Essay on Bmw

In 1994, the BMW Corporation made the strategic decision to establish an assembly plant in Greer, SC. The move ade BMW only the second European carmaker to move to the US, the Volkswagen Corporation was the first. There were several reasons that contributed to BMW's decision to assemble some of their vehicles outside of Europe. The value of the German deutschemark was one of the leading reasons for this decision, the low deutschemark value made it difficult for the European carmaker to compete with sales from other European carmakers in the US.

South Carolina was the state of choice for BMW, because S.C. offered tax and real estate incentives for BMW to choose their state. Both parties won in that deal because BMW got land and tax breaks for their assembly plant, while S.C. citizens received jobs from the deal. The wages and benefits the local German employee receive is substantially higher than that same employee in S.C., that alone is a cost savings to BMW. US suppliers built factories around the S.C.

BMW assembly plant that provided supplies at a cheaper rate than BMW could receive in Europe, so BMW exported the lower cost parts to their European assembly plants. BMW made the decision in 1994 to [1] "acquire 80% of the British automaker Rover in a $1.2 billion deal," which was an example of BMW diversifying their corporation. With the purchase of Rover, BMW was able to pay lower wages to it's Great Britain employees than to it's German employees. With the acquisIn 1994, the BMW Corporation made the strategic decision to establish an assembly plant in Greer, SC.

The move made BMW only the second European carmaker to move to the US, the Volkswagen Corporation was the first. There were several reasons that contributed to BMW's decision to assemble some of their vehicles outside of Europe. The value of the German deutschemark was one of the leading reasons for this decision, the low deutschemark value made it difficult for the European carmaker to compete with sales from other European carmakers in the US.

South Carolina was the state of choice for BMW, because S.C. offered tax and real estate incentives for BMW to choose their state. Both parties won in that deal because BMW got land and tax breaks for their assembly plant, while S.C. citizens received jobs from the deal. The wages and benefits the local German employee receive is substantially higher than that same employee in S.C., that alone is a cost savings to BMW. US suppliers built factories around the S.C.

BMW assembly plant that provided supplies at a cheaper rate than BMW could receive in Europe, so BMW exported the lower cost parts to their European assembly plants. BMW made the decision in 1994 to [1] "acquire 80% of the British automaker Rover in a $1.2 billion deal," which was an example of BMW diversifying their corporation. With the purchase of Rover, BMW was able to pay lower wages to it's Great Britain employees than to it's German employees. With the acquisition of Rover it required more products from local suppliers whichincreased BMW's buying power and negotiating room with it's multiple local suppliers.

BMW made the decision to expand it's automobile assembly plants globally versus staying local in the German community. This change created new opportunities for the car maker and gave BMW more bargaining power with it's suppliers. When the corporation diversified it's assets it made the corporation more profitable while making it less dependent on the German deutschemark and less dependent on the higher wages that German employees require.

References: 1.Kim, Yong-Cheol and McElreath, Robert. Managing operating exposure: A case study of the automobile industry, Multinational Business Review. Spring 2001. of Rover it required more products from local suppliers which increased BMW's buying power and negotiating room with it's multiple local suppliers.

BMW made the decision to expand it's automobile assembly plants globally versus staying local in the German community. This change created new opportunities for the car maker and gave BMW more bargaining power with it's suppliers. When the corporation diversified it's assets it made the corporation more profitable while making it less dependent on the German deutschemark and less dependent on the higher wages that German employees require.

References: 1.Kim, Yong-Cheol and McElreath, Robert. Managing operating exposure: A case study of the automobile industry, Multinational Business Review. Spring 2001.