BMW’s Acquisition Strategy Issues

Introduction:

Merging and acquisition are one of the important business strategies that assist the business to expand into a new market and gain a competitive edge. This study will analyse the issues in the given case study of BMW by applying the two relevant approaches to the acquisition and merging process. The approaches are German Management styles and British management styles. The study is going to discuss three different areas such as HRM management, changed management and operation management strategies in order to highlight how BMW can make possible changes in these areas in order to deal with outcomes of issues that have been arisen due to the merging and acquisition strategy.

Issues in the case study:

Based on the given case study, it can be stated that acquisition of Rover Group by BMW in 1994 and then selling of greater part of it in 2000, leads to the development of several issues for BMW. Moreover, after selling the greater part of the Rover Group, BMW has retained the rights of manufacturing MINI cars, which put them into several troubles. There are three areas in which BMW can face the issues regarding its merging, acquisition and corporate strategies such as changes management, operation management and HRM management. The issues faced by BMW are as follows:

Changed management:

Changed management is one of the important areas in business which assist the organisation to deal with any changes in the company. The acquisition and merging strategy that was taken by BMW in order to gain the authority of Rover Group (in 1994) had put several obligations and change into its corporate management strategy. On the other hand, the decision of selling most of the stocks of Rover Group also affects the overall management process BMW. Marketers' and staffs of BMW is now focusing on implementing proper changes in their market strategies and market orientation to adapt to the changes in the overall management process. [Refers to Appendix 1]

Operation management:

The decision of BMW in acquiring Rover Group and then selling greater part of this brand leads to developing several issues in the area of the operation management process. One of the leading issues that BMW is going to face is an inflation of the operation cost due to making an innovating and luxurious model of MINI for grabbing the higher competitive advantage in the market. Another potential issue that BMW can face regarding overall operation procedure of manufacturing a modern and highly trendy model of MINI is the time-consuming production process. As stated by Kingand Schriber (2016), in order to deal with the time consumption and increased the manufacturing cost of products, the organisation need to focus on forming strong operation management process, which will assist marketers to maintain the perfect balance between the operation cost and selling price of products.

HRM planning and management:

Issues that are faced by BMW in the areas of HRM planning and, the management process is the appointment of the huge number of manufacturers, lack of available resources, changes in the resources allocation process and poor resources support to the products other than MINI. As stated by Brueller et al. (2018), HRM planning and management process is not only associated with appointing relevant staffs for the organisation rather it deals with proper allocation of organisational resources to different sectors in order to gain equal profit and priority from these sectors. The Corporate strategy is taken by BMW in order to represent the high-class model of MINI cars puts the overall HRM managers into trouble. In order to manufacture the high class and highly trendy model of MINI, the majority of the funds and other resources are used in this operation. [Refers to appendix 2]

Approaches or theories used in evaluating the issues faced by BMW in the given case study regarding its merging acquisition and corporate strategy:

Two different approaches such as German management styles and British management styles are there which can be applied in the given case study in order to discuss as well as evaluate the issues faced by the BMW.

German management style is perceived by British managers as structured, industrious, workaholic and meticulous (Achim, 2015). Moreover, the German management process is strictly professional which is more cautious, relief, threatening and humourless. When it comes to discussing the overall acquisition nada merging strategy that is mentioned in the given case studies of BMW, German management styles can be irreverent and inappropriate in this context. This is because; German management Styles is less risk-taking. German managers always focus on conducting research before undergoing any acquisition or merging process. On the other hand, BMW managers are more risk-taking and prefer to take challenges which are proved through continuous merging acquisition and selling process of this brand. Based on the German management styles, acquisition of Rover group by BMW and then selling of greater stocks of this brand is not accepted as the effective and intelligent move of the management team. Rather it can put the company in several challenges such as production cost, conflicts among staffs and managers, increased workload and lack of resources. [Refers to appendix 3]

On the contrary, the British management style is more risk-taking, liberal, humorous, easy going, less formal, less critical and less structured (Hickson, 2015). Based on this approach, the challenge that BMW has taken through selling greater parts of Rover and retaining the right of manufacturing the most innovative and high-class design of MINI is one of the important moves. According to Li et al. (2016), British management approach appreciates the acquisition and merging process, as it believes that through using continuous merging and acquisition process, the company can go out of the comfortable zone in order to identify its potentiality. BMW, although face several challenges such as product cost, resources limitation, lack of skilled staffs and heavy workload due to manufacturing innovative car model of MINI, it will assist this brand to prove its market position and strength in front of the global market. Moreover, based on the British management styles, through taking proper operation management

Conclusion:

From the above-mentioned discussion, it can be concluded that acquisition, merging and corporate strategy is associated with several advantages and issues. In the given case study, BMW is going to face several issues in three management areas such as operation management, changed management and HRM management and planning. By applying the German management styles and British management styles, the evaluation of these issues faced by BMW is possible. Through using German management styles it can be stated that the continuous acquisition and merging process of BMW is not effective as it can pose risk on this brand regarding production cost, operation management, pricing strategy and overall HRM process of this brand.

Recommendations:

Following recommendation can be made for BMW such as:

Improvement of operation management process:

BMW needs to focus on improving the overall operation management process to manage the production and operation cost of MINI. Through conducting proper pricing process, high-quality management and well-organised production strategy, BMW can balance the production and operation cost of its brand new MINI cars.

Appointing high skilled HR team:

By appointing high skied HR team, BMW can maintain proper resources and budget allocation for its entire segment which will assist marketers to pose equal priority on the entire car manufacturing segment rather than emphasizing only on MINI.

Reducing production cost of MINI:

BMW should focus on reducing the production cost of MINI, which assists this brand to make the proper allocation of its resources into different manufacturing segment. In this aspect, BMW should focus on manufacturing such models of MINI that can be permitted by their allocated budget. Moreover, by using the effective changed management policy, BMW managers can use strategies to manufacture trendy but cost-effective MINI cars that can be afforded by a different class of buyers.

Reference list:

Bereskin, F., Byun, S.K., Officer, M.S. and Oh, J.M., 2018. The effect of cultural similarity on mergers and acquisitions: Evidence from corporate social responsibility. Journal of Financial and Quantitative Analysis, 53(5), pp.1995-2039.

Brooks, C., Chen, Z. and Zeng, Y., 2018. Institutional cross-ownership and corporate strategy: The case of mergers and acquisitions. Journal of Corporate Finance, 48, pp.187-216.

Bueller, N.N., Carmeli, A. and Markman, G.D., 2018. Linking merger and acquisition strategies to postmerger integration: a configurational perspective of human resource management. Journal of Management, 44(5), pp.1793-1818.

Fiorentino, R. and Garzella, S., 2015. Synergy management pitfalls in mergers and acquisitions. Management Decision, 53(7), pp.1469-1503.

Greve, H.R. and Man Zhang, C., 2017. Institutional logics and power sources: Merger and acquisition decisions. Academy of Management Journal, 60(2), pp.671-694.

Hickson, D.J. ed., 2015. Management in Western Europe: Society, culture and organization in twelve nations (Vol. 47). Walter de Gruyter GmbH & Co KG.

King, D.R. and Schriber, S., 2016. Addressing competitive responses to acquisitions. California management review, 58(3), pp.109-124.

López-Duarte, C., González-Loureiro, M., Vidal-Suárez, M.M. and González-Díaz, B., 2016. International strategic alliances and national culture: Mapping the field and developing a research agenda. Journal of World Business, 51(4), pp.511-524.

Rani, N., Yadav, S.S. and Jain, P.K., 2015. Financial performance analysis of mergers and acquisitions: evidence from India. International Journal of Commerce and Management, 25(4), pp.402-423.

Uhlenbruck, K., Hughes-Morgan, M., Hitt, M.A., Ferrier, W.J. and Brymer, R., 2017. Rivals’ reactions to mergers and acquisitions. Strategic Organization, 15(1), pp.40-66.

Zhu, H. and Zhu, Q., 2016. Mergers and acquisitions by Chinese firms: A review and comparison with other mergers and acquisitions research in the leading journals. Asia Pacific Journal of Management, 33(4), pp.1107-1149.

Appendices:

Appendix 1:

Changed management:

From an analysis of the given case study, it can be seen that BMW has put more emphasis on modernisation of the Mini models, in order to represent the cars as a unique and innovative model that can easily attract the eye of buyers. This process of making innovative and unique models and car parts of MINI, enhance the overall manufacturing cost of the cars. That's why; the overall price of the modern MINI has exceeded their list price. As stated by Brooks et al. (2018), increased production cost makes it obligatory for the marketers to make possible changes in their management and strategies which will assist them to make a proper balance between the overall selling process and the manufacturing price of the products. On the other hand, BMW has retained the rights of manufacturing MINI cars in spite of selling the greater part of the Rover Group, which pose huge expectation and obligations of the manufacturers of this company to provide the high-quality cars to the market. In this aspect caged management is one of the most important strategies

Another important challenge that BMW is going to face after selling majority parts of the Rover group and retaining the rights if manufacturing MINI is a huge workload on the staffs and manufacturers of this brand. Previously under the ownership of BMW, the overall manufacturing process was controlled and managed by Recover Group. Now the entire scenario has changed with increasing loads of work responsibilities on BMW marketers, manufacturers and staffs in order to produce an innovative and highly trendy model of MINI. This can raise the issues of conflict among staffs and managers, which will make it obligatory to make possible changes in the management process to combat the overload of work.

Appendix 2:

HRM planning and management:

This makes it difficult for the HR managers of BMW to allocate proper resources to the other car models. As a result, BMW is going to face a huge loss in other car segments. Moreover, selling of major parts of Rover will pose challenges on HRM team in order to set new market strategies and staffing process which will assist the overall employee structure to deal with the huge workload and changed management framework.

Appendix 3:

Approaches or theories used in evaluating the issues faced by BMW in the given case study regarding its merging acquisition and corporate strategy:

German management style:

BMW managers are more risk-taking and prefer to take challenges which are proved through continuous merging acquisition and selling process of this brand. Based on the German management styles, acquisition of the Rover group by BMW and then selling of greater stocks of this brand is not accepted as an effective and intelligent move of the management team. Rather it can put the company in several challenges such as production cost, conflicts among staffs and managers, increased workload and lack of resources.