BMW“BAVARIAN MOTOR WORKS”

BECKY ENRIGHT, BRITTANY HOWARD, JEFF KEUCH,

NICOLE MATRANGA, ALANNA WAMBOLDT

WELCOME TO BAVARIAN MOTOR WORKS

“TO BETTER UNDERSTAND BMW TODAY YOU HAVE TO KNOW AND UNDERSTAND BMW HISTORY. THE LAST CENTURY GIVES THE “FLAVOR” OF TODAY’S BMW CARS ALONG WITH INGREDIENT THAT MAKES THEM SO SPECIAL. THIS “SPECIAL INGREDIENT” CAN BE ALMOST SEEN AS THE SOUL OF A PERSON. BMW CARS HAVE AN UNMISTAKABLE PERSONALITY AND AN OBSESSIVE CARE ABOUT THE FEELING OF DRIVING, THUS THEIR SLOGAN "THE ULTIMATE DRIVING MACHINE". THIS CREATES A BOND BETWEEN THE CAR AND THE DRIVER THAT MAY LAST FOR A LIFETIME.

THESE THREE MAGIC LETTERS, BMW, STAND FOR BAYERISCHE MOTOREN WERKE, OR IN ENGLISH, BAVARIAN MOTOR WORKS. THE "MOTOR" IS THE CORE OF THIS ACRONYM AND IS THE FOUNDATION; THE KEY PART AROUND WHICH BMW BUILDS EVERY PRODUCT.” (BMWDRIVES.COM, 2015)

WE INVITE YOU TO JOIN US IN THIS AMAZING JOURNEY INTO THE FUNDAMENTALS OF THE BMW GROUP.

THE HISTORY OF BMWFOUNDED IN 1916 BY:

KARL RAPP, FRANZ JOSEF POPP & CAMILLO CASTIGLIONI

BMW GROUP WORLDWIDE HEADQUARTERS IN MUNICH, GERMANY

BWM WAS FIRST KNOWN FOR PRODUCING AIRCRAFT ENGINES IN 1916.

DURING WWII, BMW DEVOTED ITS RESOURCES SOLELY TO THEGERMAN AIR FORCE

MOTORCYCLE PRODUCTION

IN 1923 BMW INTRODUCED ITS FIRST MOTORRAD, THE R 32.

UNTIL THEN, THE COMPANY HAD ONLY SUPPLIED ENGINES RATHER THAN COMPLETE VEHICLES.

AUTOMOBILE PRODUCTION

STARTED AUTO PRODUCTION IN 1928

FIRST CAR PRODUCED – DIXI 3-15 DA

BMW IN AMERICA

BMW UNITED STATESHEADQUARTERS IN WOODCLIFF LAKE, NEW JERSEY

FIRST US PRODUCTION PLANT

SPARTANBURG, SOUTH CAROLINA

STARTED PRODUCTION IN 1994

FIRST CAR PRODUCED-318I

BMW AND ITS DIVISIONS

Across 3 brands; 2,247,485 automobiles and 136,963 motorcycles have been delivered to their customers in 2015

VISION & MISSION STATEMENT

VISION STATEMENT:TO BE THE MOST SUCCESSFUL PREMIUM

MANUFACTURER IN THE INDUSTRY.

MISSION STATEMENT:THE BMW GROUP IS THE WORLD’S LEADING

PROVIDER IN PREMIUM PRODUCTS AND PREMIUM SERVICES FOR INDIVIDUAL MOBILITY.

BMW BOARD OF MANAGEMENTHAROLD KRUGER CHAIRMAN OF THE BOARD OF MANAGEMENT OF BMW

AG SINCE MAY 2015

BOARD OF MANAGEMENT OF MINI, MOTORRAD, ROLLS-ROYCE AFTER SALES BMW GROUP, 2012-2013

BOARD OF MANAGEMENT , HUMAN RESOURCES 2008-2012

DIRECTOR OF TECHNICAL INTEGRATION –MUNICH, 2007-2008

DIRECTOR OF ENGINE PRODUCTION-HAMS HALL, 2003-2006

PROJECT ENGINEER-SPARTANBURG, 1993-1995

JOINED BMW AG IN 1992

BMW BOARD OF MANAGEMENT

MILAGROS CAINA-CARREIRO ANDREE

HUMAN RESOURCES OF BMW AG SINCE JULY 2012

HEAD OF HR –DB MOBILITY LOGISTICS AG, 2001-2012

HEAD OF CORPORATE STAFF-DB MOBILITY LOGISTICS, 2006-2001

VOSSLOH-WERKE GMBH, 1984-2006

BWM BOARD OF MANAGEMENT DR. KLAUS DRAEGER- PURCHASING AND SUPPLIER NETWORK

WITH BMW SINCE 1991

DR. FRIEDRICH EICHINER- FINANCE WITH BMW SINCE 1987

KLAUS FROHLICH- DEVELOPMENT WITH BMW SINCE 1993

DR. IAN ROBERTSON-SALES AND MARKETING WITH BMW SINCE 1988

PETER SCHWATZENBAUER-MINI, BMW MOTORRAD, ROLLS-ROYCE AFTER SALES- WITH BMW SINCE 1984

OLIVER ZIPSE-PRODUCTION- WITH BMW SINCE 1991

CORPORATE SUSTAINABILITYENVIRONMENTAL PARTNERSHIPS

NATURE CONSERVANCY

SOUTH CAROLINA WILDLIFE FEDERATION

ENVIRONMENTAL RESPONSIBILITY 95% RECYCLED WASTE

5% WASTE SENT TO LOCAL LANDFILLS

GAS TO ENERGY PROJECTREDUCED CO2 EMISSIONS BY

92,000 TONS PER YEAR

CORPORATE SUSTAINABILITY

ISO CERTIFICATION ISO 14001 CERTIFIED SINCE 1998

Waste Treatment and Recycling ProgramsWater UseGreen ManufacturingRecycling Programs In the cafeteriaPacking MaterialsMetal & Miscellaneous

CORPORATE SOCIAL RESPONSIBILITY

OVER $36 MILLION THROUGH 201447% TO EDUCATION

CALL ME MISTER PROGRAM

VARIOUS STUDENT PROGRAMS

BMW FELLOWSHIP AT CU-ICAR

35% TO THE COMMUNITY CORPORATE SPONSORSHIP

ECONOMIC IMPACT

USC STUDY

ANNUAL BMW GOLF TOURNAMENT

18% TO THE ARTS

CORPORATE ECONOMIC RESPONSIBILITY

30,000 JOBS, 1.6% OF THE SOUTH CAROLINA WORKFORCEONSITE HEALTH FACILITYONSITE POLICE AND FIRE DEPARTMENTS

50 TRAINED POLICE

AND FIRE CREW

MEMBERS

ENERGY CENTER PRODUCES 30% OF

PLANTS ELECTRICAL NEEDS

50% TOTAL

ENERGY REQUIREMENTS

FORCES DRIVING INDUSTRY COMPETITION

DETERMINANTS OF ENTRY: EXPENSIVE, LARGE CAPITOL REQUIREMENTS, SWITCHING COSTS, GOVERNMENT POLICIES

DETERMINANTS OF RIVALRY: HIGH, INDUSTRY GROWTH $17.5 MILLION, TECHNOLOGY IS A KEY HELPFUL FACTOR

DETERMINANTS OF SUPPLIER POWER: HIGH, BUT LONG TERM RELATIONSHIPS WITH SUPPLIERS IS HELPFUL ALONG WITH TECHNOLOGY ADVANCEMENTS

DETERMINANTS OF BUYER POWER: HIGH, DEALERSHIPS AND DIRECT CUSTOMERS, INCOME BASED

DETERMINANTS OF SUBSTITUTION: HIGH THREAT OF GM RAISING BAR FOR MID-SIZE SEDANS, LEXUS, AUDI, MERCEDES

THE REMOTE ENVIRONMENTECOLOGICAL FACTORS

CO2 EMISSIONS HAVE DROPPED FROM 130 G/KM IN 2014 TO 127 G/KM IN 2015

REDUCTION OF CO2 HAS DROPPED FROM 1995 TO 2015 BY 40% WITH A GOAL TO DROP BY 50% BY 2020

UNITED STATES STANDARDS REQUIRE CO2 MUST AVERAGE 225 G/M

EFFICIENT DYNAMICS TECHNOLOGIES IN EVERY MODEL SINCE 2007

ELECTROMOBILITY

SOUTH CAROLINA PLANT EFFICIENCIES FROM 2006-2015

THE REMOTE ENVIRONMENTECONOMIC FACTORS

JOBS 122,244 AS OF 2015SALES REVENUE: 2015: 92.2 BILLION EUROS UP FROM 80.4 BILLION EUROS IN 2014

SOCIAL FACTORSCONSUMERS LOOKING FOR BEST PERFORMANCE AS WELL AS PRICEMOST POPULAR LUXURY CAR IN 2015 IN UNITED STATES

POLITICAL FACTORSEVER GROWING EPA RESTRICTIONSNO LEMON POLICIES, LABOR LAWS, LAWSUITS

TECHNOLOGICAL FACTORSIMPROVED FUEL EFFICIENCYNCF KEY PROTOTYPE, CONNECTEDDRIVE SERVICES

INDUSTRY ANALYSISLUXURY AUTOMOBILES INDUSTRY

BMW GOALS: SET TRENDS IN PRODUCTION TECHNOLOGY AND SUSTAINABILITY

AS AN INNOVATIVE LEADER

INNOVATE MATERIALS ENABLE LIGHTER VEHICLES

111,410 EMPLOYEES IN AUTOMOTIVE SEGMENT, 7,697 EMPLOYEES IN FINANCIAL SEGMENT, 30 PRODUCTION LOCATIONS IN 14 COUNTRIES

ONLY AUTOMOBILE AND MOTORCYCLE MANUFACTURER WORLDWIDE TO FOCUS ALL BRANDS ON PREMIUM SEGMENT

COMPETITIVE ANALYSISBMW’S MARKET SCOPE: ALL PREMIUM VEHICLES KEEP MODELS IN INTRODUCTION AND GROWTH

STAGESBMW IS PUSHING THE BAR OF TECHNOLOGY

STANDARDSINNOVATION IS KEY TO BMW’S SUCCESSDREAM IT. BUILD IT. DRIVE IT.

-PROGRAM OFFERS ABILITY TO CUSTOMIZE X3 MODEL

-AUDI AND MERCEDES OFFER SIMILAR PROGRAMS BUT TURN AROUND TIME IS 8-16 WEEKS WHILE BMW IS AT 2-3 WEEKS

COMPETITIVE ANALYSIS CONTINUED

LOWER MARKET SHARE AT 5.4%, BUT TECHNOLOGY UPGRADES ALLOW FOR LARGE PRICE TAG

BMW X3 MODEL OFFERS SIMILAR FEATURES FOR SLIGHTLY LESS THEN COMPETITORS AUDI AND LEXUS

NET INCOME: SLIGHTLY OVER 6 MILLION EUROSRAW MATERIAL COSTS DECLINING ALLOWING

FOR SHORT TERM GROWTH IN OTHER ASPECTS OF BUSINESS(R&D AND MARKETING)

Strengths• Brand image and reputation• Technology, features, and

capabilities• Reliability• Sense of corporate

responsibility

Threats• Price of raw materials• New competition• Exchange rate fluctuation• Loss of personnel to

competition

Weaknesses• Vulnerable to economic

changes• Brand portfolio• Damage to brand image• Lack of strategic partnerships

Opportunities• Form strategic partnerships• Improve performance in

overseas markets (China)• Product diversification

INTERNAL ANALYSIS: SWOT

BMW BRAND VALUE VS. COMPETITORS

Human Resources

Firm Infrastructure

Technology Development

Procurement

InboundLogistics Operations Outbound

LogisticsMarketing and Sales Service

MA

RG

ININTERNAL ANALYSIS:

VALUE CHAIN ANALYSIS

INTERNAL ANALYSIS: 3-CIRCLE ANALYSIS BMW VS. MERCEDES

INTERNAL ANALYSIS: RESOURCE BASED VIEW

Tangible Assets

Intangible Assets

Organizational Capabilities

CORPORATE & BUSINESS STRATEGIES

PROFITABILITY EARNINGS QUALITY CAPITAL EFFICIENCY REDUCE CAPITAL EXPENDITURE PER VEHICLE

BY FOCUSING ON THEIR RETURN ON CAPITAL CHANGE IN THEIR PRODUCT MIX TO INCLUDE

MORE “ENTRY LUXURY” VEHICLES HIGH QUALITY PRODUCTS WITH HELP FROM

R&D AND MARKETING

CORPORATE & BUSINESS STRATEGIES, CONT.

BELIEVE IN TAKING RISKS SEEK NEW OPPORTUNITIES IN THE LUXURY

VEHICLE MARKET

BMW PLANS ON CHALLENGING THEMSELVES WITH TECHNOLOGY TO COME UP WITH NEW AND MOTIVATED PRODUCTS

OBJECTIVES TO THEIR SUCCESS

MAKE THEIR POSITION STRONGER

INCREASE SALES GLOBALLY

HELP SOCIETY BY BEING RESPONSIBLE

STAY IN FRONT OF THE COMPETITION

MANUFACTURE EARTH FRIENDLY CARS

CURRENT PERFORMANCE

BEST SELLING CAR BRANDS IN GERMANY (2015)

1. VOLKSWAGEN: 685,669 CARS SOLD

2. MERCEDES: 286,883

3. AUDI: 269,047

4. BMW: 248,565

5. OPEL: 229,352

6. FORD: 224,579

7. SKODA: 179,951

8. SEAT: 179,951

9. RENAULT: 110,039

10. HYUNDAI: 108,434

STATEMENT FIGURES (2015)

TOTAL REVENUE: $92,175 MILLION EUROS (+15% FROM 2014)

NET INCOME: $6,369 MILLION EUROS (+10% FROM 2014)

GROSS MARGIN PERCENTAGE: 19.7% (-8% FROM 2014)

RETURN ON EQUITY PERCENTAGE: 15.97% (+9% FROM 2014)

PROFIT MARGIN: 9.1% (BMW’S TARGET IS BETWEEN 8%-10%)

• OPERATING EXPENSES: $9,453 MILLION EUROS (+8% FROM 2014)

• BASIC EARNINGS PER SHARE: 3.23 (+10% FROM 2014)

• PAYOUT RATIO PERCENTAGE: 35.2% (+9% FROM 2014)

Statement Figures (2015), cont.

CURRENT STOCK PRICE AS OF APRIL 22, 2016: $82.78 PER SHARE

BMW’S CURRENT CORPORATE AND BUSINESS STRATEGIES ARE FOLLOWING THEIR MISSION STATEMENT WHICH IS ALSO THEIR STRATEGIC OBJECTIVE

HAS A CLEAR FOCUS ON PEOPLE AND THEIR ENVIRONMENT

AMBITION IS TO DELIVER SOLUTIONS THAT ARE BOTH GROUND BREAKING IN THEIR INDUSTRY AND ALSO BEING RESPONSIBLE

THEY ARE SETTING OUT THE FRAMEWORK TO SHAPE CHANGE IN THE AUTOMOBILE INDUSTRY FOR INDIVIDUAL MOBILITY

HAS VERY CLEAR CUT STRATEGIES THAT ARE VERY ACCOMPLISHABLE SINCE THEY HAVE HAD 6 RECORD BREAKING YEARS IN SUCCESSION

STRATEGIC ALTERNATIVES• DEVELOP A MORE SUBTLE PRICED BASED VEHICLE WHILE MAINTAINING THEIR HIGH END FEEL.• EXPAND THEIR MARKETING

TECHNIQUES TO ATTRACT THE FEMALE EYE.• KEEP UP WITH HIGH DEMAND OF

GOING GREEN AND PRODUCE AND HEAVILY MARKET BATTERY POWERED AND HYDROGEN POWERED VEHICLES. • IMPROVE OVER SEAS MARKET.

BMW PRODUCTION LOCATIONS

• SPARTANBURG, SOUTH CAROLINA, USA

• BERLIN, GERMANY,

• DINGOLFING, GERMANY

• CAIRO, EGYPT

• CASSINETTA, ITALY

• CHENNAI, INDIA

• EISENACH, GERMANY

• GOODWOOD, GREAT BRITAIN

• JAKARTA, INDONESIA

• KALININGRAD, RUSSIA

• KUALA LUMPUR, MALAYSIA

• LANDSHUT, GERMANY

• LEIPZIG, GERMANY

• MANAUS, BRASILIA

• MUNICH, GERMANY

• OXFORD, GREAT BRITAIN

• RAYONG, THAILAND

• REGENSBURG, GERMANY

• ROSSLYN, SOUTH AFRICA

• SHENYANG, CHINA (DADONG)

• SHEYANG, CHINA (TIEXI)

• SWINDON, GREAT BRITAIN

• STEYR, AUSTRIA

• WACKERSDORF, GERMANY

• SAN LUIS POTOSI, MEXICO

QUESTIONS?!?!