CASI STLY ON INCRIASING SHARIHOLIR VALLI

AN BLSINISS CYCLI IORICASTING OI BMW

Brillo, Jocelyn
Deocariza, Hazel Ann
Mendizabel, Raoul
Pazos, Kimberly
Financial Controllership- Sat. 10:30-1:30
Total Words: 2,967
BACKGROUND OF THE COMPANY
Bayerische Motoren Werke AG (inIo) (BMW), (English: Bavarian Motor Works) is a
German automobile, motorcycle and engine manuIacturing company Iounded in 1916. It also
owns and produces the MINI brand, and is the parent company oI Rolls-Royce Motor Cars.
BMW produces motorcycles under BMW Motorrad and Husqvarna brands. BMW is known Ior
its perIormance and luxury vehicles.
AIter World War I, BMW was Iorced to cease aircraIt (engine) production by the terms
oI the Versailles Armistice Treaty. The company consequently shiIted to motorcycle production
in 1923 once the restrictions oI the treaty started to be liIted, Iollowed by automobiles in 1928
29. The circular blue and white BMW logo or roundel is portrayed by BMW as the movement oI
an aircraIt propeller, to signiIy the white blades cutting through the blue sky an interpretation
that BMW adopted Ior convenience in 1929, twelve years aIter the roundel was created. The
emblem evolved Irom the circular Rapp Motoren werke company logo, Irom which the BMW
Company grew, combined with the white and blue colors oI the Ilag oI Bavaria, reversed to
produce the BMW roundel. However, the origin oI the logo being based on the movement oI a
propeller is in dispute, according to an article recently posted by the New York times, quoting
"At the BMW Museum in Munich, Anne Schmidt-Possiwal, explained that the blue-and-white
company logo did not represent a spinning propeller, but was meant to show the colors oI the
Free State oI Bavaria."
In 1992, BMW acquired a large stake in CaliIornian-based industrial design studio
Design Works USA, which they Iully acquired in 1995. In 1994, BMW bought the British Rover
Group (which at the time consisted oI the Rover, Land Rover and MG brands as well as the
rights to deIunct brands including Austin and Morris), and owned it Ior six years. By 2000,
Rover was making huge losses and BMW decided to sell the combine. The MG and Rover
brands were sold to the Phoenix Consortium to Iorm MG Rover, while Land Rover was taken
over by Ford. BMW, meanwhile, retained the rights to build the new MINI, which was launched
in 2001.
ChieI designer Chris Bangle announced his departure Irom BMW in February 2009, aIter
serving on the design team Ior nearly seventeen years. He was replaced by Adrian van
Hooydonk, Bangle's Iormer right hand man. Bangle was Iamously (or inIamously) known Ior his
radical designs such as the 2002 7-Series and the 2002 Z4. In July 2007, the production rights Ior
Husqvarna Motorcycles were purchased by BMW Ior a reported 93 million Euros. BMW
Motorrad plans to continue operating Husqvarna Motorcycles as a separate enterprise. All
development, sales and production activities, as well as the current workIorce, have remained in
place at its present location at Varese.
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POINT OF VIEW
Group`s view point as a Financial Analyst is to Iind out the strategies on how company
increasing sales as well as shareholders` value.
SWOT ANALYSIS
Internal Environment
S1REAC1H

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http://en.wikipedia.org/wiki/BMW

O BMW is not the best biggest but the best car company in the world.
O BMW has strongly inIluenced consumers through media and Iilm industry.
O The Spartanburg plant can build 250 to 300 cars a day and production is set up to be
Ilexible so that it can produce several models on the same line in random sequence.
O The plant currently employs 1,500 people and the plan is to grow to 2,000 by the end oI
this decade.
O Spartanburg oIIers us the opportunity to develop a new set oI relationships in North
America.
O In Brand and Product, it expand perIormance image to quality, saIety and social
responsibility
O Secure product investment and address cost oI ownership.
O Make buying and owning a BMW a pleasant experience Ior the customer.
O In terms oI Organization and People, they create the Iirst class organization with highly
motivated, Iirs-class people (BMW dealers and BMW employees) through delegations oI
responsibility and authority.
O Use meritocracy to reward perIormance.
O Secure a clear organization structure and inIormation and training systems.
O Inspire dedication to live up to what BMW owners expect Irom BMW.
EAKAESS
O Their corporate image is too serious and tradition-bound.
O BMW was perceived to be a German-made car, not an American-made car.
External Environment
!!R1UAI1Y
O The cars won't be that expensive as compared to German-manuIactured cars.
O This is BMW's Iirst auto plant outside Europe. This is the chance Ior BMW to take a step
away Irom being a German car manuIacturer towards its long-term goal oI becoming a
truly global brand.
O Spartanburg can really change what BMW stands Ior.
O Establish BMW as the Iirst class Iranchise which Iocuses on customer orientation and
guarantees prudent investment, long term trust and conIidence, prestige, but also Iun and
excitement.
1HREA1S
O Other luxury car import manuIacturers were rumored to have similar concepts under
development.
O There are a lot oI competitor luxury cars in the country.
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STRATEGY ASSESSMENT TOOLS
Financial 1rends Analysis
O Net Profit: When the question oI Iinancial perIormance come, the main thing come to
anyone mind is the proIitability. But only proIitability cannot indicate the Iinancial
perIormance oI a corporation.
O Sales Revenues: To Iind out the broader picture oI analysis on the Iinancial perIormance
oI the automaker giant BMW, trends analysis oI revenue earnings can be another tool.
BMW sell mainly two types oI products, as automobile and motorbike. The line oI the
automobile sales is like as the line oI sales revenue. And it can be said that the reduction
oI BMW`s sales revenue caused because oI reduction in the sales oI automobile around
the world.
O Cost: To Iind out the reasons oI proIitability we also need to analyze the cost associated
with the revenue earnings. The Cost oI Goods Sold (COGS) also dropped along with the
reduction oI revenue and sales unit. Costs, that are not associated with the production,
have little inIluence. There are many ways oI cost reduction, such as employee
reduction, reduction in the production, cutting administrative cost salaries etc. But it is
easily said that BMW Iollow the production cost reduction policy. And the employee oI
the BMW also remained in the same level, as it was beIore. So it is conclude that the
BMW`s sales Iorecast was very good, that`s why they can reduce total cost without
reducing employee and administrative cost.

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http://www.oppapers.com/essays/Bmw-Swot-Analysis/120320
O Asset Base: BMW is very much satisIactory in the crisis time. But asset base in another
important Iactor need to be considered to Iind out the Iuture prospects. The asset base oI
the BMW is as Iollows At present current asset oI the BMW is three (3) times higher
than its` noncurrent or short term assets. But decrease in Iixed asset and more increase in
current asset can be alarming Ior the organization.
Ratio analysis
Ratio Analysis is one oI the most commonly used ways to analyze the Iinancial condition
and Iinancial health oI any organization. Through the ratio analysis we can Iind out the
eIIiciency oI utilization oI various resources oI the organization. However, to analysis the
Iinancial health and to Iind out the proper utilization oI BMW`s resources, Ratio Analysis
will be a tool.
O Liquidity Ratio:
The liquidity ratio oI the BMW is calculated as (current assets / current liabilities).
Data necessary Ior liquidity ratio analysis are available only Ior 3 years. From this ratio it
is Iound that BMW`s liquid assets are well enough to pay the current debt. But it holds
some extra cash, which means some oI its money is remain idle.
O Profitability Ratio: The proIitability ratio oI BMW is calculated as (net income / total
sales). The ten years proIitability ratio oI BMW dictates that it maintains certain
proIitability over the time. The percentage oI the proIitability is not big, but it is not a big
problem. As it is large automaker company, 1 or 2 oI proIitability ratio leads to huge
income Ior it. But the alarming situation is that its` proIitability ratio decrease in last two
years as a result oI decrease in revenue.
O Basic Earning Power (BEP) Ratio: The BEP ratio oI BMW is calculated as (Earnings
beIore tax / total assets).
O Return on Assets (ROA) Ratio: ROA oI BMW is calculated as (net income / total
assets). This means the less eIIiciency oI utilizing assets. Though there is global recession
out there, BMW`s assets increase that time and they cannot eIIiciently use the assets in
gaining revenues. So they need to acquire more expertise to use the resources eIIiciently.
O Return on Equity (ROE) Ratio: ROE ratio oI BMW calculated as (net income / total
equity)
O Dividend Payout (DP) Ratio: DP ratio oI BMW is calculated as (divided / net
income). Though the DP ratio is not so much inIluential on the Iinancial health analysis
oI organization, It is belong to Iind out the BMW`s promise to the shareholders.
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ALTERNATIVE COURSES OF ACTION
ACA: Take the traditional marketing strategy oI BMW. This is the traditional television
and print advertisement marketing strategy. The television and print ads will be utilized in order
Ior the new Z3 roadster is advertised all over the United States.
ANALYSIS
Advantages:
O In this way, the tradition oI television and print advertising will be preserved.
O It will be less costly Ior them to advertise the new Z3 model.
isadvantages:
O Their goal oI making the new Z3 model unconventional will be deIied.
O There will be less impact with regards to their new car model.
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CONCLUSION
It can be drawn that the perIormance oI the BMW AG is very satisIactory in time oI
recessions. They can retain their proIitability and employees in that time. On the other hand

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FINANCIAL STATEMENT ANALYSIS OF SUNDARAM CLYATON LIMITED BY DR.K.
RAVICHANDRAN, ASSISTANT PROFESSOR, KING SAUD UNIVERSITY, KINGDOM OF
SAUDI ARABIA. (COLLECTED FROM SSRN).

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reduction in sales and revenues were low compared to other automaker around the world. And
they can control their cost with the sales. They also maintain a high dividend payment to the
shareholders that means BMW is committed to the shareholders Ior adding value to them. But
there is some inconsistence in the perIormance oI the BMW. Higher current assets compared to
the noncurrent assets. Improper Iinancial disclosure and decreasing trends oI sales, revenues and
proIits, inconsistency in earnings, huge contingent liabilities and no indication oI cash Ilow in
recent years make it diIIicult to make comment on Iuture proIitability oI the BMW.
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The positive side of the BMW
1. Financial perIormance BMW in terms oI sales and revenue are quite satisIactory in time oI the
recession.
2. Control over the cost oI production is very well.
3. EIIective sales Iorecasting reduce the cost oI goods sold oI BMW.
4. Continue the proIitability overtime.
5. Increase in the total assets.
6. BMW maintains good liquidity ratio overtime.
7. High eIIiciency oI utilizing equity Ior generating revenues.
8. Maintain the proIitability in time oI crisis.
9. Paid good amount oI dividend every year.
The negative side of the BMW
1. Increase in the current asset and decrease in the noncurrent assets.
2. Decrease in the revenues in the last two years, as result oI the global Iinancial recession.
3. Huge contingent liabilities.
4. No cash Ilow statement in the Iinancial statement.
5. Do not make proper disclosure oI the assets segments and liabilities segments.
6. Still cannot regain Irom the recession.

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FINANCIAL STATEMENT ANALYSIS OF SUNDARAM CLYATON LIMITED BY DR.K.
RAVICHANDRAN, ASSISTANT PROFESSOR, KING SAUD UNIVERSITY, KINGDOM OF
SAUDI ARABIA. (COLLECTED FROM SSRN).

7. IneIIiciency oI using resources Ior generating revenues.
8. Decrease in the proIitability ratio in last two years.
9. Inconsistency in earnings.
10. Huge amount oI idle money in some years.
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STRATEGIC POSITION
BMW took an aggressive approach, and reIlecting on the successIul US introduction,
introduced the new integrated strategy as BMW`s 'Second Great Opportunity in the United
States.
This strategy had three elements:
1. BMW was the Ultimate Driving Machine and not a soIa on wheels. Since US automakers
were advertising a Iloating ride experience that was 'so smooth you couldn`t Ieel the road,
BMW had become lulled into the same concept. However, the European automaker had a history
oI perIormance. A return to those roots was needed Irom both the marketers and products. The
1992 models were true powerhouses. The 740 would sport a V8 engine, and the entry 325i would
oIIer 189 hp. In addition the pricing Ior the new models was aggressive. The $54,000 740i was
between the Lexus LS400 and the Mercedes 300E. This suggested higher prestige than the
Japanese and more value than Benz.
2. A new customer-centric or customer oriented Iocus was a core part oI the new plan. BMW
realized that consumers wanted value, even Irom the luxury automobiles. The Iranchise was
critical in conveying the beneIits oI 'prestige, Iun and excitement. The products would backup
these values.
3. What BMW called 'Organization and People was a Iocus on improved customer experience.
This required dealers to know their customers. BMW delegated the responsibility and authority
to deliver on customer needs. Dealers respected the BMW products but were unclear on the
Iuture. Since many sold Iar more economy cars than BMW`s, their eIIort was Iocused on the

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FINANCIAL STATEMENT ANALYSIS OF SUNDARAM CLYATON LIMITED BY DR.K.
RAVICHANDRAN, ASSISTANT PROFESSOR, KING SAUD UNIVERSITY, KINGDOM OF
SAUDI ARABIA. (COLLECTED FROM SSRN).
volume sales. BMW was committed to creating a 'new standard Ior customer treatment. This
included new account management, retail operations and dealer bonuses.
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ACTION EVALUATION
Grelinger understood the need to create exciting new models while managing the BMW
brand and has strengthened the BMW brand and it`s perception in the market place through his
new integrated strategy; however, to Iully manage the BMW brand, the key will be to understand
and then to enhance the consumer experience. This will lead the BMW brand into the Iuture
maximizing not only their US market presence, but ultimately their global reach as well.
Key problems include:
1. Not knowing their customer. BMW needs to have a good sense oI who their customer is and
understand Iully the experience they have when purchasing one oI their cars.
2. The consumer experience begins with the dealer and Iirst impressions are vital.
a.) BMW Dealer presence in the US was not solely Iocused on BMW sales in comparison
to competitors. OI the 375 dealers, only 106 sold BMW exclusively.
b.) The correct brand image and brand perception is not being presented on the dealer
Iront. The brand is not being represented exclusively; and the sites are still not uniIorm`
in appearance or in policy.
In support oI the integrated strategy and to succeed in its sales goal oI 100,000 units Ior the
North American market, BMW should also examine the Iollowing strategies:
1) Change nothing except produce cars Irom the US plant.
2) Buy back dealerships that are not totally Iocused on the luxury car segment.
3) Consider targeted and sub-specialized advertising Ior its various models.
4) Further improve upon the BMW customer care program.
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STRATEGY IMPLEMENTION
BMW`s Integrative Strategy
The new corporate drive` thereIore had to evolve Irom a prestigious Iocus` (as was the
Iocus oI their 15 yearlong 'The Ultimate Driving Machine campaign) to a more value-oriented
and customer driven Iocus (as with their new 'BMW The Smart Choice campaign).
Traditional ads with polo players and yachts had become tools used against BMW, since they
suggested overpriced excess. Although BMW`s new buyer was amongst the youngest and
wealthiest oI the luxury car market, the experience they desired diIIered Irom the BMW
consumers oI the past decade.
An integrative three part strategy was devised and implemented (by Grelinger) in the
early 1990`s to address the diminishing market share and BMW`s brand ambiguity with relative
success. The strategy addressed brand and product enhancement (through the development and
introduction oI six exciting new models), Iranchise improvements (through dealer network
improvements), and organizational changes which encompassed the broad category oI people`
(through internal policies, manuals and some structural changes), however, a key component was
still being overlooked: The consumer experience.
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RECOMMENDATION
First, we agreed as a group that the 'do nothing strategy would only serve to aid the
competitors in stealing market share Irom BMW.
Secondly, the issue with the dealer network should be to buyback dealers not Iocused
completely on the luxury car segment and resell those dealerships to dealers willing to specialize
in BMW only. This strategy is also in line with the new Iocus on consumer satisIaction.
Thirdly, the case study also reIerences that 'research data had shown that buyers oI
BMW`s were the youngest and in the highest income also show a clear distinction between the
3/5 series and the 7/8 series models, as both have distinctive buyers median incomes, buyer`s
median ages and unit prices. This clustering would suggest that both sets oI models would need

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to be advertised with slightly diIIerent emphasis as they would be targeting diIIerent buyer
income levels.
Fourthly, although BMW has improved upon its customer care program, there could still
be some improvements made. Namely, they break behind Lexus and InIiniti in terms oI
powertrain warranty and behind Lexus, Acura and Cadillac in parts reimbursement. At least
matching these companies in these areas will go a long way to improving customer care.
We also believe that Irom a dealer perspective the Dealer Operating System (DOS)
should be renamed Ior two reasons. The Iirst reason is that DOS conveys a sense oI 'old (ie.
The old DOS systems oI computer operations) and more importantly, the paper also mentions the
'dealer operating standards. Dealers should not be conIused about which systems to reIer to
otherwise the goal oI creating greater customer value cannot be Iully realized.
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