The striker believes Manchester City's summer spending has turned the club into a far more fearsome prospect after failing to advance from the group stage in 2011 and 2012
City have struggled to make an impact in Europe's premier competition during their two previous stints, failing to win a single group game last season as they finished bottom of their group.
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"We've played a few years together and we also have four new players and they've improved the squad," Dzeko told reporters.
"We're definitely better this year than last. We don't have to think about the last two years because it's done.
"We didn't get out of the group [last season] but we have started this season in the Champions League very well and that's important for the team and the confidence.
"Now [we are] at home against the big rival in the group and we want to beat them and stay in the first position.
"We know that and [Bayern] they are defending the Champions League. Every player wants to play in the big games against the big teams and the 11 have to give more than 100 per cent to try to win the game.
"Our fans will be there and we'll give everything, that's for sure."
Dzeko believes the new manager, Manuel Pellegrini, will be key in changing City's European fortunes this season and pointed to the recent derby victory over Manchester United as a reason to be confident.
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"We showed that against a big club like Manchester United and why shouldn't we go forward with that and be more consistent with those games? It's just the beginning of the season and I am sure we will improve.
"I've said it before; the manager is very important and for every player it's important to know the manager believes in him. He gives confidence that can change everything."