BMW 2014 Annual Report Download - page 72

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18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23 Report on Economic Position
23 General and Sector-specific
Environment
26 Overall Assessment by Management
26
Financial and Non-financial
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
61 Comments on Financial Statements
of BMW AG
64 Events after the End of the
Reporting Period
65 Report on Outlook, Risks and
Opportunities
65 Outlook
70 Report on Risks and Opportunities
82 Internal Control System and Risk
Management System Relevant for the
Consolidated Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87
BMW Stock and Capital Markets
Opportunities management system and identification
of opportunities
New opportunities regularly present themselves in the
dynamic business environment in which the BMW Group
operates. General economic trends and sector-specific
factors – including external regulations, suppliers,
cus-
tomers and competitors – are monitored continuously.
Identifying opportunities is an integral part of the pro-
cess of developing strategies and drawing up forecasts for
the BMW Group.
Market, competition and scenario analyses are conducted
and evaluated and forecasts are drawn up as part of
the process of identifying opportunities. The Group’s
product and service portfolio is permanently reviewed
in the light of these analyses and, as appropriate, new
product projects are presented to the Board of Manage-
ment for consideration.
The continuous optimisation of important business
processes and strict cost control are essential to ensure
good profitability and a high return on capital e m-
ployed. The forecast is drawn up on the assumption that
profitability improvement measures will be imple-
mented. One example is the implementation of modu-
lar-based production and common architectures, which
enable a greater commonality of features between
different models and product lines. This, in turn, con-
tributes to improved profitability by reducing develop-
ment costs and investment on the series development
of new vehicles. The new approach has a positive im-
pact on production costs and helps increase production
flexibility. A more competitive cost basis opens up oppor-
tunities
to engage in new market segments.
The implementation of identified opportunities is
un-
dertaken on a decentralised basis. The significance of
opportunities for the BMW Group is classified in the
categories “material” or “not material”.
Risks and opportunities
The following table provides an overview of all risks and
opportunities and shows their significance for the BMW
Group.
Neither at the balance sheet date nor at the date on which
the Group Financial Statements were authorised for
issue were any risks identified which could pose a
threat to the going-concern status of the BMW Group.
Risks and opportunities which could, from today’s per-
spective, have a significant impact on the results of
operations, financial position and / or net assets of the
BMW Group are described in the following sections.
Political and global economic risks and
opportunities
As one of the world’s leading providers of premium
products and services, the BMW Group faces a variety
of major challenges. The world is changing at great
speed. Resulting situations can give rise to risks on the
one hand and opportunities on the other.
Political and global economic risks
Individual mobility remains a key issue in a great many
countries, in terms of political regulation and national
industrial policymaking. Changing values in society are
constantly calling for new solutions in the field of mo-
bility. Unpredictable disturbances in economic
interde-
pendencies, together with ever-greater competition,
may give rise to knock-on reactions that are practically
impossible to measure.
Risks and opportunities Risk Change
amount compared to
prior year
Political and global economic risks
and opportunities High Stable
Strategic and sector risks and
opportunities Medium Increased
Risks and opportunities relating
to operations
Production and technology Medium Stable
Purchasing High Stable
Sales and marketing High Stable
Pension obligations High Stable
Information, data protection and IT Medium Stable
Financial risks and opportunities
Foreign currencies High Stable
Raw materials High Stable
Liquidity Low Stable
Risks and opportunities relating
to the provision of financial services
Credit risk High Stable
Residual value High Stable
Interest rate changes Medium Stable
Liquidity / operational risks Medium Stable
Legal risks Low Stable