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