid out
subsidies to China. BMW AG offered 5.1 billion yuan ($820 million) to dealers in China to
foster up better dealers across China. This gives the Chinese the ability to bargain with auto
makers. (Murphy, BMW Agrees to Subsidies)
As for connection to our text, BMW has applied itself to different nations norms. Within
China, a leading economy, BMW release the 7 Series to appeal to the Chinese ideals and
interests in longer bodied cars. BMW recognized this norm or common idea and adjusted itself
to better its sales. BMW is a globalizing company. Territory is not something to necessarily be
considered. They sell anywhere where they anticipate high sales. BMW is almost like a civil
society. They perceive this luxurious lifestyle from within their cars. When people buy their cars,
theyre buying this unwritten rule that they are on a high end spectrum. It places individualism
into the hands of BMW owners who can customize and create an image for themselves.

Missy Walmer
Dr. Chris Dolan
Magnitudes and Dimensions of Globalization
25 September 2015
Works Cited

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"BMWGroup:Company:History:Milestones."BMWGroup:Company:History:
Milestones.N.p.,n.d.Web.24Sept.2015.
Bradshaw,Jon."AustralianManufacturingForum."GovernmentSnubsGMHinFavorofBMW
forCommonwealthCars.N.p.,1Apr.2011.Web.24Sept.2015.
Dougherty,Tom."BMWBrandStudyofItsBrandedHouseStrategy."StealingShare.N.p.,n.d.
Web.24Sept.2015.
Johnson,Walter."InformationonBMWForeignDirectInvestment."EHow.DemandMedia,
n.d.Web.24Sept.2015.
"MarketingMixofBMW."Marketing91.N.p.,n.d.Web.24Sept.2015
Murphy,Colum."BMWAgreestoSubsidiesforChinaDealers."WSJ.TheWallStreetJournal,
5Jan.2015.Web.24Sept.2015.
Olivier."BMWStrategyAnalysisinChinaMarketingChina."MarketingChina.Marketing
China,10Apr.2014.Web.24Sept.2015.
Preston,Benjamin."MoneyMakers:PuttingAutoIndustryCEOPayinPerspective
[Infographic]."MoneyMakers:PuttingAutoIndustryCEOPayinPerspectiveFeature
CarandDriver.CarandDriver,13Aug.2014.Web.24Sept.2015.
Whiteley,Steve."TakeoversandMergers."Business.Tutor2u,10May2012.Web.24Sept.
2015.