Domestic Environment
BMW was started in 1913 to make aircraft engines in Germany. In 1928, BMW made a car manufacturing unit and started manufacturing a small car called Dixi’. It was BMWs first car and was sold by the name BMW 3/15. The 328 roadster, was considered very advanced for their time, and the roadster was even nominated as the Car of the Century in 1999. BMW “The Ultimate Driving Machine”, the original German slogan Freude am Fahren which means “Joy in Driving” and has been the ultimate driving machine for 28 years. The company has continued to invent new better models and enjoys a wide market share over the world.
Rostow’s growth model comprises of five stages namely: the traditional society, pre-conditions to take off, take off, drive to maturity and age of high mass consumption. The first stage of growth according to Rostow has comprised of agricultural development and the society gives little attention to technology. In the 1900s, Germany’s industrial revolution stood at 13% which was before the Second World War and the great depression. BMW’ take off stage began in the 60s and the 70s when they started to lay out their expansion plans. Having withstood two world wars, the company is now experiencing a massive consumption of its goods worldwide.
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John Galbraith’s theory of the firm shows that the goal of every firm is to maximize profits due to the need for survival. The main affirmative role of the firm is to grow in the corporate world regarding more sales, security of employees and the output. The Second World War affected the integrity of major companies around the world, and BMW was not left behind. During this period, the company diverted all its attention to producing war equipment such as planes and thus affecting the desires of the majority of the shareholders. The company, however, resumed its main operations in 1951 after the war.
The Global Environment
The major economic impact of the company is in South Carolina where more than 28,000 jobs have been created so far which accounts for about 1.7% of the total workforce in the state. The multiplier effect stands at 4.3 meaning that three jobs are created elsewhere for every job created in the company. Using the Rostow’s model of growth, the United States notably occupies the final stage of the development which is marked with massive consumption of goods. Since the company decided to tap into the huge American market in 1994, the company has experienced a lot of growth. Regarding the theory of the firm, the company has disapproved John Galbraith due to its huge contribution to the society. In 2014 alone, the company donated over $36 million.
Limitations
Rostow’s model of growth is limited in some ways as some critiques have pointed out. The theory does not apply to all countries since societies are different. All countries do not end up with massive consumption. Even though a country may develop, it might have huge income disparities as it is the case for Singapore. On the other hand, John Galbraith ignores the fact that the consumer has the free will of which company to invest in or fail to invest. Additionally, his attack on the profitability of the firms is misguided since companies must make profits or risk being taken over.
References
Li, R. Y. M., & Hung, R. (2013). Rostow’s Stages of Growth Model,'Urban Bias' and Sustainable Development in India.
Galbraith, J. K. (2017). Economics in perspective: A critical history . Princeton University Press.
Bartl, M., Jawecki, G., Bilgram, V., & Wiegandt, P. (2013). The BMW Group Co-Creation Lab: From Co-Creation Projects to Programmes. Discontinuous Innovation: Learning to Manage the Unexpected , 22 , 179.
