BMW India Pvt. Ltd.

Sindhu Wadhwa

BBS 1 e

50165

ACKNOWLEDGEMENT

The project that I have undertaken required a lot of information gathering and guidance which has been provided by various people at various stages of the project.

For this purpose I would like to thank the following people:

Mr. Ameet Sao, who gave me an opportunity and freedom to work on this project and study the style of operation and work culture of BMW India Pvt. Ltd.

Ms. Pooja Wadhwa, an intern in BMW India at the Chennai plant, who provided me with information about the company, let me understand the working pattern of managers at the Chennai plant.

Mr. Bill Gates, Chairman, Microsoft, without whose advanced software this project would have not been possible.

Mr. Page and Mr. Brin, Founders, Google corp. whose web portal allowed me to search for relevant information for my study on the chosen company.

Contents

1) Company Profile

2) Reason for Entry into Indian markets

3) Strategic Objective

4) Visions

5) Mission

6) Marketing strategy

7) Dealership Network Strategy

8) Product Line Modifications

9) Market Share and Performance

10) BMW India Market Competition

11) The Five Forces Model

12) SWOT Analysis

13) Operations at BMW - The Assembling Process

14) Key Inferences about the Operations Process

15) Quality at BMW

16) The Purchasing process at BMW

17) BMW Human Resources Policy

18) Brand Building and Sustenance

19) Corporate Social Responsibility

20) Management at BMW India

21) Organization chart of BMW India

22) Key inferences from the Organization Chart

23) Basic principles followed by BMW

24) Future Expansion Plans

BMW India Pvt. Ltd.

Company Profile

Headquartered in Chennai BMW India Private Limited is a 100% subsidiary of the BMW Initial investment in India is 1.1 billion Indian Rupees Employed around 200 people

Models

Assembled/Manufactured Locally

BMW 3 Series (330i, 320i, 320d Corporate Edition and 320d Highline)

BMW 5 Series (523i, 520d, 525d and 530d)

BMW X1 (To be launched soon)

Imported

BMW 5 Series (535i CBU)

BMW 5 Series Gran Turismo (Limited Edition)

BMW 6 Series (650i Coupé and 650i Convertible)

BMW 7 Series (740Li, 750Li, 760Li and 730Ld)

BMW X3 (X3 xDrive25i, X3 xDrive20d)

BMW X5 (X5 xDrive50i and X5 xDrive30d)

BMW X6 (X6 xDrive50i and X6 xDrive30d)

BMW X6 M

BMW M3 (Coupé and Convertible)

BMW M5

BMW M6 (Coupé and Convertible)

BMW Z4 (sDrive35i Roadster).

Reasons for entry into Indian Market

The luxury segment is puny in India, accounting for no more than 0.03% of the market.

Nevertheless, high-end carmakers see it as crucial to build a presence here due to the

market's anticipated growth.

In 2000, only five in every 1,000 Indians owned a car; by 2010, the number is expected to have

risen to 11 per 1,000. By 2010 there could be 13 million cars on India's already crowded roads,

up from just 5 million in 2000.

"We want to benefit from this growth potential, but we also want to make an active contribution

to this growth," said Norbert Reithofer, chairman of BMW's board of management.

"Chennai has a developed infrastructure and it benefits from having parts suppliers nearby,"

added Frank-Peter Arndt, BMW board member in charge of production.

13 potential production locations were analyzed for setting up the production plant in India. Chennai

was chosen as the most feasible option because of the following reasons:

Automobile manufacturers

Automotive suppliers

Qualified labor

Cost balance for production location

Infrastructure – International Airport, Sea Port, Road Network

Strategic objective

“The BMW Group is the leading provider of premium products and premium services for individual

mobility.”

Vision

“Uniqueness through diversity, Leadership, taking Risk, courteous”

Mission

"To become most successful premium manufacturer in the car industry"

Marketing Strategy

BMW India studied the Indian markets and found it to portray immense dynamism and this is how BMW formulated its marketing strategy.

BMW India decided to stand their ground in a fiercely competitive environment with new ideas and the strength to promote our new products. In absolute terms, India cannot compete with other high-volume single markets yet. But, the future belongs to India. If you want to benefit from the dynamics of the Indian market later, you need to act today. This is what they did. They were prepared to meet the challenges head-on to ensure their company's success. These qualities enabled them to weather stormy conditions and continue to invest in our future. They were able to anticipate trends and that gave them an edge.

Their strategy has been to embark on an aggressive product offensive with rapid market expansion through greater customer intimacy. They have addressed these through competency-enhancement across all levels seeking new business opportunities. As pioneers in bringing luxurious dealerships to India, they set a decisive course by setting up BMW dealerships of international standards across all metros. They have set very high standards in service quality and customer care in India, which meet the expectations of their customers.

And this is exactly how they position themselves to redefine luxury, focusing on individuals, recognizing future challenges, promoting creativity, and being the leading supplier of luxury products and services for individual mobility. They always concentrate on their strengths and thus on the

Implementation of the luxury claim which they convey with each of their vehicles. They do not make compromises. This has been their strategy in India, where they currently have 16 BMW dealer facilities. As we embark on the next phase of our dealer network strategy, BMW India will further expand operations by establishing its presence in 10 more cities.

Communication, Pricing and Distribution

Most of the BMW communication takes place through print media in magazines and newspapers. This is supported by communication through TV advertisements and point of sales promotion. Now days a good company has a state of the art web portal. BMW websites are highly informative, interactive and a pleasure to watch. One can get any amount of detailed information regarding the prices, features, retailers, support services, etc. There are company specified retailers and distributors throughout the country who are in constant touch with the parent and comply implicitly.

Dealers also have round the clock servicing and repair. BMW also has a used car portal where one can choose and buy his/her appropriate model.

Dealership Network Strategy

BMW India is the pioneer in bringing luxurious dealerships to India. BMW India has set a decisive course in India by setting up BMW dealerships of international standards across all metropolitan centers of the country. BMW India has set very high standards in service quality and customer care in India. The present dealer network covers 95% of the sales potential of the premium car segment in India. BMW India’s dealership Network Strategy comprises of two phases as mentioned below.

Phase I

Phase I of the Dealer Network Strategy included establishment of 12 dealers covering major metropolitan centers of the country by the end of 2009. An aggressive plan was chalked out and implemented for completion of Phase I of the dealer network, much ahead of schedule (Phase I was completed by end 2008).

Owing to an exuberant growth potential, BMW India has further chalked out Phase II of its dealer development strategy to support its plans

Phase II

In Phase II, BMW India will further expand operations in 10 additional cities in India.

Presently, BMW India is present at 17 locations in the Indian market; BMW Studio (New Delhi), Deutschen Motoren (New Delhi), Deutschen Motoren (West Delhi), Bird Automotive (Gurgaon, NCR), Navnit Motors (Mumbai), Infinity Cars (South Mumbai), Krishna Automobiles (Chandigarh), Navnit

Motors (Hosur Road, Bangalore), Navnit Motors (Millers Road, Bangalore), KUN Exclusive (Hyderabad), Kun Exclusive (Chennai), Bavaria Motors (Pune), OSL Prestige (Kolkata), Parsoli Motors (Ahmedabad), Platino Classic (Kochi), Kun Exclusive (Coimbatore) and Sanghi Classic (Jaipur).

BMW dealerships presently display the BMW 3 Series and BMW 5 Series that are produced at the BMW Plant Chennai. BMW dealerships also display the BMW 6 Series, BMW 7 Series, BMW X3, the BMW X5, the BMW X6, BMW Z4, and the BMW Gran Turismo which are available in the country as CBU’s (Completely Built-Up Units). The BMW M3 Coupé, BMW M3 Convertible, BMW M5, BMW M6 Coupé, BMW M6 Convertible, BMW X6 M, BMW 6 Series Individual and BMW 7 Series Individual can also be ordered at BMW India dealerships.

Product Line Modifications

BMW entered the Indian car market in the year 2006 with the launch of its first BMW model. The company established a sales subsidiary in Gurgaon in 2006 to develop its dealer network. In 2007, BMW set up its first state of the art manufacturing unit in Chennai. 

According to the Society of Indian Automobile Manufacturers (Siam), BMW India registered growth of 12.76% at 1,016 units from April-July 2009. However they have extensive expansion plans and hope to bag a sales figure of 3,000 units in 2010. This was planned to do by modifying the product line according to the Indian markets.

BMW Initially launched the 3 concept cars in India- 3 Series, 5 Series and 7 Series which were priced as follows:

3-Series – Rs. 36-38 L

5-Series – Rs. 45-50 L

7-Series – Starting Rs. 1.08 Cr.

The company further studied the Indian market in depth and realized that the models launched do no suit the Indian roads as well as the Indian mentality. Therefore, the company planned to modify models as per Indian markets. The new models of BMW were altered with some features such as the I-drive function; the 7-Series was no more a customized model; standardized interiors and many such modifications. Thus, the company was able to cut down prices. The new models were priced as follows:

3-Series – Rs. 27-33 L

5-Series – Starting Rs. 39 L

7-Series – Rs. 80-90 L

Luxury car maker BMW India achieved 100 per cent growth in its car sales this year.BMW India have already sold 2,703 cars till November and aims to sell 2,800 by the end of this year against 1,387 last year, company’s president Peter Kronschnabi told reporters.

Market Share and Performance

BMW India Ranks as the Number One in the Luxury Car Segment in India   BMW India Achieves Leadership Position by Increasing its Market Share in the Luxury Segment of the Indian Automotive Market to over 40%

BMW India is the number one in the luxury car segment in India and portrays a symbol for dynamic and forward striving people.

BMW India increased its market share in the luxury segment of the Indian automotive market to over 40% in 2009 (from 9% at the end of 2006). With 3619 cars delivered to customers in the calendar year 2009, BMW India has achieved the “highest sales by a manufacturer in the luxury car segment in a year” till date.

In 2009 BMW India sold 

-- BMW 3 Series – 1155 units-- BMW 5 Series – 1590 units-- BMW 6 Series – 28 units-- BMW 7 Series – 350 units-- BMW X3 – 101 units

-- BMW X5 – 287 units-- BMW X6 – 83 units-- BMW Z4 – 25 units

2007, 2008 and 2009 were demanding years for BMW India and, at the same time, the most successful market entry for BMW in any country recently. Various activities initiated during this period have provided BMW India with a solid basis to develop a strong foundation.

BMW India Market Competition

Talking of competition prevailing in the Indian market for BMW India, we talk of companies like Mercedes, Audi, Volkswagen, Ferrari, Aston Martin and Porsche. Ferrari, Aston Martin and Porsche being car manufacturers are not considered tough competitors to BMW India because these brands have much higher profile in various other markets of the world and will take time to establish themselves in the Indian market. Moreover, Ferrari struck the Indian markets in 2010 and, Aston Martin and Porsche plan to do that next year. Thus, we can say, major competitors to BMW India are Audi and Mercedes.

BMW has been giving equal fight to both the car manufacturers since its launch in the Indian market.

Story till 2009

German luxury car maker BMW had left behind its closest competitor, Mercedes-Benz, by selling a larger number of cars in the luxury segment in 2009. Mercedes-Benz has so far been the undisputed leader in the luxury car segment in India. The company had started local assembly operations almost a decade ago, thus making it difficult for competitors to beat its prices. Recently, however, both BMW and Audi have started local operations in the country. In January 2009, BMW managed to sell 270 cars, as against the 79 units sold by Mercedes, and 244 units as against Mercedes’ 226. Audi is also fast catching up, having sold 109 units.Mercedes-Benz CEO Wilfried Aulbur told media persons that BMW’s increased sales in recent months was attributable to the heavy discounts it was offering. After the launch of the new 3-Series, inventories of the older model were cleared with the help of discounts. Taking a direct shot at BMW, Aulbur said that Mercedes was against “stuffing” dealers with huge inventories to increase numbers and that ideally manufacturers and dealers should both get a good deal in the business. He also said that Mercedes-Benz was confident of maintaining its edge by launching latest models and strengthening sales and service network.

Current scenario

The battle between the Germans is getting serious in India. BMW caught Mercedes Benz napping and went past the three pointed star last year. However, with the launch of the new E-class, C-class Executive and the supercar SLS AMG, Mercedes Benz has taken the lead over BMW and Audi in the first seven months of 2010. Mercedes’ sales jumped by a massive 79.31% while BMW and Audi witnessed 35.35% and 56.5% respectively in the period Jan-Jul 2010 compared to the same period last year. Mercedes Benz shifted 2,921 units compared to 2,718 for BMW and 1,535 for Audi so far in 2010.

Future Anticipation

We still have three months left in 2010 and the ultimate winner will depend on how well the market receives the new F10 5-series and the upcoming BMW X1. Even the all new X3 and 6-series could come before the end of the year tilting favour towards BMW. In comparison, Mercedes Benz does not have any big launches coming up this year. BMW has just got a new India head and everyone is eagerly looking at him what new strategy it comes up with. Audi has launched their all new A8 this year as well. Their competitor to the X1, the Q3 is under consideration for India as well.So who will eventually win in 2010? We predict that BMW will take over sales as they have a slew of launches in the second half of this year. The new 5-series has also got off to a good start beating the E-class in its first month. Audi are getting to the top and they may give Mercedes and BMW serious threat next year.

Audi as a competitor

The Audi Q3 will go into serial production in 2011 in Spain and once that happens, the cross coupe crossover from Audi to take on German rival BMW might just make just make it to Indian shores too. Now, plenty of stuff happening at Audi India seems to suggest just this. First things first, Audi India is nowhere near Mercedes Benz India and BMW India when it comes to car sales. This, despite of Audi having an excellent portfolio of world class premium cars in its arsenal. Audi India’s weak links have been its pricing and its brand awareness amongst the Indian premium car buying populace which is way lesser than Mercedes Benz and BMW.

Also, Audi India being the latest of the entrant amongst the German car makers is clearly not as aggressive a BMW India, which really has turned the heat on Mercedes Benz with a slew of cheaper and in many cases better products. Audi India however has been content playing a distant number three and so far hasn’t done anything really, for it to move up and out of this position. On the other hand, rivals like BMW and Mercedes Benz are chalking out very aggressive plans to get into the INR 20-25 lakh segment with their offerings.

BMW India till now did not experience much competition from Audi, but the coming year and beyond might not be the same. Audi, as read above has a better growth rate in terms of sales. This could be the turning point for the luxury car segment in the Indian markets and for Audi as well.

The Five Forces Model

Threats from

Potential entrants

Suppliers

Bargaining power

Competitive

Rivalry

Buyers

Bargaining power

Threats from

Substitutes

Porter explains that there are five forces inherent in a market, which will jointly determine the intensity

of competition and profitability of BMW and the automobile industry. The first is the threat posed by

new entrants, the high capital expenditure and confidence of customers represent significant barriers

to entry and the market is also sensitive to reputation. However, the emergent of low cost

manufactures do pose a significant threat. There is an opportunity in the low price/ low economy (fast)

sector. The second is the threats from substitutes, as there are many make and model of other

premium branded cars, hence, Mercedes Benz, Audi etc. The third force is the threats from the

bargaining power of buyers, is this strong for both BMW and the entire automobile industry with a

large number of alternative suppliers, hence, the aggressive pricing strategy. This results in a very

strong competitive rivalry in the industry. This is intensified as a result of little or no differentiation in

the basic product offered. Finally the threats from the suppliers bargaining power, this is fairly low in

the automobile industry, due to dual sourcing strategies, using arrange of alternative sources of

supply for parts.

The five forces analysis gives an improved understanding of the degree of competition within the

business environment. The analysis shows that the automotive industry is highly competitive, with

buyers possessing and exerting a very powerful influence to the large number of substitute brands

available to them.

SWOT Analysis

An Internal and corporate analysis in terms of strength, weaknesses, opportunities and threats

(SWOT) will assist in gaining an understanding of where BMW is currently in terms of strengths and

where improvement is required within the business and what outside environmental threats it may

face as well as what new opportunities are available to the company in the short and medium term.

STRENGTHS

Diverse ranges of Products

Strong Cash Flow Position

Increase turnover and trading profits

Strong Balance Sheet

World's leading Premium Quality Automobile Manufacturer

Brand Awareness

Human resources

Capabilities to turn resources into advantages

OPPORTUNITIES

New Products Innovation & Alliances Customers demand change to more

comfortable and relevantly cheap cars

Diversification New Technologies in Automobiles

WEAKNESSES

Perception of High Prices Customer disinterest Environmental issues: Pollutions Buyer sophistication and

knowledge Substitute products or technologies

THREATS

New & existing competition Volatility in Price of Fuel New legislations Consequences of the oil crisis Economic recession Market shift to globalization Takeover bids Far-East (Japan, Korea, etc.)

Automobile companies expansion Extremely high competition for

customers and resources

Operations at BMW - The Assembling Process

Key Inferences about the Operations Process

Step 1 The basic body of the vehicle is unloaded Vehicle Identification Number Engraving

Step 2 Light weight plugs, heat insulators, strikers are fittedRubber stripes are fixed in the door and mirror positions

Step 3

Trim LineQuality GateOverhead Final LineWheel alignment Final quality gate

Step 4

E- COS TestRolling and ABS TestRoad TestSinusodial TestCobble stone TrackABS TrackS- TestReverse TestWater Test

1. Design of processes

1.1 it essentially means the various choices that we make with respect to the flow of parts in a

manufacturing system

1.2 the 3 important aspects that influence process are volume, variety and flow

1.3 volume indicates the average quantity of products produced in a manufacturing system

1.4 variety refers to the number of alternative products and variants of each product that are

produced in a manufacturing system

1.5 flow provides an understanding of how the components and material in an operations

system get transformed from the raw material stage to finished goods stage

1.6 BMW follows a Continuous Flow System. The reasons for the same are:

1.6.1 The Assembling Process, as explained above, is characterized by streamlined flow

of processes in the operating system

1.6.2 The production process is sequential and the required resources are organized in

stages

1.7 In the category of Continuous Flow System, BMW follows a Mass Production

manufacturing system. The reasons for the same are:

1.7.1 the volume of products is high

1.7.2 the number of variations in the final product is low

1.7.3 each product flows into each department in a streamlined fashion

1.7.4 within each department, there is an orderly flow of raw material and component

1.7.5 in the context of planning and scheduling of activities , this type of structure is called

as “flow shop”

2. Layout

2.1 it deals with physical arrangement of various resources that are available in the system

with an objective to improve performance of the operating system thereby providing better

customer service

2.2 BMW adopts a Product Layout. The reasons for the same are:

2.2.1 the resources are placed to follow the sequence dictated by the product

2.2.2 the process is standardized

2.2.3 simpler operational control is possible

2.2.4 high volume is achieved

3. Cycle time

3.1 The cycle time for making a BMW is 14 Hours (2 working days)

3.2 The entire assembling process is explained above

Quality at BMW

Garvin had proposed 8 quality dimensions and BMW seems to follow all of them. The 8 dimensions

followed by BMW are:

1. Performance

2. Features

3. Reliability

4. Conformance

5. Durability

6. Serviceability

7. Aesthetics

8. Safety

The products offered by BMW undoubtedly perform outstandingly on each of the dimensions

mentioned above.

The Quality Principles followed by the company are:

a. Prevention instead of Reaction

Forceful redirection of the quality activities from “after the fact” fault correction to “anticipatory”

fault prevention

b. Conserve best practice, safeguard new techniques

Assuring best practice by product and process design kits, safeguarding innovation and

changes

c. Mature concepts – little changes

Influence the design of processes and indicators to be able to evaluate the product and

process maturity at any time

d. Quality adds value

Initiation of projects and initiatives to achieve the quality targets while considering cost and

return principles

e. Our concepts lead to top level customer satisfaction

Transfer of customer feedback to concrete product and process measures

f. Quality is a leadership task

As BMW creates value for money for its customers, it provides them with the best possible

services at the time of sale as well as after sale. Before any car is ready to be dispatched for the

showroom in different parts of the country, the car is taken through various tests at the plant. A

BMW model undergoes the followings tests:

Rolling and ABS Test

The performance of the vehicle is checked by rotating its wheels at a speed of 120-150 km/hr. the

engine performance and gear box performance is evaluated. Lights are checked. The vehicle is put

into drive mode as well as manual mode to check performance

ABS means Anti lock braking system. The performance of all the 4 brake lines corresponding to 4

wheels is checked while running the engine. The pumps and the pressure levels are also checked.

Road Test

Before the road test begins, the seat covers are removed, the viper and engine compartment are

checked. The vehicle is made to run for the first time to check the parts setting. The vehicle is driven

to various test tracks to test its performance.

Sinusoidal track

The track is in sinusoidal waves. The vehicle is driven at a speed of 20 km/hr to check whether the

parts are welded properly or if any crack is there.

Cobble Stone Track

The vehicle is made to run on a track having stones to check if there are any loose parts. If so, then it

will make noise and the defect can be found out.

ABS Track

The vehicle is made to run on a track on which water has been sprayed. This track helps to check the

stability and control of a vehicle in slippery conditions.

S-Test

The vehicle is made to run in S-Shape to check the fitment of parts

Reverse Test

The vehicle is driven in reverse direction to check for missing parts and if any abnormal noise is being

produced during driving.

Water Test

The vehicle is placed in a water station for 8 minutes. The water is sprayed from all directions on the

vehicle. This test helps to find out any leakage in the vehicle.

After the water test, the vehicle is sent to the car wash area where it is completely washed and dried. After finishing all these tests, the vehicle is sent to the covered parking area and is considered to be ready for use.

The Purchasing process at BMW

BMW engages into 2 different kinds of purchase

a. Direct Material Purchase

This includes the Local Consumables Purchase, Technical Components Purchase. Local Consumables Purchase includes Adhesive Tape, Assembly Lubricant, Transmission Oil, and Sealing CompoundTechnical Components Purchase includes Seat, Door Trim.

b. Indirect Material PurchaseThis includes all the material that assists in the making of the automobile but is not a part of the automobile. There are 2 kinds of purchase orders for indirect material purchase. They are:1. Standard Purchase Orders

These purchase orders are used for all those material which do not fall under the category of frequent purchases. For Example: Generators, Printer, Trolley, etc

2. Frame AgreementsThese purchase orders are used for all those materials which are frequently purchased. The Frame Agreement does not change for a minimum period of 6 monthsFor Example: General Stationers, Beverages, etc

The General Purchasing Process Steps

Request for Quotation (RFQ) should contain the following specification

a. The supplier must accept all BMW Payment terms and conditions b. The delivery terns must be stated on the quotationc. The quotation must be dated and stamped when received

Step 1 Specification of Demand

Step 2 Supplier Selection

Step 3 Request for Quotation

Step 4 Purchase Requisition

Step 5 Purchase Requisition Release Strategy

Step 6 Evaluation/ Negotiation

Step 7 Purchase Order creation

Step 8 Purchase Order Release Strategy

Step 9 Goods Receipt Strategy

Step 10 Invoice Receipt

Step 11 Payment

Purchase Requisition (PR) must contain the following specifications

a. Supplier Nameb. Commodity requiredc. Cost centerd. Value as per quote

Invoicing must contain the following specifications

a. Total price including base price, sales tax, service tax and excise dutyb. It must also include the currency of transaction

As read above, BMW India is known for its quality and creating value for money for the customers, this is reflected through their purchasing strategy. Selection of suppliers for BMW is done through a very formal procedure to avoid any sort of quality issues. Supplier selection is based on the result of evaluation based on Supplier Performance Scorecard

The aspects covered in the Supplier Performance Scorecard are as follows:

Aspects Maximum Points

Quality 35

Cost 25

Logistics 20

Management 20

Total 100

Considerations for the Quality Aspect

a. No. of issues / volume of car set supplied

b. Count of PIS / Quantity Supplied

c. No. of repeat quality issues / No. of Quality issues

d. No. of VIN affected / No. of cars produced

e. Count of MCDR’ s / No. of cars produced

f. No. of VIN reworked / No. of cars produced

g. No. of Quality points at supplier end / No. of quality issues at BMW

Considerations for the Cost Aspect

a. Timeliness in quote submission

b. Response to our queries

c. Cost –break down and details of the offers

d. Cost escalation control plan

e. Productivity realization

f. Exchange rate – review

g. Identify parts for further localization / new product initiative

Considerations for the Logistics Aspect

a. Packaging issues

b. Schedule adherence – Timeliness

Considerations for the Management Aspect

a. TC Planning and smooth implementation without disturbing production

b. Invoicing and documentation issues

BMW Human Resources Policy

In response to a changing business environment BMW is being more business and service focus. In the past decade the organization has become much more proactive, dealing with new concepts to become more service and customer focus oriented. The structure of the organization has been redefined to deal with the new ways of operating. Organizational structure defines important relationship within the business for achieving business objectives. At the same time it helps to

define the new business culture within BMW. Culture exists with the minds and hearts of BMW's employees and contributes to business strategies of the organization. Therefore, BMW's human resources policies are critical in the organizations structure, conduct and performance.

Competitive pressures on BMW and national economies have increased markedly in recent decades. New competitions are emerging and forcing older companies to adopt or reform to survive. Different structures affect the way in which human resources are managed. BMW like all other businesses require the same basic human resources activities like recruitment, development and training, appraisal and reward systems, and control and feedback mechanisms. Organizational structures are influenced by culture. Employees have strong feelings towards the organizations they work for. BMW India has inherently a flat, less rigid structure. The McKinsey 7 'S' model is often used to identify all the areas that make up an organization. Structure, Style, Staff are three such areas.

BMW has an equal opportunities none sexual discriminating culture within its organization. BMW actively supports young female executives and gives females insight into the field of technology. BMW also offers extensive training for all level of staffs; BMW‘s Trainee Promotion Programme (TPP) provides the perfect combination of theoretical studies and practical work. BMW trainees receive many benefits in addition to their pay, other social payments such as holiday and Christmas bonuses, meal and travelling expenses subsidies, health programme and PC training.

BMW claims that it does not see its staff as a cost factor but as an essential performance factor. Also the employees are referred to as ‘associates' rather that works. BMW in its human resources policy states that any policy that is not oriented towards its associates will lead to negative cost effects in the long-run.

As a future-oriented company, we seek to pursue an exemplary, creative and associate-oriented human resources policy, making significant contributions to business success through our human resources activities. The human resources policy of BMW is an integral feature of our overall corporate policy in both strategic and operative decisions. (Corporate appraisal (or SWOT analysis) consists of the internal appraisal of the organization’s strength and weaknesses and an external appraisal of the opportunities and threats open to organizations in competition within industry.

Recruitment at BMW India

Process Step Input Mandatory Documents

Mandatory Tools Output

Step 1Request of staff for approved job card

Operational requirement based on business plan

Approved organization chart, Job Description document, Manpower Requisition Form

Completed forms, Job description sheet of the required position

Step 2Candidate search.Preference given to internal candidates

Job description data sheet

Portfolio results of employees

Source of recruitment; newspaper advertisements, recruitment agency, internet advertisements

Collection of applications

Step 3Short listing of applications

List of applicants with their applications

Job Description Document

Short listed applicants for interview and finalization of interview schedule

Step 4Interview and Selection

Candidate and interview schedule

Pre employment form-curriculum vitae, interview evaluation form

Selected candidates with agreed target start date

Step 5Enrollment

A copy of required documents

Employment contract, required relevant documents from candidate

Completion of joining formalities

Step 6Orientation

Orientation Schedule

Orientation evaluation form

Feedback on orientation obtained, training material provided, signed JD collected

Step 7Update department organization chart

Completion of compensation documents

Communication charts Updated organization chart

Step 8Probation Evaluation

Job Description document, target agreement

Probation evaluation form Result of evaluation

A vision of things to come

BMW is aiming to fortify its number one position in the Indian luxury car market, with 2010 car sales

of more than 3,000.

BMW India, therefore, also aims to expand its operations by the year 2010-2011. For this purpose,

the company is constantly engaged in recruitments. The present employee strength of BMW Plant

Chennai is 120. The company aims to recruit around 50 more people and increase its strength to

160-200 by the year 2010-2011.

The sources of recruitment used by the company for this purpose are as follows:

External Sources mainly Campus recruitments, Recruitment agencies

Campus recruitments

The selection process for candidates undergoing campus recruitments is as follows:

a. Technical round / Aptitude Test

Competency tested: Communication Skills

b. Group Discussion

Competency tested: Communication skills

c. Personal Interview

Competency tested: Communication Skills

All candidates are required to appear for the aptitude test and group discussion. The short listed

candidates are required to appear for personal interviews.

Internal Sources mainly transfers and promotions

a. Horizontal Shifts (Transfers)

b. Vertical Shifts ( Promotions)

Brand Building and Sustenance

 Since its inception, the BMW brand has stood for one thing: sheer driving pleasure. Sporting and dynamic performance combine with peerless design and exclusive quality, resulting in the unique appeal of BMW automobiles.

BMW has successfully leveraged its history and tradition of excellence along with innovation to become the most famous and recognized carmaker in the world. Typical consumer brand associations for BMW might be “heritage”, “stylish”, “luxurious”, “powerful”, “elegant”, “performance” and “fuel efficient” to an extent.

Also, with our enhanced product portfolio we have engaged with our customers and prospects in innovative dialogues to ensure that the brand affinity transforms into product ownership. There have been initiatives such as the BMW Golf Cup International across 10 cities and the BMW Art Cars exhibition, held at the Jahangir Art Gallery in Mumbai. Conceptualizing the BMW Studio at Janpath, Delhi as a venue where our customers can indulge with the brand in an exclusive environment is another. There are also formal dining and wine-tasting events at leading BMW dealerships across India.

To reiterate the focus of the brand, we have adopted communication of the rich heritage of BMW Eras through association with leading fashion designers and events such as the India Couture Week. For us, if actions submit to the values recognized as being 'on-brand', it will cumulatively build the organization’s desired long-term reputation. If not, we appreciate that it risks fragmenting what our brand stands for, and we won't go with the idea, however compelling it is. This doesn't mean the brand is rigid, nor does it deny BMW opportunities. Rather, it serves as a framework for decision-making, enabling the business to feel confident that all its operational decisions are building the brand towards its long-term ambitions.

Corporate Social Responsibility

BMW has undertaken to provide the basic welfare amenities to 3 villages. The details of the proposal

for these 3 villages are as follows:

The Proposal

School Elementary Middle Higher Secondary Total

School Students School Students School Students Students

Anjur 1 127 - - 1 700 827

Kunnavakkam 3 150 - - - - 150

Thenmelpakkam - - 1 50 - - 50

Facilities Anjur Kunnavakkam Thenmelpakkam

Present Required Present Required Present Required

Tables and Chairs

None 167 None 51 None 17

Computers 10 10 - 3 - 1

Toilet facilities Minimal 3 Minimal 3 Minimal 1

Drinking water None 2 water purifiers

None 3 water purifiers

None 1 water purifiers

Tiling of floor Cement floor

Floor tiles Cement floor

Floor tiles Cement floor

Floor tiles

Salary of teachers

- Salary for 2 teachers for H Sc. School

- - - -

Scholarship for H Sc.toppers

- For first 3 ranks in SSLC and H Sc. exams

- - - -

Management at BMW India

Frank-Peter Arndt,

President of BMW India Pvt. Ltd.

Peter was born in Villingen, Germany, in June 1966. He graduated with a diploma in International

Business Management from the Pforzheim University of Applied Sciences, and joined BMW AG in

1995 under the International Trainee Programme in Sales & Marketing. In 1996 he rose to the

position of Manager for the Africa Caribbean Region responsible for product and price. In 1998 he

was promoted as Junior Area Manager for the Region, and held the post of Area Manager during

1999-2002 In 2002 he was elevated as GM Market Development, Asia, Pacific, Africa and Eastern

Europe Region a post he held till 2005 end when he was appointed as President of BMW India Pvt.

Ltd.

Andreas Schaaf,

Managing Director, BMW India Pvt. Ltd.

Andreas Schaaf was born in Berlin, in March 1964. After graduating as Diploma-Ingenieur specialised

in the study of Production Technology at Technische Universitat Berlin, From1991 -95 he worked

AEG AG Berlin as a Production Engineer, and came to BMW AG in 1995 working in the FIZ Munich

Plant of BM AG in the Process Planning and Technology Assembly Department. He was promoted to

Manager Production, at the door assembly plant Munich in 1998 till 2001 when he was elevated as

head of Assembly Process & Structure Planning, Rosslyn Plant, BMW South Africa a position he held

till end 2003. In 2004 He returned to his old plant FIZ Munich as Head of Projects Assembly Products

Line-2. From 2005-2006 he was Head of Projects VPS Value Added Production System at

technology Assembly, FIZ Munich before being appointed as Managing Director, BMW Plant

Chennai.

Organization chart of BMW India

Managing DirectorGeneral

Manager- IT and Logistics

Team Leader- Physical Logistics

Specialist- Customs

Clearance

Specialist- claims mgt

Specialist-material

Specialist-PPC

Manager IT

Specialist-VDC

General Manager- Assembly

and QualitySection Manager

Manager E/E

Manager Maintenan

ce

Manager Process Planning

Facility Mgr

Team leaders

Specialist QMS

Manager Product Quality

Technical officer-product

audit

Manager quality info

Plant ControllerSpecialist accountin

g

Officer-finance

Officer Indirect Taxation

General Manager- PurchaseDeputy Manager-Purchase

Senior Officer-

Purchase

General Manager-

Human Resources

Deputy Manager-

HRPartner HR

Key inferences from the Organization Chart

1. Horizontal Differentiation

It refers to Departmentalization

BMW adopts functional departmentalization.

2. Vertical Differentiation

2.1 It refers to hierarchical levels in an organization

2.2 Hierarchy in BMW is that Managing Director- General Managers-Deputy

Manager-Specialists- Team Leader-Associate

3. Span of Control

3.1 It refers to the number of subordinates a manager can efficiently and

effectively supervise

3.2 Ideally, the number is 5-6 subordinates

3.3. In BMW, the span of control ranges from 3-7 subordinates

4. Centralization

it refers to the extent to which the decision making authority is

concentrated at the top management

In BMW, the final decision lies in the hands of Managing Director

5. Formalization

It refers to the extent to which the rules, procedures, communication, and

instructions are written down and followed by organizational members.

In BMW, formalization is high

Factors causing high formalization are Nature of task is routine, nature of product is

Mass, Predictability of outcome is high, Cause and Effect relationship is high,

Presence of functional departments, low variety, high volume

6. Specialization

6.1 It refers to the work specialization which is the result of division of labor

6.2 In BMW, there is high specialization

6.3 Reasons for the same are that every functional head is an expert in his or her

area.

Basic principles followed by BMW

Responsibility

Customer orientation

Peak performance

Effectiveness

Adaptability

Dissent

Respect, trust, fairness

Leading by example

Sustainability

Society

Independence

Associates

Future Expansion Plans

BMW plans to invest Rs 70 crore

BMW Group plans to invest Rs 70 crore by 2012 to strengthen its market share in India.

The new investment will be in addition to Rs 110 crore investments made by the company in setting up the Chennai plant.

“We will further step up investment in India to cope with the growth market of India. As a first step, production capacity at the BMW plant in Chennai has been increased from 3,000 to 5,400 units and the dealer network further expanded,” BMW AG Member Board of Management Frank-Peter Arndt BMW AG said on Tuesday. BMW also launched its new sports utility vehicle X5. The company’s two new sports utility comes in both petrol and diesel variants and is priced between Rs 52.99 lakh and Rs 69.50 lakh.

In addition to strengthening capacity, a new vehicle logistics centre will also be set up on the grounds of the Chennai plant, for which land has already been acquired, he said.

To meet rising customer demand for BMW vehicles and services, its sales network will be systematically expanded to 22 dealerships by 2011 – almost doubling its size since early 2009, Arndt said.

Towards the end of this year, BMW Financial Services will also begin offering its financial services in the Indian market for the first time, he indicated.

BMW India will enter luxury motorcycles segment

As part of the company’s plan to spread its brand across product segments, BMW India will enter the luxury motorcycles market.

Andreas Schaaf, president BMW India, announced that the company has already commenced the due diligence procedure and a final decision will be made in another month. “We are currently investigating whether it’s a good idea or not to enter the Indian market (for motorcycles). No final decision has been taken yet but the investigation would be over in the next couple of weeks,” Schaaf said. However, he stated that an immediate plan of establishing an independent manufacturing base in India for producing motorcycles is not on the cards at the moment.

The company has also chalked out plans to sustain its supremacy in the luxury market. In the next 2 years, BMW India would make a fresh investment of Rs 70 crore in its wholly-owned facility in Chennai, Schaaf said. Furthermore, the company has also increased capacity to 5,400 units from the current 3,000 units.

Since 2007, BMW has invested Rs. 110 crore for expansion purpose in India. “India is a market that holds great potential for the future for us and is a building block in our global market offensive,” BMW AG board member Frank-Peter Arndt said. Apart from this, the company also plans to enter the pre-owned car business - rival Mercedes-Benz is also adopting the same strategy.

Schaaf said that this move of opening an entirely new segment will widen the customer base for BMW products in India. In June this year, Mercedes-Benz India launched its global program of 'Proven Exclusivity' in India by providing second hand models to buyers. BMW will also raise its manpower strength to 400 by the end of this year – it is 200 currently. “At the same time as we are expanding capacity, we will also be gearing the plant to produce a further model, XI, for the Indian market, starting in November 2010,” he added.

BMW Financial Services India

This year, we plan to introduce BMW Financial Services India, which will function as a non-banking finance company once it gets the necessary regulatory clearances. This division will offer solutions for Retail Financing for BMW customers and also offer insurance solutions to its customers through its cooperation partner. We also plan to introduce a pre-owned car business with the launch of BMW Premium Selection in India. Everything about a BMW says quality. So whether your BMW is three weeks or three years old, it is still the 'ultimate driving machine.’