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The automotive industry is arguably one of the most valuable contributors to the global economy. It provides the means of transportation not just to the consumer as well as business worldwide. Albite providing transportation a vehicle also provides liberty to the owner and facilitates monetary exchange by accessing services and markets in a way that was not possible only a century ago. The industry contributes approximately five percent of the global manufacturing. Due to the development and growth of emerging markets this industry is also benefiting from perpetual growth forecasted at 20%-30% by 2030. The current global turnover is 1.889 trillion Euros annually with a public revenue of 433 billion Euros.
These numbers are exemplified in the production of 73.5 million cars and 23.5 million commercial vehicles in 2017 (oica.net, 2018). In addition to large economic contributions and increasing quality of life, this industry has far-reaching impacts across the globe. Two major reasons can be attributed to this fact, first a vehicle is a complex construct and second the consumption of fuel or alternative energy to utilize the vehicle.
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The complexity of producing a vehicle is the net result of the number of materials necessary. There are four primary categories of material; natural components, metals and alloys, gases and chemical polymers. Primary examples of these components include; timber, leather, rubber, aluminum, steel, polyester, polypropylene and many more. The variety of the components necessary for manufacture implies a very complex and diversified supply chain which spans the globe.
In addition to the complexity of the market, several issues have recently reshaped the consumer choices changing the industry.
The factors asserting the strongest changes in recent years are complexity/cost pressure, diverging markets, digital demand, a shift to alternative energy as well as changes within the supply chain (Mohr et al., 2018). Most of these factors are relatable to advances in available technology, restrictions in legislation as well as changes in consumer habits. Notable drivers are significant advances in energy storage technology (leading to more efficient electric vehicles), a more eco-conscious market, differences in vehicle utilization as well as changes within the component manufacturing base. Because of these changes new startups and competition have established themselves in recent years. One of the most notable companies responding to such trends is automotive manufacturer Tesla, focusing on forecasted market changes such as 95% of vehicle purchases being electric by 2030 and investing accordingly into R&D (Kuhnert, Stuermer and Coster, 2018).
The complexity and size of the automotive market make it highly competitive and carry with it a high degree of social and ethical responsibility. A company which is coping very well with all these factors is Bayerische Motoren Werke (BMW). The company rates globally among the highest earners taking 9th place at 110 billion US dollars and is rated the third most valuable car manufacture at 25.62 billion US dollars (statistica.com, 2018). On a global scale, BMW has 30 manufacturing sites and employs nearly 115 thousand people. The company is represented in nearly 150 countries across the globe. The BMW group encompasses in addition to its own brand the Mini line and Rolls Royce. Due to its renown and presence across the globe the company strives to engage with the public in a socially and ethically responsible fashion.
Corporate Social Responsibility (CSR) has become one of the primary concerns of the company in recent years. The company embodies CSR as indicated by their company policy, “taking social and environmental responsibility for everything that we do is an integral part of how we see ourselves as a company”, published in their 2014 Sustainable Value report. In addition to this policy, Mr. Krueger stated that “sustainability means future viability – for the BMW Group and for society” (bmwgroup.com, 2018). The commitment by the company to CSR is reflected in its evaluation as well as social and environmental initiatives.
In terms of driving CSR through environmentally conscious initiatives, BMW engages in a twofold strategy. This involves creating a green conscious supply chain as well as green-focused production through improvements of products and manufacturing practices. In terms of reassessing its supply chain, the company has shifted to a more responsive integrated networking between its suppliers and customers. This has led to the limitation of available models pending on the customer base as well as reducing overall available stock levels (Newessays.co.uk, 2018). Due to the limitation in overall stock availability BMW has engaged in a supply chain that is low in capacity and requires high responsiveness. The added benefit is reduced over manufacture. This type of lean implementation has increased the overall value of its supply chain with respect to sustainability while offering customers satisfaction through a made to order approach. Further to this development, BMW has practice higher transparency through supply chain publications in their annual sustainability report. In addition to creating a stronger supply chain effort, BMW also focused on manufacturing practices and the efficiency of the new vehicle fleet. This was exemplified by reducing CO2 emissions by 141 grams per kilometer in new vehicles and sourcing CO2 emission-free energy for all their European manufacturing sites (bmwgroup.com, 2018). Integral to their success in engaging in greener technology was an investment in a new battery plant as well as increasing its market share in the sale of electric vehicles making BMW a market leader.
While these points are reflecting upon social responsibility, BMW is also heavily involved in public welfare. The company accomplishes this goal through multiple pathways including academic support, welfare programs as well as strict company policies regarding human rights. With respect to human rights and legal compliance, the company has established an internal network of oversight committees which allow for open channels of communication at all levels within BMW. This type of internal review enforces BMW ethics policy stating; “BMW Group is committed to the highest standards of ethical behavior, integrity, and conduct.” Through the framework, BMW established three important publications were produced in recent years exemplifying its commitment to ethical responsibility. These are “The limited Slavery and Human Trafficking Statement 2017”, “The Joint Declaration on Human Rights and Working Conditions” first published in 2005 and resigned in 2010 as well as “BMW Group Supplier Sustainability Standard” published and enacted in 2012. In addition to the legal efforts of ethical responsibility, the company has engaged in social benefit programs. The programs include public health programs such as “The Sauze Project”, “Light up Hope” and “Hope Sharing” as well as public education programs such as “Intercultural Innovation Award”, “Seed” and “The Jerusalem foundation” (Phillips, 2018). Another great example of academic support is through the BMW Scholars program which directly incorporates students into the workplace through an apprenticeship program within BMW manufacturing site fully subsidized by the company. This active approach prepares the student for real-world application thus enabling and creating a stronger more innovative workforce (Luminafoundation.org, 2018).
While these efforts are admirable and deserve credit, the company has also been shown to lack enforcement one some key issues and well as being involved in less desirable practices. Even though BMW is a leader in electric car sales a prominent example regarding advertisement and ethical practices can be shown. The Advertising Standards Authority (ASA) in the UK banned an advertisement by BMW in 2017 due to false advertisement. In this advertisement, BMW claims that its i3 series is a clean emission-free car however, it is utilizing a petroleum-based support engine. As such the advertisement does not fulfill the claim of emission-free and was thus barred (Harvey, 2018). While this could be attributed to unintentional error the company has also been involved in discrimination lawsuits and other ethical issues. A case of this was filled by the EEOC due to the use of Criminal Background Checks to prevent the hire of employees of primarily African descent (O'Toole, 2013). In addition to such activities “The Ethical Consumer”, a consumer watchdog site, has raised awareness about enforcement issues and poor policymaking regarding the use of conflict minerals and issues such as poor toxic substance and waste management particularly in vulnerable countries. The criticism was based on BMW’s 2017 sustainability report publication.
Overall BMW has been found to be one of the most sustainable, ethically and socially responsible companies globally today. Evidence has been presented to support this view both from a manufacturing as well as a social perspective. The company faces a continually changing market that is driven by consumer choice and geopolitical developments. Due to the size and competitiveness of the automotive industry, BMW is forced to evolve and find creative solutions to be competitive and maintain proper CSR. Albite its efforts there are still issues the company still needs to improve in terms of legal and ethical enforcement of its policies both internally as well as on its subsidiaries as well as suppliers. Overall BMW continues to develop as a leading company in the field of CSR.
BMW: a Case Study Of Ethical And Social Commitment. (2024, Feb 02). Retrieved from https://studymoose.com/bmw-a-case-study-of-ethical-and-social-commitment-essay
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