Would BMW benefit if the UK government took us into the Euro by January 2004? Introduction In this piece of coursework, I have been asked to research a business, in this case I have chosen BMW and see if they would benefit if the UK government took us into the euro by January 2004. To answer this question, I am going to use various sources (e. g. the Internet, newspaper articles, etc. ) to research the British part of the BMW company, their finance system to see if they can cope with a change of currency and send a survey through e-mail to see what the managers and employees think about the situation.
If BMW is a successful firm I can't see a change of currency affecting them in any way. Hypothesis When this piece of coursework is complete, I expect to find that BMW would benefit from the government's decision to take us into the euro by 2004. Because BMW is a successful business, with a more than capable financial system, I think that BMW will either not be affected or they will see an improvement in sales because of the conversion rate from the pound against the euro. Exchange rates obviously have an important role to play in the competitiveness of a country.
The euro will assist competitiveness for some businesses in their trade with Europe. With all prices given in one currency across the euro zone, it will be easy to identify the most competitive products. This transparency will remove many uncertainties. The creation of the euro has generally been welcomed by many big businesses because of the opportunity to work in a stable currency area. The combination of stability and reduced transactions costs has mad the idea of one currency appealing to many.
As Europe has become the focus for a high proportion of the UK's trade, this is a strong argument for businesses that seek stability. The knowledge that prices in Europe will not change is attractive. The value of the euro beyond the euro zone is, however, subject to the fluctuations in foreign exchange markets. These fluctuations will reflect conditions in the euro zone as a whole rather than in individual countries. There is thus a trade-off between stability and flexibility.
Price stability can be expected within the euro zone, but if businesses lose competitiveness exchange rates will not be able to adjust to reflect this. It is quite likely that individual regions within the euro zone will from time to time find themselves losing competitiveness. With no exchange rate flexibility they will be forced to find ways of cutting costs and money wages may have to fall if employment is to be maintained. The second trade-off is the constraint on economic policy. Once in the euro zone, a country must conform to certain macro-economic objectives.
This may create difficulties for countries which are out of line with the rest. The political agenda may prove to be a stronger driving force than the economic one. Until the currency is more firmly established, it is difficult to tell whether the gains will outweigh the losses for any particular country. Field Research BMW is a major UK employer, with its UK sales and marketing operations at Bracknell, Berkshire, production plants at Hams Hall, Warwickshire, Swindon, Wiltshire and Oxford and Financial Services company in Hook, Hampshire.
In January 1994 BMW acquired the Rover Group from British Aerospace. The two companies retained their separate identities, whilst reinforcing the integrated global nature of the BMW Group's presence the world over. Between them, the two companies produced over one million vehicles a year. Despite enormous investment of 3 billion in the Rover Group, its people, production facilities and new models, a combination of downward price pressure, the strength of the pound and lack of consumer confidence in the Rover brand led to continued losses – over 2 million a day in early 2000.