BMW International Business What Did Essay

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Of course, BMW also hoped to take advantage of Rover's 13% market share in the UK. BMW has always placed a heavy emphasis on improving its logistics: "Even before the establishment of its U.S. plant, BMW was spending several hundred million dollars annually in North America to procure parts and materials for its German-made vehicles. Although transportation costs were higher, exchange rates and lower production costs made them cheaper to import to Germany than to acquire [them] domestically or elsewhere in Europe" (Kim & McElreath 2001).

Diversification of marketing and advertising is also important in risk management: it allows a company to offer several different types of models and different price points. This allows a company to minimize the risks of currency changes in the exchange rates. For example, when a currency is devalued within a nation, a company must decide if it should cut production values and cut costs, or if it should raise the price of the goods.

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When the currency rate grew less favorable to Ford in Mexico, Ford created more budget-conscious vehicles, and scaled down its design, while Honda in the U.S. raised prices, when faced with similar conditions. However, diversification allows to potentially capitalize upon both strategies, as seen in the positioning of BMW in Great Britain. The company can anticipate changes in demand on by marketing to the low as well as the high ends of demand. BMW, for example, used the Rover name to offer cheaper and more affordable cars to UK consumers, and the use of the name Rover meant that this did not undercut the luxury associations of the BMW name.

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