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Multinational Company Bmw Economic Essay

Essay by   •  May 11, 2013  •  Research Paper  •  5,485 Words (22 Pages)  •  1,745 Views

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Multinational Company Bmw Economic Essay

BMW is the multinational company that I choose for the assignment. BMW is a company that operating in more than 1 country. They are not only operating in their home country (Germany) but they also operate in many countries like: Malaysia, Singapore, Thailand and etc. Beside that BMW also have manufacture in country like UK, USA, Mexico, South Africa and etc. So BMW is proving as a multinational company. BMW Group is one of the world's largest premium carmakers and BMW is also the parent of the company of BMW MINI and Rolls-Royce car brands, and, formerly, Rover. BMW headquarters in Munich, Germany. The company slogans in English are "The Ultimate Driving Machine" and "Sheer Driving Pleasure." BMW was founded by Karl Friedrich Rapp in October 1913. Automobiles, motorcycles and financial services are three segments that operate by BMW and they manufactured the first passenger car running by hydrogen.

BMW manufacturing is plant in Germany, Austria, UK, USA, Mexico, South Africa, Egypt, Brazil, Malaysia, Indonesia, Philippines and also Vietnam. BMW's main competitors include Acura, Alfa Romeo, Audi, Cadillac, Infiniti, Jaguar, Lexus, Mercedes-Benz and Volvo all of this are consider luxury brands of the car products. Nowadays, BMW is support by 11different types of series which is: BMW C1, BMW 1, 3, 5, 6, 7 series, BMW X3, 5, 6, BMW Z4, BMW M5, BMW M6, and BMW Z4 M. According to the research, shown that there are 2 new divisions for BMW been introduce in October 1, 2007. Which are corporate and brand development will be lead by the director of corporate planning this is focus on the vital for brand management, corporate planning, and strategic implementation BMW. Second, purchasing and supplier network that headed by Dr.Herbert.Diess. The purpose is to reduce the material cost and expenses factor. These are few of the new management strategy that BMW Company is using to operate the company. 15

Sentence of credit crunch in general are stand for credit crunch make it almost impossible to the lender like bank and investor to borrow the money because they become very chary of lending the money to the corporation. They scared of bankruptcies and defaults, which they drive up the price of debt products for borrowers which result in higher rates. The consequence is drag on of recession, which the shrinking of the credit supply wills happens as a result. 2

Credit crunch overall background is starting with the lender like bank are suffering loss because of their previous lending loans, and this make them normally unable and averse to lend the money again to the borrowers. This happen when the borrower in arrears and the properties underlying a defaulted loan and drop in the value. As in this case the borrowers default, the bank can only foreclose on hypothecate and trying to sell this property to compensate the funds they loaned out. Thereby, if the pricing of the house is decreasing, the bank is considered left selling at the cost. The banker capital position is reducing; when they suffer losses which are reduce the amount that they are able to lend out. The lending institutions are requiring keeping down the minimum levels of capital. 3

The reasons that cause to the credit crunch are first: speculation. Many people go to obtain additional loans with very easy terms for instance no initial down payment because it is too easy to gain the credit from the banks so that all of the peoples and investors think that the price will going to increase also. The rapidity increase in property value make investors to jump into the investment with low and no fundamentals. This situation will make the investors to feel that they are missing out and left behind, in case as many investors going to heap up it will cause increasingly unsustainable to the price of property. Next is lack of the regulatory oversight, the distrustful of loans are make by mortgage brokers and bankers, the underwriters who working in the bank are determine whether the ability of the borrowers is there for them to repay the loans and turn a blind eye to what is going on so that the increasing of the profit can see by the loans that they have written. In additional, there are others reasons like Adjustable-rate mortgages (ARMs) and subprime loans, the repeal of the Glass-Steagall Act, Historically low interest rates, and as well as politics which happen because many of the politicians going to say that the higher of the rate of the home ownership for Americans is better, but what would happen to the economy from the perspective of those that can't afford their homes when an inevitable slowdown occurred.4

The occurring of the credit crunch will actually affect the economy of a country and company in few ways. First, the banker will actually tighten up the credit for all types of loans and become more caution to lending the loans. So that this directly affects the small businesses peoples that who are depend on the loans and the credit to fund their day to day operation and become illiquid. Next, unemployment rises is one of the ways that will affect a company and country where the businesses are unable to pay for all the immediate bills and so that they also facing the problem that they cannot pay for the employee's salary and so that caused the situation like unemployment increasing in nationwide. The bankers and the brokerage firms are hit by this credit crunch. Apart of that a spiraling domino effect occurs, above these two economies effects of the economies crisis can make the economy of a country going down and than affect the whole country economy and if the economy of a country continues to going downward, it will lead to the difficult to stop the cycle. 5

On year 2008, America was affected by the serious economy crisis, and their economy is actually hit really hard by this economy crisis. We can see through the secondary data that done by research show that BMW also hit by 2008 economy crisis. According to (Chris Reiter 2010) BMW and Mercedes this two world largest luxury car makers was only sold a combine 31,000 fewer vehicles last month because of the occurring of economy crisis and cause credit crunch that discourage the power purchasing of consumers. The percentage of sales are also falling down 8.3% to 113.005 cars and sport- utility vehicles from 123,300 vehicles a year earlier by BMW Company whose are also owns the Mini and Rolls-Royce auto brands. Next, Auto sales in US BMW as a biggest market also decrease 32 percent in October of 2008 to the lowest monthly total since January 1991. They look back to their 2008 profile target on November BMW plans to cut production by 65,000 cars and SUVs according to (Chris Reiter 2010).

Chris Reiter (2010) states that BMW is involved in the extremely changeling market and the vehicles sales are decreasing for



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