BMW 2013 Annual Report Download - page 79

79 COMBINED MANAGEMENT REPORT
performance culture and the development of the skill-
sets of both staff and managers alike throughout the
or-
ganisation could also have a positive impact on revenues
and profitability. Compared to the outlook, the BMW
Group’s earnings performance is unlikely to benefit from
efficiency improvements to a significantly greater ex-
tent
than that incorporated in the outlook.
Further opportunities may arise due to other technical
innovations relating to products and processes and as
a result of organisational changes. In the field of light-
weight construction, carbon is being put to use in high
volumes for the first time in the automobile industry in
the construction of the BMW i3. The potential for effi-
ciency improvements in this area is quite considerable,
including the increased use of this material in other vehi-
cle projects
, as a result of which the competitiveness of
the products involved – both in terms of consumption
and driving dynamics – could be improved to a signifi-
cantly greater extent than originally planned. The op-
portunities presented by these new developments are
primarily relevant for the medium to long term and will
not have a material short-term impact on the BMW
Group’s earnings performance.
The BMW Group focuses its selling capacities primarily
on markets with the greatest sales volume and revenue
potential and fastest growth rates. Investment in exist-
ing and new marketing concepts is firmly aimed at in-
tensifying relationships with customers. A good exam-
ple is the new marketing concept for BMW i products
and services, which will be offered in selected markets
in the future via an innovative multi-channel model.
There will be no let-up in the active search for new op-
portunities
to create even greater added value for cus-
tomers than currently expected, whilst at the same time
looking for ways to boost sales volumes and achieve
better selling prices.
Developments in the field of digital communication are
also opening up opportunities for marketing the BMW
Group’s various brands. Consumers can meanwhile
be reached on a more targeted and individual basis,
thus helping to strengthen long-term relationships and
brand loyalty. The BMW Group keeps track of the latest
developments and trends in communication technology,
including the use of social media and networks, in order
to extend customer reach. The BMW Group’s brands
are present on numerous platforms, such as Facebook,
YouTube and Twitter. Thanks to its intensive efforts in
this area, the BMW Group is registering faster growth
rates on the various platforms than its competitors,
measured in terms of the number of fans and visits.
The decisive advantage of digital communication is that
the brands are able to engage in a direct dialogue with
customers and thus create a more intense brand expe-
rience. The BMW Group considers that these opportu-
nities
will not have a material impact compared to the
assumptions made in the outlook.
Pension benefits represent an important component of
the BMW Group’s overall remuneration package, mak-
ing it easier to recruit qualified staff and to gain them
for the enterprise on a long-term basis. Pension liabili-
ties are matched in part by corresponding pension plan
assets. Within a favourable capital market environment,
the return generated by pension assets may exceed
expectations and reduce the deficit of the relevant pen-
sion plans. This, in turn, could have a materially favour-
able impact on the net assets position and earnings per-
formance of the BMW Group. Pension plan assets also
help to reduce the interest and inflation risks attached
to pension liabilities.
Financial opportunities arising from currencies
and raw materials
The ability to compete on global markets is also
signifi-
cantly influenced by changes in exchange rates and raw
materials prices. Favourable developments in exchange
rates (in particular for China and the USA) and in raw
materials prices could have a positive impact on the
finan cial result of the BMW Group. Developments on
the financial markets are closely monitored, in order to
identify and make the best use of any opportunities
that may arise. Financial opportunities are managed by
employing the same processes and methodologies used
to manage financial risks. The principal objective of
these management processes is to reduce risk by improv-
ing
forecasting reliability. Currency and raw material
price opportunities could have a material impact on the
earnings performance of the BMW Group.
Further information in conjunction with financial in-
struments is provided in note 42 to the Group Financial
Statements.
Opportunities arising in conjunction with the provision
of financial services
The principal risks arising in the Financial Services seg-
ment, namely credit and residual value risks, are closely