The Spartanburg Plant Investment by BMW AG

The Spartanburg Plant Investment by BMW AG

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Inhaltsangabe:Abstract: In the pursuit of success, higher profit, gaining market share and dealing with the challenges of day to day business. The big national companies, wherever they may be, have dreams and aspirations. As a CEO or General Manager of a big company; there is several objectives to achieve and strive for. Among them, on the top of any list, these will be some of them. Get the most of the revenues and provide for the shareholders, it has in the recent years become more and more apparent, that the big companies seem to focus on shareholder value . This is often found in the US and is finding its way to the European continent. Another primary aim is to expand and become bigger or at least as big the main competitor. There is several reasons and valid objectives; one being the natural instinct of any CEO or General Manager; to achieve success and become an even bigger share of the global market. Other reasons may be the search for new markets, for whatever reason, the need for cutting the production costs, to be closer to the customers or even to have access to new technologies or raw materials. In this case study, we will deal with the issue of BMW AG s decision in the mid 90 s to go abroad. To settle on the US market, starting up a manufacturing facility. There is a wide range of reasons, concerns and objectives to be dealt with prior to make that certain move, settling on foreign shores and setting up business. In order to understand what we are dealing with, we need to define multinational: Companies operating in multiple countries, but responding to local product-markets through more customized approaches In order to deal and operate in that environment, that company is expected to have highly qualified resources and access to a wide range of information s; such as pricing, local laws and regulations, knowledge and understanding of the customer s need and preference s to name of few. The road that the company is about to embark upon, prior to going multinational, is full of risks in all sorts of different areas; such as political risks, financial risks, regulatory risks and risks dealing with competition. There must be a solid research team ready at hand, being able to provide the management team, with the necessary information s and background information. We will cast a light on the problems, benefits, motives and challenges regarding multinational business. Zusammenfassung: Die vorliegende englischsprachige Projektarbeit behandelt das Thema internationale Investitions- und Standortentscheidungen in der Automobilindustrie am Beispiel des amerikanischen BMW Werkes Spartanburg in South Carolina. Ziel der Arbeit ist es, die Entscheidungskriterien fA¼r internationale Hersteller allgemein und am Beispiel von BMW herauszuarbeiten als auch die dazu korrespondierenden wirtschaftspolitischen Gestaltungs- und FAprderungsmApglichkeiten am Beispiel des Bundesstaates South Carolina und der Stadt Spartanburg aufzuzeigen. Dazu wurde die Arbeit in 3 Teile untergliedert. Im 1. Teil werden allgemein die GrA¼nde, Ziele und betriebliche Auswirkungen internationaler Investitionsentscheidungen beleuchtet. Ferner werden Finanzinstrumente wie z.B. European Mid Term Notes und Euro Commercial Papers erlAcutert. Im 2. Teil wird das Umfeld von BMW im Zeitpunkt vor dem Bau des US-Werkes analysiert und untersucht, warum im Zeitalter der Globalisierung Investitions- und Standortentscheidungen die Strategie Produktion follows the market zugrunde gelegt wurde. Des weiteren werden die Kriterien von Investitions- und Standortverhandlungen untersucht: Auf der einen Seite die Vorteile, die BMW als potenziellen Investor von den politisch Verantwortlichen aus South Carolina und Spartanburg angeboten wurden. Auf der anderen Seite die positiven Auswirkungen fA¼r die gesamte Region durch das neue Werk und der nachgefolgten Zulieferindustrie. Die Arbeit schlieA┬čt ab mit dem 3. Teil, in dem die die Investition tragenden Finanzinstrumente dargestellt, die finanziellen Auswirkungen der Investition auf die Bilanzen der BMW AG kommentiert und anhand von 6 SAculendiagrammen erlAcutert werden. Table of Contents: 1.Introduction: Multinational Finance Decisions4 1.1Strategic reasons and benefits for going Multinational5 1.1.1Market seekers5 1.1.2Raw materials8 1.1.3Production factors9 1.1.4Know How Seekers9 1.1.5Low cost countries11 1.1.6Fewer regulations12 1.2Chances and threats for multinational companies13 1.2.1Corporate Culture14 1.2.2Financing on the domestic and foreign markets14 of scale15 and marketing expertise15 technology based on heavy research15 strength16 products16 1.3Summing up17 1.3.1Strategic Management Process17 1.3.2Means of financing18 1.3.3European Mid Term Notes (EMTN)19 1.3.4Euro Commercial Paper (ECP)19 2.Reasons for BMW's Spartanburg investment: An evaluation of the chances and threats behind the decision20 2.1Reasons for why BMW decided to produce outside Germany and Europe22 2.1.1Chances and threats for Non-US manufacturer in the US car market23 rate fluctuations23 luxury tax24 2.1.2BMW's new Strategy24 2.2Reasons that made BMW decided to produce in the USA25 2.2.1Advantages of BMW being a domestic manufacturer25 of exchange rate fluctuations25 new BMW image in the US public26 part in NAFTA26 a part of America's automobile industry26 2.2.2Other advantages29 2.3Reasons for why BMW selected the Spartanburg Site29 2.3.1Examination of the locational advantages30 2.3.2BMW's economic impact to Spartanburg's new welfare31 2.3.3South Carolina's and Spartanburg's incentive packet for BMW33 and local environment33 incentives by State and Local Government34 of local infrastructure36 2.4Conclusion36 2.5Appendix38 3.Financial aspects of BMW's Spartanburg investment42 3.1External and internal financial decisions in the year 199242 3.2External and internal financial decisions in the year 199344 3.3External and internal financial decisions in the year 199445 3.4External and internal financial decisions in the year 199548 3.5External and internal financial decisions in the year 199649 3.6External and internal financial decisions in the year 199751 3.7Summery: 10th anniversary in Spartanburg and numeral overview53 3.8Numeral figures overview56 Bibliography59Ford later started manufacturing cars in and for the Australian market by opening a plant in Geelong near Melbourne. Chrysler, were far less active ... selling their domestic products, but rather by selling products made for the local market.

Title:The Spartanburg Plant Investment by BMW AG
Author:Pascale Taube, Johannes-Cornelius Adari, Henrik Thrane - 2004-08-10


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