BMW 2015 Annual Report Download - page 70

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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
27 Overall Assessment by Management
27
Financial and Non-financial
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
59 Comments on Financial Statements
of BMW AG
62 Events after the End of the
Reporting Period
63 Report on Outlook, Risks and
Opportunities
63 Outlook
68 Report on Risks and Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87
BMW Stock and Capital Markets
Opportunities management system and
identifying 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, sup-
pliers, customers and competitors – are monitored on a
continuous basis. Identifying opportunities is an integral
part of the process of developing strategies and drawing
up forecasts for the BMW Group.
The Group’s product and service portfolio is continually
reviewed on the strength of these analyses and new
product projects are presented to the Board of Manage-
ment for consideration, as deemed appropriate.
The continuous improvement of important business pro-
cesses and strict cost controls are essential in the Group’s
ongoing endeavours to ensure good profitability and
(net of appropriate countermeasures) and its likelihood
of occurrence in each case. The amount of a risk is ap-
proximated in the case of risks measured on the basis of
“value-at-risk” and “cash-flow-at-risk” models. In this
situation, the following assessment criteria are applied:
a high return on capital employed. Any profitability im-
provement measures likely to be implemented are in-
corporated in the forecast. One example is the imple-
mentation of modular-based production and common
architectures, which enable a greater commonality of
features between different models and product lines.
This strategy, in turn, contributes to improved profita-
bility by reducing development costs and other invest-
ment
on the series development of new vehicles. The
new approach helps cut production costs and increase
production flexibility. Moreover, a more competitive cost
basis opens up opportunities 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 illustrates 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 that could pose a
threat to the going-concern status of the BMW Group.
Any risks or opportunities which could, from today’s
perspective, 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.
Class Risk amount
Low > €0 – 50 million
Medium > €50 – 400 million
High > €400 million
Risks and opportunities Risk amount Change com- Opportunities Change com-
pared to prior year pared to prior year
Political and global economic risks and opportunities High Stable Insignificant Stable
Strategic and sector risks and opportunities High Increased Insignificant Stable
Risks and opportunities relating to operations
Production and technology Medium Stable Insignificant Stable
Purchasing Medium Reduced Insignificant Stable
Sales and marketing High Stable Insignificant Stable
Pension obligations High Stable Significant Stable
Information, data protection and IT Medium Stable Insignificant Stable
Financial risks and opportunities
Foreign currencies High Stable Significant Stable
Raw materials High Stable Significant Stable
Liquidity Low Stable – –
Risks and opportunities relating to the provision of financial services
Credit risk High Stable Significant Stable
Residual value High Stable Significant Stable
Interest rate changes High Increased Significant Stable
Liquidity / operational risks Medium Stable – –
Legal risks Low Stable – –