CONTINUOUS INTERNAL ASSESSMENT -1

INTERNATIONAL BUSINESS (MBA 561 S)

A STUDY ON INTERNATIONALIZATION PROCESS ADOPTED BY COMPANIES

BMW

SUBMITTED BY:

Subhangi Raj

2027044

SUBMITTED TO

DR. SANGEETA MEHROLIA

MBA PROGRAMME

SCHOOL OF BUSINESS AND MANAGEMENT

CHRIST (DEEMED TO BE) UNIVERSITY, BENGALURU

 NOVEMBER, 2021

Origin of the company

BMW stands for Bayerische Motoren Werke, which translates roughly to the Bavarian
Engine Works Company. The name alludes to the company's beginnings in the German state
of Bavaria. It also represents BMW's original product line: engines for a variety of
applications. Rapp-Motorenwerke GmbH, which began producing aircraft engines in 1913, is
the forerunner of today's BMW AG. It was the successor to the 1916-founded Bayerische
Flugzeugwerke AG. As a result, 1916 is regarded as BMW's founding year.

The BMW Group's main focus is on high-end two- and four-wheel cars for international
markets. Germany, Brazil, China, India, Mexico, the Netherlands, South Africa, the United
Kingdom, and the United States all have BMW production sites. With the introduction of the
BMW New Class compact sedans in 1962, BMW established itself as a leading maker of
sport-oriented vehicles, and it continued to extend its selection during the 1960s, adding
coupe and luxury sedan models.

BMW’S Expansion in Different Nations

BMW opened its first independent sales unit in France in 1973. Many more nations followed
suit over the following few years, transforming the BMW Group into a worldwide business.
The BMW Group is made up of 31 production and assembly plants spread across 15 nations,
as well as a worldwide sales network that reaches over 140 countries. In the fiscal year 2020,
China was BMW's largest sales market. China contributed for 33.5 percent of Rolls-Royce,
BMW, and MINI sales. Approximately 778,700 such vehicles were bought by Chinese
buyers in fiscal year 2020. This is more than double the number of automobiles acquired by
German motorists. The firm was rated 71 in a list of global brands based on their worth in
2021, with a brand value of around 24.8 billion US dollars. The brand value of the vehicle
manufacturer increased by 21% in the previous year.

Product line

BMW's marketing mix includes premium sedans, SUVs, and sports cars, which offer style,
performance, and a status symbol. The products go through a continual process of technical
improvement to stay competitive in the marketplace. The company's previous distinguishing
traits were luxury and elegance. BMW has just entered the market for electric and hybrid
vehicles. The BMW Group now offers 13 electrified cars in 74 markets, all of which are
completely electric or plug-in hybrid. Its worldwide EV sales increased by 31.8 percent,
accounting for 15% of its entire sales in Europe, assisting the firm in meeting its European
Union emissions objectives from the previous year.

INTERNATIONALIZATION OF BMW
BMW began exporting automobiles to other nations and marketing its goods on a global scale. It has
established itself as the world's most opulent automotive manufacturer, and it has been growing
globally since the eighteenth century, with its first manufacturing facility outside of Europe opening
in the United States in 1994.

Since then, the company has modernised its South African plant and significantly expanded its US
factory, as well as creating complete manufacturing operations in China and, most recently, Brazil,
with ambitions to add a plant in Mexico. BMW competes not just with other multinational businesses
but also with local rivals in each of its operational countries as a transnational firm. As a result, they
have never had it simpler when it comes to internationalisation.

TIME FRAME AND DESTINATION COUNTRIES:

YEAR COUNTRY

1929 South Africa

1978 Austria
1994 United States of America
1995 Brazil
2000 United Kingdom
2003 China
2007 India

TIMELINE OF BMW IN THE FOLLOWING COUNTRIES:

Austria: In 1978, BMW and the Austrian company Steyr-Daimler-Puch agreed to create a joint
venture to develop, build, and sell diesel engines. When the joint venture came to an end in 1982,
BMW founded its own firm and took over the Steyr factory.

United Kingdom: In the year 2000, the BMW Group introduced its flagship brand MINI to the
European market. The MINI One and MINI Cooper were the first models to be introduced.

United States of America: In 1994, BMW's Spartanburg facility in South Carolina, USA, began
production of BMW vehicles for the global market. The enormous popularity of these autos prompted
the Spartanburg facility to expand dramatically.

China: In 2003, the BMW Group expanded its international activities by opening a facility in
northeast China.

India: BMW first entered the Indian market in 2007, opening a sales office in Gurgaon and then
establishing an assembly plant there. Chennai, in southwest India, was chosen as the plant's location.

EPRG Framework
ETHNOCENTRIC APPROACH:

 Do not adapt their products to the needs and wants of other countries where they have
operations.

POLYCENTRIC APPROACH:
  Equal Importance to every country’s domestic market.
 Believe in uniqueness of every market.

REGIOCENTRIC APPROACH:

 Economic, political and cultural similarities among regions.

GEOCENTRIC APPROACH

 The main idea is to target global customers who have similar tastes.
 To borrow from every country what is best.

MODE OF ENTRY IN DIFFERENT NATIONS:

Foreign Direct Investment: Foreign Direct Investment (FDI) refers to the practise
of physically investing money in another nation. Foreign direct investment may be divided
into three categories. They are the aim, the direction, and the motivation. Foreign direct
investment requires an understanding of local competitiveness and circumstances such as
labour, raw materials, and so on. As a consequence, they will almost likely be able to earn
more money. BMW is investing in the United Kingdom, the United States, Austria, India,
China, and South Africa, among other nations.

BMW spent almost R20 million in plant expansion in South Africa in 1996. It made a one-
billion-euro investment in Rosslyn's engine in 2002 and continues to do so today.

In 1992, BMW invests $500 million in the United States and completes construction in 1994.
BMW invests £1.56 million in Rover in the United Kingdom in 1998. As a result of these
investments, BMW has increased its business in all of these areas via FDI.

Exporting: The marketing and direct selling of locally produced items in another nation is
known as exporting. Exporting is a well-established and time-tested means of reaching out to
overseas markets. BMW produces a variety of parts in a number of nations. In India, it
assembled the body pieces, engine, and other components. Manufacturing, assembly,
painting, and trade are all carried out in Germany. Specific models are available in the United
Kingdom; just two models are accessible in South Africa; and only the engine unit is offered
in Austria. In this situation, one nation will produce components for a different country.

INTERNATIONALIZATION STRATEGY OF BMW:

BMW uses a transnational strategy, which is a blend of multidomestic and global strategy, at the
corporate level. The trade-offs between local responsiveness and global efficiency are reflected in this
method. In order to gain a competitive advantage, BMW must devise a strategy that capitalises on the
company's core skills while remaining difficult to copy. Given the variances across markets and the
similarities established by the flatteners, this sort of method is widely sought and accepted. The issue
is that combining multinational and global plans is difficult since it demands attaining both flexibility
and coordinating goals. In this context, BMWs who utilise a transnational strategy beat rivals who use
either multidomestic or global corporate-level strategies. BMW has a successful worldwide strategy in
which all areas will have autonomous relationships to boost trust. As a result, BMW generates value,
competitive advantage, and creative outcomes via a range of marketing techniques targeted at the
most significant premium segments.

IMPACT OF BUSINESS ENVIRONMENT:

This type of study is critical for firms like BMW since it allows them to better understand
market trends and continuously improve their operations:
Political Factors: BMW is a renowned premium automobile company in the globe.
Two important political forces have lately influenced BMW. The first is the intensification of
the United States-China trade conflict. Second, as a consequence of Britain's choice to exit
the European Union, there is increased political instability in Europe. The financial markets
have been affected as a consequence of greater tariffs on commodities transported between
the United States and China, resulting in a reduction in stock prices in the car sector.

Economic Factors: China and the United States of America, in addition to the
European Union, account for a significant amount of BMW's income. As a consequence, any
unrest in these nations might be detrimental to BMW. BMW's increasing investment in
electrifying its drivetrain systems (which transmit power to the wheels) might lead to
significant cost hikes. In addition, the corporation intends to expand its production facilities.
The company anticipates earnings before taxes to reduce from 10675 million Euros to 9815
million Euros as a consequence of these concerns.

Social Factors: The BMW Group is present in over 140 countries. Automobiles,
motorcycles, and financial services are the three divisions of the BMW Group. With all of its
brands catering to the luxury category, BMW's automotive business provides the majority of
its revenue. BMW is making strenuous efforts to boost customer happiness. BMW seeks to
deliver additional services to its customers in addition to boosting customer satisfaction with
its products.

Cultural Factors: Factors influencing the BMW Group's culture include a willingness
to explore new routes, look forward, and break new ground. They employ individuals who
want to be a part of something extraordinary and who have a strong sense of cooperation,
initiative, and a desire to learn something new every day. BMW has a persistent high-
efficiency culture that adheres to product quality requirements. Employees at BMW are
constantly pushed to better themselves and their products. This is only possible if there is a
strong feeling of teamwork.

Refrences:
1) https://www.mbaskool.com/pestle-analysis/companies/18042-bmw.html

2) https://www.google.com/search?
q=bmw+product+line&tbm=isch&ved=2ahUKEwjSoPTHt5n0AhUlj9gFHcdUCfkQ2-
cCegQIABAA&oq=bmw+product+line&gs_lcp=CgNpbWcQAzIFCAAQgAQ6BwgAELEDEEM
6BAgAEEM6CAgAEIAEELEDOgsIABCABBCxAxCDAToECAAQHjoGCAAQCBAeOgQIAB
AYUOYFWKUoYMIqaABwAHgAgAGvAogB2hWSAQgwLjE1LjMuMZgBAKABAaoBC2d3cy
13aXotaW1nwAEB&sclient=img&ei=CtWRYdLzFKWe4t4Px6mlyA8&rlz=1C1NHXL_enIN839
IN842#imgrc=5oTOoBBsW0FiCM

3) https://www.ukessays.com/essays/marketing/how-bmws-internationalisation-strategy-has-
evolved-marketing-essay.php

4) https://www.mbaskool.com/marketing-mix/products/16810-bmw.html

5) https://en.wikipedia.org/wiki/BMW

6) https://www.bmw.com/en/automotive-life/BMW-name-meaning-and-history.html