Business Studies assignment C and D
The effects of the environment on a business
,Business Studies assignment C and D
The effects of the environment on a business
,Business Studies assignment C and D
The effects of the environment on a business
,Business Studies assignment C and D
The effects of the environment on a business
Contents
Introduction.................................................................................................................................................................. 5
Synopsis:......................................................................................................................................................................... 5
Internal and External environment:.................................................................................................................... 5
BMW PESTLE Analysis.............................................................................................................................................. 5
Political factors:.............................................................................................................................5
Economic factors:..........................................................................................................................6
Social factors:.................................................................................................................................7
Technological factors:....................................................................................................................7
Legal factors:..................................................................................................................................7
Environmental factors:..................................................................................................................8
BMW SWOT Analysis................................................................................................................................................. 8
Strengths:.......................................................................................................................................8
Weakness:......................................................................................................................................9
Opportunities:................................................................................................................................9
Threats:........................................................................................................................................10
Porter's 5 forces........................................................................................................................................................ 10
Threat of substitute products:.....................................................................................................10
Threat of new entrants:...............................................................................................................10
Bargaining power of suppliers:....................................................................................................10
Bargaining Power of customers:..................................................................................................11
Competitive rivalry:......................................................................................................................11
External Factors Monetary Policy:..................................................................................................................... 11
Fiscal Policy:............................................................................................................................................................... 12
Competitive Environment..................................................................................................................................... 12
Corporate social responsibility (CSR).............................................................................................................. 13
Corporate culture..................................................................................................................................................... 14
Market Structure....................................................................................................................................................... 14
Response to changes in the market................................................................................................................... 15
External environment and situational analysis:.......................................................................................... 16
Conclusion:.................................................................................................................................................................. 17
,Business Studies assignment C and D
The effects of the environment on a business
Introduction
As part of my coursework for assignment C and D I have been tasked to write
a report on a large business of my choice that operates within the EU. The
business I have chosen to investigate is BMW which is a large and successful
business that operates globally. In my report I will be discussing the
environment in which BMW operates and how BMW adapted and reacted
towards changes in the market in the past and how they are preparing for possible
future changes.
Synopsis:
The Business I have chosen to conduct my research on is BMW which is a multinational company
that produces a variety of types of automobiles such as luxury cars and motorcycles. They also used
to produce aircraft engines until 1945. They are a globally known business that allows them to have
“30 production and assembly facilities in 14 countries as well as a global sales network” 1They are
also the world’s leading manufacturer of premium automobiles and motorcycles and they also
provide premium financial and mobility services.
Internal and External environment:
The internal environment in a business are the factors within business such as the employees,
management and Corporate Culture. Some of these factors only affect the business on a small scale
for example by only influencing the managers whereas other effects can be on a larger scale
“Traditional managers give explicit instructions to employees, while progressive managers empower
employees to make many of their own decisions.” 2The internal structure is the opposite of the
external structure as the effects from them usually influence the activities, choices and behaviour of
the employees. However, the external environment is the outside influences that have an impact on
the businesses operation such as suppliers that have a huge impact on the business as they supply
the business with their products to sell and dictate how much the business has to pay for their
services. Another external factor that has a large impact on a business is the customers as they are
the primary source of income for a business especially a business-like BMW that rely on their
customers to make a profit
BMW PESTLE Analysis
Political factors:
Laws and regulations have a large impact on the automobile industry as they ensure that during the
manufacturing process the businesses have to take into account the environment. For example,
1 "Company - BMW Group." https://www.bmwgroup.com/en/company.html. Accessed 3 Oct. 2020.
2 "The Internal Environment - CliffsNotes." https://www.cliffsnotes.com/study-guides/principles-of-
management/managerial-environments/the-internal-environment. Accessed 3 Oct. 2020.
,Business Studies assignment C and D
The effects of the environment on a business
some of the new laws related to CO2 emission are major political factors that affect BMW in their
manufacturing processes meaning that they will have to implement certain designs to adhere to the
laws. Another political factor that has an impact on BMW and the automobile industry is the
government policies and taxes as the government policies in foreign countries help BMW estimate
the probability of success on a global scale This allow them to know what line of their products in
their portfolio is most successful so they can produce more of the successful products and see what
the issue is with their least successful products. Also, the introduction of new schemes has an impact
on BMW for example “new schemes in the US and Europe automobile industry wherein regulations
led to produce high mileage cars along with increase in automobile sales and production (Hill,
2008)”3. This has an effect on BMW as it means that their automobiles in the US and Europe that
have a higher mileage are more successful. Brexit will also have a large impact on BMW and many
other manufacturing businesses that operate in the EU. This is due to the potential effects of the UK
leaving the EU having negative effects on BMW’s operations as it would introduce multiple
complications when importing products from the EU for example, essential parts needed for
production that they import from overseas into the UK. “Hundreds of lorries a day arrive at Cowley
with parts from across the world, with 60% of components coming from the EU.” 4 This expresses
how important importing components from outside the UK is to BMW and it resulted in them taking
measures to prepare for this impact on their operations. “BMW plans to shut its Mini plant for a
month after the UK’s official departure from the European Union, to minimise the impact of a no-
deal Brexit that it fears would cause a shortage of parts.” 5 This shows that the effects of a no-deal
Brexit will have negative impacts on BMW and they would need to close down at least one of their
factories which also has knock on negative impacts such as the loss of jobs and hindering BMW’s
production levels.
Economic factors:
The constant GDP fluctuation in Europe has had an impact on BMW’s performance as it has a direct
influence on consumer spending and employment which has a direct effect on BMW’s group
performance. This impacts BMW as it means that customers might be more likely to save their
money or look for cheaper options which may mean they may find what they are looking for outside
of BMW’s portfolio. It could also be bad for employment within the business because research has
shown that the decrease in GDP also results in the increase in unemployment “However, historically,
a 1 percent decrease in GDP has been associated with a slightly less than 2-percentage-point
increase in the unemployment rate.” Another important factor is the currency exchange rate which
has a large impact on BMW’s Group reported revenue. For example, the Euro’s value depreciated in
2006 which benefited BMW because of the large amount of its products being exported to
international markets. However, the changes in exchange rate aren’t always positive to the BMW
Group as it can eat away at their revenue. “The company’s own calculations in its annual reports
3 "Strategic Analysis (PESTEL, Porter and SWOT) of ... - WritePass." 17 Nov. 2012,
https://writepass.com/journal/2012/11/strategic-analysis-pestel-porter-and-swot-of-bmw/. Accessed 3 Oct.
2020.
4 "BMW to close Mini plant for a month post-Brexit - BBC News." 18 Sep. 2018,
https://www.bbc.co.uk/news/business-45561908. Accessed 3 Oct. 2020.
5 "BMW to close Mini plant for a month post-Brexit - BBC News." 18 Sep. 2018,
https://www.bbc.co.uk/news/business-45561908. Accessed 3 Oct. 2020.
,Business Studies assignment C and D
The effects of the environment on a business
suggest that the negative effect of exchange rates totalled €2.4bn between 2005 and 2009.” 6 This
means that between 2005 and 2009 BMW was losing out on money despite the rise in sales due to
the costs of the exchange rate so they had to come up with strategies such as the Natural Hedge
strategy to combat the costs. Inflation rate is another important external economic factor BMW has
to deal with. The company has to adjust by increasing their prices often to address the increase in
inflation. “The price of some top-selling cars has risen well above the inflation rate over the last four
years.”7 This means that BMW would have had to increase the prices of their vehicles in 2005 to
2009 to keep up with the increasing rate of inflation and not lose out on profits.
Social factors:
The increase in awareness of global warming and the increase in popularity of eco-friendly
automobiles influences the sales and success of BMW as not all of their vehicles are eco- friendly and
release pollution into the atmosphere. “German carmakers BMW, Daimler and Volkswagen are to
face an EU inquiry for allegedly conspiring to restrict diesel emissions treatment systems.” 8This
means that BMW have not prioritised the environmentally friendly aspects of their diesel vehicles
which has deprived customers of the choice to buy fewer polluting vehicles.
Customer buying patterns also have a large influence as it means there could be high or low demand
for BMW’s products. “Changes in buying pattern of the consumers due to recession in mature
markets.”9 This shows that customers can be encouraged to save or spend their money depending
on the economy which also has an influence on BMW’s sales.
Technological factors:
One technological factor that has an impact on BMW is the increased use of technology in their
products which is used to beat their competitors by appealing to a wider audience as it allows BMW
to be more innovative in their production and come up with new features to implement into their
vehicles. The technology used in the vehicles need to be high quality, reliable and efficient due to the
restrictions they have on using technology that is damaging to the environment. Also, the use of new
and unique designs is used to overcome the decreased margins in the industry and surpass the other
manufactures in the market.
Legal factors:
Restrictions and strict pollution norms set up in markets will affect what BMW can implement in
their vehicles. “The restricted norms on environmental measures and preventive measures to ensure
more fuel efficient and go-green vehicles.” 10 This means that BMW would have to be more
environmentally conscious when designing their vehicles which will also improve their brand image.
6 "The case study: How BMW dealt with exchange rate risk ...." 29 Oct. 2012,
https://www.ft.com/content/f21b3a92-f907-11e1-8d92-00144feabdc0. Accessed 3 Oct. 2020.
7 "The case study: How BMW dealt with exchange rate risk ...." 29 Oct. 2012,
https://www.ft.com/content/f21b3a92-f907-11e1-8d92-00144feabdc0. Accessed 3 Oct. 2020.
8 "BMW, Daimler and Volkswagen face EU diesel ... - BBC." 18 Sep. 2018,
https://www.bbc.co.uk/news/business-45558588. Accessed 3 Oct. 2020.
9 "Strategic Analysis (PESTEL, Porter and SWOT) of ... - WritePass." 17 Nov. 2012,
https://writepass.com/journal/2012/11/strategic-analysis-pestel-porter-and-swot-of-bmw/.
Accessed 3 Oct. 2020.
,Business Studies assignment C and D
The effects of the environment on a business
The implications help to set Euro standards countries that are more developed and those which are
less developed. “Strict implications of the EURO norms in developing countries e.g., formation of
BHARAT norms on the lines of EURO norms in India (CEN, 2006)” 11
Environmental factors:
The shift in consumer’s tastes and preferences towards use of more environmentally- friendly cars
such as hybrid cars or electric cars affects BMW’s sales as some of their Vehicles meet the
description of the customer demands however most of their vehicles are not as eco-friendly.
“People give preference to the fuel-efficient and environment-friendly vehicles. Choice should be
made towards more hybrid cars, energy efficient and technology embedded vehicles.” 12 This means
that BMW would need to invest more into the fuel efficiency area of their vehicles to adjust to the
change in trend of people looking more at the impacts of the environment which has a direct impact
on their purchasing decisions.
BMW SWOT Analysis
Strengths:
One of BMW’s strengths is their reputation as one of the most valuable automotive brands in the
world as they are known to have luxurious and high quality as they continue to innovate new
features to attract even more customers and stay ahead of the competition. “BMW used advanced
technology for its products that embarked its products design, quality and price.” 13 Another one of
BMW’s strengths is the variety of different products they produce to appeal to a mass market and
maximise their profits. For example, they offer multiple different types of cars such as hybrid or
electric to appeal to the customers who are more conscious of the environment. BMW has what can
be considered to be the best facilities in Germany allows them to produce their products at the
highest quality. This is due to the talented workforce and the industries best suppliers which enables
BMW to be flexible and productive in their work. They are able to keep their costs down by sharing
the components between their products for example the 5 series shares components with the X5
and the 6 series.
10 "PESTEL & SWOT Analysis of BMW - Essay Example."
http://www.dissertationhomework.com/essays/marketing/pestel-and-swot-analysis-of-bmw.
Accessed 3 Oct. 2020.
11 "Strategic Analysis (PESTEL, Porter and SWOT) of ... - WritePass." 17 Nov. 2012,
https://writepass.com/journal/2012/11/strategic-analysis-pestel-porter-and-swot-of-bmw/.
Accessed 3 Oct. 2020.
12 "PESTEL ANALYSIS OF BMW MOTORS - Notesmatic." 23 Sep. 2019,
https://notesmatic.com/2019/09/bmw-pestel-analysis/. Accessed 3 Oct. 2020.
13 "Strategic Analysis (PESTEL, Porter and SWOT) of ... - WritePass." 17 Nov. 2012,
https://writepass.com/journal/2012/11/strategic-analysis-pestel-porter-and-swot-of-bmw/.
Accessed 3 Oct. 2020.
, Business Studies assignment C and D
The effects of the environment on a business
Weakness:
One of the weaknesses of BMW is that they have a large amount of debt. “BMW’s debt is the
highest in the company’s history. It has been growing significantly over the last five years and
reached nearly €130 billion in 2015.” The large amount of debt affects the company by limiting how
much the business can invest in R&D or other areas. 14 Another one of BMW’s weaknesses is their
lack of strategic partnerships which has disadvantages such as increasing the brand awareness which
is hugely important to a business such as BMW having good brand awareness and a good image
attracts more customers as they will be confident to buy from a familiar brand. Another weakness of
BMW is that due to their reputation of having high quality products it also comes with the
perception that all their prices are high which can drive away potential customers. Also, BMW has
high costs due to their high-quality standards and high costs associated with the manufacturing of
these high-quality products. Even their indirect costs are high due to multiple factors such as tariffs.
“BMW’s indirect procurement costs amount to about 20 billion euros a year, but BMW needs to
make savings so the company can invest more in developing electric and self-driving cars.” 15
Opportunities:
One of the opportunities that BMW can capitalise is the high demand for vehicles and the good
reputation they have as a manufacturing business. Especially in the electric cars market as people
are becoming more environmentally conscious BMW can capitalise on it by producing more electric
cars to satisfy the demand in the market. “Strong demand for electric vehicles (EVs) saw values rise
0.9% in September, while average used values remained static, says Cap HPI.” 16 Another opportunity
for BMW is that they can use the rise in fuel prices to further increase their profits as it has multiple
advantages to BMW’s range of vehicles17. For example, the lower prices of fuel are more beneficial
for larger vehicles however BMW has invested more on their smaller vehicle range. Also, the rise in
fuel prices has increased the demand for electric cars which BMW has invested in with their BMWi
range. “Record high costs for filling up a car with petrol are expected within the next couple of
weeks, as experts predict further increases. It is believed that on average costs for filling up a tank
could soar to over £70, claimed the RAC.” 18 This shows that with the significant increase in fuel prices
there will be a substantial increase for the consumer demand in electric and hybrid cars for BMW to
capitalise on.
14 "BMW - Net Debt - Trading Economics." https://tradingeconomics.com/bmw:gr:net-debt.
Accessed 3 Oct. 2020.
15 "BMW looking to cut 1 billion euros in indirect costs | Reuters." 6 Jul. 2017,
https://www.reuters.com/article/us-bmw-costs-idUSKBN19R2RN. Accessed 3 Oct. 2020.
16 "Demand for used electric vehicles continues to rise - Fleet News." 26 Sep. 2018,
https://www.fleetnews.co.uk/news/fleet-industry-news/2018/09/26/demand-for-used-electric-
vehicles-continues-to-rise. Accessed 3 Oct. 2020.
17 "Post to Tumblr - Preview." 26 Apr. 2017, https://gas2.org/2017/04/26/total-electric-cars-
decrease-demand-gasoline-2030/?share=tumblr. Accessed 3 Oct. 2020.
18 "Petrol prices rise to see the cost of filling a car skyrocket to £70 ...." 26 Sep. 2018,
https://www.express.co.uk/life-style/cars/1022933/Petrol-prices-rise-cost-filling-car-skyrocket-70.
Accessed 3 Oct. 2020.
The effects of the environment on a business
,Business Studies assignment C and D
The effects of the environment on a business
,Business Studies assignment C and D
The effects of the environment on a business
,Business Studies assignment C and D
The effects of the environment on a business
Contents
Introduction.................................................................................................................................................................. 5
Synopsis:......................................................................................................................................................................... 5
Internal and External environment:.................................................................................................................... 5
BMW PESTLE Analysis.............................................................................................................................................. 5
Political factors:.............................................................................................................................5
Economic factors:..........................................................................................................................6
Social factors:.................................................................................................................................7
Technological factors:....................................................................................................................7
Legal factors:..................................................................................................................................7
Environmental factors:..................................................................................................................8
BMW SWOT Analysis................................................................................................................................................. 8
Strengths:.......................................................................................................................................8
Weakness:......................................................................................................................................9
Opportunities:................................................................................................................................9
Threats:........................................................................................................................................10
Porter's 5 forces........................................................................................................................................................ 10
Threat of substitute products:.....................................................................................................10
Threat of new entrants:...............................................................................................................10
Bargaining power of suppliers:....................................................................................................10
Bargaining Power of customers:..................................................................................................11
Competitive rivalry:......................................................................................................................11
External Factors Monetary Policy:..................................................................................................................... 11
Fiscal Policy:............................................................................................................................................................... 12
Competitive Environment..................................................................................................................................... 12
Corporate social responsibility (CSR).............................................................................................................. 13
Corporate culture..................................................................................................................................................... 14
Market Structure....................................................................................................................................................... 14
Response to changes in the market................................................................................................................... 15
External environment and situational analysis:.......................................................................................... 16
Conclusion:.................................................................................................................................................................. 17
,Business Studies assignment C and D
The effects of the environment on a business
Introduction
As part of my coursework for assignment C and D I have been tasked to write
a report on a large business of my choice that operates within the EU. The
business I have chosen to investigate is BMW which is a large and successful
business that operates globally. In my report I will be discussing the
environment in which BMW operates and how BMW adapted and reacted
towards changes in the market in the past and how they are preparing for possible
future changes.
Synopsis:
The Business I have chosen to conduct my research on is BMW which is a multinational company
that produces a variety of types of automobiles such as luxury cars and motorcycles. They also used
to produce aircraft engines until 1945. They are a globally known business that allows them to have
“30 production and assembly facilities in 14 countries as well as a global sales network” 1They are
also the world’s leading manufacturer of premium automobiles and motorcycles and they also
provide premium financial and mobility services.
Internal and External environment:
The internal environment in a business are the factors within business such as the employees,
management and Corporate Culture. Some of these factors only affect the business on a small scale
for example by only influencing the managers whereas other effects can be on a larger scale
“Traditional managers give explicit instructions to employees, while progressive managers empower
employees to make many of their own decisions.” 2The internal structure is the opposite of the
external structure as the effects from them usually influence the activities, choices and behaviour of
the employees. However, the external environment is the outside influences that have an impact on
the businesses operation such as suppliers that have a huge impact on the business as they supply
the business with their products to sell and dictate how much the business has to pay for their
services. Another external factor that has a large impact on a business is the customers as they are
the primary source of income for a business especially a business-like BMW that rely on their
customers to make a profit
BMW PESTLE Analysis
Political factors:
Laws and regulations have a large impact on the automobile industry as they ensure that during the
manufacturing process the businesses have to take into account the environment. For example,
1 "Company - BMW Group." https://www.bmwgroup.com/en/company.html. Accessed 3 Oct. 2020.
2 "The Internal Environment - CliffsNotes." https://www.cliffsnotes.com/study-guides/principles-of-
management/managerial-environments/the-internal-environment. Accessed 3 Oct. 2020.
,Business Studies assignment C and D
The effects of the environment on a business
some of the new laws related to CO2 emission are major political factors that affect BMW in their
manufacturing processes meaning that they will have to implement certain designs to adhere to the
laws. Another political factor that has an impact on BMW and the automobile industry is the
government policies and taxes as the government policies in foreign countries help BMW estimate
the probability of success on a global scale This allow them to know what line of their products in
their portfolio is most successful so they can produce more of the successful products and see what
the issue is with their least successful products. Also, the introduction of new schemes has an impact
on BMW for example “new schemes in the US and Europe automobile industry wherein regulations
led to produce high mileage cars along with increase in automobile sales and production (Hill,
2008)”3. This has an effect on BMW as it means that their automobiles in the US and Europe that
have a higher mileage are more successful. Brexit will also have a large impact on BMW and many
other manufacturing businesses that operate in the EU. This is due to the potential effects of the UK
leaving the EU having negative effects on BMW’s operations as it would introduce multiple
complications when importing products from the EU for example, essential parts needed for
production that they import from overseas into the UK. “Hundreds of lorries a day arrive at Cowley
with parts from across the world, with 60% of components coming from the EU.” 4 This expresses
how important importing components from outside the UK is to BMW and it resulted in them taking
measures to prepare for this impact on their operations. “BMW plans to shut its Mini plant for a
month after the UK’s official departure from the European Union, to minimise the impact of a no-
deal Brexit that it fears would cause a shortage of parts.” 5 This shows that the effects of a no-deal
Brexit will have negative impacts on BMW and they would need to close down at least one of their
factories which also has knock on negative impacts such as the loss of jobs and hindering BMW’s
production levels.
Economic factors:
The constant GDP fluctuation in Europe has had an impact on BMW’s performance as it has a direct
influence on consumer spending and employment which has a direct effect on BMW’s group
performance. This impacts BMW as it means that customers might be more likely to save their
money or look for cheaper options which may mean they may find what they are looking for outside
of BMW’s portfolio. It could also be bad for employment within the business because research has
shown that the decrease in GDP also results in the increase in unemployment “However, historically,
a 1 percent decrease in GDP has been associated with a slightly less than 2-percentage-point
increase in the unemployment rate.” Another important factor is the currency exchange rate which
has a large impact on BMW’s Group reported revenue. For example, the Euro’s value depreciated in
2006 which benefited BMW because of the large amount of its products being exported to
international markets. However, the changes in exchange rate aren’t always positive to the BMW
Group as it can eat away at their revenue. “The company’s own calculations in its annual reports
3 "Strategic Analysis (PESTEL, Porter and SWOT) of ... - WritePass." 17 Nov. 2012,
https://writepass.com/journal/2012/11/strategic-analysis-pestel-porter-and-swot-of-bmw/. Accessed 3 Oct.
2020.
4 "BMW to close Mini plant for a month post-Brexit - BBC News." 18 Sep. 2018,
https://www.bbc.co.uk/news/business-45561908. Accessed 3 Oct. 2020.
5 "BMW to close Mini plant for a month post-Brexit - BBC News." 18 Sep. 2018,
https://www.bbc.co.uk/news/business-45561908. Accessed 3 Oct. 2020.
,Business Studies assignment C and D
The effects of the environment on a business
suggest that the negative effect of exchange rates totalled €2.4bn between 2005 and 2009.” 6 This
means that between 2005 and 2009 BMW was losing out on money despite the rise in sales due to
the costs of the exchange rate so they had to come up with strategies such as the Natural Hedge
strategy to combat the costs. Inflation rate is another important external economic factor BMW has
to deal with. The company has to adjust by increasing their prices often to address the increase in
inflation. “The price of some top-selling cars has risen well above the inflation rate over the last four
years.”7 This means that BMW would have had to increase the prices of their vehicles in 2005 to
2009 to keep up with the increasing rate of inflation and not lose out on profits.
Social factors:
The increase in awareness of global warming and the increase in popularity of eco-friendly
automobiles influences the sales and success of BMW as not all of their vehicles are eco- friendly and
release pollution into the atmosphere. “German carmakers BMW, Daimler and Volkswagen are to
face an EU inquiry for allegedly conspiring to restrict diesel emissions treatment systems.” 8This
means that BMW have not prioritised the environmentally friendly aspects of their diesel vehicles
which has deprived customers of the choice to buy fewer polluting vehicles.
Customer buying patterns also have a large influence as it means there could be high or low demand
for BMW’s products. “Changes in buying pattern of the consumers due to recession in mature
markets.”9 This shows that customers can be encouraged to save or spend their money depending
on the economy which also has an influence on BMW’s sales.
Technological factors:
One technological factor that has an impact on BMW is the increased use of technology in their
products which is used to beat their competitors by appealing to a wider audience as it allows BMW
to be more innovative in their production and come up with new features to implement into their
vehicles. The technology used in the vehicles need to be high quality, reliable and efficient due to the
restrictions they have on using technology that is damaging to the environment. Also, the use of new
and unique designs is used to overcome the decreased margins in the industry and surpass the other
manufactures in the market.
Legal factors:
Restrictions and strict pollution norms set up in markets will affect what BMW can implement in
their vehicles. “The restricted norms on environmental measures and preventive measures to ensure
more fuel efficient and go-green vehicles.” 10 This means that BMW would have to be more
environmentally conscious when designing their vehicles which will also improve their brand image.
6 "The case study: How BMW dealt with exchange rate risk ...." 29 Oct. 2012,
https://www.ft.com/content/f21b3a92-f907-11e1-8d92-00144feabdc0. Accessed 3 Oct. 2020.
7 "The case study: How BMW dealt with exchange rate risk ...." 29 Oct. 2012,
https://www.ft.com/content/f21b3a92-f907-11e1-8d92-00144feabdc0. Accessed 3 Oct. 2020.
8 "BMW, Daimler and Volkswagen face EU diesel ... - BBC." 18 Sep. 2018,
https://www.bbc.co.uk/news/business-45558588. Accessed 3 Oct. 2020.
9 "Strategic Analysis (PESTEL, Porter and SWOT) of ... - WritePass." 17 Nov. 2012,
https://writepass.com/journal/2012/11/strategic-analysis-pestel-porter-and-swot-of-bmw/.
Accessed 3 Oct. 2020.
,Business Studies assignment C and D
The effects of the environment on a business
The implications help to set Euro standards countries that are more developed and those which are
less developed. “Strict implications of the EURO norms in developing countries e.g., formation of
BHARAT norms on the lines of EURO norms in India (CEN, 2006)” 11
Environmental factors:
The shift in consumer’s tastes and preferences towards use of more environmentally- friendly cars
such as hybrid cars or electric cars affects BMW’s sales as some of their Vehicles meet the
description of the customer demands however most of their vehicles are not as eco-friendly.
“People give preference to the fuel-efficient and environment-friendly vehicles. Choice should be
made towards more hybrid cars, energy efficient and technology embedded vehicles.” 12 This means
that BMW would need to invest more into the fuel efficiency area of their vehicles to adjust to the
change in trend of people looking more at the impacts of the environment which has a direct impact
on their purchasing decisions.
BMW SWOT Analysis
Strengths:
One of BMW’s strengths is their reputation as one of the most valuable automotive brands in the
world as they are known to have luxurious and high quality as they continue to innovate new
features to attract even more customers and stay ahead of the competition. “BMW used advanced
technology for its products that embarked its products design, quality and price.” 13 Another one of
BMW’s strengths is the variety of different products they produce to appeal to a mass market and
maximise their profits. For example, they offer multiple different types of cars such as hybrid or
electric to appeal to the customers who are more conscious of the environment. BMW has what can
be considered to be the best facilities in Germany allows them to produce their products at the
highest quality. This is due to the talented workforce and the industries best suppliers which enables
BMW to be flexible and productive in their work. They are able to keep their costs down by sharing
the components between their products for example the 5 series shares components with the X5
and the 6 series.
10 "PESTEL & SWOT Analysis of BMW - Essay Example."
http://www.dissertationhomework.com/essays/marketing/pestel-and-swot-analysis-of-bmw.
Accessed 3 Oct. 2020.
11 "Strategic Analysis (PESTEL, Porter and SWOT) of ... - WritePass." 17 Nov. 2012,
https://writepass.com/journal/2012/11/strategic-analysis-pestel-porter-and-swot-of-bmw/.
Accessed 3 Oct. 2020.
12 "PESTEL ANALYSIS OF BMW MOTORS - Notesmatic." 23 Sep. 2019,
https://notesmatic.com/2019/09/bmw-pestel-analysis/. Accessed 3 Oct. 2020.
13 "Strategic Analysis (PESTEL, Porter and SWOT) of ... - WritePass." 17 Nov. 2012,
https://writepass.com/journal/2012/11/strategic-analysis-pestel-porter-and-swot-of-bmw/.
Accessed 3 Oct. 2020.
, Business Studies assignment C and D
The effects of the environment on a business
Weakness:
One of the weaknesses of BMW is that they have a large amount of debt. “BMW’s debt is the
highest in the company’s history. It has been growing significantly over the last five years and
reached nearly €130 billion in 2015.” The large amount of debt affects the company by limiting how
much the business can invest in R&D or other areas. 14 Another one of BMW’s weaknesses is their
lack of strategic partnerships which has disadvantages such as increasing the brand awareness which
is hugely important to a business such as BMW having good brand awareness and a good image
attracts more customers as they will be confident to buy from a familiar brand. Another weakness of
BMW is that due to their reputation of having high quality products it also comes with the
perception that all their prices are high which can drive away potential customers. Also, BMW has
high costs due to their high-quality standards and high costs associated with the manufacturing of
these high-quality products. Even their indirect costs are high due to multiple factors such as tariffs.
“BMW’s indirect procurement costs amount to about 20 billion euros a year, but BMW needs to
make savings so the company can invest more in developing electric and self-driving cars.” 15
Opportunities:
One of the opportunities that BMW can capitalise is the high demand for vehicles and the good
reputation they have as a manufacturing business. Especially in the electric cars market as people
are becoming more environmentally conscious BMW can capitalise on it by producing more electric
cars to satisfy the demand in the market. “Strong demand for electric vehicles (EVs) saw values rise
0.9% in September, while average used values remained static, says Cap HPI.” 16 Another opportunity
for BMW is that they can use the rise in fuel prices to further increase their profits as it has multiple
advantages to BMW’s range of vehicles17. For example, the lower prices of fuel are more beneficial
for larger vehicles however BMW has invested more on their smaller vehicle range. Also, the rise in
fuel prices has increased the demand for electric cars which BMW has invested in with their BMWi
range. “Record high costs for filling up a car with petrol are expected within the next couple of
weeks, as experts predict further increases. It is believed that on average costs for filling up a tank
could soar to over £70, claimed the RAC.” 18 This shows that with the significant increase in fuel prices
there will be a substantial increase for the consumer demand in electric and hybrid cars for BMW to
capitalise on.
14 "BMW - Net Debt - Trading Economics." https://tradingeconomics.com/bmw:gr:net-debt.
Accessed 3 Oct. 2020.
15 "BMW looking to cut 1 billion euros in indirect costs | Reuters." 6 Jul. 2017,
https://www.reuters.com/article/us-bmw-costs-idUSKBN19R2RN. Accessed 3 Oct. 2020.
16 "Demand for used electric vehicles continues to rise - Fleet News." 26 Sep. 2018,
https://www.fleetnews.co.uk/news/fleet-industry-news/2018/09/26/demand-for-used-electric-
vehicles-continues-to-rise. Accessed 3 Oct. 2020.
17 "Post to Tumblr - Preview." 26 Apr. 2017, https://gas2.org/2017/04/26/total-electric-cars-
decrease-demand-gasoline-2030/?share=tumblr. Accessed 3 Oct. 2020.
18 "Petrol prices rise to see the cost of filling a car skyrocket to £70 ...." 26 Sep. 2018,
https://www.express.co.uk/life-style/cars/1022933/Petrol-prices-rise-cost-filling-car-skyrocket-70.
Accessed 3 Oct. 2020.
