Essay on Bmw

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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 suppliers....
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