BMW 2015 Annual Report Download - page 75

75 COMBINED MANAGEMENT REPORT
Opportunities relating to sales and marketing
The BMW Group focuses its selling capacities primarily
on markets with the greatest sales volume and revenue
potential and fastest growth rates. Developments in the
field of digital communication and connectivity 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. Investment in both existing and new mar-
keting concepts is firmly aimed at intensifying relation-
ships
with customers. A new online sales platform was
introduced in Great Britain, for example, which enables
customers to select, finance and buy their vehicles
online. There will be no relaxing of efforts in the ac-
tive search for new opportunities to create even greater
added value for customers than currently expected,
whilst at the same time looking for ways to boost sales
volumes and achieve better selling prices. 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
for its brands. The automotive-related business activities
of technology companies are also closely followed (e. g.
automated driving). The BMW Group’s brands are present
on numerous platforms, such as Facebook, YouTube
and Twitter. Digital communication can result in a more
intense product and brand experience for customers,
which could, in turn, have a positive impact on revenues
and earnings.
The BMW Group considers that these opportunities will
not have a material earnings impact over the two-year
assessment period compared to the assumptions made
in the outlook.
Risks and opportunities relating to pension obligations
The BMW Group’s pension obligations to its employees
resulting from defined benefit plans are measured on
the basis of actuarial reports. Future pension payments
are discounted by reference to market yields on
high-
quality corporate bonds. These yields are subject to
market fluctuation and therefore influence the level of
pension obligations. Changes in other parameters, such
as rises in inflation and longer life expectancy, also im-
pact pension obligations and payments. Opportunities
and risks arise depending on the nature and scale of
changes in these parameters.
Most of the BMW Group’s pension obligations are
managed in external pension funds or trust arrangements
and the related assets are kept separate from those of
the Group. The amount of funds required to finance pen-
sion
payments out of operations in the future is there-
fore substantially reduced, since most of the Group’s
pension obligations are settled out of pension fund
assets. The pension assets of the BMW Group comprise
interest-bearing securities, equities, real estate and
other investment classes. Assets held by pension funds
and trust arrangements are monitored continuously
and managed on a risk-and-yield basis. A broad spread
of investments also helps to mitigate risk. In order to re-
duce fluctuations in pension funding shortfalls
, invest-
ments are structured to coincide with the timing of
pension payments and the expected pattern of pension
obligations. Remeasurements on the obligations and
fund asset sides are recognised, net of deferred taxes, in
“Other comprehensive income” and hence directly in
equity (within revenue reserves).
If risks relating to pension obligations were to materialise,
they could have a high negative earnings impact over
the two-year assessment period. The level of risk relating
to pension obligations is classified as high.
Within a favourable capital market environment, the
return generated by pension assets may exceed expecta-
tions
and reduce the deficit of the relevant pension
plans. This, in turn, could have a materially favourable
impact on the net assets position and earnings perfor-
mance of the BMW Group.
Further information on risks in conjunction with pen-
sion provisions is provided in note 35 of the Group
Financial Statements.
Risks and opportunities relating to information, data
protection and IT systems
Information technology (IT) is used to an increasing
extent in every aspect of the business. In this context,
the significance of electronically processed data and
the availability of IT systems is constantly growing.
These developments create opportunities on the one
hand, whilst also posing a source of risk on the other.
Information, data protection and IT risks
The BMW Group could incur damage if the confiden-
tiality
or integrity of sensitive information, data and
systems were to be compromised and / or availability re-
stricted. One of the direct consequences of such an
eventuality would be additional expense incurred to re-
cover data and restore systems. Such eventualities could