Wednesday, May 6, 2020

Strategic IT Plan for BMW Group

Question: Explain about the Case Study for Strategic IT Plan for BMW Group? Answer: Introduction In this particular report, it provides a strategic IT plan of BMW to meet with and aligns to the business strategy of the organization. It also summarizes the current IT department and its project structure, IT governance, and committees those are operating with BMW. Apart from all this, identification of the organizational mission and its values with the internal and external environmental factors needed to identify the IT risks within BMW using SWOT and PESTAL analysis. When the IT system implements in BMW, then identification of risks are required and mitigate it using the IT strategies. After implementing the IT strategy, it reviewed to implement the best possible IT solutions within the business operations of BMW. Finally, a cost summary is given to create a suitable balance between costs, volume and price to create a sustainable profit, whilst continually staying in positive cash flow. Background of the Company BMW is the largest car manufacturer in Germany and was founded in the year 1917. The company has a strong market position in the automobile sector (BMW, 2015). The company aims to generate a strategic IT plan by focusing on the premium segments in the international automobile markets. The current situation of the Information Technology at BMW is complex due to the poor long-term planning of the organization, limited resourcing as well as uncoordinated efforts. The strategic IT plan of BMW brings light on both strength and weakness of the IT at BMW and it enhances the services and products of IT offered by the BMW Group. Figure 1: Company logo of BMW (Source: BMW, 2015) Business Operation The BMW Group is one of the most successful manufacturers of cars as well as motorcycles globally and the largest industrial companies operated in Germany. It also has operated in aircraft engine production, hardware production, finance as well as service and electronic systems. Business Strategy BMW group provides its particular significance in its own brand through the functioning of its brand strategy (Wren, 2012). Deeply inclined by the high technology of Germany, the manufactured technology of BMW can compete with Mercedes-Benz. As the current situation of the Information Technology at BMW is complex, therefore forming a good image in the automobile sector is a big challenge for BMW to achieve their brand strategy. Current IT Department at BMW The strategic IT plan of BMW reviews the current IT department to view the situational review of the company. The IT department serves the entire requirements of BMW (Alafi, 2014). The current IT department works on highlighting the technology in the company for its future automobile such as vehicle technology, clean energy, Connected Drive as well as IT drive. It is also required to integrate labs as well as workshops that ensures for rapid implementation of technologies developed within the car (Austen, 2014). The purpose of increasing the transparency as well as accountability of the department, the reporting structure changes its dual reporting structure. The roles and responsibilities of the current IT department of BMW Group are as follows: It advances over the flow of interior information as well as developments in the IT division (Elser, 2014). It assists in allocating the resources of IT in the company It also tends to decrease the time as well as cost of the IT life cycles based on review of vendor, selection and authorization of vendor and execution of the IT plan It maintains the security of information as well as availability It also supplies the guidance and its infrastructure in order to deliver a meaningful information to the company (Feldman, 2015). The IT department improves the technique they design as well as handle the customer relationships (Toma, 2012). The department is able to control as well as store a large quantity of historical data efficiently Current Project Structure, IT Governance and Committees Project Structure As depicted in the diagram below, the business departments of BMW and the internal IT department function together for achieving certain goals: such activities include managing the sales and purchase of the project, managing the finances, marketing, production and HR personnel associated with the project (Furth, 2012). The centralized IT department is again grouped into certain teams that are responsible for the following activities: The development of the strategy plans, and the control mechanisms to be used in the project. Providing the IT solutions Providing the IT services Managing the IT infrastructure and Managing the risks and security issues of the project Figure 2: IT Structure of the BMW Group (Source: Furth, 2012, pp-546) IT governance and committees The integrated IT governance operations have to connect with the existing IT management process that is established in the group of BMW (Pasher and Ronen, 2011). These procedures together with coordinated IT governance have the objective to document the entire IT landscape, plan to further improvement over the landscape, identify the shortcomings in the landscape as well as adjust the business and IT. The existing frameworks in order to establish an IT management processes concern on the architecture of BMW and its governance models (Hartman and Werhane, 2013). It does not consider the existing processes such as TOGAF from The Open Group, Cobit from the IT governance institute etc. The committee such as Core Data Stewards is the functional team who design, monitor as well as evolve the flow of the company data, recommends policies, supports the requirements for documentation and gives training to the employees to handle the data (Joanette, 2013). The committee allows all the decentralized IT support at BMW to get a centralized forum in order to improve the communication as well as increase awareness of the issues related to IT. Identification of Organizational Mission and Values (Value Proposition Model) Mission of BMW The group of BMW is the leading provider of premium services as well as products for individual mobility. The values of the BMW are embedded in the golden history with innovative thinking. BMW always preferred to get value in the market during understanding both internal as well as the external business environment of the company (Mackey, 2014). BMW functions based on the following principles to achieve value in their organization: To the employees, the company strives to enhance their experience To provide necessary tools as well as services to enhance the software used in the car To support their strategic IT plans for efficiency as well as enhanced services Value Proposition Model (Refer to Appendix 2) Identification of Organizational Internal and External Environments SWOT Analysis At the time of formulation of IT strategy of the BMW, SWOT is analyzed and it is identified through analysis of the IT team. The following is the SWOT Analysis of BMW (Refer to appendix): Strengths: The IT team members are credited with good interpersonal skills and gives better services. The IT team has good relationships with the vendors and it keeps them supported to implement the IT system (Jones, Li and Cannella, 2013). The IT team has great steps towards the IT governance in the previous number of years. BMW also has advanced technology for its product designing. Weakness: The weakness of the IT teams is the lack of long-term planning that makes their IT system more complex. Due to this reason, the IT investment does not provide measurable value to the organization in order to gain a high level of profitability (Klochko, 2015). The weaknesses of the team are due to poor IT infrastructure of BMW, software as well as integration. Opportunities: One of the largest opportunities in the IT team is that innovation of new technology in their business operations leads to utilization of the information technology. BMW focuses to implement strategic IT plan to improve the data breach in the automobile industry. This plan will translate into best possible actions as well as changes. Threats: The availability of the financial resources on implementing the plan is one of the threats. The availability of the perfect skills for implementing the plan among the IT team members are less, therefore they are not taking the best actions for overcoming the data security issues (Kreitlein, Spreng and Franke, 2015). There is no sufficient time to schedule changes in the plan due to lack of financial sources. PESTLE Analysis Factors Description Political factors Political factors emphasize the governmental laws as well as regulations, actions of security that are applied to BMW. The factors that influence the automobile industry are: Laws and policies related to security of information Introduction of new technology in the industry Taxes and governmental foreign policies Economic factors Economic factors related to the economic growth of the company globally by improving over its security breach. The factors are: There is an implementation of new technology for manufacturing of car. It helps to grow a large amount of revenue in designing of a new product. Total increase in the GDP of the company Economic recession in the marketplace of US Social factors It is related to the change in both culture and its demographics apart from the modification in the buying techniques of the customers. Change in buying patterns due to downturn in the grown markets Environmental problems as well as awareness of risky emissions throughout the automobiles Technological factors Enhance in the use of technology in order to increase a competitive advantage Use of sophisticated design in order to overcome the decrease in profit margin of BMW Modification in the technology due to cause environmental pollution Environmental factors Transferring the taste of the customers towards eco-friendly cars as well as hybrid cars Severe application of the standards of EURO set up the curb pollution within the developing countries Awareness of the global warming Legal factors Information is gathered about the likes and dislikes of the customers using the business intelligence system. This information is the part of the legal authority of the website of the company. Table 1: PESTAL Analysis of BMW (Source: Liao and Hsu, 2012, pp-82) Risk Analysis of Current IT system at BMW Serial No. Identification of IT risks Mitigation of the risks Estimated cost to mitigate the risk (in ) Time taken to mitigate risk 1. Security risk due to storing of information of the customers In the automotive industry, it is required to keep the vital documents of the company and its prototypes of design safe from the hackers (Mackey, 2014). It is done through communications control, firewalls and encryption programs. The issue in the BMW is the data safety. BMW utilizes the e-commerce to obtain the information about the consumers likes and dislikes. This information attracts the customers more towards their automotive industry (Magdanov, 2015). This information is gathered using business intelligence system. This information is the part of the legal authority of the website of the company. Digital forensic investigation is required to identify the risks and its impacts on the industry. Timely forensic analysis helps to include the damage, conclude the scope of the breach as well as plan for a complaint response. This investigation helps to store the information of their customers and keeps the customers data secured from the third party persons. 2567 3 weeks 2. Issue in the software used inside the car of BMW The external security of BMW is breached as the hackers get free access to the onboard vehicle computer system that manages the engines and brakes of the car. The hackers might break the wireless networks on the cars in order to exploit the software glitches and vulnerabilities to attempt to hurt the drivers. The car software information should be kept secured and they should encrypt the communications in the car by using HTTP standard used in the web browsers for securing the e-commerce. 3892 4 weeks Issue due to use of public server for exchanging information The exchange of information with other factories as well as offices is done through the public server (Magdanov, 2015). Using of the public server for the exchanging of information is one of the key issues in breaching of data. BMW should use the private server for exchanging information such as cable or WiFi (Moran, 2015). It keeps the constant flow of the information as well as the innovation of new technology gives the competitive advantage for excellent communication with the factories all over the world. 2789 3 weeks Issue due to use of electronic surveillance system The issues are raised due to utilizing of electronic surveillance. BMW uses it to protect their bad utilizes (Mangram, 2012). In this case, throughout agreements prepared with the administration in corporations possessed, the construction of BMW has the accurate to contain an electronic surveillance system but it must enclose a sing notify the people in going the building regarding the CCTV. The electronic surveillance system is used for the identifying the hacker in the office. The CCTV should be kept secret and the employees should not know about the presence of CCTV in the office building. 4580 2 weeks Formulation of IT strategies to manage the Identified Risks Initiatives Based on the review of IT at BMW, its visions and values established in the plan, some initiatives are taken such as basic service, expansion of their service and service renewal. Initiatives IT strategies to manage the risk Base services The base services of BMW are initiated by increasing the security visibility of the organization (Mosavi, 2014). Theirs data are secured by two-factor authentication, secured by passwords, monitored the system and trusted employees should have access to the computer system. Service Expansion BMW should good at tracking as well as presenting the security operations through using technical metrics. The securities are measured using security KPI. It makes expansion of their service (Rodrigues, Nappi and Rozenfeld, 2014). Security KPI measures the level of risk and understands the acceptable risk thresholds from the business units. This initiative focuses on the delivery of the survey tool that is available to the staffs (Hussey and Ong, 2012). It allows the researchers in order to standardize the tool and it assures that the data collection outcomes are both secured as well as backed up (Santora and Bozer, 2015). The manager harnesses the tool that allows to collect data from the customers and employees as well as their communities. Service Renewal The network infrastructure of BMW is renewed and its aging network is renewed over a three-year period (Sassa, 2012). This renewal makes their service easier and faster than previous. Implementation of Strategic IT plan In the above section of the report, the initiatives that are being taken to mitigate the security risks of BMW have been discussed (Sassa, 2012). It has been observed that the recurrent data breaches and unauthorized access to enterprise data have occurred in the recent past, thus being indicative of the fact that the current status of the system being used to store and manage the enterprise is not up to the desirable security levels. The total time taken to implement the strategic IT plan within the business operations of BMW is around 3 months. Under such circumstances, increasing the security levels of the database system should be considered as the primary objective of the IT strategic planning. Ay the lower levels, the inclusion of the following strategic plans would be helpful in meeting the objectives of the IT strategic plan: Implementation of two way secured password systems to restrict the utilization of the database to the employees of the organization only. The IT administrators associated with the organization should have full control over all the systems being utilized to increase the security of the computer network used by the BMW: considering certain sections of the network to be restricted, based on the importance and the sensitivity of the data stored in those sections of the network (Shiva, 2015). The access to these restricted sections would be available to only those employees who are authorized to review such data. Implementation of intrusion detection and prevention systems would also reduce the chances of data intrusion or attacks on the said computer network remain noticed (Siefers, 2014). Review and Adoption of IT strategic Plan Impact of the Business of BMW Before implementing the new security solutions, BMW struggles to control over its business operations and unable to mitigate the financial risks associated with the failure of security and data breach (Magdanov, 2015). It gives threats to their customer retention. 46% of the business of BMW suffers due to failure to implement the encryption solution of their data. The percentage of causes of data breaches is shown in (Appendix 5). The IT strategic plan has a great impact on the company. It helps to increase the security visibility of BMW. By using the security KPI, it uses to measure the security operations and its customer based services increases as they are assured that their personal information is secured. The business operations of BMW are improved due to implementing security solutions. The improved area are the customers data are more secured and it is not hacked by third party. The design of their cars is kept secured with two-factor authentication password. Impact of the IT department at BMW The IT department works on highlighting the technology in the company for its future automobile such as vehicle technology. This plan, the company should us the best-secured software in their car such that their car designs are secured (Wils, Wils and Tremblay, 2014). They are increasing their security visibility so that the hackers are not getting access to the onboard vehicle computer system that manages the engines as well as brakes of the car. Therefore, this two-factor authentication is the better IT solutions for the company. Reassess strategies and the strategic planning process The principle of the concluding step is to assessment of the implemented strategies as well as the process of planned (Woodhouse, 2013). Most of the part of the implementation step occurred at the ongoing IT part of BMW. However, BMW is not engaged in the strategic planning for sometimes, therefore it is required to mark off the step as an individual one. The implementation of the two-factor authentication helps the organization to restrict the authorization of the personal data from the company (Khachidze, 2012). Therefore, the data are secured and the customers are assured of their data. The management also controlled over the security data and they should focus on the security of their car designs. The implementation of the detection system is planned to detect the attacks of the computer network. Therefore, the company should be aware of the hackers outside the company and within the company. BMW uses are new security standard for securing its e-commerce site that is used to secure the personal information of their customers. The design of the cars is stored in the company database that is secured by the password (Mackey, 2014). The password standard set out the rules for complexity of password as well as their windows standard sets out rules for hardening the clients of windows. The company uses the electronic surveillance system within the company to protect their bad employs. The strategy is made regarding that; the employees entering the building should not be notified of the security camera (Lake, 2012). The security cameras are fitted in the data storage room and trusted person should control it. The Wi-Fi password should be kept secured and it should not be shared with others. The exchange of information with other offices is done through the public server. It is the most vital issue as it is easier for the hackers to hack the computer network (Lee, 2013). Therefore, the company plans to use the private network for sharing of information. Figure 3: BMW Strategic Planning Process (Source: Woodhouse, 2013, pp-575) Costing Summary Profit and Loss for BMW Assumptions of profit and loss Year 1 Year 2 Year 3 Year 4 Year 5 Increase in yearly cumulative price - 1.00% 3.00% 5.00% 7.00% Increase in annual cumulative inflation - 1.00% 3.00% 5.00% 6.00% The rate of interest at the finale cash balance 0.50% 0.50% 0.50% 0.50% 0.50% Year 1 Year 2 Year 3 Year 4 Year 5 Revenue Gross income $500,000 $520,000 $550,000 $577,500 $658,900 Cost of IT strategic plan 200,000 200,000 206,000 216,300 240,000 Gross margin $300,000 $320,000 $344,000 $361,200 $418,900 Additional revenue $0 $0 $10,000 $0 $0 Income for interest $2,000 $2,000 $0 $0 $0 total of the revenue $302,000 $322,000 $354,000 $361,200 $418,900 Expenses for operating Plan for the strategic IT $50,000 $52,000 $53,560 $56,902 $65,000 Payroll with taxes 62,000 $63,908 $54,000 $890,245 $943,660 Depreciation 41,000 40,000 24,890 56,000 45,000 Insurance 41,000 $56,000 $56,902 $54,000 $78,906 Maintenance of the system 17,000 13,000 14,000 15,750 15,908 Utilities 32,890 $23,489 $25,000 $26,000 $28,000 Taxes for property 14,000 $14,590 $15,098 $15,853 $17,000 Administrative fees 20,000 $23,000 $23,890 $25,689 $26,000 Additional 5,000 $7,000 $8,000 $9,000 $9,540 Sum of the operating expenses $282,890 $292,987 $275,340 $1,149,439 $1,229,014 Operating income $19,110 $29,013 $78,660 ($788,239) ($810,114) Interest expense on the debt for long-term 3,600 2,789 2,190 1,290 500 Operating income before other items $15,510 $26,224 $76,470 ($789,529) ($810,614) Loss or gain on the asset sale 0 0 1,000 0 0 Additional remarkable operating cost 0 0 0 0 0 Earnings before taxes $15,510 $26,224 $77,470 ($789,529) ($810,614) Taxes on income 30% 4,653 7,867 23,241 0 0 Net income (loss) $10,857 $18,357 $54,229 ($789,529) ($810,614) Balance Sheet Assets Initial balance Year 1 Year 2 Year 3 Year 4 Year 5 Cash by means of short-range savings $49,000 $200,000 $248,900 $287,148 $459,087 $467,890 Receivable amounts 2,000 2,000 2,000 2,000 2,000 2,000 Sum of inventory 26,000 26,000 26,000 26,000 26,000 26,000 Prepaid fixed cost 1,300 1,300 1,300 1,300 1,300 1,300 Tax for income 0 0 0 0 0 0 Additional existing property 5,900 5,900 5,900 5,900 5,900 5,900 Sum of existing assets $84,200 $235,200 $284,100 $322,348 $494,287 $503,090 Security of the company $150,000 $150,000 $150,000 $150,000 $150,000 $150,000 Plan of securing the risk 120,000 120,000 120,000 120,000 120,000 120,000 Improvements over capital 0 0 0 0 0 0 equipment 120,000 120,000 120,000 120,000 120,000 120,000 Less: Accumulated depreciation expense 0 41,000 81,000 105,890 161,890 206,890 Net property/equipment $390,000 $349,000 $309,000 $284,110 $228,110 $183,110 Plan for goodwill $0 $0 $0 $0 $0 $0 Delayed in tax of income 0 0 0 0 0 0 Reserves 0 0 0 0 0 0 Deposit 0 0 0 0 0 0 Additional long-range resources 0 0 0 0 0 0 Sum of property $474,200 $584,200 $593,100 $606,458 $722,397 $686,200 Liabilities preliminary balance Year 1 Year 2 Year 3 Year 4 Year 5 Accounts owed $3,000 $3,000 $3,000 $3,000 $1,500 $1,500 Accrue operating cost 0 0 0 0 0 0 Short-range liability 0 0 0 0 0 0 Assets lease 0 0 0 0 0 0 Additional existing accountability 200 200 200 200 200 200 Sum of current liabilities $3,200 $3,200 $3,200 $3,200 $1,700 $1,700 Long-term liability from loan expense $78,000 $65,522 $50,000 $34,358 $17,598 $0 Additional long-term debt $100,000 $200,000 $150,000 $175,000 $225,000 $150,000 Sum of debt $181,200 $268,722 $203,200 $212,558 $244,298 $151,700 Additional liabilities 0 0 0 0 0 0 Sum of liabilities $81,200 $68,722 $53,200 $37,558 $19,298 $1,700 Equity Initial balance Year 1 Year 2 Year 3 Year 4 Year 5 Equity of proprietor $55,000 $55,000 $55,000 $55,000 $55,000 $55,000 Paid-in capital 200,000 200,000 200,000 200,000 200,000 200,000 Favored equity 0 0 0 0 0 0 Retain in earnings 0 10,857 29,214 83,443 (709,236) (1,519,850) Total equity $255,000 $265,857 $284,214 $338,443 ($454,236) ($1,264,850) Total liabilities and equity $336,200 $334,579 $337,414 $376,001 ($434,938) ($1,263,150) Cash Flow Year 1 Year 2 Year 3 Year 4 Year 5 Total Operating actions Net income $25,000 $37,000 $50,000 $53,890 $77,000 $242,890 Depreciation 30,000 40,900 24,890 45,000 45,000 185,790 Financial records receivable 0 0 0 0 0 0 Equipments required 0 0 0 0 0 0 Financial records payable 0 0 0 (1,500) 0 (1,500) Paying back 0 0 0 0 0 0 Additional accountability 0 0 0 0 0 0 In commission cash flow 0 0 0 0 0 0 Total operating actions $55,000 $77,900 $74,890 $97,390 $122,000 $427,180 Investing actions Expenditures $0 $0 $0 $0 $0 $0 Gaining of commerce 0 0 0 0 0 0 Sale for the constant assets $0 $0 ($1,000) $0 $0 (1,000) Additional spending cash flow 0 0 0 0 0 0 Sum of investing actions $0 $0 ($1,000) $0 $0 ($1,000) Financing activities Long-range liability $87,522 ($65,522) $9,358 $33,240 ($92,598) ($28,000) Favored supply 0 0 0 0 0 0 Sum of the cash dividend compensated 0 0 0 0 0 0 General stock 0 0 0 0 0 0 Additional financing cash flow 0 0 0 0 0 0 Total financing actions $87,522 ($65,522) $9,358 $33,240 ($92,598) ($28,000) Increasing cash flow $142,522 $12,378 $83,248 $130,630 $29,402 $398,180 Beginning cash balance $49,000 $191,522 $203,900 $287,148 $417,778 Ending cash balance $191,522 $203,900 $287,148 $417,778 $447,180 Timeline IT Strategic Plan Weekly Timeline Week 1 - 3 Week 4 - 6 Week 7- 8 Week 9 - 10 Week 11 - 12 Preliminary planning Identification of the organizational goals and values Identification of the risks and issues related to security Plan to implement a strategic IT plan Implementation of the IT strategic plan Review and adoption of strategic IT plan Conclusion It is concluded that the IT strategic plan for BMW focuses to overcome the security breach of the company. 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