The 'English Patient': BMW withdraws from Rover Longbridge

CONTENTS

LIST OF FIGURES

1. An insight view into the main stakeholders
1.1 The relative importance of their stake in BMW and Longbridge
1.2 Their benefits or rather sufferings according the different options open to BMW

2. Central dilemmas a company such as BMW finds itself in with respect to such circumstances

4. BMW’s role in the context of the ‘extended’ view of corporate citizenship

REFERENCES

LIST OF FIGURES

Fig. 1: The Stakeholder Model

Fig. 2: Carroll’s four-part model of corporate social responsibility

1. An insight view into the main stakeholders

When talking about the main stakeholders in this case, you can keep to Donaldson’s and Preston’s model which shows different types (see fig. 1). A stakeholder generally is “defined as ‘those groups who are vital to the survival and success of the corporation’ and as ‘any group or individual who can affect or is affected by the achievement of the organization’s objectives’” (Boatright, 2003, 390). Crane and Matten, however, take competitors as main stakeholders into account as well (Crane and Matten, 2004), which completes the main stakeholder network within this case of BMW and Rover.

illustration not visible in this excerpt

Source: Donaldson and Preston, 1995, 69, in: Boatright, 2003, 391

1.1 The relative importance of their stake in BMW and Longbridge

According the government the influence is rather small. The English Government wanted to help Longbridge by giving subsidies to BMW but its intention failed completely as BMW’s losses at the “English patient” were too high. Financial aid to the German car manufacturer can be seen as foreign investment, whereas the politicians surely intended more to preserve employment at Longbridge and to maintain the economic and labour situation in the whole depressed area of the West Midlands. The stakeholder segment of the political groups in this case can be seen within the government and therefore do not need to be talked about here.

Secondly, there are the customers who are also important for both BMW and Longbridge. They choose the company’s products, therefore control the economical results of Rover and BMW and it is commonly known “that organizations succeed by outperforming their competitors in providing superior value to their customers” (Crane and Matten, 2004, 267).

The influence of the competitive landscape generally spoken seems to be an indirect one as the car production and the end products are usually compared within this industry sector. In this situation however, the influence of the competitors such as Jaguar, Skoda and Peugeot is relatively big because the BMW-Management had to be aware of its brand’s value according any further steps taken on Longbridge.

Another stakeholder group in fig.1 is the local community which certainly is affected by the firm’s actions. 50,000 local jobs were and still are dependent on the Longbridge plant including other employers like supermarkets, leisure facilities or schools, just to mention a few. According BMW, it is the local community which creates a special image of the German brand. The better the social relationship between BMW and the community, the better its image will be. Moreover you must not forget about the big influence of the local press which BMW’s image is or rather was very dependent on as the press can affect big image losses if it wants to.

Donaldson and Preston also mention suppliers in their stakeholder model which were relevant in the process of decision making, too. Due to immense inflation problems, supplying companies could not help BMW and Rover by reducing prices even if they may have wanted to, since companies and their suppliers are interdependent. In this case, the suppliers had to fear job losses if Longbridge was closed down and therefore you can assume that they joined the demonstrations against BMW’s way of treating people.

Then there are the employees who, at Longbridge, are singed by their daily routine at the plant and by a tremendous fear of unemployment – especially during the last months of the decision making – which ended up in the biggest industrial marches for a long while. In this context another stakeholder segment, the trade associations can be mentioned as organisers of the demonstrations. At BMW it mainly concerns the management department, because the managers took the decisions over the Rover plant. Besides, the management was faced by shareholders’ pressure as they were afraid of high obsolescence of their investments in BMW.

Having mentioned the shareholders, they are probably one of the most important sources of influence. “This is commonly expressed by saying that the management has a fiduciary duty to operate the corporation in the shareholders’ interest and that the objective of the firm is to maximize shareholder wealth” (Boatright, 2003, 386). Especially in this case, the shareholders are very important as more than 45 percent of all BMW stocks belong to just one family, who – like all the other investors as well – are keen on growing values instead of obsolescence which leads to enormous losses in private means (Keun and Scheele, 2004).

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