PERFORMANCE MEASUREMENT AND CONTROL

Performance Measurement & Control

Executive Summary

This report considers performance measurement as applied to the two Automobile companies which are Ford Motor and BMW. Key to the discussion is the selection and use of performance indicators. The paper attempts to set out the principles of performance measurement, , as well as looking at different approaches. Some problems are identified.Performance Measurement & Control

Introduction

Consolidation in the global automobile industry moved forward at a breath-taking place in 2001.The six leading groups General Motors, Ford, Toyota, Daimler Chrysler, Volkswagen and Renault accounted for almost 70% of the worldwide production of 563 million vehicles in 2001.Fierce competition in the industry tends to force the surviving dominants to rapidly change the strategic positioning of their vehicles by using more sophisticated technology and Variety of models.

Most auto experts and industry analysists agreed that global outreach was essential to provide protection against foreign exchange swings and local labour crises. They also agreed that a company had to produce 2million vehicles a year to achieve necessary economy of scale.

The main driving force behind the decision of BMW to turn to globalisation was competition from global players in Germany, the United States and Japan who are major competitors in the luxury segment. The automobile industry is highly globalised with many major manufactures operating all over the world. Automobiles built in one region are sold, with necessary changes, around the world. The main force for global convergence was the virtual disappearance of the national manufactures being squeezed out by the international giants and the standardisation of markets across international boundaries. Forced by international regulatory bodies at regional level and fuelled by ever more intensive global communication (Schipchandler 2000, pp.25-30).

This caused problem to middle sized players like BMW and Fiat to compete with dominant players in the industry with small or differentiations not big enough to survive in the niche market.

Consolidation in the industry increased productivity and overcapacity, which lead to supply of motor vehicles in the market exceeding demand. It gave consumers more power by controlling prices. Fierce competition and cost structure lead many of the manufactures to change their strategy towards price competition.

Manufacturing in the automobile industry became more volatile with unpredictable fuel prices, parking space, increasing traffic, environmental pollution and creating a higher demand for smaller vehicles. Decreasing demand for saloons are shrinking the profitability margins for many car manufacturers.

Aim and Objective:

To use appropriateper formance measurements and control concepts, underpinned by theories and models applied in Ford motor and BMW and to provide an indepth anlysis od these two organization in the year 2009.

Overwiew of the Organizations

BMW

BMW was founded in 1916 as an aircraft-engine factory in Munich. In 1923 BMW builds first motorcycle. In 1928 BMW bought the car factory at Eisenach, Thuringia with the license to build a small car called the Dixi. This first BMW car was developed in Munich, like all other BMW products. In 1932 BMW 3/20 was developed in Munich, in 1933 - 6 cylinder's BMW ...