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Assignment #2 – BMW’s Dream Factory & Culture (Integrating Cases in textbook).
· Students will prepare a 3 to 4 page analysis responding to the following questions:
Describe the culture at BMW?
Discuss the model of leadership illustrated at BMW and the related impact on the organizational culture.
Analyze why employees derive high job satisfaction at BMW, using the concepts illustrated in the job characteristics model (see chapter 5).
Discuss the attributes of organizational creativity that are fostered at BMW.
Discuss how the culture and work environment impact the performance results of BMW.
The report will be graded using the following rubric.
Grading Rubric for Assignment # 2 – BMW
(180 total points)
1.Describe the culture at BMW.
No elements were discussed.
One element was discussed.
Two elements were discussed.
Three elements were discussed.
2. Discuss model of leadership used at BMW and its impact on organizational culture.
Does not attempt assignment, nor discusses the leadership model and its impact on organizational culture.
The leadership model and its impact on organization culture were discussed, but with less than 60 - 79% accuracy and some of the discussion points were inappropriate or were not identified.
The leadership model and its impact on organization culture were discussed, with 80 - 89% accuracy and appropriate information was discussed.
The leadership model and its impact on organization culture were discussed with 90 to 100% accuracy and all appropriate information was identified and discussed clearly.
3. Analyze why employees derive high job satisfaction by using the job characteristic model.
No characteristics were discussed.
One characteristic was discussed.
Two characteristics were discussed.
Three characteristics were discussed.
4. Discuss the attributes of organizational creativity fostered by BMW.
No attributes were discussed.
One attribute was discussed.
Two attributes were discussed.
Three attributes were discussed.
5. Discuss how the culture and work environment impact the performance results of the organization.
Does not attempt assignment, or discusses how the culture and work environment impact performance results.
The impact of culture and work environment on performance results were discussed, but with less than 60 - 79% accuracy and some of the discussion points were inappropriate or were not identified.
The impact of culture and work environment on performance results were discussed, with 80 - 89% accuracy and appropriate information was discussed.
The impact of culture and work environment on performance results were discussed with 90 to 100% accuracy and all appropriate information was identified and discussed clearly.
6 Writing – Grammar, spelling, punctuation
(APA, if required)
Sentences / paragraph structure, spelling, and punctuation
Sentences / paragraph structure, spelling, and punctuation
6 -7 errors
Sentences / paragraph structure, spelling, and punctuation
4 – 5 different errors
Sentences / paragraph structure, spelling, and punctuation
0 - 3 different errors
BMW’S Dream Factory and Culture
BMW, with more than $60 billion in sales, is much
smaller than its American rivals. However, the U.S. auto
giants could still learn some things from BMW. Detroit’s
rigid bureaucracies have been slow to respond to
competitive threats and market trends. In contrast,
BMW’s management system is flat, flexible, entrepreneurial—
Few companies have been as consistent as BMW at
producing an ever-changing product line, with near
flawless quality, that consumers like. BMW has redefined
luxury design with its 7 Series, created enthusiasm
for its Mini, and maintained some of the highest
profit margins in the auto industry. A sporty four-wheeldrive
coupe and a stylish minivan called the Luxury
Sport Cruiser rolled off the production line in 2008.
These models promise to continue BMW’s run of cool
cars under its new chief executive, Norbert Reithofer.
(His predecessor, Helmut Panke, stepped down upon
reaching the mandatory retirement age of 60. Panke
once insisted that all six members of the management
board take an advanced driving course so they would
have a better feel for BMW cars.) Says Reithofer: “We
push change through the organization to ensure its
strength. There are always better solutions.”
Virtually everyone at BMW is expected to help find
those solutions. When demand for the 1 Series compact
soared, plant manager Peter Claussen volunteered to
temporarily use the brand new factory in Leipzig,
Germany—which had been designed for the 3 Series—
to produce 5,000 of the compacts. Claussen and his associates
quickly figured out how to do it while maintaining
high quality. Recently, line workers in Munich,
Germany, suggested adding a smaller diesel engine in
the 5 Series. They contended that it would have enough
power to handle like a Bimmer (a nickname for BMW
cars, unlike the “beemer” or “beamer” nicknames used
for BMWmotorcycles) and be a big seller among those
on a tighter budget. They were right.
Culture Much of BMW’s success stems from an entrepreneurial
culture that is rare in corporate Germany.
Management in Germany is usually top-down, and the
cultural gulf between workers and managers is significant.
BMW’s 106,000 employees, however, have become
a network of committed associates with few hierarchical
barriers to hinder innovation. From the
moment they set foot inside the company, associates
experience a sense of place, history, and mission. Individuals
from all levels of BMW work side by side.
They create informal networks where even the most
unorthodox ideas for making better Bimmers or
boosting profits can be voiced. BMW buyers may not
know it, but when they slide behind the wheel, they are
driving a vehicle born of thousands of impromptu
brainstorming sessions. BMW, in fact, might just be the
chattiest auto company ever. Claussen comments: “The
difference at BMW is that [managers] don’t think we
have all the right answers. Our job is to ask the right
That’s not to say this freewheeling idea factory
hasn’t made its share of blunders over the years. In 2001,
BMW alienated customers with its iDrive control system.
The device was designed to help drivers quickly
move through hundreds of information and entertainment
functions with a single knob. It proved incomprehensible
to many buyers. Rival Audi is narrowing the
gap with BMW in Europe by producing a new generation
of stylish, high-performance cars that have topped
consumer polls. Toyota’s Lexus also has BMW in its
sights as it makes a move to gain market share in Europe
with sportier, better handling cars. Reithofer comments:
“We will be challenged—no question. We have to take
InBMW’s favor is an enduring sense that things can
go wrong. New hires quickly learn that theBMWworld
as they know it began in 1959. That’s when the company
nearly went bankrupt and was just a step away from
being acquired by Mercedes. This long-ago trauma remains
the pivotal moment in BMW folklore. Reithofer
continues: “We never forget 1959. It’s in our genes, and
it drives our performance.”BMWwouldn’t exist today if
it weren’t for a bailout by Germany’s wealthy Quandt
family—still the controlling shareholder, with a 47
percent stake—and a pact with labor to keep the company
afloat. “Near-death experiences are very healthy
for companies,” says David Cole, a partner at the Center
for Automotive Research in Ann Arbor, Michigan.
“BMW has been running scared for years.”
The story of 1959 is told and retold at each orientation
of new plant associates. Works Council Chief
Manfred Schloch, a 26-year veteran, holds up old,
grainy black-and-white photos of two models from the
1950s. The big one was too pricey for a struggling
postwar Germany. The other, a tiny two-seater, looked
like a toy and was too small to be practical, even by the
standards of that era. The company badly misjudged the
market, he says. Schloch pulls out a yellowed, typewritten
1959 plan for turning the company around with
a new class of sporty sedans. Schloch then hands out
photos of Herbert Quandt and the labor leader of the
period, Kurt Golda. Schloch states: “I explain how we
rebuilt the company with Quandt’s money and the
power of the workforce. And I tell them that’s the way it
works today, too.”
Motivated Workers, Better Cars BMW derives much
of its strength from an almost unparalleled labor harmony
rooted in that long-ago pact. In 1972 and years
before the rest of European companies began to think
about pay for performance, the company included all
employees in profit sharing. It set up a plan that distributes
as much as one and a half months’ extra pay at
the end of the year, provided BMW meets financial
targets. In return, employees are flexible. When a plant
is introducing new technology or needs a volume boost,
it’s not uncommon for associates from other BMW
factories to move into temporary housing far from home
for months and put in long hours on the line. Union
leaders have made it easy for BMW to quickly adjust
output to meet demand. Without paying overtime, the
company can increase the production schedule to as
much as 140 hours a week (20 hours per day, 7 days a
week) or scale it back to as little as 60 hours. The system
enablesBMWto provide a high level of job security, and
no one can remember any layoffs—ever. Since 2000,
BMW has hired 12,000 new associates even as General
Motors and Ford Motor have slashed tens of thousands
BMW’s human resources department receives more
than 200,000 applications annually. Those who make it
to an interview undergo elaborate daylong drills in
teams that screen out big egos. For the lucky few who
are hired, a Darwinian test of survival ensues. BMW
promotes talented managers rapidly and provides little
training along the way. It requires them to reach out to
others to learn the ropes. With no one to formally coach
them in a new job, managers need to stay humble and
work closely with subordinates and their peers. This
minimizes traditional corporate turf battles. Anyone
who wants to push an innovative new idea learns the key
to success fast. “You can go into fighting mode or you
can ask permission and get everyone to support you,”
says Stefan Krause, BMW’s 44-year-old chief financial
officer. “If you do it without building ties, you will be
Work Environment The construction of the Leipzig
factory is a testament to the power of such ties. When
plant manager Claussen first proposed a competition to
lure top architects, executives at headquarters were
taken back. Krause comments: “People said to me,
‘What’s wrong with these guys in Leipzig? We don’t
need beautiful buildings, we need productive buildings.’
” Claussen convinced Krause and others that the
unconventional approach wouldn’t just produce a pretty
factory but one whose open, airy spaces would improve
communications between line workers and managers
and create an environment that helps the company build
Even before Claussen began pushing his architectural
vision, others were busy designing the inner
workings of the plant. Jan Knau, an engineer, was only
27 when he was asked to come up with a flexible assembly
line for the factory. Knau, then just a junior
associate, contacted BMW’s top 15 assembly engineers.
He invited them to a two-day workshop at a
BMW retreat near the Austrian Alps. After a series of
marathon sessions that included discussions of every
facet of the ideal assembly line, Knau sketched a design
with four “fingers,” or branches, off the main spine.
The branches could extend to add equipment needed
to build new models. This made it possible to keep
giant robots along the main line in place rather than
moving them for each production change, an expensive
and time-consuming process.The Leipzig plant opened
in 2005. It represents Claussen’s vision of teamwork
enhanced through design by Knau’s creative engineering
concepts. With pillars of sunlight streaming
through soaring glass walls, architect Hadid’s design
looks more like an art museum than a car factory.
Open workspaces cascade over two floors. Unfinished
car bodies move along a track with enhanced lighting
that runs above offices and an open cafeteria. If the
pace of the half-finished cars slows, engineers know it
immediately and can quickly investigate the problem.
The weekly quality audits—in a plaza workers pass on
their way to lunch—ensure that everyone is quickly
aware of any production snafus. The combination of
togetherness and openness sparks impromptu dialogue
among line workers, logistics engineers, and quality
experts. Knau states: “They meet simply because their
paths cross naturally. And they say, ‘Ah, glad I ran into
you, I have an idea.’ ”
Flexibility and Innovation The flexibility of BMW’s
factories allows for a wide range of variations on basic
models. At Leipzig, for instance, parts ranging from
dashboards and seats to axles and front ends snake onto
overhead conveyer belts to be lowered into the assembly
line in precise sequence according to customers’ orders.
BMW buyers can select everything from engine type to
the color of the gear-shift box to a seemingly limitless
number of interior trims—and then change their mind
and order a completely different configuration as little as
five days before production begins. Customers request
some 170,000 changes a month in their orders, mostly
higher priced options such as a bigger engine or a more
luxurious interior. There are so many choices that line
workers assemble exactly the same car only about once
every nine months.
Integrating Cases 523
This kind of customization would swamp most automakers
with budget-busting complexity. But BMW
has emerged as a sort of anti-Toyota. Toyota excels in
simplifying automaking. BMW excels in mastering
complexity and tailoring cars to customers’ tastes.That’s
what differentiatesBMWfrom Lexus and the rest of the
premium pack. “BMW drivers never change to other
brands,” says Yoichi Tomihara, president of Toyota
Deutschland. He concedes that Toyota lags behind
BMW in the sort of customization that creates emotional
Bottom-up ideas help keep BMW’s new models
fresh and edgy year after year. Young designers in various
company studios from Munich headquarters to
DesignWorks in Los Angeles are constantly pitted
against one another in constructive competitions. Unlike
many car companies, where a design chief dictates a
car’s outlines to the staff,BMWdesigners are given only
a rough goal. Otherwise, they are free to come up with
their best concepts.
To get the most out of its associates, BMW likes to
bring together designers, engineers, and marketing experts
to work intensively on a single project. The redesign
of the Rolls-Royce Phantom, for instance, was
dubbed “The Bank.” The 10 team members worked out
of an old bank building at London’s Marble Arch, where
dozens of Rolls Royces roll by daily. “We took designers
from California and Munich and put them in a new
environment” to immerse them in the Rolls Royce
culture, says Ian Cameron, Rolls’s chief designer. The
result was the new Phantom, a 19-foot vehicle that remains
true to Rolls’s DNA, but with 21st-century lines
and BMW’s technological sophistication under the
hood. With sales of the $350,000 car running at about
700 a year, the Phantom is the best seller in the superluxury
segment, outstripping both the Bentley Arnage
and the Mercedes Maybach.
Much ofBMW’s innovation doesn’t come via formal
programs such as The Bank, however. In 2001, management
decided to pull the plug on the disappointing
Z3 sports coupe. That didn’t stop a 33-year-old designer
named Sebastian Trübsbach from doodling a sketch of
what a Z3 successor might look like. Ulrich Bruhnke,
head of BMW’s high-performance division, loved it. In
Trübsbach’s drawing, Bruhnke saw a car that could rival
Porsche’s Cayman S in performance but at a lower price.
He persuaded a few designers and engineers to carve out
some time for the renegade project. Next, Bruhnke
gathered a team to map out the business case. The small
group worked for 10 months to build a prototype.
The moment of truth came in 2004 at a top-secret
test track near Munich. Cars were lined up so the Board
of Directors could examine their styling and proportions
in natural light. Only one was covered by a tarp. Panke
approached the mystery model. “What is this interesting
silhouette?” he asked Bruhnke, who invited his boss to
take a look. Panke yanked back the cloth, exposing a
glittering, bronze metallic prototype for what would
become the Z4 coupe. Bruhnke breathed a sigh of relief
when he saw Panke’s eyes light up as they viewed the
car’s design. Panke and the Board of Directors quickly
gave the go ahead. The Z4 coupe sped to production in
just 17 months, hitting showrooms in 2007.
To take a virtual tour of how each model of the Z4 is
manufactured, go to www.bmwusfactory.com. Click on
“Virtual Tour.” The virtual tour is at BMW’s state-ofthe
art Spartanburg, South Carolina, manufacturing
plant. A moderator describes each step of the production
For more information on the BMW Group, visit the
organization’s home page at www.bmwgroup.com.
1. How would you describe the culture at BMW?
2. What model of leadership is illustrated at BMW?
How does this impact BMW’s culture?
3. Using the concepts illustrated in the job characteristics
model (see Chapter 5), analyze why employees
derive high job satisfaction at BMW.
4. What attributes of organizational creativity are
fostered at BMW?
Source: Adapted from Edmondson, G.BMW’s dream factory.
Business Week, October 16, 2006, 70–80; Kurylko, D. T. Job
swap works for BMW. Automotive News, July 9, 2007, 48;
Cokayne, R. BMW plan offers workers stable income. BusinessReport,
September 3, 2007; Pries, L. Emerging production
systems in the transnationalization of German carmakers:
Adaptation, application or innovation? New Technology: Work
and Employment, 2003, 18, 82–100; BMW Group. www.
bmwgroup.com (September 2007).
Excerpt From Essay:
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Gail Edmondson. (2006, October). BMW'S DREAM FACTORY. Business Week,(4005), 70.
Bernhard Fleischmann, Sonja Ferber, & Peter Henrich. (2006). Strategic Planning of BMW's Global Production Network. Interfaces, 36(3), 194-208.
Hirst, G., van Dick, R., & van Knippenberg, D.. (2009). A social identity perspective on leadership and employee creativity. Journal of Organizational Behavior, 30(7), 963.
Bernd Kriegesmann, Thomas Kley, & Markus G. Schwering. (2005). Creative errors and heroic failures: capturing their innovative potential. The Journal of Business Strategy, 26(3), 57-64.
Mancheno-Smoak, L., Endres, G., Potak, R., & Athanasaw, Y. (2009) the Individual Cultural Values and Job Satisfaction of the Transformational Leader. Organization Development Journal, 27(3), 9-21.
Stephanie Schleimer & Andreas Riege. (2009). Knowledge transfer between globally dispersed units at BMW. Journal of Knowledge Management, 13(1), 27-41.
Donald N. Sull. (2007). Closing the Gap Between Strategy and Execution. MIT Sloan Management Review, 48(4), 30-38.