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BMW - Production, Quality and Innovation


BMW (Bayerische Motoren Werke, or Bavarian Motor Works)




Founded in 1916 with its headquarters in Munich, BMW:

  • makes quality cars and motorcycles.
  • owns Rolls-Royce cars and the Mini (the only benefit of its disastrous ownership of Britain’s Rover cars 1994-2000). BMW - Production, Quality and Innovation

Its smaller (Series 1) cars complement its more luxurious models (Series 3, 5, 6 and 7), X3, X5 and X6 4x4’s, the highly powered M3, M5 and M6 and the Z4 sports car.

Its brand has a global reputation, symbolized by its famous circular logo with the blue and white colours of the Bavarian flag (pictured right).


What makes it competitive?

Engineering excellence

This is BMW’s key core competency which gives it the edge over its competitors:

  • Mercedes-Benz. 
  • Audi. 
  • Toyota’s Lexus.

Unlike them, it doesn’t have the financial muscle of a big company behind it, but the quality of its cars has made it the world’s best car company according to Fortune magazine.

In 2013 it

  • made €7,383 million pre-tax profit
  • sold over 1½ million cars
  • employed nearly 100,000 employees.


BMW’s key car factories and what they make

Leipzig, Germany (Series 1 and 3)

Munich, Germany (Series 3 and engines)

Regensburg, Germany (Series 1 and 3 and M3)BMW - Production, Quality and Innovation

Dingolfing, Germany - BMW’s biggest factory producing the Series 5, 6 and 7 (pictured right), M5 and M6.

Spartanburg, USA (X3,X5, X6, Z4)

Steyr, Austria (X3 and engines)

Oxford, England (Mini, pictured right)

Goodwood, England (Rolls-Royce cars)

Rosslyn, South Africa (Series 3)

Shenyang, China (joint venture) – Series 3 and 5.


Key peopleBMW - Production, Quality and Innovation

Norbert Reithofer, chief executive 2006-15 (pictured right).

Harald Krüger, head of production (who became chief executive in 2015).

The Quandt family (which owns nearly a half of BMW’s shares).


Key quotes

We push change through the organization to ensure its strength. There are always better solutions,

- Norbert Reithofer


BMW, like no other brand, will still stand for vitality and driving pleasure in the future. But it will also represent efficiency and environmental friendliness,

- Norbert Reithofer


The performance of the workforce depends on its skill, motivation and, above all, its health,

- 2010 Annual Report and Accounts.BMW - Production, Quality and Innovation


When we ask customers why they chose a BMW, a Rolls-Royce or a Mini, their first answer is design. Performance comes second, then quality.

- Adrian van Hooydonk (head of design, pictured right) in Financial Times 6/12/10).



BMW’s principles for perfect production


1. Leadership and purpose

BMW’s mission is to be:

“the world's leading provider of premium products and premium services for individual mobility”.BMW - Production, Quality and Innovation

So the top priorities of BMW’s management (led by its chief executive, Harald Krüger) are:

  • customer satisfaction.
  • quality. 
  • innovation. 

Its Strategy Number One (introduced in 2007) sets BMW profit targets and how it will achieve them:

  • exploiting new market opportunities (e.g. the market for smaller, greener cars).
  • efficiency improvements (through cost cutting, improving employee performance and the effective use of technology). 

Norbert Reithofer (pictured right) was a great leader – why?BMW - Production, Quality and Innovation


a) managing change

When he took over as boss in 2006, Reithofer’s most difficult job was to introduce necessary changes in a highly successful company.

His personal motto became instilling “a sense of urgency” to overcome any complacency.

Every new recruit is reminded how the company was saved from bankruptcy in 1959 by managers and employees co-operating together to produce better cars.


b) motivation


  • was likeable and trustworthy.
  • involved employees in decision making (a key management principle at BMW - see point 2) . 


c) long-term thinking

His ability to plan and think long-term was helped by the Quandt family’s near majority shareholding.


d) tough but tender

He was:

  • tough (making difficult decisions like firing 8,100 employees in 2007). 
  • tender (sensitive to employees’ needs with the integrity to win their trust).


e) listening

He realized (like all BMW managers) that:

  • management doesn't have all the answers.
  • its responsibility is to ask the right questions.

 BMW - Production, Quality and Innovation

Two other great chief executives laid the foundations for BMW’s success.

  • Herbert Quandt (who saved it from bankruptcy in 1959 by producing quality cars) - pictured right.
  • Helmut Panke (Reithofer’s predecessor).


2. Excellent employees

BMW’s employees produce quality cars because they are:


a) talented

BMW can cream off the best people, because it's such a desirable employer.

 BMW - Production, Quality and Innovation

b) highly trained

(with an excellent apprenticeship scheme).


c) empowered

(given the freedom to get things done as quickly and effectively as possible).


d) flexible

Being prepared to accept new technology and better ways of working (like flexible production - see point 4).

Temporary employees are used to respond to short-term increases in demand for cars


e) well motivated 

This results from:

  • employee profit sharing. 
  • mutual trust and give and take  (between management and employees)
  • involvement in decision making.

Employee involvement is a legal requirement in Germany.

BMW’s supervisory board (which oversees the management team led by the chief executive) has five employee and two union representatives.

Each of its German factories also has an employee elected works council which has to be consulted by management.


  • try to create a fun atmosphere 
  • act upon regular staff surveys (which suggest ways to increase job satisfaction).


3. Product designBMW - Production, Quality and Innovation

BMW’s cars are so popular because of their design as well as their performance and quality – beauty is just as important as functionality.

“Cars are art”, says Chris Bangle (pictured right), BMW’s head of design until 2009.

The design team is renowned for its fanatical attention to minor details that give customers maximum appeal (what BMW calls its “cup holder principle”).



4. Flexible production

BMW’s flexible production system (introduced by Norbert Reithofer when he was head of production) is vital to its success.

This is:

  • highly efficient (with robots amd mass production assembly lines)
  • customized to meet individual customer requirements in terms of colour, engine and interior fittings.

This requires close collaboration between the production, design, marketing and sales departments.

Customers can change their minds as little as five days before production, and they love it!



5. Continuous learning and improvementBMW - Production, Quality and Innovation

BMW is a learning organization that constantly learns from its successes and failures.

The near bankruptcy experience in 1959 is ingrained in the company’s psyche and still drives it to improve today.

BMW also immediately responds to customer feedback – for example:

  • the Series 5 range was improved in response to customer demands for more space and better performance, handling and fuel efficiency.
  • in 2001 Series 7’s computerized entertainment and information system, iDrive, had to be modified immediately after a barrage of customer complaints.

BMW is also renowned for its ability to break down communication barriers between different divisions and departments, so ensuring effective knowledge sharing and learning.


6. Quality management

BMW’s world-class quality comes from its effective implementation of total quality management based upon:BMW - Production, Quality and Innovation

  • a company-wide commitment to customer satisfaction.
  • world class quality and continuous improvement.
  • involvement by employees in decision making (acting upon their suggestions for improvement).
  • teamwork (particularly self-managing production teams who are empowered to take responsibility for quality).

Every BMW factory carries out weekly quality audits at every stage of production

BMW also has award winning relationships with its suppliers to make sure they deliver the best possible quality.


7. Innovation

BMW’s innovation rate is incredible with 14 product launches alone in 2010, resulting from:


a) challenging objectives

 (see point 1)


b) prioritizing research and development

BMW's innovation priorities are:

  • Efficient Dynamics (BMW’s fuel efficiency programme).
  • Connected Drive (developing all the computerized gadgetry that customers love).
  • environmentally friendly cars including the electric city car BMW i3 (launched in 2014) and the hybrid sports car BMW i8 (2013).


d) cross-functional teamsBMW - Production, Quality and Innovation

(of design, production and marketing people)

Such teams were vital in Rolls-Royce's development of the highly successful Phantom (pictured right) in 2003.


e) questioning

Every employee is encouraged to question everything through:

  • intense debate (what BMW calls “friendly fighting”)
  • suggesting new and better ways to solve customers’ problems.


f) good management

Managers listen to people's new ideas and act upon the good ones.



8. Strategic alliances (or joint ventures)

Because BMW is a relatively small car maker, it has to enter joint ventures with other companies to fully benefit from economies of scale.

For example it has partnerships with:

  • Daimler (to boost its purchasing power).
  • Peugeot Citroen (to develop engines and electric cars).


A big thank you to...

This case study has been based upon lots of different articles. But the Financial Times has been particularly useful.


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